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Gift Business: Innovation In Gift Giving (Part 2)

Earlier, in Gift Business: How Do People Buy Gifts? (Part 1), we covered the individual steps of the gift giving process.  Here, in Part 2, we will take a look at innovations that improve, replace or eliminate these steps.

We have already talked about the gift receipt innovation in our previous post.  The logical follow up is the gift card.  Aiming to make the entire process even more efficient, the gift card eliminates the SPECIFIC GIFT substep entirely for the gift giver, and makes the DELIVERY step easier, by reducing the size of the gift significantly, sometimes entirely, in the case of electronic gift cards.  

Because of its convenience, a number of new business models emerged around the gift card idea.  We are not merely talking about existing online and offline retailers, like Amazon or Starbucks selling their gift cards, but rather about new businesses that make concepts previously deemed impossible or impractical come to life.

CashstarOutsourced gift card services is one such concept.  For retailers that do not want to implement a gift card service by themselves, either because they are not tech-savvy enough or simply do not want to make the necessary investment, companies like CashStar provide a practical solution. CashStar’s digital gifting platform lets B2C and B2B retailers integrate a complete e-gift card service to their offering.  Customers can create personalized e-gift cards with their own text, photos and videos, then send them to recipients via the retailer’s website, mobile site or even Facebook.

Speaking of Facebook, the company is the main enabler of another concept made possible by the gift card innovation: social gifting.   In Facebook: Show Me The Money, we talked about Facebook’s role as an Integrated Social Utility:

“Facebook is … a social utility.  Just like other utilities, it is meant to work with other businesses, not compete with them.  That means it can be the provider of all kinds of social data to whoever is willing to pay for it.  Facebook has the ability to be the irreplaceable partner of every internet based business out there, integrated into their systems, providing them with data about their customers they otherwise would not be able to get.”

Wrapp MobileEven though Facebook has acquired social gifting start up Karma last year, and turned it into Facebook Gifts, the company allows its users to send paid-for, discounted or free gift cards to their friends via applications from dedicated gifting companies such as WrappDropGifts, or Boomerang.  CNET editor Paul Sloan explains in his article The Social Gifting Boom:

“It works like this: You sign up for Wrapp, either on the Web site or via the mobile app, by connecting directly to your Facebook account information. Wrapp notifies you of each friend who’s having a birthday, say, or who’s gotten engaged. Then, because of the targeting options it gives its retail partners, Wrapp will match its offers with information about the person you want to send a gift card. The choices you’ll see for a woman 18 to 25 are different than those for a man in his 40s.

While many of the cards are free, there is also an option to add more money. So you can chose to give a free $6 H&M gift card to a friend for Christmas, or you can make it for more, as any real friend would. Once you pick the offer, you write a message, press the Give button and you’re done. Your friend gets a notice on her Timeline, and it shows up in the news feeds of mutual friends (although there are options to send it directly through e-mail or SMS). If you receive a gift, Wrapp requires you to download the app to redeem it.”

Sloan believes that the beauty of the model is not how it works for the user, but the way companies like Wrapp have convinced their retail partners to give away free gift cards. Companies treat these cards almost like coupons, and gladly give away cards of a certain value because they know full well that recipients will either add more money to the card or that when they come to the store to redeem the card, they will end up spending more than just what is on the card.

treaterThere are others, as always, who look for the niche within the niche.  Treater is a gifting platform for sending casual, spur-of-the-moment, consumable, low price gifts.  It does work under the same principles as its larger rivals, but unlike them, it focuses on everyday treats, low cost items and local businesses instead of  formal occasions, big ticket items and national brands.  The idea is that next time a Facebook friends posts a status update on what a bad day they are having, you can send them a cup of mocha to make them feel better or when a friend announces a promotion at work, you can give your congratulations by treating them to a burger for lunch.

Even though gift cards provide recipients with the flexibility of making their own decision at the SPECIFIC GIFT step, there is always the possibility that the recipient may not exactly be happy with the LOCATION, or even the GENERAL IDEA.  In such a situation, the recipient could be stuck with an unwanted gift card.

