What I Learned About Entrepreneurship by Playing Ms. Pacman

The title of my next book (ok, well the first book is very unfinished and will probably remain that way for a while) is tentatively titled “What I Learned About Entrepreneurship by Playing Ms. Pacman.”

Why this title? Well, I love entrepreneurship and I love playing Ms. Pacman. I even have one in my home and I’m a fairly decent player (I get to play a lot and have been playing a long time.) I got to thinking through all the playing that there are some solid entrepreneurship lessons that come through playing this amazing classic game:

  • Starting from zero
  • Things always speed up
  • Fast pivots are key to success
  • Using tunnels to get more done
  • Timing big dots to your advantage 
  • The types of ghosts you’ll encounter
  • The importance of patience
  • Leveraging random fruit

I have an outline and I hope the book will be both entertaining and educational. Now on to the hardcore writing.

I’ll be sharing more of the book content here in the coming weeks (months) and look forward to sharing the finished product with you.

Three Keys to Winning Pitch Competitions

I’ve listened to hundreds of idea pitches. It’s always a lot of fun and it’s great to hear new ideas. I’ve witnessed some of these ideas progress into full-blown startups and some even into very successful businesses.

But I’ve also seen many bad pitches. Pitches that not only have poor quality of the verbal presentation but also have poor content, poor design and poor narrative structure.

So what distinguishes a good pitch from a bad pitch? What advice can entrepreneurs follow in building a great pitch?

By the way, here I’m talking mainly about the short stack variety (there are many great resources regarding the full-blow investor pitch). Idea pitches are usually quick (one to five minutes), often without slides, and usually with a few questions from judges.

Here are my three keys to winning idea pitch competitions:

1. Pitch elements. There are at least six elements to most pitches:

  • the Problem (or unmet need)
  • the Market (including size)
  • the Customer (target)
  • the Innovation (uniqueness)
  • the Solution (specific details)
  • the Value (including monetization strategies).

Start by determining which of these elements you need to include in your pitch and start developing a narrative for them.

2. Pitch design. Next is figuring out the design of the pitch. This might be informed by the rules of the competition and the judging criteria. Pay attention to that as a starting point and then start building your pitch with the following approaches:

  • Element sequence. What is the story you are trying to tell? Does it start with the problem and then proceed to the solution or is the innovation so unique that you will want to lead with that as a strength?
  • Element emphasis: For each pitch element, first determine the length for each and the depth of discussion. This is where you are highlighting your strengths that the judges will remember. You have to decide how long you talk about each element and the depth of detail you go into for each. Finally, you also need to consider if you need to loop back into any elements during your pitch to deliver more clarity. I call these “clarity loops”. For example, you may start by briefly talking about the problem so you can quickly proceed to the great innovation, but then you may need to loop back to the problem in order to provide a more concrete example.
  • Design for great questions. Most competitions allow the judges to ask questions. Design your pitch so you get great questions that help you expand on your narrative so you can emphasize your strengths. Don’t make the judges ask “dumb” questions that you should have answered by having a great pitch design.

3. Pitch visualization. This is tougher (especially with verbal-only pitches) but is key to holding the attention of the audience and helping you to deliver a great pitch. With visualization, you are designing your pitch so that the audience can “see” where you are going. You could start with the big picture problem and then progressively move into more and more detail through the pitch. Or you could start with the detail of the specific solution and then expand into a broader talk of the customer and market opportunity. Maybe you start big with a problem statement, go small with details on your innovation/solution and then end with a big emphasis (“this will change the world for a billion people!”). Developing your craft of storytelling is certainly a key to developing a great pitch.

Every pitch competition is different but the above will give you a solid framework for developing a great pitch and aiming to not only win pitch competitions but to ultimately get you broader interest in your idea and what you need to move it forward.

Finding Customer Zero

“I was Patient Zero. The first person to have their reputation completely destroyed worldwide via the Internet.” – Monica Lewinsky

The prevailing approach to starting something today is that you first find a customer and then figure out their problem. Only then do you develop and test a solution with them. It’s a great approach.

This customer discovery process hopefully leads to a much better result for both the customer and the entrepreneur. The early customers that you cultivate, nurture and grow are the ones that become an extension of your team and should best represent your future customers.

Much like an epidemiologist seeks to find the initial patient in a disease breakout, an entrepreneur needs to find their first customer. Of course, along the way the trail may go cold, there may be dead ends, there may be false positives. But there’s nothing more important for the entrepreneur to do than to identify exactly who they are solving a problem for and then go about working to craft the “right” solution with them. They are your “Customer Zero”.

So how do you find your “Customer Zero?”  There are many ways, including:

  • Observation (people you see)
  • Relationships (people you know)
  • Networks (people you can find)

(Of course by “people”, I also mean “companies” if you are a B2B venture.)

I challenge every new entrepreneur I meet to identify their first customer. Research them, understand them, spend time with them. Find your “Customer Zero” first, then go figure out a cure.

 

Starting at Zero

The correct handling of equity allocation for founding teams is one of the more frequent issues that I hear from entrepreneurs. Determining what’s right, what’s fair, what’s bulletproof – all very difficult questions to answer. And unfortunately, there are no “right answers”. Every situation is different, every team dynamic is different, and every individual contribution is different.

Fortunately there are some great resources that are helping entrepreneurs make sense of this and to help them put a framework in place. A few Google searches will help point anyone in the right direction. Books such as Slicing Pie, online calculators, and articles from Lean Startup guru Eric Reis all provide some great guidance on this topic.

