Top 10 Legal Mistakes made by Entrepreneurs

A good friend of mine sent me this HBS article earlier this morning and told me that he would have loved to have had the chance to read this prior to some of his previous partnership fallouts. It definitely is a must read for all of you out there that are trying to do your first startup. You will definitely feel the importance of it if anything ever goes wrong which happens more often than most people expect. In my opinion, these precautions should always be taken into consideration and in most cases, as standard practices no matter how much you trust your partners and others.

Entrepreneurs vs. Arm Chair Quarterbacks

I have in my life taken a much different route compared to most of my peers. Startups and entrepreneurship have always been part of me since the very early stages of my life. I vividly remember the experience of leaving my cushy IS Manager job at a medium size corp when I was 16 years old to start an import car accessories and stereo consulting/installation company for the first time. Sure, it wasn't a glamorously successful venture but I made my lunch money and had lots of fun while doing it. From that point on, I knew that entrepreneurship was what fits me best. However, startups are not for everyone. I think many would agree with me. With that said, the thing that I can't stand is exactly what Kelly Smith from Curious Office beautifully describes in his blog entry, Entrepreneurs vs. arm chair quarterbacks. Arm chair quarterbacks criticizing startups can be pretty annoying. It's like if EnGadget were to do product reviews without ever even touching the physical thing... Doesn't make a lot of sense does it?

China Content Filtering

One of the things I found annoying when I was in Beijing at the end of last year was that I was unable to blog because Blogger, Livejournal, wordpress, and most any large blogging sites were blocked by the government's filters. This is not new to me since it's pretty much a widely known fact but it's one of those "I knew that" type things that didn't really sink in on me until I actually experienced the block first hand.



This experience made me think of a crazy idea. I started by thinking that if I ever moved to China, I would make sure I had a VPN server hosted in the US so that I can route all my traffic through the US to by-pass the filters (I am sure other techies have thought of this before and probably already do it). Then I thought hey, there are probably quite a bit of US/UK/CA entrepreneurs and English teachers that would enjoy the same technology. What if I made a business out of this by providing a service available to foreigners visiting or living in China? That way, the online freedom we have always enjoyed can travel with us regardless of what country we visit. Of course, that's given that the Chinese government only cares about filtering the content that the Chinese nationals see and hear but not foreigners as well. However, even with that aside, it may still be an unrealistic idea after all. This is because I am concerned about two factors:

1. Political implications
2. Demand for this type of service to make it a viable business

As you can probably tell, this is probably something I won't pursue myself but if anyone is gutsy enough, has a good business model, and has enough connections with the Chinese government to get their support for it based on economic growth implications, I would love to see it happen!

Stress Relief / Team Building Facilitator

One of the coolest things about working at Imagekind is that everyday between 3pm - 7pm, you will from time to time hear this "tick, tack, tick" sound coming from near by our front door at the office. This is not a clock ticking like you might have guessed but rather the sound of pairs of our employees taking short 10 min breaks to get their ping pong game on. =)



Some times startups get so entrenched into their work because of limited resources, they forget that proper team building and stress relief also needs to take place to keep a healthy company culture. It also puts an interesting mix into a work day which allows employees to look forward to not only taking down their work related challenges each day but also an intense 21 point ping pong madness.

You might wonder, "What about productivity?" Let's just say, with or without ping pong, people should always step away from their monitor for 10-15min which will one, give their eyes a break that they need, and 2, give a short down time for the employees to rejuvenate their mind so they can attack their challenges again when they come back to their desks. With that said, what a better use of time than to play some ping pong and loosen up your entire body and hence, getting some real rejuvenating rest?

For you readers out there, what do you do for stress relief at work? What's your facilitator? I would love to hear more ideas.

Ideas, People, and Execution

I am sure by now, most everyone has read one article or another that says, "it's not the idea, it's the people." I like to take one step further and point out that, aside from the ideas and the people, what's even more important is "execution." I am not the first one to say this as this idea has been published by well established entrepreneurs like Ryan P. Allis before. Here's an example.

With that said, this is not to say that I am undermining the importance of good ideas and great people but on a scale of comparison, execution is what I see as the primary factor for why many startups fail which ties in very closely with my last post because execution summarizes exactly what many former fortune 500 executives running their first startup fail in.

Ideas need to be refined to create a sound business model but as Allis pointed out in the above linked article, unless you are a PHD doing research at a top university, chances are, someone else has probably thought of your idea. On the other hand, giving "people" credit for a successful business seems flawed in that although the people is the source of effective execution, at the end of the day, "execution" is the underlying factor on why a business is successful.