This is where gift card exchange services come in. Exchange services such as Cardpool or Plastic Jungle allow gift card owners to either sell their gift cards, or trade them for another gift card of their choosing, at a discount.  The process is fairly simple. Once the gift card owner enters the gift card information (merchant, amount, card number) on the exchange’s website, the exchange will make the gift card owner an offer, if they want to sell the card, or display trade options, if they want to trade the card. Most gift cards can be sold or traded online, without the need to visit a store.

The ultimate solution to the unwanted gift issue, however, comes from Amazon.  Even though it has not been implemented yet, Amazon received a patent for a System and Method For Converting Gifts on November 2010.  The background of the patent application explains the motivation behind the innovation:

“…it sometimes occurs that gifts purchased on-line do not meet the needs or tastes of the gift recipient. For example, the recipient may already have the item and may not need another one of that same item. Alternatively, the item may not be the right size, the right type, the right style, and so on. In such situations, the recipient may wish to convert the gift to something else, for example, by exchanging the gift for another item or by obtaining a redemption coupon, gift card, or other gift certificate to be redeemed later.
… However, the process of converting the gift to something else once it has already been opened may be perceived by the recipient as being inconvenient. This may particularly be the case in the context of a gift purchased on-line, where the gift would likely need to be repackaged for shipping back to the merchant. Accordingly, the recipient may not ultimately convert the gift to something else, even though the gift does not meet the needs or tastes of the recipient.”

Amazon Patent Gift ConverterThe patent’s basic idea is a system by which a recipient’s gifts will be converted into things they actually want, through personalized lists and filters. Similar to email filters for products, potential recipients set up a personalized series of rules, and if any gifts sent through the online merchant trigger these rules, the recipients are sent either an item from their Amazon Wish List, or a gift certificate instead of the unwanted gift.

While innovative, the system drew sharp criticism from not only traditional minded gift givers, but also from etiquette experts.  The system was accused of being “dishonest” and while returning gifts that will not be used is deemed acceptable, returning gifts before even receiving them is considered to take the focus away from the appreciation of being given a gift.

wantful catalogThe balance between pragmatism and the spirit of gift giving we like is that of Wantful.  The company enables gift givers to choose gifts and create a small catalog of gifts. The recipient is sent a beautifully designed and personalized hard copy catalog that allows them to choose a gift, which is later sent to them in the mail. It is almost like a nice compromise on all fronts: the gift giver gets the convenience of not having to go to the store and the post office, while the recipient not only gets a nice, “hands on” catalog, but also has a degree of freedom in choosing a gift they want, without the hassle of  having to return an unwanted one.

Yet another innovative concept is group gifting.  Uniting the resources of many gift givers into a gift card enables the recipient to receive a more expensive gift they actually want,  instead of many small valued and mostly unwanted ones.  Group gifts not only make it possible for the gift givers to co-buy a gift of larger value, but also let the recipients choose or sometimes even predetermine their SPECIFIC GIFT.

A number of models have emerged around the group gifting concept.  eBay’s Group Gifts is one of them.  Once the gift fund is set up via an eBay and a PayPal account, gift givers can be notified via email or Facebook, and contribute to the fund with their credit cards.  No one gets charged until everyone chips in, and once it is fully funded, the gift fund will be sent to the designated PayPal account, and the recipient can checkout the same way as they would normally purchase any item on eBay.  It is a simple system that combines existing infrastructures of eBay and PayPal into an innovative service.

DreamBank‘s model is slightly different than the average gift fund.  Rather than focusing on items as gifts, the platform lets a recipient set up a fund for their dreams and enable gift givers to fund the recipient’s dream, which can be anything from a Caribbean cruise to an anniversary party, from a certificate program at the local university to ballroom dancing classes. The service is built as a community, so the recipient and the gift givers can interact over time with each other by sharing progress, resources or even encouragements. Gift givers can also set up a DreamBank account for unsuspecting recipients and surprise them after the dream has been funded.

