Asking for money can be fun

Thanks so much to everyone who came out to Amber Lounge on last Wednesday night to celebrate All Things Wishful's launch!  It was amazing to be surrounded by a large room of people who had come out to get excited with us about our business.  Despite the rainy, windy weather (did we mention we are in Seattle?), the stars aligned for our launch party.  In keeping with All Things Wishful's goal of helping engaged couples get the gifts they want, our co-host was fellow Seattle start-up was CupidsPlay, a clever social gaming and online dating site started by  veteran entrepreneurs and friends of ours.  Add a signature drink named Cupid's Wish (for CupidsPlay and All Things Wishful - get it?) and a couple hundred very nice-looking (and very nice) people, and we had the perfect celebration of our businesses.  Kudos to Arry for orchestrating this fabulous night.

All night, as we were telling our guests about our awesome product, we were again struck by how what All Things Wishful does seems to really resonate with people.  Sometimes, the most thoughtful gift is cash.  With cash, you can get what you want, when you want, from wherever want.  The only thing is that it isn't always an easy thing to ask for.  Well, that's what All Things Wishful is here for.  We make asking for money fun and easy.  AND we make giving money fun and meaningful for your friends.  Check out our cool platform at: www.allthingswishful.com.

-Mina

At last, All Things Wishful is alive!

At long last, after a year of anticipation, All Things Wishful is up and running!  

Here is a little bit about All Things Wishful for those of you who have followed us but don't yet quite know what we're all about.

We are a gift registry and fundraising platform that stemmed out of our belief that gift giving and receiving should be meaningful, easy and fun.  We are about offering gift receivers the flexibility to choose what they really want rather than what is available at the store.  We are about offering gift givers the satisfaction of giving gifts that the receiver truly wants rather than a gift that was requested merely because of their accessibility.  Our company mantra is “No more waste!” – We are about giving both gift receivers and givers a gift exchange experience that reduces waste in shipping and handling costs as well as returns.

As with every start-up, this past year of building All Things Wishful has been filled with a lot of fun as well as a few set-backs.  What kept us going through tough times is our conviction that our site is absolutely necessary in the world of gift giving and fundraising.  Michael, Arry and I (Mina) are so excited that we are finally at a point that we can share our site with you!

-Mina

Come visit us at:  www.allthingswishful.com.

Learn more about how this site came about here. 

Learn how the site works here.

Tell us what you think here. 

social media check-in

Social media adds value to our lives in many ways - with some of them seemingly more dumb that others to some people.  For me, it's all fun.  It adds a little color here and there to my day.  I get this stupid grin on my face and sometimes I may even add a silly squeal to that when I get a badge from one of my check-ins.  It's not real, no where near real, but who cares?  It's fun for me (and a zillion others).  Why you ask?  How is this fun?

Click here to read the rest of the article.

~Arry

the rules are changing for women (and men)

I'm a sucker for TED.  As I've gotten older, I also prefer the company of women for friends.  In my career, most of my colleagues have been men - recently as I have had the opportunity to venture out on my own (until this past week), I've had the opportunity to choose women to be my clients and colleagues.  Here's a summary of my thoughts from my past 5 years:

The rules for women (and men) are changing:
Liza touches some interesting points.  Back in the day, say children born in the 1960s and earlier, life was different.  Boys became men by having muscles, working on cars, and being protectors and providers...  Girls became women by wearing pink and dresses, taking home economics, and learning to bake and the art of being sweet and soft.  Now - it's different.  Click here to read the rest of the article.

~Arry

websites for small businesses should be cheap

Websites are expensive.  Like our All Things Wishful CTO says, "they're like sausage - tastes good at the end, but man, what a mess it is to make it."  And wow, seriously, it is quite a lot of work creating just the right site from scratch.  Having worked in consulting first with ginormous technology clients for many years, websites are also a majorly expensive venture.  Thousands and thousands of dollars, a zillion hours... pushing that damn pixel up and down, playing with fonts and copy.  Logos.  Design.  Usability and user experience.  Buttons.  Security.  Privacy.  Data...

But what about the small businesses that want a nice website for their bar or restaurant, yoga studio, photography business?  Why should they have to pay thousands and thousands of dollars to a firm or freelancer to build them a website - that might, just really suck and they wouldn't know it?  WHY!?  WHY!?  WHY!?  When a small business wants a nice website with a nice home page, a menu, a contact us page, a blog, some photos...  they should not be burning valuable resournces on hiring a developer (or few) to build a website.  HELLZ NO.  I've had the opportunity to work with a bunch of small women-owned businesses with their website needs recently, and here are some thoughts:  Click here to read the rest of the article.

~Arry

Beta testing complete!

A break in posts on business growth for some exciting news:  We have completed an initial round of beta testing.  Our dear friends and family were kind enough to give us some very detailed and honest (we think!) feedback on our product.  We are not quite at "Go" right now, but we are definitely at "Set."  Very excited to announce our launch SOON!

-Mina

What Affects Small Business Growth? Part IV: Capital

Having already discussed how founder experience, background and aspirations affects business growth, I’d like to talk about capital.  This is the eight hundred pound gorilla in the small business world – whether you internally generate financial capital or raise it externally, you can’t grow without it.   Financial capital offers you, the business owner, the ability to implement growth strategies, hire talented employees, develop better products and explore new markets.  

