Thursday, March 27, 2008

Moving Safely through Collaborations

A couple weeks ago Bootstrap Austin had two opportunities to enlighten the attendees of SXSW Interactive on the hallmarks of what it means to be a Bootstrapper and how to be a Bootstrapper. In the second panel discussion, Bootstrapping through Entrepreneur Collaboration Networks, the panelists Kevin Koym, Allen Beuershausen, Bijoy Goswami, Bruce Krysiak, and myself illustrated how the "collaboration networks" that we use to grow our businesses, are actually a community. Once we view the ever-available resources of the bootstrappers as a "community", then we can move into a collaboration dance with other entrepreneurs. In contrast to the other models of building businesses, bootstrap businesses don't impose arbitrary structures on themselves. Instead, they extract structure from chaos with tools like the wiki and see the potential of opportunities everywhere, finding that the best ones are often those that are unexpected!

It is the collaboration dance that I find so fascinating! This is not simply because I am a Relater (Bijoy's MRE model of energy), an Extrovert (Myers-Briggs personality preferences), or that the college degrees I've collected include the word, "psychology." These one-to-one collaboration dances are how I have grown my business and created new service offerings! Nevertheless, being driven, energized, and overly-trained regarding people, I also tend to enjoy collaborating with others and realize that for many entrepreneurs, they do not have this same comfort. During our panel discussion at SXSWi, a good number of questions from the audience were about concerns dealing with the people in their collaborations/partnerships. One person asked, "You put yourself out there and make yourself vulnerable, working to build a collaboration with someone. What if they aren't being honest with you and don't have the same level of integrity?" Hence, the need to move safely through collaborations.

To begin with, we need to find the "right" people for our collaborations. Think about the effort we put into hiring people...okay, think about the effort that business people who hire GREAT employees put into hiring; it's a process where they spend time. They spend considerable time and energy, ask good questions, contact references, look for fit of the individual in their company, look closely at the needs of the company, and assess the individuals ability or likelihood of meeting those needs. In developing collaborations to build your business, keep in mind that the "right" people are a complement to you! They are not your clone. Of course, the "right" people are different depending on who YOU are, what your business is, the time it is in your life, local/global economics and where you are in your business (the stage of your venture). In trying to figure out if someone is the "right" person for you to develop a collaboration with, here are a list of features that you will want to know about the person:

  • strengths and natural talents
  • personality preferences
  • values and passions
  • skills and expertise

For more information about collaborations, you can also reference EIN's August newsletter, Boutiques for Sole Proprietorships. Finally, remember that mutual respect is a critical component in the successful collaboration dance.

So what else is important for safely building collaborations?

We also need a lot of clarity and awareness about ourselves. The quote, "One must know himself before they can know another' applies directly. What are our own strengths and weaknesses? Our personality preferences, values, and passions? So it is, that in the collaboration dance, it is vital to really know who we are. After all, we are looking for our "business complement". Furthermore, it is important to know what we need in our business. This could be any number of things. Do we need a collaboration to: take our business to the next level; expand our reach; handle operations; manage people; create new products/services; or simply meet the demands of a new, large-client project?

As we're collecting all this information about ourselves, our business, and potential people to collaborate with, we want to be mindful of possible hitch points that can come up along the way. And sometimes, it is simply a matter of timing, and not the right time or a good time for this collaboration. Hitch points, however, are signs or warnings that it may not be safe to proceed with the collaboration. They can show up as:

  • conflict in ethics or values
  • skewed power or lack of balance in power
  • lack of reciprocation

Essentially, whenever we sense any of these dynamics, it is our wise, intuitive self trying to warn us that there is a high risk that this collaboration will be a costly and negative experience. This is also discussed in Business Relationships: Develop the Essential Components and Dodge the Hitch Points.

Finally, after we've found the "right" person, uncovered the specifics of ourselves and the needs of our business, and there haven't been any hitch points, focus on setting this collaboration up for success! As we develop the collaboration, spend time discussing what each of us need and outline and agree to the parameters of what we're actually doing together, who is specifically doing what, and when things will happen. These steps will help to ensure that we not only safely venture into collaborations, but that our collaborations will also be successful!