SocialGift provides outsourced group gifting services for existing online retailers. Similar to what CashStar is doing for gift cards, SocialGift provides retailers with a plug-in for their product pages.  Customers can create a group gift directly from the retailer’s online store via an event page.  Through the event page, gift givers can determine how many people will contribute, track the progress of funds raised, invite more people to contribute or socialize with other gift givers.  The gift is shipped immediately, once the funds have been raised. If the gift is underfunded by a predetermined date, a gift card for the amount raised by the group is sent to the recipient.

While all the innovative concepts mentioned in this post so far have touched upon, utilized or modified most of the steps of the gift giving process, one step alone is outside the scope of most businesses: WRAPPING. This is where Delightfully comes in for digital gifts.

DelightfullyRecognizing the need to capture and enhance the emotional aspect of gift giving, Delightfully presents itself as “wrapping paper re-imagined”. Through Delightfully, gift givers can select an unwrapping experience for their gift, from 3-D mazes to a puzzle, from photo albums to a virtual tour. Gift givers can add their own personal messages and photos to the preexisting tools of the “wrapping paper.” Facebook users even have all of their photos on Facebook available for the platform. Co-founder Jason Shin explains:

Gift-giving is intended to be about a relationship between two people — not a vendor and a recipient.  When we talk about digital gift-wrapping, what we mean is showing some effort, the same way you do when you do a great job wrapping a physical gift.”

We have only talked about but a small subset of innovations and new businesses in the gift space.  Undoubtedly, some of them will prevail, while others will not. John D. Rockefeller once said that “the power to make money is a gift from God.”  Which of the businesses and innovations we have covered have received that gift, and which of them will convert that gift into their own gift cards? Time will tell.


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Gift Business: How Do People Buy Gifts? (Part 1)

Gift giving is a universal phenomenon.  From the Holiday Season to Mother’s Day, from Valentine’s Day to Graduation Day, from birthdays to weddings (not to forget anniversaries) literally hundreds of millions of gifts exchange hands every year, making both givers and receivers happy.  While many people give gifts the “traditional” way, others utilize new technologies and services.

We are going to cover the Gift Business topic in two parts.  In this post, Part 1 of the series, the individual steps that occur during a gift giving experience will be discussed.  In Part 2, we will take a look at how new technologies and services can improve, replace or eliminate these steps.

Many GiftsWe are all familiar with the “traditional” gift giving process, even if we do not always consciously think of it as a process or recognize the individual steps.  There exist many academic studies with conceptual frameworks attempting to describe the gift giving process, such as this example from the clothing industry:

“The framework consists of four stages: prepurchase, purchase, presentation, and postpresentation. Components of the prepurchase stage are object; interactions among occasion, recipient, and gift object; giver and recipient; cost of gifts; and information search. The purchase stage includes choice of retail outlets for gifts, distance traveled to locate gifts, and methods of payment. The presentation stage focuses on perceptions of the giver and the recipient when the gift is revealed. The postpresentation stage includes ways in which gifts affect interpersonal relationships; consumption of gifts is another component of this final stage.”

In this post and the next one, however, we are going to follow our own framework.  The gift giving process starts with a NOTIFICATION.  The NOTIFICATION can be external, such as receiving a wedding invitation or a birthday reminder email, although it can be internal as well, where you remember your child’s birthday, or just feel like rewarding your team at work.  This is the stage where “whether to get a gift or not” decision is made.

If a NOTIFICATION results in a go-ahead, it is generally followed by the SELECTION step, with its three substeps: GENERAL IDEALOCATION and SPECIFIC GIFT, although not necessarily in that order.

The GENERAL IDEA is just what it sounds like: you do not know exactly, but you have a “general idea about the nature of the gift” for the recipient.  This idea can be dictated by tradition (flowers on Valentine’s Day) or can be a result of your own free will (“I will get my friend a book, because I know she likes to read.”)  The GENERAL IDEA helps narrow down the options for LOCATION or “where to get the gift.”

Sometimes, however, it works the other way around.  The gift giver may decide on the LOCATION first, and then move on to the GENERAL IDEA (if the LOCATION offers many different options, such as a department store) or skip the GENERAL IDEA step altogether and let LOCATION dictate the nature of the gift.  Reasons for deciding on LOCATION first can range from convenience (“I can buy the gift on my lunch break at the department store across the street.”) to timing (“I thought her birthday was tomorrow!”) to financial considerations (“I already have a coupon/store credit for this store.”)