While numerous studies have documented that financial capital does indeed affect revenue and employment growth, the most interesting demonstration of the role of financial capital comes from studies that show what happens when you don’t have capital.  Researchers Fairlie and Robb, through two large sample studies using data from the Census Bureau, the first comparing black business owners to white business owners and the second comparing women owners to male owners, show the extent to which lack of access to capital can influence the growth and survival of companies.   They found that the disparity in access to capital explained 23.6 percent of the difference in sales between black and white firms, 36.9 percent of the difference in number of employees, and 43.2 percent of the difference in rate of closures.   For differences between women and male owners, difference in access to financial capital was responsible for 15 percent of the difference in sales, 32 percent of the differences in number of employees, and 44.7 percent of the difference in rate of closures.

Financial capital, though, isn’t the only important form of capital.  Of course, there is “human capital” – the experiences, skills and personality traits you bring to the table as I discussed in earlier posts, but increasingly human and financial capital cannot explain in entirety why some companies grow and others don’t.  The final form of capital is social – the resources mobilized through your social networks.  Because this form of capital is less visible and less tangible than the other two forms of capital, this is what is often at work when business owners talk about the “luck” component of success (there is no such thing as luck!).

There are a myriad studies that show how social capital affects people and businesses.  Here are a few that pertain specifically to small businesses and their growth.

In a now-classic in-depth study of apparel firms, researcher Uzzi showed that strong ties to business groups – or informal groups of independent businesses linked through friendship, family or shared equity ties – had greater chances of survival and attributed this to trust between the parties that lead to the sharing of resources and joint problem-solving.  In a study of 973 businesses that participated in the hospital software systems industry over 30 years, researchers Singh and Mitchell showed that the chance of a business dying increased when its strategic partner stopped operations or created a linkage with a different firm.  

Social capital can be a little more complex than just having a lot of relationships.  Researcher Stuart showed that not all relationships have equal effect on growth.  Through a study of 150 semiconductor firms, he showed that firms that have alliances with bigger partners (in terms of revenue) enjoyed growth than firms that had alliances with smaller partners.  He explained that this is because of the reputational advantages of being associated with a large, well endowed firm in addition to the greater access granted through these bigger partners to customers and distribution channels.

The relationships that a firm maintains matter, but so do the relationships of the contacts themselves.  Maintaining a network in which contacts are not connected to each other can be more beneficial because they can provide information and resources that are unique and non-redundant to what other contacts in the network can provide.  My own study of 256 Silicon Valley entrepreneurs showed that the less connected the entrepreneurs’ contacts are to each other, the greater the amount of financial capital entrepreneurs were able to receive.  Greater financial capital, as shown in the previous section, is associated with greater growth.   

Finally, the attention received by business incubators and industry clusters for their positive impact on business and economic growth highlight what is essentially the positive impact of networks across organizations.  Incubators are an option for businesses that want to reduce costs by sharing equipment and support staff and to receive onsite counseling and consultations.  Beyond these benefits, incubators facilitate peer-to-peer mentoring and the leveraging of each others’ networks.  Furthermore, belonging to an incubator can increase the legitimacy of start-ups, increasing the likelihood that suppliers and clients will want to work with them.   Likewise, industry clusters, or “geographic concentrations of interconnected companies, specialized suppliers, service providers, firms in related industries, and associated institutions” according to researcher Porter, offer considerable cost savings to members of the cluster thanks to greater access to specialized input suppliers and business services, a larger pool of specialized workers, and greater likelihood of attaining public infrastructure that is oriented towards that particular industry.  

-Mina

Coming up next:  Management team and business growth

Sources:

Fairlie, R. W. and A. M. Robb (2007). "Why are Black-owned businesses less successful than white-owned buinesses?  The role of families, inheritances, and business human capital." Journal of Labor Economics 25(2): 289-323.

Fairlie, R. W. and A. M. Robb (2009). "Gender Differences in Business Performance: Evidence from the Characteristics of Business Owners Survey." Small Business Economics v33(n4): 375-95.

Porter, M. (2001). Cluster of innovation:  Fregional foundations of U.S. competitiveness. Council of Competitiveness, Washington, D.C.

Stuart, T. E. (2000). "Interorganizational Alliances and the Performance of Firms: A Study of Growth and Innovation Rates in a High-Technology Industry." Strategic Management Journal 21(8): 791-811.

Uzzi, B. D. (1996). "The sources and consequences of embeddedness for the economic performance of organizations:  The network effect." American Sociological Review 61: 674-698.

Yoo, M. (2004). "Ties that unbind: Networks and performance among Silicon Valley immigrant entrepreneurs." 

what makes an influencer?

INFLUENCERS FULL VERSION from R+I creative on Vimeo.

If you haven't already, check out Malcolm Gladwell's The Tipping Point.  This post was inspired by: @Gearheadgal, and the site InfluencersFilm.com.

~Arry

What Affects Small Business Growth? Part III: Industry Experience and Education

It’s been a couple of weeks since I last wrote.  In my defense, a few things have happened in those two weeks:  I had a baby (the adorable and already charming Kai Yoo Whitmore), bought a new house, and had six family members come in for the holidays.  Oh, and I got pink eye somehow and couldn’t open my eye without massive amounts of pain and tears for several days.  Now that I am able to see again, I thought I would post another entry continuing on the topic of small business growth.

So far, we’ve seen research that showed that aspiration and intention are key in small business growth as are general management and leadership skills.  That is all well and good, but how about specific knowledge about your industry and product?  To what extent does that matter?  Relatedly, how about education?

Specific experience in same/closely related industry

Is industry experience important?

