Transcriber: TED Translators admin Reviewer: Ilze Garda
In the last 20 years,
I have founded, grown and sold two online software companies,
and advised many others.
For today,
I've distilled some practical tips from these experiences
to show you how you can release your inner company.
First, why would you be interested in starting and growing your own company?
Well, let me suggest three reasons.
First, the freedom to do what you want and what you love doing;
security for you and your family,
and no one else is going to provide for your security but you;
and opportunities that are unique to you.
No one else has your unique combination of skills, knowledge, and networks,
and so, you have the potential to create a company that no one else can.
So, where do you start? Start with what you're passionate about.
It could be your work, your family, a sport, a hobby,
anything you have compelling and powerful feelings about.
I've been a Math geek since I was in junior high school,
so starting companies involving data analysis has been a natural for me.
But the good news is that anyone can become passionate about something.
Just keep reading and learning, and talking and doing it,
perhaps start with Wikipedia, go to meetups or meet with experts.
The more you learn and develop your expertise in something,
the more engaging it becomes,
and the more passionate you become about it.
So, why is passion so important in a start up?
Let me suggest two reasons.
First, it gives you staying power to break through obstacles
and find ways around them.
During the dot-com bust,
just to keep CustomerSat, my first company, alive,
we had to factor receivables, cut back salaries 20%,
lay off 30 % of our workforce,
and move to smaller and more modest offices.
Hard and humbling things to do.
Many of our competitors did not survive.
I believe that was because we cared more deeply about our business,
and that let us survive when our competitors did not.
Passion also means curiosity,
which lets you see and address opportunities sooner than others.
Again, at CustomerSat, we worked closely with our best clients
to automate and assign cases when their best customers
indicated in surveys that they were dissatisfied.
That feature which was then unique propelled us out of the dot-com boom
and fueled our growth for the next several years.
Again, it was passion, in this case for our customers,
that was behind our success.
So passions define the space of possibilities
within which you can consider starting a company.
Within that space you need two things:
market needs and an advantage relevant for addressing that need.
Rather than go to a Mackinsey or Gartner group to find market needs,
listen to your passions and go some place closer to home:
your own backyard.
In the areas that you're passionate about,
think of things that people want to do that they currently cannot do
with products and services currently available.
In your neighborhood,
maybe it's gourmet meals ready when people get home.
If you're into kitesurfing, maybe even your grandparents could enjoy it.
Maybe it's easily converting Flash to HTML5 applications,
or GPS for scuba divers.
Bingo! You have just articulated an unaddressed market need.
I started my first company, Decisive [Technology],
with a really cool technology: conditional voting,
for which there was no market need.
It took me 6 months to let go of that idea
in favor of something for which there was a market need,
namely online surveys.
So don't make the same mistake that I did,
start out focusing on real market needs.
Once you've found a real unaddressed need, I want you to think big: super size it.
Rather than just a single kiosk in a mall,
how about a chain of kiosks in all of the malls across your city?
Rather than improving the performance of one mobile application,
how about new tools and techniques
for improving the performance of any mobile application?
The scale of market that you address has to match the scale of your resources,
so you will probably need to start out highly focused, that's OK.
Your super-sized vision will help guide you as you grow.
Let's turn to your advantages.
We often overlook many of your advantages.
Our network of friends and family, who are absolutely unique to each of us,
people we know and trust who can handle jobs for us,
a spare bedroom or garage
where we can start business without paying office rent,
our unique skills and technical knowledge.
I want to emphasize technical knowledge,
even if your market need is not very technology-oriented.
Let's say it's stamp collecting or involves basket weaving,
even those can probably benefit
by the application of technology in some fashion.
Who would have guessed 10 years ago
that today we would be downloading books online
or using Twitter for customer support?
So try staying informed of, and ideally, trying out
as many new technologies as you can.
Make a list of all the technologies you know something about.
If two of them are both growing and are both new,
the intersection between them would likely grow even faster.
If you can meaningfully combine three technologies, even better.
My first company combined surveys and the Internet,
my next company added real-time analytics and case management.