Usually, people tend to decide on GENERAL IDEA before LOCATION, if they have a strong motivation to get a “good” gift for the recipient to enjoy, and vice versa if they care less about how much the recipient will enjoy the gift, than the fact that they are giving a gift, as is the case with obligatory gifts (such as Secret Santa at the office.)

Next comes the SPECIFIC GIFT step, where the gift giver decides on the purchase.  Depending on the nature of the gift giver’s relationship with the recipient, and how well they know each other, it is possible to skip the two previous steps and get the SPECIFIC GIFT directly.  (“I know that my fiancee really wants these earrings.”)  The availability of gift options also dictate whether the gift giver is ready to move on to the next step, or go back and change the LOCATION (“They do not have that sweater in her size here, I will look elsewhere.”) or even the GENERAL IDEA. (“I originally wanted to get my nephew a katana, but they are so expensive, so I decided to get a book on Japanese swords instead.”)

The steps we covered so far involve many research, analysis and decision activities on the gift giver’s part, which we will not discuss in detail.  There are tools, many of them online, that help gift givers research various dimensions of gift options, analyze their viability and price/value ratios, as well as make relative and absolute comparisons to decide which gift will ultimately yield the optimal outcome for both the giver and the recipient.  While it would be interesting to take the process map one level deeper, and look at these processes and tools in the flow, for the purposes of this discussion, we are going to stick to the high level steps.

The next step is PAYMENT.  After the gift giver decides on the method (cash, debit card, credit card, installations, coupon, existing store credit) they must also make a very cruical decision which affects the rest of the process: whether to get a gift receipt or not.  While the more traditional minded gift givers frown upon the idea of their gift getting returned and exchanged for something else, the more pragmatic minded gift givers always give the recipient the option to exchange the gift, which has become a standard service at retailers.

WRAPPING, what makes a gift really look and feel like a gift, comes next.  While gift wrapping is a standard service at many retailers, some traditional minded gift givers insist on wrapping their gifts themselves, with decorative wrapping paper and accessories appropriate for the occasion, which indeed does add a personal touch to the gift giving process.  Many people argue that an important part of the joy of giving and receiving gifts is the surprise element, achieved by the WRAPPING, and the excitement that comes from unwrapping.  Although getting a gift wrapped at the store is more convenient, it can take away some of the surprise if the wrapping paper has the retailer’s logo all over it and hints at the GENERAL IDEA. (“I wonder what that rectangular gift wrapped in paper with Barnes & Noble logo all over is?”)

Traditionally, DELIVERY is the last step of the gift giving process.  A gift giver generally prefers to give the gift to the recipient in person when possible, usually in order to witness the happiness of the recipient firsthand.  When a personal DELIVERY is not practical, usually due to factors such as distance, availability or size, a commercial delivery by either the store or a commercial delivery service is arranged.

Gifting ProcessAlthough it does not affect the steps of the process by itself, the gift receipt innovation, mentioned at the PAYMENT step, has altered the flow of the process.  Rather than ending the process at DELIVERY, a gift receipt has the potential to set the process back to the SPECIFIC GIFT step, by giving the gift recipient the choice between keeping the original gift and exchanging it for something else.

As mentioned earlier, traditional minded gift givers dislike the gift receipt, because it not only makes the entire original SELECTION step irrelevant, thus overriding the original intent of the gift giver, but also reveals the actual monetary value of the gift, which is considered to be impolite.  In contrast, progressive minded gift givers defend the gift receipt, claiming that it gives the recipient an opportunity to exchange an unwanted gift for a better one, increasing the recipient’s utility, and after all, is not the gift giver’s ultimate goal just that?

So far, we have examined the individual steps of the gift giving process.  In Part 2, we will take a look at various innovations that redefine the process, its flow, as well as one or more of the steps.

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Do Not Let Your Startup Die

Last month, we talked about some of the reasons that usually cause new ventures to fail in Entrepreneurs: 10 Mistakes, 5 Lessons And 3 Methods To Learn Wisdom, and also stressed the importance of learning from other people’s mistakes, as recommended by Martin Zwilling and Confucius.