I want to illustrate what I mean by "execution": For example, even if you have the greatest product in the world but your deployment staff is poorly trained or communicated to, no customer is ever going to be happy with you. Another example would be, if your employee's morale is low, the outcome of their work will never be optimize even if it's acceptable. Perhaps an even better example would be, if you don't properly foster a healthy environment for employees to step up and take charge of their area of expertise, you are wasting money and producing poor results.

The point to all of this boils down to one thing. When starting a business or reevaluating why your business may not be optimized, pay very close attention to the execution portion of your business and the answers to your questions will become much more clear.

Common Problem of Many Startups

Over the last 10 years, I have heard over 50 entrepreneurs pitch to me about how a niche of their startup is that their management staff consists of former big shots of so and so fortune 500 company. Little do they know that it's a red flag for me when I hear a pitch like that.

This is why:

1. They over reference how things were done at the fortune 500 they were working for (ie. At Microsoft, this was how it was done..." 10 times a day! Get over it... you are not at that company anymore and this startup is nothing like it!

2. They have no idea how a small business should be managed. Their team building skills in startup environments is particularly weak. They also want everyone to do things the "big company" way even when it doesn't make sense to do so.

3. They carry over bad and illogical habits from their fortune 500 experience. ie. being overly political about everything that just doesn't need to be.

4. Their bandwidth for managing multi-facets of the business is usually very low because they are used to the blinders that they have to put on when working at a fortune 500 or otherwise spoiled by having other departments to take care of some of the responsibilities of a manager in a startup. ie. What? I have to worry about chasing after my employee's benefits paperwork? Or what? We need another IT guy for 20 extra hires?

5. Communication is not fostered by them. ie. Let's keep the information to ONLY the people that ABSOLUTELY have to know. Well, news flash buddy, a lot of other people need that information too if you just put yourself in others' shoes to analyze overall information needs and distribution. For example, I once worked with a startup that fired people and didn't announce it hoping that it would just blow over... Imagine that. They apparently didn't understand that this method of terminating employees only leaves others feeling like they don't know when they will be let go of too for whatever unreasonable conspiracy. Former fortune 500 managers also often forget that because the company is so small, even employees from other dept also feel near and dear about why another employee at another dept is fired unlike a large corporation where segregation makes it none of their business. The result is that, when you asked the employees what they thought of the manager who did the firing, 80% of them used the word "shady" to describe the manager. The issue then was that there was no more trust within the organization and morale for the company as a whole became extremely low.

These are just some of the reasons why I am not a big fan of most former fortune 500 executives running their first startup. I say the word "most" obviously because not all of them are the way I describe them to be. However, I bring this up because this has been responsible for too many growth stunnings of startups from what I have seen. Of course, even with all that said, there are also many other counter factors that can make a startup successful even with such management personnel but I will leave that for another post.

Thoughts on Venture Capital & the Current Market

I have been meaning to write something about this topic for a while and finally decided it's time. I think the kicker was definitely from reading this blog entry.

If you scroll down towards the readers' comments after reading the blog entry, you will see an individual commenting on the fact that NWVA is failing because of its investment strategy. I am not dismissing that there's the possibility of that being a partial cause of failure but I am more supportive of Simpson's explanation. Here's why:

The market is saturated and full of failing ideas because:
1. There are too many individuals with great ideas "playing business" when they are blatantly not ready and haven't the slightest idea about what they are getting into.
2. Most of these same individuals described above are extremely outspoken and can easily manipulate investors even though they have no viable execution plan.
3. Simpson is right in that, there are too many "me too" companies. Everyone seems to think "I can do better." Face it, it's not that easy.

This is largely fostered by an influx of venture capitalists as described by Simpson who are just throwing money left and right. When the supply of funding became greater, the natural market reaction was that the minimum quality of what investors demand decreased by a mile. I think most of you would agree with me that some of the business ideas that were funded in the recent years are just absolutely ridiculous.

In my opinion, everything is interrelated. There's always a cause for every effect. In this case, I would say the current business trend caused by many of the factors mentioned above has created a broken down economy. The only reviving chance is if more realistic and experienced entrepreneurs step up to supply us with some breakthrough businesses to stimulate our downward curving economy.

By break through, I mean business ideas that are less trend aligned. I have never really been a big believer of business ideas that are heavily aligned with the latest hype such as a good number of the web 2.0 businesses out there. Sure, they make money and I am definitely not denying the success of trend catchers. However, I truly believe that a great business idea is something that's timeless. Of course, maybe this is most likely derived from the fact that I am more or less a traditional and conservative businessman.