The more technologies you can usefully integrate,
the more differentiated your solution will be.
Incidentally, this, on a small scale, is how all innovation takes place,
by finding new combinations of existing technologies
and combining them in novel ways.
Next, to choose among different opportunities,
match up your market needs with the strength of applicable advantage
and see how well they fit.
The one where the combination of size of market and strength of your advantage
is greatest, is likely to be your best opportunity.
Now, you know your market needs, and strengths, and passions best of all,
so you can best do this analysis than anyone else can.
In this example,
event production is neither the largest market need nor the strongest advantage,
but the combination of size of market need and strength of advantage
makes it the best option overall.
After that, it's a process of gathering more and more input and market feedback,
finding people and resources who can strengthen your advantages,
and refining and ever aligning your market needs with your advantages.
This may take weeks or months.
The product or service that you ultimately arrive at
will be far superior to the idea that you started out with.
That's good, that's creative destruction happening within your own company.
HP, Dell, IBM, all run Windows,
each of them is better than the other in some way.
Perhaps 20% faster or 20% cheaper.
In contrast,
Apple has long been different, more graphical, easier to use,
better for publishing music and video.
As a result, Apple has taken away steadily market share from Windows,
and is today the most valuable company in the world.
Better means your startup has to fight larger competitors head on.
Instead, be different in a way
that is deeply valued by some set of your customers.
You won't have to compete directly,
and you'll have more time and room to get established.
And as those customers buy from you again and again,
and tell their friends about you, you will grow with them.
Let's talk about your team.
I remember well how much easier life was for me
after my CTO, Dickey Singh, joined CustomerSat.
He took over software development, QA, web operations, tech support and IT,
letting me focus more on sales, marketing and customers.
Your chances of success are more than double
with the right business partner or cofounder,
somebody whose skills complement your own,
who shares your work ethic, whom you trust,
and who shares at least broadly your vision for the company.
You also start building experience sooner
dealing with the issues
that will be most important to your company as you grow:
teamwork, consensus, resolving conflicts, and creating a positive work environment.
So, one plus one equals three.
Funding.
In my experience,
90% of startups waste time seeking funding before they are ready.
The best times
are when your company achieves milestones
that significantly reduce investor risk.
If you have customers, that eliminates the risks that your idea works.
If you have positive cash flow,
that eliminates the risk that you can get customers.
By holding off until you're ready, you're in a stronger negotiating position,
the deal comes together faster,
and it takes less time away from building the company,
which is what both you and your investors want you to do.
You want to design your company to generate increasing revenue or profit
for every additional dollar of capital invested,
that's called scalability.
Here, the green company is much more scalable
and a much more attractive investment opportunity
than the red company;
probably, the red company is more labor-intensive.
You can make your company more scalable.
Here are some thoughts.
Instead of your staff configuring your product,
let your customers do it themselves online.
Instead of purchase orders and invoices, which are labor-intensive,
take credit cards and eliminate the paperwork and accounting.
Instead of selling annual renewals and upgrades,
have evergreen subscriptions that renew automatically;
and instead of, or in addition to customer service and support,
reward your customers for supporting each other through online communities.
These things will help make your company more scalable.
Let's turn to psychology.
The human mind is like an iceberg.
We're consciously aware of only about 20% of the messages
that come into our minds through all of our senses.
The remaining 80% enter and get stored unconsciously.
Many of these unconscious messages we accept as fact,
so we need to be very deliberate about what messages we allow in.
The most dangerous messages are the ones that come from ourselves.
Negative thoughts, like these, if repeated,
are likely to come true even if they have no merit whatsoever.
So don't say or think anything negative about yourself.
If it all, use the past tense, "this is the way I used to be".
For any negative thought that might creep into your mind,
think of a specific detailed moment, no matter how small,
where you did the opposite of that.
If it was at a party, you put everyone at ease;
if it was in a game, you were the star.
Keep this tangible evidence in mind and readily at hand,
so that you can quickly recall it.
This will help those strengths become a reality for you.
When I was in my mid-thirties, I accepted the fact that I'm gay.