Prof. Noam Wasserman of Harvard Business School agrees with them.  Wasserman, who spent decades researching startups and why they succeed or fail, has compiled a database of experiences from 10,000+ company founders, and shares his findings in his book The Founder’s Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup.  Let us take a look at some of the most common mistakes:

Co-founding with friends or family.  Wasserman found out that the most common decision of entrepreneurs is to team up with someone they know socially.  While this is understandable, it is the least stable of all teams, because the founders will most likely be of very similar backgrounds and have too many of the same skills, being unable to complement each other’s shortcomings.  To fix this, founders should be aware of these collective deficiencies and complement their personal strengths with professionals, either as partners or consultants.

There are also emotional issues, because it is more difficult to decide and say what needs to be done on topics such as compensation, decision making, responsibilities when dealing with friends or family.  The solution is to actively pursue the “tough discussions” while building firewalls between the work relationship and the social relationship to protect the social one from harm.

Early equity splits.  73% of the company founders included in Wasserman’s research decided on how to divide the equity within a month of founding.  While a decision needs to be made on who owns what share of the venture upfront, mostly because of funding requirements, the equity division should never be permanently fixed.  At the beginning of a venture there is a lot of uncertainty.  What will the strategy be? What roles will each of the founders play? How much will everyone be able to invest other than money?

Most divisions are equal splits, which assumes that all founders will provide equal contributions.  That almost never happens, at least one person will feel that they are contributing more than their fair share, which will inevitably lead to problems.  It is best not to set equity stakes in stone, but rather to agree upfront upon a dynamic mechanism that enables a redistribution of equity over time based on performance and contribution of the founders.  Something like a vesting plan over time or based on achievements of milestones works well.

I advise my consulting clients to always write and sign a gentlemen’s agreement before starting any venture, a legally non-binding document that lays out the founders’ decisions on issues such as how to redistribute equity over time, how to share profits if and when they materialize, what the overall roles of each founder will be, what the general decision rights are, how the equity will be valued if a founder decides to back out of the venture, which expenses will be reimbursed and so forth.  Such an agreement is always useful, as it exerts moral pressure on the founders to be more cooperative, eliminating many problems over time before they arise.

Professional vs. emotional investors. It is quite common for entrepreneurs to ask their family or close friends to invest in their venture when they get started.  They do this because it is easy, mostly due to an existing emotional bond and established trust between the parties.  However, investment decisions based more on emotional than rational reasons can cause problems.  It is essential that the founders have an honest and open discussion with their investors and explain the risks and timelines very clearly to manage expectations.  If a founder’s grandmother who put money into the venture suddenly gets anxious and asks for his money back just when the startup is trying to launch a product, there will be management problems due to added stress on top of everything else that is going on.

The emotional investors also lack the scrutiny of professional investors.  Professional investors are very rational, caring a great deal about their money and where they put it.  They would not hesitate to point out to flaws or weaknesses in the business, maybe even offer suggestions and would not at all care about the feelings of the founders, the way a grandmother might.

Having said that, it is also true that while professional investors add value, they also bring control risk.  Emotional investors would not fire a founder because they do not like their performance, but professional investors would, and have.  52% of the company founders included in Wasserman’s research were replaced as CEOs by the time they raised their C round of funding. Of those, three out of four were fired by the board, i.e. professional investors.

Conflicting goals of founders. Sometimes startups are launched without the founders having a shared understanding of why they are getting into the venture.  While everyone is intent on “building something” in the initial stages, later on, they may have different ideas on how to proceed.  Without a mechanism such as the gentlemen’s agreement, this may lead to significant problems for the founders, both personal and financial.  Wasserman talks about what he calls the “rich-vs.-king dilemma.”

“The king is a visionary who wants to bring something to fruition and have an impact on the world without having to sacrifice the idea or have others twist and turn it. This person is more control-oriented and should think about being a solo founder, bootstrapping the venture, and finding inexpensive employees who are going to be more rising stars than rock stars.

