Fire in the belly or heartburn?

As I'm continuing to mentor a group of high-school freshmen on starting a business (posted here), I find that every week I get some fresh insight on entrepreneurship, the 'real' kind, for those of us who're doing it for a living. After the last meeting my co-mentor and I were bemoaning the fact that we don't see the 'fire in the belly' and hoping that it will be lit as the team gets more involved and sees their ideas taking shape. And then I came home and read the continuing grim economic news - the trouble with tracking multiple sources is that you read the same bad stuff multiple times. There's a surfeit of stories about startups shutting down (the lucky ones get bought at a fraction of their valuation from last year) - and it struck me, there's heartburn just as often as fire in the belly. Heartburn is a stomach-related symptom too, and while they are literally focused on the same anatomical region, metaphorically they imply two very different things.

• Fire in the Belly: When you can't go to sleep because you keep thinking up product designs or marketing strategies
  
• HeartBurn: When you can't go to sleep because you're worried about your product or the market out there

• FB: When you chat up your company with everyone you meet and talk about its great potential
• HB: When you talk about how hard it is to run a company with everyone you meet

• FB: When you meet a great potential employee and say 'I want to recruit you!' (thanks Sean/Harvey)
  
• HB: When you meet a great candidate and say 'I don't have the money to recruit you'

• FB: When you run into a problem, you're impatient to resolve it so you can move ahead
  
• HB: When you find a problem, you put off dealing with it because you think it will reveal more problems
  

• FB: During tough economic times, you think 'there must be a way to thrive'
• HB: When the economy is hurting, you think 'it's going to be hard to survive'

• FB: You read a list like this, and think 'of course, this is what entrepreneurs do'
• HB: You read this and think it's just another unrealistic exhortation to 'think positive'

The right one for you

A little while ago I was asked for 'the top 5 things to look for to determine if an entrepreneurial opportunity is the right one for you'. I understood it to mean how to assess an offer to join a startup and answered it as such, only to find out later that it was about assessing which idea to pursue. Interestingly the high school kids I'm mentoring are going through the same exercise of coming up with ideas and seeing if they measure up, so I'll do a post on this soon. For now though, I'll share the answer to the question I thought I was asked - there's actually much benefit in thinking about what kind of startup you'd like to join as it overlaps a lot with what kind of a startup you'd like to build yourself.

To start with, let's assume that you're OK on the compensation front of salary/benefits/equity in whatever proportion. Also, let's assume the logistics, hours etc. are not a problem. Apart from that, here's what I'd recommend you look at, pretty much in order of importance:

1. The team. Do you respect their expertise and, just as importantly, their values? And the most critical question, do you think you can mesh well with the group and their style?

2. The offering. Is it something that you believe you'll find compelling day in/day out, especially at the end of extra-long days? Do you believe you can sell what the company does with passion even if you're not in sales?

3. The plan. Granted early stage startups' biz plans are likely to change as they progress and they may need to prove some things first, but does the sales/distribution plan hold water? Is it in the realm of possibility? Is the market addressable and believable? Is the development plan achievable and the funding feasible? At this stage it is really only a sniff test, but you should look at these points as an investor, of time and energy if not money.

4. The role. Depending on the stage, you may wear many different hats, but still, you need to know what's the core contribution you'll be making and if it makes your heart sing. Startups can be great learning opportunities, in fact, sometimes that may be all the reward that you get when the promise of a big payoff dissipates. But if you're going to spend huge chunks of time doing stuff you don't care about, why bother?

5. The exit. Both yours and the company's. AKA 'worst case scenario'. Everyone will say 'IPO', or more likely, 'M&A' for the company's exit plans, but what will happen if the company doesn't meet it's goals? Shut down, sell the technology, keep it going because it will produce revenue from year 1? And about your exit - what are the events that would cause you to leave? It is always good to have the point at which you call it quits identified well in advance as it will save you a lot of sleepless nights later on. And the reason why this is important before you choose the startup is that it may vary based on the points above, and you should feel comfortable about your exit plans, the timing and the inevitable impact on your future. Check out my previous post on this for the entrepreneur's take.

Finally, there's one last question to ask yourself - would you have fun?

Time to build

It's two weeks into the new year, and many are still refining (if not defining) their resolutions, regardless of what the gym ads say. Maybe it's because those resolutions made in the hopeful haze of the holidays don't hold up as January briskly marches on.

Well, this blog is about the startup ethos, and I don't do resolutions - but I do plan. And as the year ended, I, like many others, had to review the financials, the marketing and development plans, yada yada. Planning at year end is pretty much a given for any entrepreneur. But last year was not just any old year, and 2009 is starting from the ashes of what was simultaneously the bleakest year for the global economy but also the most hopeful year in American politics, and needless to say, the two are intertwined.

There have been many writings about how startups can survive the year ahead. There was the famous Sequoia presentation that started the belt-tightening in the VC and startup communities of Silicon Valley, and a flurry of how-to-survive posts from CEOs - you can read one here or here. All very useful, but also all oriented to those that have some level of funding or an established revenue stream. What about the entrepreneur who has just started out? How do you grow when everyone's pulling back?

I believe that now's the time to build. That doesn't mean that we sit back and wait for the government to infuse funds and start projects. We need that of course, but what we do at the personal level will have a ripple effect at the global level - if enough of us do it. And for an entrepreneur, in any area, just sitting around wringing hands and bemoaning fates/financiers/politicians is not an option. It's not in our DNA. We've got to be making something happen or we...er, move on.

So how do you build your business with little on no money? Very simply, you need to invest. You need to make an investment of time, energy and mind-share, if not money. Here are some ways you can build:

1. Invest in customers.

• Get to know your current and future customers/users. Build relationships that you can leverage when they have money to spend or you have the money to deliver. This works for every level, from large enterprises to individual consumers. Even when you're cutting back on spending, or specially then, the promise of new ideas and innovation on the horizon is always sexy.
• Do stuff for free for your users/customers. What you give away now will help you get revenue later.
  

2. Invest in domain expertise.

• Improve your expertise in your chosen area. Build skills and knowledge, do market research, do competitive analysis, talk to customers (see a pattern here?). Get better at what you do.
• Help your team members, if you have any, do the same.
  

3. Invest in your product/service and infrastructure.

• Build out your product or service. There are folks out there who're either stuck in paying, but boring, jobs or out looking for a job and willing to hone their skills 'donating' a few hours for you. If you're in the service business, take this opportunity to refine/streamline your offerings.
  
• Talk to customers/users (again!) to make sure you're positioning your product/service for the new environment we're facing.
• Improve your infrastructure and processes, stuff like file sharing, accounting or technical documentation.
  

4. Invest in connections.

• Meet people and establish genuine connections, not just the biz card swap. Customers and users (of course), advisors, tech and domain experts, and even funding sources. Even if they're not investing now, they could help later. Though personally I'm not a fan of doing the 'VC pitch' when there's no hope of funding, I think it helps just to get to know the people in the know.
  

5. Invest in marketing.

• No, this doesn't require much money, or even a marketing person on your team. You can spiff up your website (at least update the content), spiff up your presentations and fact sheets, set up blogs and user communities, and generally polish and spread the word.

Assuming you're already taking care of the 'making a living' part, there's still plenty you can do to build your business now so you're poised to take off when things improve, as they will. So build now and you can fly later.