Most people would not view this as a strength.
I disagree.
For me, it's been a strength in at least two ways.
First, when I was growing up, it wasn't socially acceptable to be gay,
and so the energy that I might have put into dating,
I put into school, and career, and sports.
Today, I'm very much enjoying the benefit of that early investment.
Also, I'm not a minority in any sense that I can think of other than being gay,
so this has sensitized me to what it's like to be a minority.
Similarly, if you see something in yourself
that you genuinely cannot change, find a way to view it as a strength.
Please, set the bar very high.
Don't use this to accept some aspect of yourself
that you can change and that you would like to change.
But if it is something you cannot change,
doing this will be hugely empowering
and will be freeing for you as it was for me,
and that aspect of you will become one of your strengths.
When we criticize or complain, endorphins flow to our brains
and for all of five seconds, we enjoy a sense of well-being and superiority.
But after the five seconds,
the endorphins fade away, we lose that sense of well-being,
and the people around us who we criticized are demoralized.
The net outcome of this can only be negative.
Many other approaches are better:
asking questions, articulating the consequences of actions,
celebrating the good; try these instead.
Just as we saw that reminding ourselves of our strengths can make us stronger,
so can reminding others of their strengths help make them stronger.
Even if we detected just a glimmer of courage,
or good judgment, or perseverance in someone,
letting them know that we see it, being as specific as possible,
helps build those strenghts in them.
People are drawn to people who help build them up.
So this also attracts good people to you
and elevates you to a position of leadership.
PowerPoint tip - to make any slide more engaging,
add a kitten, a cat or a puppy.
(Laughter)
But this isn't about the cat.
Do you see the point on the carpet that is marked by the arrow?
I can't lift to that point up very high, can I,
unless all the other points around it are also lifted up.
Well, we are all like the points on that carpet.
Finally, let's consider ethics.
When people talk about business ethics, what do we usually hear about?
Predatory behavior, theft, false advertising, corruption -
that's bad.
Or, corporate philanthropy, helping hurricane victims,
or the hungry in Africa - that's good.
Well, I don't disagree with either of those,
but I don't think that is the full story
or even the most important part of the story.
Rather, I'm going to make the case to you right now
that entrepreneurship is the most ethical thing you can do.
Let's start with the stages of entrepreneurship.
We've seen many of them already:
finding an idea for a new venture, striking out on your own,
testing and refining the idea, and so on.
Now, let's look at the individual virtues and values
that are required to do this successfully.
Well, to come up with new ideas takes diligence, creativity and rationality.
To strike out on your own takes courage.
To test and refine an idea or to reject an idea
for which there is no market need,
as I had to do with conditional voting, takes intellectual honesty.
To attract and retain employees, customers, and other stakeholders,
you need to treat them fairly and honestly.
Or why should they come to you
when they can go to a better established organization?
So, those are individual values and virtues,
now let's take a look at social benefits that come out of entrepreneurship.
Well, it is impossible to be successful as an entrepreneur
without making the world better for your customers.
If you don't, they're not going to buy your product or service,
they'll go elsewhere.
Making life better means more choice, more innovation, lower cost,
or some combination thereof.
It costs many more times as much to attract new employees and train them
as it does to retain existing ones.
So you continuously have to create win-wins to keep good employees
or else they'll go somewhere else too.
So, as an entrepreneur, you have to make life better for all of your stakeholders.
Stepping back and looking at the big picture,
we see that millions of entrepreneurs
are driving innovation and win-wins worldwide,
and raising the quality of life and standards of living across the globe.
Incidentally,
guess where most of the money that funds philanthropy comes from?
Yes, entrepreneurship.
Given all of these benefits,
I rest my case that entrepreneurship is the most ethical thing you can do.
We've talked about practical tips,
and the psychology, and ethics of entrepreneurship.
Releasing your inner company, no matter what size,
will give you freedom, will help insure your security,
and endow you with the self-confidence
that you will enjoy for the rest of your life.
You don't need credentials, you don't need permission,
you just need to do it.
So go enjoy doing it.
Thank you.
(Applause)