In their study comparing rapid- and slow-growth firms,  Barringer, Jones and Neubaum found that 76 percent of founders in the rapid-growth group (with an average compound annual growth rate of 167.29 over three years) and 1.55 percent over three years, respectively) had worked in the same or close related industry while only 24 percent of founders had similar experience in the slow-growth group (with an average compound annual growth rate of 1.55 percent over three years). In explaining how previous experience in the same industry affects growth, they suggested that in addition to knowledge, experience in the industry gives access to a network of contacts who can provide resources for the growth of the current firm.

Similarly highlighting the important of industry experience, Stam and Wennberg, in their a study of over 600 firms, found that the greater the industry experience of the founder, the greater the employment growth of the firm in the first six years of their lives.

Education

Will your years of education pay off in growing your business?

Barringer, Jones and Neubaum discovered that more founders of high-growth firms had a college education compared with founders of slow-growth firms.    Researchers Fairlie and Robb showed that compared with business owners who are high school drop-outs, college graduates have  25 percent higher sales. Owners who have completed graduate school have sales that are roughly 37 percent higher than college graduates.   Education can provide founders with technical skills relevant to their businesses while the process of getting educated in formal group settings can entrench the owners in networks that later prove to be useful in the growth of their ventures.

Education can have an indirect effect as well.  Wiklund & Shepherd show that education, like management experience, magnifies the positive effect of growth aspiration on actual growth. 

The moral of these studies:  Knowledge = growth.

-Mina

Coming up next: Financial and social capital and business growth

Sources:

Barringer, B. R., F. F. Jones, et al. (2005). "A quantitative content analysis of the characteristics of rapid-growth firms and their founders." Journal of business venturing. 20(5): 663.

Fairlie, R. W. and A. M. Robb (2007). "Why are Black-owned businesses less successful than white-owned buinesses?  The role of families, inheritances, and business human capital." Journal of Labor Economics 25(2): 289-323.

Stam, E. and K. Wennberg (2009). "The roles of R&D in new firm growth." SBU Small Business Economics 33(1): 77-89.

Wiklund, J. and D. Shepherd (2003). "Aspiring for, and Achieving Growth: The Moderating Role of Resources and Opportunities  *." Journal of Management Studies 40(8): 1919-1941.

collaborating and sharing: the power of we

2010 is coming to a close: Looking back now as the year 2010 is coming to a close, it’s quite amazing to see where I am, where my friends/family are, and society in general as a whole.  There’s no doubt that the general consensus is that 2010 was a year of epic change for many of us.  Epic: for many of my friends/family that moved to new cities to begin new lives, some closed the chapter on long relationships, and some began new chapters with new career changing moves.  Me?  I am sitting here, on a Monday, having just finished cooking all morning, plowing through my piles of books, and thinking about what I need to get done today so I can go to bed with a clear conscience – I need this clear conscience saying I added value to the world today.  I spend a lot of time analyzing and thinking.

Our world has changed.  The world has gone through some crazy changes.  Our irresponsible ways of hyper consumption have caused the collapse of our financial systems - because there is a price for everything. The world is stretching and working its muscles as we are being forced to change – and change very quickly.  No pain, no gain, right?  We have had a change of power in our government (US) – and more changes will come to bear as the old inefficient processes and systems undergo more scrutiny.  We’ve been shuffled into a new world of sharing, thanks to the world of technology and all that’s happened during start of the 21st century. 

The power of we:  Sharing.  Collaboration.  Co-working.  Collaboration.  Co-paying.  That’s where the past decade has taken us.  Isn’t it amazing?  Now, with the simple click of a button – I can reach out to thousands of people, some of whom I know very well, and some of whom I’ve never met. Thanks to technology, we have a system of trust happening between complete strangers.  We have a global community.  Flickr.  Yelp.  Twitter.  Facebook.  YouTube.  Foursquare.  It’s so simple.  We are connected.  We have moved from the individualistic culture focused on “me” (20th Century) to a collaborative one that understands the power of “we” (21st century).  There’s hope for us yet! 

Examples: The average consumer today is no longer the passive one just taking in like before – today, we are proactive, informed, and collaborative.  We trust the recommendation from a peer over the one that is produced by the system. 

• We bargain hunt and reuse/redistribute goods and services via communities like Craigslist.  Why pay $1,200 for the brandnew TV when I can get a working one for $500?  How about I trade you my season 1 of LOST for your season 1 of the Sopranos?  I’ll fix your iPhone if you help me setup my iTunes.
• We’re more collaborative.  Now you can land on the comfy couch of a complete stranger while couch-surfing your way through Europe (couchsurfing.org).  You have multiple designers working together to build witty tee shirts (Threadless.com).  You can work with a stranger who has the gardening skills to grow food in your extra plot of backyard space (landshare.com)
• We share products.  What if you could have all the benefits of a product without having to own the product outright?  I’m talking about a culture where access to this product is more valuable than actually owning it (Netflix.com, avelle.com, zipcar.com).  With Netflix, I don’t want a pile of DVDs, I want the movies.  I don’t want stuff – I want all of the needs and experiences that the stuff can give.

Trust.  I spent a great deal of time working with some researchers in the domain of trust/internet security and privacy – so all of this collaborate, sharing goodness requires trust.  Reputation is paramount – and is being created with every interaction you have in the world wide web. Reputation and social credit is the new currency of how products/services are being sold.  We’re headed towards a more sustainable system that makes the collective good the priority.

All Things Wishful: So as you know, the three of us (Arry, Mina, Michael) are working on a startup called All Things Wishful.  We hope to help the change the world a little bit through our product that helps communities collaborate and share.  We’re hitting beta now – so keep your eyes peeled! 