The founder who primarily wants to get rich will do what it takes to grow the venture, including hiring the best employees, finding the best co-founders, [and] giving up control to the investors with the best financial resources, guidance, and networks. They don’t mind imperiling control in hopes that the pie will grow a lot bigger—and their slice, while smaller, will be much more valuable.”

How about an entrepreneur’s point of view?  Andrew Montalenti is not an academician.  He is the co-founder and CTO of Parse.ly, and speaks from firsthand experience as an entrepreneur in Why Startups Die, where he conducts a post mortem on startup deaths, based on patterns he discovered:

  • Marriage Trouble: If you [and your partners] can’t work well together and co-motivate each other through thick and thin — then the startup will fail.
  • No Bootstrapping Plan: If you have the mentality that “without funding, I can’t work on my startup”, then your startup will likely die.
  • Startup is a Career Move: If you are treating your startup as a “career move” — a way to move up in the “startup ecosystem” and end up a C-level executive at some other, VC-funded rocketship, then, in all probability, your current startup will fail.
  • Refusal to Change Original Idea: You should be obsessed with your company’s mission, but willing to change your company’s approach given new data or circumstances.
  • Pre-Emptive Scaling: Worrying about “scale” in the early days of your startup is simply a bad investment.
  • Growing Too Fast: The more your company starts to feel like a big company, the slower you will move, and the more you will spend.
  • Scared of Code: Nothing simultaneously focuses your team in its mission and gathers the most useful market feedback like actually building software prototypes… Without concrete, tangible progress toward a product, it simply becomes too easy to walk away.

Montalenti has a general piece of advice for startups: Be persistent and continue moving forward, no matter what.  He makes references to Paul Graham, who is known for his work on Lisp, for co-founding Viaweb (which later became Yahoo Store), and for co-founding the seed accelerator Y Combinator.  Graham is also the creator of the famous “Startup Curve”.

Graham, an experienced incubator who has seen quite a few number of startup failures, tells entrepreneurs what to do to survive:

When startups die, the official cause of death is always either running out of money or a critical founder bailing. Often the two occur simultaneously. But I think the underlying cause is usually that they’ve become demoralized. You rarely hear of a startup that’s working around the clock doing deals and pumping out new features, and dies because they can’t pay their bills and their ISP unplugs their server…They may have to morph themselves into something totally different, but they won’t just crawl off and die. They’re smart; they’re working in a promising field; and they just cannot give up.  All of you guys already have the first two. You’re all smart and working on promising ideas. Whether you end up among the living or the dead comes down to the third ingredient, not giving up.”

There are many ways a startup can die, but there are also many ways to prevent that from happening.  Learn from other people’s mistakes, do the hard work, and most importantly, keep the faith.

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Girişimciler: 10 Yanlış, 5 Ders Ve Bilgeliğe Ulaşmanın 3 Yolu

Birkaç ay önce, küresel bir teknoloji şirketinin İstanbul’daki Ortadoğu Bölgesi Merkezi’nde üst düzey yöneticilik yapan bir arkadaşımla konuşuyordum.  Arkadaşım bana önceki hafta sonunu bir yeni girişimler maratonuna katılarak geçirdiğini, oraya katılan takımlara bakarak içlerinde umut vaadeden ve düzgün iş planları olanlarını aradığını anlattı.  Keyfi kaçmıştı, çünkü katılan birçok takımdan para edebilecek iş planları olanlar bir elin parmaklarını geçmiyordu.  Onlar bile büyük olasılıkla ya yatırımcı bulamayacak, bulsalar bile başarılı olamayacaklardı.  Bunun nedeni şuydu: İş planları ile ilgili sorunlara dikkatleri çekildiğinde ya hemen aşırı savunmaya geçiyor, herhangi bir öneri ya da yoruma şiddetli tepki veriyorlardı, ya da pasif agresif davranarak savunmaya geçmiyor, ama önerileri dikkate de almıyorlardı.  Tüm hafta sonunu harcamasına rağmen, arkadaşım eli boş dönmüş, ve daha çok da girişimci adaylarının tavırları nedeniyle sinirlenmişti.

