When in business, assume that:

• Originality is zero and copycats are a-plenty
• Ideas are worth nothing unless they can be and are acted upon
• The early bird catches the worm
• Passive research is good, active testing is better
• With customers, everything else falls into place, so sell-sell-sell !

What does this tell you about starting a business? That you, as an entrepreneur, should be in a place where two things happen quickly: technology being developed and the market being developed. If the market is there, but missing the tech: develop the tech! If the tech is there, but missing the market: develop the market!

With those deceptively simple words, I’ll leave you, but before I do, a brief note about my mantra-series: With them, I am essentially developing an entrepreneurial philosophy, which I am encouraging you to share and criticise. To repeat, mantra 1 was: get paid for what you do, rather than making that a secondary issue. Mantra 2 is: have the skills and resources to act quickly when you need to act. This particular recession, for instance, which has barely got started and will truly hit us in 2009, pushes this point home particularly strongly.

Enjoy the weekend!

Vincent

P.S. don’t forget to answer our poll !!!

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I feel, I’ve been somewhat conned. During my studies, I did a course called “New Business Development,” which was about me and a team working out a business-proposal in the form of a plan for a new business within an existing business. A spin-in, if you will, also sometimes called intrapreneurship.

But so far, 99% of business development jobs are nothing more than sales-functions disguised by a cooler name (E.g. Monster.com)! I realise that nobody really likes salespeople, they have a bad name, but come on! Sales is when you have a product or service and you’re trying to sell it to a customer (B2B sales for companies; B2C sales for individuals). Business development is when you develop a business for another company. Believe it or not, there is a big difference!

I’m not denying that changing the name from sales to business development is a great sales-tactic in itself. Just like the word “entreployees,” I recently came across. But, for people like me, looking for the right job, it makes things super-annoying. One company even said: as a business developer, we expect you to be calling people 99% of the time and spend the other 1% looking up their names in a phonebook. That is a sales-job, worse, a tele-sales job!

Incidentally, what I am currently doing for a consultancy is: leading a team of people to develop a new business opportunity for that company. And yes, my title is business developer or business development manager! That is not to say that sales isn’t an integral part of that function; I spend half my time networking with professionals and customers. The other half is spent in product- and operations-development for that business however. That is what makes it fun, that is what makes it “a business!”

Vincent

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Just briefly… I did a practice defence for my thesis yesterday, was certainly interesting, and got to listen to a whole lot of other entrepreneurship-students (and potential entrepreneurs) on their own thesis-topics. Why I love universities is, of course, because of all the smart people I meet, but also because there usually isn’t a confidentiality agreement attached to our conversations, which means I can brainstorm about it openly with you.

The one thing I came away with was that networking is in… “Hah!” you say, and I wouldn’t blame you. With the rise of social networks and its media attention, of course it’s “IN.” No, but what I mean is that about 70% of the thesis-topics I heard being presented yesterday, were in some form or fashion centred on networking. And I can’t remember it being so dominating a topic before.

As was mine, incidentally, being in part about incubation and innovation systems, and how to improve the connection between tech-startups and investors, but there was one thing I didn’t look at, which was: Weak ties, strong ties, and their implications. I won’t explain it in great detail now, if interested, you should definitely read this pdf, I just uncovered, by Mark Granovetter, the originator of that theory and how to measure (!) it.

The idea is that we are surrounded by possible ties, some of them non-existant and potential, some of them strong, meaning that we meet frequently and that psychic distance is low, some of them weak, meaning that we see them rarely and that they are perhaps based on less emotional factors. If you’re in a university environment, it’s of course easy to imagine that you have a lot of strong ties. As everyone enters their careers, your ties to to each other become weaker and weaker. The same, to some extent is happening on this blog: some I have stronger ties with than others, simply because of the frequency of interaction. Of course, I’m hopefully a not-to-weak tie to all of you on this blog

Regarding the power of weak ties, Granovetter also writes:

The macroscopic side of this communications argument is that social systems lacking in weak ties will be fragmented and incoherent. New ideas will spread slowly, scientific endeavors will be handicapped, and subgroups separated by race, ethnicity, geography, or other characteristics will have difficulty reaching a modus vivendi.