~Arry

What Affects Small Business Growth? Part II: Management Experience

In my last post, I (Mina) started a series of posts reviewing the myriad of studies out there on what affects small business growth.  We saw that one critical thing that affects whether or not a small business grows is whether or not the owner aspires to grow (this might explain why billions of dollars poured into growing small businesses simply do not have much impact – most small business owners don’t want to grow).  In this post, let’s look at how much owners’ management experience and skills matter in growing his/her company.

In my previous life teaching and researching at a business school, we often told our students that even if their ultimate goals were to start their own businesses, they would benefit greatly from gaining management and business skills by working for someone else.   The research out there supports this view.  Yes, it is extremely tempting to glorify the high-school dropout who builds a revolutionary product prototype in her parents’ basement to turn it into a multi-billion dollar business without ever having worked for someone.  However, to the extent that such people exist, they are truly the exceptions.  In most cases, high-growth businesses are started and owned by people who have had sizeable experience in management prior to their current businesses.  Research shows that  even if the experience is not from the same industry as the current industry of the owners/founders, it has a significant and positive effect on the growth of small businesses.  What’s more, the important management qualities are not oriented towards control, monitoring, planning and day-to-day business operations but rather towards general leadership and vision.

In one study, researchers Nohria, Joyce, and Roberson examined 160 companies and their performance over a ten-year period, measuring growth by total return to shareholders.  “Winners,” or those that outperformed its peers in the industry through the study period, multiplied their shareholders investments by 945%, while “losers” produced only 62% in total returns.  The researchers found that among the key differences between the winners and losers was that the CEOs of the winners were able to build a strong organization culture and institutionalize a fast, flexible and flat structure while the CEOs of the losers were not.

The differences in growth among minority business owners and white business owners also highlight the significance of management and business skills.  In explaining why minority business owners achieve lower growth in their ventures than their white counterparts, researchers Fairlie and Robb pointed to their relative lack of experience in their families’ businesses prior to starting and running their own.  Analyzing nearly 40,000 small businesses, they showed that average sales among white-owned firms were nearly four times larger than average sales for Black-owned firms (median sales among white-owned firms were twice as large as those for Black-owned firms).  More white firms had employees (21.4 percent compared with 11.3 percent) and among those that had employees, white-owned firms hired three times as many as black-owned firms.  The researchers attributed a substantial portion of this difference to the lack of family business experience among black business owners compared to white owners, claiming that experience in family businesses offer an opportunity to gain general management skills which then affects the ability of business owners to grow their companies.  For all owners, sales were approximately 40 percent higher if the business owner had experience working with self-employed family members before starting their own businesses.

Management skills and experience can have an indirect effect on growth as well. 

In a study of 156 small and medium-sized firms, Sadler-Smith and his colleagues found that leadership behaviors such as managing culture and vision was positively associated with what they call “entrepreneurial style” (innovation/creativity and risk-taking) which was positively associated with high growth (defined in this study as greater than 30% sales growth in the past five years).  Management behaviors that emphasized planning, control, monitoring and evaluation were negatively associated with entrepreneurial style.

Finally, researchers Wiklund & Shepherd showed in a study of 326 small business CEOS that management experience, experience working at a rapid-growth organization and start-up experience magnify the positive effect of growth aspirations on actual growth.  

-Mina

Coming up next: Experience in industry, education and business growth

Sources:

Fairlie, R. W. and A. M. Robb (2007). "Why are Black-owned businesses less successful than white-owned buinesses?  The role of families, inheritances, and business human capital." Journal of Labor Economics 25(2): 289-323.

Nohria, N., W. Joyce, et al. (2003). "What really works." Harvard Business Review July: 1-13.

Sadler-Smith, E., Y. Hampson, et al. (2003). "Managerial Behavior, Entrepreneurial Style, and Small Firm Performance." J Small Bus Manage Journal of Small Business Management 41(1): 47-67.

Wiklund, J. and D. Shepherd (2003). "Aspiring for, and Achieving Growth: The Moderating Role of Resources and Opportunities  *." Journal of Management Studies 40(8): 1919-1941.

What Affects Small Business Growth? Part I: Ambitions, Aspirations, Intentions

Several months ago, I (Mina) wrote on controlled growth. In the next few entries, I’d like to talk about what affects growth in the first place. We have frequently been hearing the statistic that 70 percent of all new jobs are created by small businesses. But the fact is that the majority of the firms in the U.S. provide hardly any jobs. Many businesses do not ever have employees in their lifetimes, and even those that do have employees have only a few – 61 percent of employer firms have fewer than 4 employees. It turns out that only a handful of firms grow its employment by at least 15 percent per year – 6 percent of all businesses according to the National Commission on Entrepreneurship – and these few firms create the majority of new jobs.

If these few firms are so important to the economy, the question is: What affects whether or not a firm grows? What makes some firms the kind of rapid-growth firms that we count on to grow jobs while others fail, struggle or slowly grow at best? I recently took a look at about 30 scholarly studies on small business growth. The next few posts reflect what I found.

Ambitions and Aspirations

Of the many studies on what makes small businesses grow, one of the most consistent findings is the significant role of founder aspirations on the actual growth of their companies. Simply put, without ambition and the intention to grow, it won’t happen. However, when business owners do aspire to growth, these aspirations can have enormous impact on the future of their companies.

In a study of over 800 firms, researchers Delmar and Wiklund found that growth motivation at a given time point has a significant and positive effect on employment and revenue growth 3 and 4 years down the line. Another set of researchers, Stam and Wennberg, examining 647 firms over six years and testing numerous factors that might possibly affect growth (such as innovation, experience, industry) concluded that small business growth, especially in less technology-oriented industries, appear to be driven mainly by owner/founder ambitions.