Martin Zwilling’in, Entrepreneur Magazine’de yayınlanan “İlk Defa Deneyen Girişimcilerin Başarısız Olmalarının 10 Nedeni” (10 Top Reasons Why First-Time Entrepreneurs Fail) adlı yazısı bana arkadaşımı ve verimsiz haftasonunu anımsattı.  Yazının başlığından anlaşılacağı gibi, Zwilling girişimcilerin ilk bir iki girişim denemelerinde yaptıkları yanlışlardan bahsediyor.  Bu tür yanlışlar genellikle deneyimsizlikten kaynaklanıyorlar, çok yaygınlıkla karşılaşılıyor ve çoğu zaman bir kere yanlışı yapıp öğrendikten sonra tekrarlanmayacaklar.  Zwilling, girişimcilerin kendi hatalarını yaşayıp öğrenmek yerine başka insanların yanlışlarından ders çıkarıp doğrusunu öğrenmeleri gerektiğini anlatıyor.  Bilge bir öneri, Konfüçyüs’ün sevdiğim bir sözüne benziyor:

“Bilgeliği üç yöntemli öğrenebiliriz: birincisi üzerinde düşünüp kafa yorarak, ki bu en soylusudur, ikincisi taklit ederek, ki bu en kolayıdır, ve üçüncüsü bizzat yaşayıp tecrübe ederek, ki bu en acısıdır.”

Girişimcilerin on hatası yazıda çok iyi şekilde anlatılmış.  Aşağıda, benim yatırımcı diline tercümelerimle bu on hatayı görüyoruz. Ne yazık ki hepsi de aynı sonuca varıyor:

  • Yazılı iş planı olmaması
    = yetersiz planlama = uygulama riski = düşük kar = kötü yatırım
  • Ciro modelinin zayıf olması veya hiç olmaması
    = ciro yok = kar yok = kötü yatırım
  • İş imkanlarının kısıtlı olması
    = ciro yok = kar yok = kötü yatırım
  • Uygulama becerisi yok
    = uygulama riski = düşük kar = kötü yatırım
  • Fazla rekabet
    = yetersiz ciro = düşük kar = kötü yatırım
  • Fikri mülkiyet yok
    = kolaylıkla taklit edilebilir = fazla rekabet = yetersiz ciro = düşük kar = kötü yatırım
  • Deneyimsiz bir takım
    = uygulama zayıf = uygulama riski = düşük kar = kötü yatırım
  • Kaynak gereksinmelerini hafife almak
    = yetersiz planlama = uygulama riski = düşük kar = kötü yatırım
  • Yeterince pazarlama yapmamak
    = ciro yok = kar yok = kötü yatırım
  • Çok erken hevesi kırılmak
    = uygulama riski = düşük kar = kötü yatırım

Bunların hepsi bir girişimcinin aklında tutarak dikkat etmesi için çok fazla gibi duruyor.  Neyse ki OneWire kurucusu, başkanı ve COO’su Brin McCagg, VentureBeat’te yayınlanan “Deneyimli Girişimcilerin Öğrendiği Beş Ders” (Five Lessons Experienced Entrepreneurs Have Learned) adlı yazısında yönetici arkadaşımın karşılaştığı türden girişimci adaylarına öğrenmeleri gerekenleri özetliyor:

  • İşini takip etmek çok önemlidir.

“Hem uzun vadede hem de kısa vadede, uygulama konusundaki becerini kanıtlamak için detaylı pazar araştırmaları yürüt ve ekonomik görünüm olumsuz da olsa vazgeçme.”

  • Heyecanlı ve tutkulu bir takım oluştur.

“Vizyonuna şiddetle inanan ve pazardaki krizler ile bir yeni girişimin iniş çıkışları gibi olaylarda hemen moralleri bozulmayacak bir çekirdek ekip kur ve onlara güven telkin et.”

  • Denge kritik önem arzeder.

“Yeterince sermaye bul ve işini genişletmek için kaynakları uygun şekilde dağıt.  Doğru dengeye ulaşmaya çalış; pazar şartlarına göre iş planını değiştirip uyarlamaktan çekinme.”

  • Yatırımcı gibi düşün.