Thursday, March 20, 2008

Entrepreneur vs. Wild

In my own experience and based on some of the entrepreneurs I have talked to over the years, I think there is a useful and simple way of defining an entrepreneur's risk profile. That is, a simple way of explaining how an entrepreneur evaluates the opportunities available to him versus the utilization of available resources associated with this activity. I break it down simply into three types of risk profiles for entrepreneurs:
  1. Lifestyle - optimized for what makes you comfortable, or happy
  2. Investor - optimized for the greatest return
  3. Survival - optimized for sustainability
Each of these profiles provides a distinct context both for how opportunities are evaluated and how resources are managed. Each profile makes different fundamental assumptions about how incremental investment choices are made. In this simple framework, the risk profile seems to change from time to time based on the goals of the entrepreneur, the team or the venture as a whole.

Exploring this is a longer conversation, but the point I want to explore here is this: being in survival mode, and considering survival as your primary risk profile during the Valley of Death is absolutely critical to building a longterm business. Unlike starting a franchise, or targeting a quick exit, or building a lifestyle business, bootstrapping is about building a longterm, sustainable organization.

So, what does that really look like?

One analogy I really like is Bear Grylls of Discover Channel's Man vs. Wild. Bear is an experienced adventurer who has climbed Mount Everest, hiked through Antarctica, served in Britain's special forces, and a number of other experiences that most of us would consider insane because we value our lives. On his television show, Man vs Wild, he is dropped off in various dangerous parts of the wilderness. He must endure the conditions, eat whatever crawls in front of him that may provide nutrients, find water in the strangest of environments, and build shelter in places that allow him to survive the night.

Bear demonstrates quintessential survival mode - he knows what might endanger him in his environment, he knows what not to do to keep from killing himself, and he knows what opportunities to engage in and those which he should pass on. You could put Bear anyplace on earth, and know that he could use his survival skills to safely find his way home (if anyone could).

Think about it, Bear can survive under any conditions because he has spent his career training himself to do so. He has mastered sustainability.

The ability to sustain should be the output of the Valley of Death in the bootstrap process.

Bootstrapping is about mastering sustainability in your venture. It's about using absolutely everything you have at your disposal and learning how to survive - to know the limits of what you and your venture are capable of doing without killing yourself. And I do mean the limits.

There was an episode of Man vs. Wild where Bear turned to the camera and explained how it was his experience in pushing his own abilities to the limit that really gave him his sense of identity. At first I thought this was kind of corny, but then when I thought about it, this is exactly what the Valley of Death phase feels like for the entrepreneur. Think about it, what better way is there to truly know all that your venture is capable of until you have tested the limits in every way imaginable. Bear knows how much water he needs, what he can eat, how far he can jump, what problems he is capable of solving (usually), how cold his body can get, etc.

The Valley of Death is about pushing your venture to the limits, teetering on the edge of trying to kill yourself, all the while you are effectively eating creepy insects and drinking your own urine in order to make it to the next level.

The output gets coded into your venture DNA - it's a protocol for being sustainable in an attempt to leverage your greatest assets. It's an underlying way of making opportunity decisions that follows your venture so that when you switch gears to becoming an investor you don't kill yourself in the process.

Ok, so why is this important?

#1 - Focus. Don't worry about being happy, don't worry about your ROI, focus only on long-term survival and forming a sense of identity.

Struggling in the VoD? Perfect, just don't die and you win.

#2 - Sustainable Growth. Having the survival DNA present within your venture will allow you to seize on new opportunities so that you can maximize your own investment without shooting yourself in the foot.

#3 - The limits of your capability. Experience in the face of your venture's limit is the only way to define your true self-identity.

We're talking about sustainable finance policies, sustainable hiring practices, sustainable vendor relationships, sustainable product development. Once you really figure out how the parts of your company can be sustainable, you can start to put repetitive measurement and control systems in place and continue to focus on bigger and better things.

I have found that until we put processes in place that allowed my business to deliver value in a consistent and sustainable fashion, only then could I switch mindsets with regards to our risk profile. Only then could I really begin to think in an investment mindset - and that's what the growth stage is all about.

Post originally created for the Bootstrap 101 panel at SXSW interactive on March 10, 2008.

Jonathan McCoy
is a the founder of semantic web startup, Perception Labs.

Friday, March 14, 2008

I am Bootstrap (And So Can You!)

