Author: Steve Shu

Carlos Velez has put together a series of posts on the mistakes that entrepreneurs make when seeking capital. Here they are:

1. Mistake #1 – Not writing a check
2. Mistake #2 – VC is the only path
3. Mistake #3 – Taking your time
4. Mistake #4 – Learn how to swim before jumping into the pool
5. Mistake #5 – Not seeking professional help

People should contact Carlos (per his post here) if they want to get a PDF of the article. Also if you resonate with #2 at all (which you should), you should also see the post at the Entrepreneurial Mind, "There Is Life Beyond Venture Capital".

Update (11/17/05): Carlos has a very nice follow-up post here that sheds more light on #5 with some specific examples in the drug discovery space.

Update (11/17/05): Texas Venture Capital Blog  has a post here where some  entrepreneurs come clean and admit to making some the exact mistakes that Carlos mentions.

In formulating new products and/or doing sales and business development, it is very easy to get caught up in jargon, frameworks, etc. that make a company’s offering sound sophisticated, but in the end, cloud the issue about why someone should purchase any product at all, not to mention your company’s product. Ed Sim, as motivated by a post by Mike Neven, posts about spinning one’s wheels in a sales process in the enterprise software space (I think the general direction of these implications go beyond just sales in enterprise software):

Interestingly enough, over the last year a trend I have been seeing is
the "do nothing" trend from enterprise customers.  We find out that the
potential customer has budget, we are selected as the winner, and then
they do nothing.

Thus, while a very large percentage of proposed projects meet all technical, functional, business, and investment criteria for a client, many projects do not move forward.

Mike Neven suggests mastering three soft factors in the sales process that drive the subjective decision-making process of purchasers:

1. Fear of Being Left Behind
2. Board Room Pressure
3. The Squeaky Wheel

Annecdotally, I have not seen as many cases of #3 as the other areas as this requires sophisticated timing to know when and where the squeaky wheel in the organization is at. I have used #2 tactics in startup situations, but I have found this harder to do in larger companies as the distance between the product group and account gets wider. #1 is a good one, but sometimes the market structure and industry analyst coverage may not work to one’s favor. I would suggest an addition to Mike’s list – if one can (as a supplier) show up to the bid opportunity and demonstrate credibility that one can actually get the job done (as opposed to blowing smoke) or solve an even bigger problem for the client (a variation of chinning up), this can be a winning factor. I have used this tactic in a number of competitive deals (i.e., one or more competitors at the table) and led the winning bid. I might frame this tactic as a "Don’t Miss This One/Specific-Fit Opportunity".

When my daugther started to learn how to write words (as opposed to just letters), some of the first things she scratched out were the letters, "Kn I hv a Gnod". I had no idea what it meant when I read it, but I later found out from my wife that my daughter was very intrinsically motivated to write it. It turns out that she wrote it during the holiday season, and the inscription was a question, "Can I have an egg nog?" (a popular holiday drink in the States). Totally remarkable I thought.

Figuring out what motivates someone is probably one of the most important things I have learned in business, but this knowledge is not something that is taught explicitly in any of the schooling I have ever been through. It was never explictly taught in any job I’ve been in before either.

Whether it be designing the sales compensation plan for a sales executive, coaching a subordinate that works for you, determining whether to hire someone, or developing a relationship with a sales prospect that does not know you very well, figuring out what makes other people tick is crucial (not to mention that it is important to reflect on what makes you tick too).

I get a kick out of the fact that Topix.net picked up on one of my posts about Dave Weckl (one of my favorite drummers) and has put my item as one of the top news items on him. These are trench-level signs that news and blog content (for better for worse) are getting mixed together.

Pandemic flu thing. Not sure what to do yet, but it is on my list. This thing is probably going to influence the equivalent of the home bomb shelter of the Cold War era.

Update (11/13/05): Scientific American article/cover story here.