Not only do growth aspirations matter, communicating this commitment can also make a difference. When researchers Barringer, Jones and Neubaum compared 50 rapid-growth firms and 50 slow-growth firms (with an average compound annual growth rate of 167.29 and 1.55 percent over three years, respectively), they discovered that the founders of the rapid-growth firms were more likely to articulate growth as a firm objective and to include growth in their written mission or vision. This result was consistent with earlier findings by Doorley and Donovan that 60% of the rapid-growth firms in their study had put their growth vision in writing, whereas only 15% of the slow-growth firms had done the same. In line with these two studies, in a 6-year longitudinal study of 229 small businesses, Baum and Locke found that the growth vision the entrepreneurs/CEOs communicated to their employees, the goals they set for growing the firm, and their faith in their abilities to growth the companies significantly affected the growth of the firms.

If growth ambitions are so important to actual growth, what affects such aspirations?

Delmar and Wiklund found that the older the CEO of the company, the lower the growth motivation and the slower the growth of the firm both in terms of employees and in terms of revenue. They also found that education affected growth similarly: CEOs with the longest education had the highest growth motivation. The lowest growth motivation was found in employed CEOS (those who did not start, inherit or buy the firm).

Reasons for starting a small business can affect growth aspirations as well. In a study of 170 businesses, Cassar found that those who cited financial success as the reason for starting a business showed greater intent to grow and that those who cited independence as the main reason for starting a business showed lower levels of growth intentions. Correspondingly, those who were motivated by financial success and had a high level of growth intention also showed higher actual sales and higher employment. Those who cited independence showed lower employment.

-Mina

Coming up next: Business owner background and business growth

Sources:
Barringer, B. R., F. F. Jones, et al. (2005). "A quantitative content analysis of the characteristics of rapid-growth firms and their founders." Journal of business venturing. 20(5): 663.

Baum, J. R. and E. A. Locke (2004). "The Relationship of Entrepreneurial Traits, Skill, and Motivation to Subsequent Venture Growth." JAP Journal of Applied Psychology 89(4): 587-598.

Cassar, G. (2007). "Money, money, money? A longitudinal investigation of entrepreneur career reasons, growth preferences and achieved growth." Entrep. Reg. Dev. Entrepreneurship and Regional Development 19(1): 89-107.

Delmar, F. and J. Wiklund (2008). "The Effect of Small Business Managers’ Growth Motivation on Firm Growth: A Longitudinal Study." Entrepreneurship Theory and Practice 32(3): 437-457.

Doorley, T. L. and J. M. Donovan (1999). Value-creating growth. San Francisco, Jossey-Bass.

Stam, E. and K. Wennberg (2009). "The roles of R&D in new firm growth." SBU Small Business Economics 33(1): 77-89.

Working together

Arry has written several posts on the parallels between the romantic courting process and finding start-up partners.  I want to talk about what happens after the courtship process – after the long walks on the beach, big fancy wedding and the honeymoon to Europe, when you unpack your respective baggage (literal and figurative) and realize that this other person is not only imperfect (just like you are) but is going to largely affect your happiness and the course of your life.  As the high rate of divorce shows, living with another person long term is not an easy one.  Similarly, many founders of businesses cite partnership troubles as the foremost reason for the closures or failures of their businesses.

Last weekend, my husband and I attended a relationship workshop in preparation for our baby’s arrival in a month.  This two-day weekend workshop was based on the research of John Gottman (formerly a professor at the University of Washington) who has spent decades studying relationships and what makes some work (which he calls “master” relationships) and others fail (the “disasters”).  I had first learned of Gottman’s work in Malcolm Gladwell’s book Blink where he talks about how Gottman and his colleagues can look at a couple interacting for three minutes and predict with 90 percent accuracy whether they are going to get divorced.  Fascinating!  I was eager for this workshop not only at a personal level for its potential to help make my relationship with my husband even better  but also at an intellectual level for understanding the dynamics of human interaction.  Both of these expectations were met, and as a bonus, I was even able to apply some of the ideas from the workshop to working with business partners.

Here are some of my conclusions regarding start-up partners that the workshop helped me articulate. 

1.  Be friends with your partners.   

There’s the old saying, “Don’t go into business with a friend.”  I disagree.  While there are certainly some negative elements to starting a business with a friend, knowing your partners, their preferences, their tendencies and generally what is going on in their lives outside of your business can help you avoid the “fundamental attribution error.” For those of you who don’t remember this from college psych classes, the fundamental attribution error is basically our tendency to attribute behaviors to personality rather than the situation.  Think about it.  When we believe that a poor behavior is the result of some personality deficiency, the person exhibiting this behavior becomes a lot more unsympathetic  and less tolerable than if we believe that this behavior is the result of some temporary external situation (such as sleep deprivation due to taking care of a sick family member).   Being unsympathetic and intolerant leads to poor conflict resolution and less effective problem-solving (see next section). 

Gottman also talks about the “fondness and admiration system” of mutual liking and respect and of building an “emotional bank account.”  The idea is that the more you like your partner and the more “currency” you have in your emotional bank account through previous positive, validating interactions, the more able your relationship is to withstand negative interactions that are certain to come up.  So, if you are not already friends with your partner, get working on it!