In other words, strong ties aren’t everything either—they, rather, lock you into a clique and prevent ideas from spreading and changing the world!

The strength of ties & funding

Some things I learned yesterday, was that networking and its strength has certain implications in areas pertaining to funding and sales. One student did his thesis on the Greek semi-conductor industry and how it was funded. He found that (my phrasing):

strong ties are important for finding early-stage funding, like friends & family. But that weak ties are actually the predominant factor in finding funding from VCs and similar. His opinion is that those investors make their decisions not on emotions, but on business-reasons. A connection certainly helps, but is not the primary decision-maker.

The strength of ties and sales

If you ever worked in sales, you know that it’s often not really a job focussed on relationship-building. Rather it is about maximising turnover, which can best be achieved by selling to as many people as possible in a short period of time.

Another student did his thesis on how the social environment of startups affects their sales strategies. He interviewed three independent ICT startups and three, which were located in incubators, and found that the first group was much more focussed on developing their sales-force, while the latter group depended much more on the ties it had with their respective incubator, often finding their first customers within, one even supplying the incubator with software. Kind of scary, I think, this co-dependency in the latter case.

Strong ties were an important factor in business development, which were more intense relationships between businesses, trying to get a larger project off the ground. Sales, in general however, relied mostly on NO ties, aka cold approaches to customers. So if you want a job in sales, that’s kind of what to expect.

Thoughts and questions

While I dig theses a lot for their practical research alone—it sometimes reads like a section of a business-plan, and I have used it before to research an industry—we are obviously dealing with theories that are generalised across whole populations. But it seems like strong ties are actually not a very important factor in either getting funded or making a sale.

So some questions to you…

• How do you feel about networking after hearing this?
• Can you provide counter-argument, where a strong tie to a person actually improved your career? Ok, wives, girlfriends, boyfriends, and husbands should definitely be left out of this
• Are there other areas, apart from funding and sales, where either strong or weak ties are better?
• How often do you use contacts-of-contacts on LinkedIN or otherwise for professional reasons?
• Can you provide some Best Practices in regards to “Weak-tie management”?

I look forward to your answers!

Vincent

P.S. I asked a friend to send me the names of these students. I’ll try to fill them in later.

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This is a good question to ‘crowdscource,’ as I’m sure there’s some disagreement about it.

Products (to which I include services, for now), exist on different spectrums, of course, some of which are:

And all of which will to some extent affect a product’s “stand-alone sales-potential.”

The question of ‘good‘ in ‘good products,’ also begs for interpretation. A product, let’s say an iPhone, is not just its physical parameters and software, but it is the whole ecosystem around it—carriers, apps, other partners, relevance to consumer-context (e.g. work or home)—as well as factors like price, quantity, the message that communicates the product’s value, the company’s goodwill, etc.

So by a “good” product I in fact mean: good execution on the technology- and market-side. In a business-plan also, you may have presented a great product, and that will go a long way, but it’s plenty of other factors that will convince an investor.

Even so, the best product can still meet with plenty of opposition from the mainstream-market, what Geoffrey Moore calls the “early majority” or “the pragmatists,” who:

“care about the company they are buying from, the quality of the product they are buying, the infrastructure of supporting products and system interfaces, and the reliability of the service they are going to get…“

Take a B2B-situation, where conventional solutions are favoured, because they have proven their worth, while new products still need to build up a reputation of not only being good, but being good continuously, something that can show its value in next year’s numbers. In a B2C-situation, decisions are made somewhat less long-term perhaps, though still much more conservatively than amongst early adopters.

Both of these can be seen catch-22 situations, where it can be argued that customers want good products, and the development of good products requires cashflow, i.e. customers. That kind of reasoning ignores that presence of early adopters and investors, however.

Entering the B2B/B2C “mainstream” is clearly also a matter of good execution, but one which is much more contextual to the consumer, and which can be affected by other non-qualitative factors also (such as politics, incentives, or competition).

So, the question stands: do good products sell themselves? Name some examples if you can.

Vincent

Related reading:

• AVC: Is Geek Tech going mainstream?
• ReadWriteWeb: Rethinking ‘Crossing the Chasm’

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