“İlgi çekmek için pazardaki bir ihtiyacı karşılayan parlak bir fikir gerekli olsa da, yatırımcılar aynı zamanda ilgilerini girişimin yönetici kadrosuna duydukları inanca göre ayarlarlar.”

  • Dinle ve öğren.

“Girişimciler daha çok iletişime, ikna etmeye ve satmaya odaklanırlar.  Ama yatırımcılar sadece para kaynakları olmanın da ötesinde, kişisel deneyimlerine, başarı ve başarısızlıklarına dayanarak aynı zamanda danışman olarak da yararlı olabilirler.”

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Entrepreneurs: 10 Mistakes, 5 Lessons And 3 Methods To Learn Wisdom

A few months ago, I was talking to a friend of mine who is a high level executive of a global technology firm’s Middle East Region headquarters in Istanbul.  He complained to me that he had spent his entire weekend attending a startup marathon, trying to see if there were any promising teams with decent business plans.  He was upset that of the many teams that attended the event, only a handful had ideas that could be worth something.  Even those few would most likely not be successful or get any funding, because when the problems with their business plans were pointed out, they either became very defensive, reacting strongly to any recommendation or comment, or very passive aggressive, not arguing, but not really listening to suggestions, either.  For all his effort over the weekend, my friend came up empty handed, and was frustrated, mostly due to the attitude of the would-be-entrepreneurs.

Martin Zwilling’s article, 10 Top Reasons Why First-Time Entrepreneurs Fail, from the Entrepreneur Magazine, reminded me of my friend and his weekend. As the title suggests, Zwilling lists top ten mistakes made by entrepreneurs during their first couple of ventures.  Most of these mistakes are due to inexperience, are quite common, and would probably not be repeated after the first time.  Entrepreneurs, Zwilling suggests, should learn from other people’s mistakes rather live through them personally.  Sage advice, very similar to a favorite Confucius quote of mine:

“By three methods we may learn wisdom: first, by reflection, which is noblest; second, by imitation, which is easiest; and third, by experience, which is bitterest.”

The ten mistakes are very well explained in the article.  Here they are, plus my translations into investorese. Unfortunately,  they all lead to the same outcome:

  • No written plan
    poor planning = execution risk = low profits = bad investment
  • Slim or no revenue model
    = no revenue = no profits = bad investment
  • Limited business opportunities
    = no revenue = no profits = bad investment
  • Can’t execute
    = execution risk = low profits = bad investment
  • Too much competition
    = not enough revenue = low profits = bad investment
  • No intellectual property
    = easily replicated = too much competition = not enough revenue = low profits = bad investment
  • An inexperienced team
    = cannot execute = execution risk = low profits = bad investment
  • Underestimating resource requirements
    = poor planning = execution risk = low profits = bad investment
  • Not enough marketing
    = no revenue = no profits = bad investment
  • Giving in too early
    execution risk = low profits = bad investment

All that is a lot for an entrepreneur to watch out for. Luckily, Brin McCagg, co-Founder, President and COO of OneWire, in his VentureBeat article, boils it down to Five Lessons Experienced Entrepreneurs Have Learned, for the would-be-entrepreneurs like the ones my executive friend has encountered.  If they listen, learn, and internalize, they could avoid most of the ten mistakes:

  • Follow-through is essential.

“Prove your ability to execute in both the short and long term, conduct comprehensive market-research and don’t give up when economic outlook appears grim.”

  • Build an enthusiastic and passionate team.

“Build and inspire a core team that fiercely believes in your vision and has the commitment to persevere through market crises and the ups and downs of a startup.”

  • Balance is critical.

“Raise sufficient capital and allocate the appropriate resources to expand your business. Seek to achieve the right balance; don’t be afraid to adjust your business plan depending on market conditions.”

  • It pays to think like an investor.

“While you undoubtedly need a brilliant idea that addresses a market need to spark interest, investors also gauge their faith in the executive team.”

  • Listen and learn.

“Entrepreneurs often focus on communicating, convincing and selling. But investors can be more than financial-backers; they can also act as advisors who speak from their personal experience, failures and successes.”

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