 2.  Accept that you will be influenced to be influential.   

Your start-up is your baby.  Your future, your ego, and your finances are tied up in it.  So it makes sense that you have strong ideas about what your product should look like.  But this is true for your partner as well – her future, ego, finances are just as involved in your start-up as yours is.  This can lead to head-butting and to a massive waste of time when the issue is probably not all that important anyway (see my earlier post on the folly of trying to create the perfect product).  At worst, it can lead to animosity and stagnation of progress.  At the Gottman workshop, I learned that research shows the more influence you accept from your partner, the more likely you will have influence on your partner.  So, if you feel really strong about your idea, try accepting your partner’s and see how she responds to you.

As a further incentive to avoiding major conflict (besides the sheer unpleasantness of it), research also shows that when you are in a conflict or argument, your body reacts as if you are in physical danger.  This state is commonly known as the “flight or fight” response or “Diffuse Physiological Arousal,” in which your heart beats faster and blood pressure rises.  In this state, you have trouble processing information, listening, and coming up with creative solutions.  Doesn’t your business deserve your best problem-solving skills?

3.  Avoid the Lake Wobegon Effect.   

This didn’t come up during the Gottman workshop, but I started thinking about various concepts from my college psychology classes, and this one seemed very appropriate for the start-up world where most partnership troubles essentially stem from issues of perceived fairness and equity (at least based on my discussions with and research on entrepreneurs).  Lake Wobegon is a fictional place where everyone in town is above average in this town.  Assuming you know what an average is, you know that this statement cannot be logically true.  However, this is exactly how we are.  Countless social psychology studies have shown that we, when comparing ourselves to others, believe that we are superior (in looks, intelligence, work input, you name it), even when we are not objectively superior as judged by third parties.  This “illusory superiority” plagues us all and can be especially dangerous in the start-up setting.  You can easily imagine how one partner might overvalue her own work and contributions and become disgruntled and unhappy.  Sure, it’s possible that you are actually doing all the work in your company, but before you get into a death spiral of self-pity and resentment for your partner, have a conversation with your partner.  Your partner might agree that you have done all of the work, but more likely, she will feel exactly the same about her relative contribution compared to yours and you will leave the conversation having a better appreciation of each other’s role in the company.

Related to issues of fairness and equity (and while I am throwing out psych concepts), beware of the “recency effect,” or the tendency to remember what happened more recently as opposed to things that have happened further in the past, as you evaluate the relative contributions of yourself and your partners.   As we hear all the time, starting a company is not a sprint but a marathon.  Don’t judge your partner based on your recollection of how the last few miles have gone; each mile builds upon the previous and is just as important, even if we are in such a state of pain from running the current mile that we can’t remember the miles we’ve run.

 -Mina

a bootstrapping startup chick

Bootstrapping has been my game since I’ve started working on startups – and as you know in July, I was no longer part of the luxurious-salaried-with-benefits world. In an effort to live more frugally and off of my savings, I cut down on quite a bit of my extravagances in dining out and shopping. I consolidated bills, got rid of my Comcast cable TV, decreased my phone plan minutes, rode the bus/walked around town, met up with friends for coffee in lieu of lunch and dinners, and cereal (particularly Honey Bunches of Oats – with almonds)became my blood sugar saver. I still have a bunch of expenses going out the door: rent, food, utilities, gas, biz insurance, health insurance, home insurance, car insurance, …

The past two weeks have been crazier for me since I decided that I needed to hustle (as my very close and talented friend, Kate recommended to me) – and picked up a short term gig to build up more savings via some freelance projects. Time was tight back in August/September as it was, see previous post, but now … time is just flying by in the blink of an eye (another post on managing all the different balls in the air coming soon).

Bootstrapping Tips from a Startup Chick:

Here are some tips I’ve picked up along the way on being a bootstrapped startup chick:

1. Don’t be lazy = take the time to look presentable. Being a startup chick = I can dress with more bang and flair – it means I can now shamelessly throw my colorful persona into my wardrobe. [I’ve actually had colleagues/mentors in the corporate world tell me to wear more grey/black/navy/brown – and less pink/purple/red…. = yes… BARF on that!!!]
2. Going along with point #1, before walking out your front door – give yourself a pep talk if you need to, but always go out into the world with a smile, good posture, and determined confidence. I have this note on my door [see picture above].
3. Get some cheap simple business cards – and lots of them. I’ve already run out – unplanned, so now I have to find time somehow somewhere to go order some more. Woot!
4. Coffee and happy hour are the best times to meet up – and that covers the entire day. Just because I’m on a budget does not mean I cannot meet up and be social. Come on – tea costs under $2 even at Starbucks! Happy hours are going on all over town from 4pm to 2AM.
5. Get rid of the cable TV (saving me $65/month) – I didn’t have time before, I certainly don’t have time now. If I’m going to sit and watch anything pop-culture, it’s going to have been curated and recommended by a brilliant connoisseur of media. This means, all the stuff I should watch will already be on Netflix, Hulu, or something of the like (except Glee – which I can watch a day later online).
6. Walk. Take public transportation. Carpool. And for me… ride the scooter after hours because I can park that cute sucker anywhere. Walking will burn those old calories I picked up while glued to the desk in a cubicle when I was once salaried. Public transportation is convenient – and taking it supports our community’s ecosystem.
7. Don’t be cheap, be smart. Budget = yes, cheap = no. Do the right thing when it comes to your family, your friends, your clients, etc…
8. Join the Walgreens Prescription Savings Club. http://bit.ly/Gi1SM.  Serious.



Anyone else have ideas or tips you’d like to share with me?