Like most people I thought entrepreneurship was reserved for those with business degrees. I thought I would need to learn how to write a business plan, buy a suit and try to make friends with my local banker. I thought I would have to have a BIG IDEA to have them overlook what some college era naivety had done to my credit rating. I was wrong. These are some of the myths that Bootstrap Austin helped me knock down, one by one.

Two years ago I was a hairstylist and a manager at a high-end hair salon. Today I have two businesses thriving in the Austin area. Both of these businesses have emerged from a natural process of listening to my customers and following bootstrap principles. The resulting businesses are so different from how I originally conceived them, that had I tried to sit down to write a business plan, I simply couldn't have done so.

One afternoon at the salon, I realized the photos of hairstyles on the walls were not only uninspiring, but out of date. I had been attending the First Thursday Gallery Night on West 6th street with some friends each month and had met some really great artists. It occurred to me that I could use our wall space to showcase local art and beautify the space at the same time. Having a changing artistic environment would be fun for our clients and our staff, so I put the word out and soon I was having well attended art opening parties. Best of all, the artists were actually selling their work! Word got out and other local businesses were asking me to help them display local art as well.

Six months later, I launched Austin Art Start and was displaying art in local businesses, convinced that volunteering these services was the best way to go. I was uncomfortable charging the artists. I had turned down someone who charged to place art in my own business, so I decided other businesses wouldn't pay either. A friend of mine, Allen Beuershausen, had been urging me to make a business of this service. Because of the myths I believed about business, I consistently refused. Allen had been a member of Bootstrap for two years and had invited Bijoy Goswami to a meeting where I and a couple of other folks had planned to decide how I should proceed. (This meeting happened to also be the kick-off for the Bootstrap Art Subgroup.) This meeting went down more like an intervention than anything else and I left with a clear idea that it was possible for me to charge for what I was doing.

After this point I stalled for a long time. I just wasn't excited. The idea had been done. Every coffee shop and hair salon in town had local art displayed. However, I continued to actively participate in the lively art scene. In the meantime I had moved my hairstyling practice to a new salon and this is where the real breakthrough happened: my clients started asking me to keep an eye out for a special piece of art for their homes! My art consulting business was born, and the inspiration was back. Not only was I actively consulting my clients about the local art scene, I was learning quite a lot of them were intimidated by galleries and they welcomed the prospect of having a guide. I arranged studio visits with artists that intrigued them. Soon, they brought friends! I began renting passenger vans, hiring caterers, bartenders and support staff. I had stumbled upon a fun, unintimidating way for people to get involved in the local art scene. The studio tours now include dinner, drinks, transportation and a chance to see the studio where artists create, as well as get to know them on a personal level. What fun!

So, here we are. I have created something I love doing that is a unique and valuable service to my clients as well as to the artists I represent. My "big idea" emerged from the process. I am so glad I didn't waste any time writing a business plan or visiting with bankers - and I never had to buy a suit. One of the best parts for me personally is I now have a chance to help other people begin an entrepreneurial journey of their own through my second business. I launched Liminicity Consulting in the fall of 2007 and have helped several entrepreneurs use bootstrapping to get their start. Who would have thought?

Friday, March 07, 2008

Bootstrapping, Art and SXSW

I am excited and honored to sit on the Bootstrap 101 panel during SWSX. The Interactive portion of this event is proof that life reflects art and art reflects life, and business, deservedly is an art. This is probably why so many terms used by artists and entrepreneurs are so interchangeable. Art in its highest form is an inspiration of the spirit of mankind. When great artists deliver great art it transforms us, allowing us to view other possibilities, provoking thought and furthering the evolution of mankind.

Each work of art embodies the VISION of its creator(s), following the intent and values from their own unique experience of life. This is why the success of companies that have had a massive effect on the world such as Google and Apple can only be explained in reverse.

One of the unique properties that business provides to art is the ability of its practical participation. Where other art such as music, writing, and painting engage thought faculties that are much more boundless, the restrictions of material application force the entrepreneur artist many more restrictions. Works of art in the business community must have a buy-off from the collective and it must invoke action in the world. The entrepreneur artist must continue to have an ongoing magnetic presence where the collective world can interact.

It is inspirational that SXSW has recognized business in this category, and fittingly so.

Danny Gutknecht is the artist/Evangelist/cofounder of InHouse Assist.