Hugs,
Arry
[PS also posted on http://www.arryinseattle.com/blog.html]

incremental innovation

Last weekend, I met the founder of a new business that provides an online trading platform for investors.  A new business taking on well established  companies like TD Ameritrade, Charles Schwab and Scottrade?  I felt my inner critic come out – what’s the hook?  Do we really need another trading site?  Isn’t one basically interchangeable with the other, aside from the transaction fee?   Then I learned that his company had partnered up with a game development company to create a more intuitive, fun and useful interface and that his goal was to get young people more interested in investing.  My interest was piqued – a cross of gaming and investing with the noble goal of getting youngsters financially savvy!  I created an account and played around on kapitall.com, and I have to admit, it was much more user-friendly and visually pleasing that any other platform I have seen.

The question is:  Is improved user experience enough?  More broadly speaking, can a business be built on an incremental innovation over an existing (and widely accepted) product?  Well, the jury is still out on kapitall, but despite our tendency to be dazzled by “revolutionary” and “proprietary” products and to pooh-pooh ideas that are “not unique,” research shows that many successful businesses sell products and services that are similar in function (if not completely interchangeable) with those of other businesses.  Amar Bhide’s work on Inc. 500 companies (companies deemed by Inc. magazine as promising, high-growth companies) showed that 58 percent of the founders said that there were identical or close substitutes in the market for their products and services and 36 percent said that there were slight and moderate differences between their products and their competitors’.  Only 6 percent claimed that they had a unique product or service.   

So, what differentiates these founders from all of the struggling business owners out there who also sell ordinary products?  It turns out that there IS a secret to these high-growth entrepreneurs’ success – exceptional execution.  The takeaway:  You don’t need to have a unique idea to build a successful business, but you have to carry out the idea very, very well.

Mina

(For those interested, here is the full citation for Bhide’s work:  Bhide, Amar.  2000.  The Origin and Evolution of New Businesses.  New York:   Oxford University Press.)

workaholic schmocoholic

You heard me, workaholic = schmocholic.  All work and no play makes you a very boring person.  I'll also jump in and say you're probably inefficient, ineffective, playing the game of "looking good" with all of that "face time" you're putting in at the office.  You're spinning - making up stuff to do, wasting time, trying to look busy.  That's not busy - that's stupid.  I've been there, I've seen it - I've even done it.  Oooohhh la la, everyone thinks you're a rockstar because you put in 80 or 100 hours at work.  Not me any more.  I'm way too busy.  Recently, my co-founders and I read this great book, Rework and found it to be inspiring - so here's my response to one of the big takeaways from that read. 

The busiest people get the most done.  I'll give you an example from my own life: high school, for me, was a time when I was insanely busy.  Okay - like the other preppy high school kids around, I took all AP classes, played in the school orchestra, enjoyed shopping and eating late night in diners, and baby-sitting here and there to make some extra cash for my shopping-hobby.  Unlike many other kids, I also was governor in the class student government, played in both the school orchestra and the New York State regional orchestra, played in our school pit orchestras, had my own string quartet, was the pianist for two churches, was a competitive pianist as I traveled to New York City every other weekend for piano, regularly did (3-4 times a week) and sometimes even taught Tae Kwon Do (black belt), had piano lessons sometime two to three times a week for four to five hours at a time, taught private piano lessons for 8 students (weekly), was part of the math club + speech and debate club,  did weekly community service working with the area nursing homes and hospital emergency rooms, worked on huge 5 feet by 5 feet paintings for my special advanced art classes, took care of my younger brother, went to Bible study groups, worked at the Empire State Plaza giving tours of Albany, NY, sang in a choir, and still was in top of the class with my grades ...  insanely busy.  Yes, call me an over achiever.  And that's just an example of a high school kid!  I definitely believe this: You want something done, ask one of your busier friends - if they believe in it/you, they will get it done.

Workaholics schmocoholics burn time.  The biggest grievance I had (and continue to have) with working a regular full-time corporate job was with expectations around "face-time".  I get it - sometimes you put in a little more when you start a new job or a new project at a client site until trust has been built, and your reputation (assuming a good one) is confirmed through solid work output and results.  Awesome.  But when you have a work environment or culture where people are counting the hours between when you arrive and when you leave, that's plain ridiculous.  When you have bosses/management praising those that don't know how to manage their time and that are regularly and normally pulling 55+ hours a week at the office, the place has got issues.  That's not busy = that's inefficient.  Billable hours my ass - it's inefficiency.  The "face-time" aka look for that "butt-in-the-seat" attitude disgusts me.  You end up with people creating work, making up work, spinning in circles and spending valuable time on ineffective tasks. If an employee can get the job done in two hours, makes the necessary meetings, gets things done - who cares? 

Click here to read more.

~Arry

Re-working

Hello from Mina.  While my partner has been diligently posting astute observations and thoughts about love and relationships, I have been… well, delinquent.  Not that this is an excuse, but the past several months have been full of changes for our business.  Some very exciting  progress – our off-shore development team finally finished their work!  (About 6 months behind schedule, but hey, it’s done!)   And some not so great news  – our CTO had to leave us for personal reasons.  After “courting” him for months then working with him for another several months, this decision on his part led to soul-searching and strategic re-thinking on my and Arry’s part as well as some inevitable delays just when we had been gaining momentum.   Where are we now?  We were incredibly fortunate that just before our CTO left, we had recruited another developer to become a part of our start-up family.  Michael gallantly and skillfully picked up the pieces, and we are happy to report that we have a team that is even stronger and more committed than ever before.

As our business regains its momentum and as we rally towards our launch, one thing that has helped me get  focused and clear-headed is the book Rework by Jason Fried and David Heinemeier Hansson.  This concise and entertaining book was actually recommended by our new CTO Michael (another reason we’re  lucky to have him – he has great taste in books), and as I flew through it, I was reminded of all of my beliefs about start-ups that the past several months had successfully distracted me from.  It really is amazing how much of your own beliefs you can lose track of.   This book on entrepreneurship has 70 and more axioms, observations, pleas and otherwise clever sayings (although the authors would never use the term “entrepreneurship”  as they see it as  “loaded with baggage” and elitist).  Here are a few points from Rework that really hit home for me:

-“Planning is guessing.”  This reminder was really timely as I was pulling my hair out trying to come up with every possible financial scenario and corresponding projections.  Some readers of this blog might remember my post on business plans, but I temporarily got caught up with the need to have some certainty (or as much certainty as possible at the moment).  To do:  Make short term plans; be ready to improvise.

-“No time is no excuse.”  Enough said.

-“Draw a line in the sand.”  This reminds me of Guy Kawasaki’s point that a great business should polarize people.  You can’t be everything to everyone.  Instead, go for “superfans” who will love you and talk about you to anyone with two ears.

-“Embrace constraints.” “Build half a product, not a half-assed product.” Lack of resources can actually be a good thing, and help you be focused or to draw that line in the sand for a simpler product that works supremely well.

-Go for “quick wins.”  Break down projects into small tasks and milestones to build momentum and motivation.  Yes! 

-“Don’t be a hero.”  “Go to sleep.”  I have a real problem with the glorification of all-nighters and other acts of “heroism” in start-ups and the corporate world in general.  True, in some instances, sleeplessness is called for to deal with real crises that require real action immediately.  In most cases, though, (sorry to sound unsympathetic), this kind of heroism can be attributed to the need to create work for its own sake (to brag about being overworked??) and/or lack of judgment about what is important and/or inefficient work habits. 

-Lastly, my favorites:  “Good enough is fine.”  “Launch now.”  No business is perfect, and if every entrepreneur perfected their product before marketing and selling it, we would still be hunting and gathering.  I look forward to our launch, when our product may not yet be perfect but will certainly be good enough.

-Mina

3 things to look for when choosing your co-founders

This post was inspired by an article I read recently in VentureBeat, with the same title, "3 Things to Look for When Choosing Your Co-Founders".  It's quite eerie and amazing, again, how similar the three things you look for when choosing your co-founder for your business, aka the person you will go into business with – are to the things you ought to look for when choosing the co-founder for your own family and your future, a.k.a. the person you will grow your family with. 

1.       Choose a “friend” – not because they are your friend, but because they have the right combination of absolute loyalty to you and the team, and die hard trustworthiness and trust in you and the team.  Faith.  Commitment.  When the tough get rough, the bank is in the red and the world seems to be against you, will they stand by you?  Will they stick up for you?  Trust is an absolute must-have and without it, a deal breaker.  Take the time to get to know the person, grow the relationship and the trust.

2.       Choose your mirror, not your clone – choose a co-founder with the right combination of skills that complement you and the team. 

Click here to read the rest of the post.

~Arry

life of the unemployed - what's life like outside of the corporate job?

Imagine this: not having to drive your painfully long commute to work, or having time to finally meet up with your friends for a 5PM happy hour at that cool downtown bar you’ve always wanted to check out.  I always imagined that my life of unemployment would be great: sleeping in, vacationing, eating ice cream, watching lots of television, partying it up …   I imagined all this plentiful free time I would have to do all the things I never get to do.  It’s supposed to be great.  I thought how lovely it would be to have time to do groceries and cook at home, how clean my place would be, how happy my dog would be to have me around more often. 

It is great.  It’s awesome.  …   Just the part about the plentiful amounts of free time to play and hang out, that part is a myth.  Well, at least for me, I'm busier more than ever.

What have I been doing?  Well…  I left my nice salaried job back in July 2010, and for that first month afterwards: 1) I did an independent contract gig at Expedia for a month, 2) I went to Hawaii for the first time in my life for a week, and 3) then came back to a to-do list as long as the Nile River (I brought my trusty notebook with me to Hawaii and jotted notes down while there).  The second month, ...  Click here to read more

~Arry

[10] 5 ways social media has changed dating

I love social media.  I'm all over it - Twitter, Facebook, LinkedIn, Blogger, etc...  I love how it's allowed me to keep in touch with friends all over the world, reconnect me with friends from decades ago, and build new ones in our ever so busy lives.  Even with Twitter, I cannot thank this tool for how many awesome women I've been able to connect with because of it.  Social media is fun when it comes to dating - you can instantaneously see how your love is doing throughout his day, see the comments from those in his life, virtually flirt back and forth, ... social media provides tools for building authentic relationships --> but in the world of dating, it is truly important to remember to consistently use the more traditional means in growing faith, trust and strength in your love: holding hands, talking on the phone, going on walks, cuddling, kissing, and eye contact (some of my absolute favorites).

As much as I love social media, there are some new challenges and changes it has produced in the world of dating and love.  Some things I've learned and will share:

1. Online personalities do not necessarily present the real person as they are in real life.  The person who interact with and see online is not necessarily the same person in person.  Why?  The person you are building in your mind from watching the conversations and persona's online creates a person that is a little different then who that person is in real life.  Without the other communication cues like facial expressions, body language and tone, what else do you have to work with?  None - you interpret with the lens and bias that you hope to find in this person.

Read the rest by clicking here... 

~Arry