But none of them (at least in my initial observation) really set the stage for the way an entrepreneur needs to think about this. In most cases, entrepreneurs believe they are starting with a company and go about trying to figure out how to allocate 100% of the pieces of the company on an equitable basis.

My advice lately has been different. Instead of starting at 100% and trying to figure out an allocation, I’m asking entrepreneurs to “start at zero”. Everyone, including the founder(s), are then receiving a piece of the company based on their relevant contributions. How equity is “earned” specifically is up to the team (using some of the  aforementioned resources as guides), but with the psychology of “starting at zero” there could be fewer cases of mis-allocated equity and fewer battles among founding teams.

With this approach, everyone has to justify their contribution (whether its cash, sweat equity or other resources), and the entire team gets to agree on how equity allocation plays out over the long-term, not just based on the first few months of the venture.

Creating an entrepreneurial ecosystem

Much has been written about how to create and sustain an entrepreneurial ecosystem. It’s interesting to see the ways that local governments get involved in this process. The City of Philadelphia has one method that is helping – through its StartupPHL program. The “Fund Your Ideas” part of this program provides up to $500,000 over a 3-year period to groups, companies or individuals who are helping to boost Philadelphia’s entrepreneurial potential.

I was the recipient of a recent award in this category with a program to create a regional university-based business plan competition. We’re looking forward to providing a great platform for university students across the Philly region to showcase locally (and to the world!) what they are developing.

Along the way, we’ll be adding to another piece of the entrepreneurial ecosystem pie.

Minimum Viable Failure

Failure, failure, failure. It’s on every startup’s agenda today. Failure is popular. Even Esquire magazine recently ran an extensive feature on startup failures and the new culture of failure.

Unfortunately, entrepreneurs are getting advice from all corners – fail fast, fail slow, don’t fail, don’t fear failure, failure is good, failure is bad, failure is a badge of honor, just fail and get out of my face.

The advice to entrepreneurs is conflicting, confusing and probably pretty harmful. Like anything, failure isn’t one-size-fits-all. It gets down to the definition – what is failure and what are the degrees of failure?  Is it failure because your startup didn’t get to IPO or get acquired? Is it failure because you didn’t become the next Facebook? Is it failure because you didn’t get past your A-round and you were ousted yet the company moved on successfully without you?

I think it’s important to read between the lines of the failure stories and the advice. Nobody wants to fail, especially the deeper and longer they get into their startup journey. Nobody wants to spend other people’s money (OPM) and have to face them with the realities of what happened to it. Yet I think individuals have different thresholds of what is acceptable failure to them. This even extends into how individuals decide to move forward in the face of big (or even small) failure points in their entrepreneurial journey.

I recently listened to Philadelphia-area investor Howard Lubert give a talk at our faculty entrepreneurship bootcamp about investment. He had a great slide that basically said that by the time you take investment money you better be done pivoting and you better have a plan. No more minimum viable product (MVP) and lean at that point. The failure stakes just went way up. To an astute investor like Howard, failure is something done on your own dime.

One of the most satisfying outcomes that I have when teaching the “Launch It” course at the Charles D. Close School of Entrepreneurship is when about mid-way through the term (sometimes earlier) students learn that their idea probably isn’t going to succeed. At least not in its current form. Often this happens before they even get to their MVP. They quickly learn they need to pivot on their problem and customer hypotheses before even getting to the possible solution. They feel their original idea has failed and sometimes struggle with what to do next. Some are ok with this but others are devastated.

So I’m starting to ask this question to our students and to the early stage startups that incubating in the Baiada Institute for Entrepreneurship  – “What is the minimum amount of failure that you can afford to have and what will you do when you hit that point?”  If you have a personal bankroll then your failure threshold may be fairly high.  If you’re leveraging OPM then it probably needs to be very low. If you fell in love with your idea before validating product-market fit then you may have a high threshold and will want to push through despite a number of failures along the way. All of this comes with fundamental decision making – deciding what to do in the face of a major failure point.

I’m calling this “Minimum Viable Failure” (MVF).

Just as with a MVP, you want to spend the least amount of time and money possible to get to major failure points. Use Lean Startup methods to determine where your biggest risks reside and have an idea of what will be your Minimum Viable Failure. Asking yourself as early as possible about how much failure you can afford will go a long way to helping you make good decisions down the line. Never set out to fail. But knowing how much and what type of failure you can afford will help you better deal with the challenges and unexpected outcomes that nearly every startups faces in their journey.

Stop Apologizing!

Proud to be part of Todd Cohen’s new book, “Everyone’s In Sales, Stop Apologizing“.  I was given the opportunity to write the foreward for this very practical book. Here’s a snippet:  “We don’t always call entrepreneurs sales people and entrepreneurs don’t always think of themselves as sales people because of that. Yet as an entrepreneur, I am always selling. I am selling in order to build a team. I am selling to get investment. I am selling to develop press relations. And of course I am selling in order to get my first customers.”

Check it out!

Startup Strategies and the Casino Floor

I’m embarking on teaching a new course this fall called “Ready, Set, Fail”.  It’s a course about entrepreneurial failure, but what it’s really about is how to learn from failure and how to use risk mitigation strategies to reduce the likelihood of startup failure.
 
While doing some research for the course, I came across Diana Kander’s book “All In Startup – Launching a New Idea When Everything Is on the Line“.  It’s a unique entrepreneurship book in that it’s written as a fictional narrative.  The setting is Las Vegas, the action is a poker tournament, and the main characters are entrepreneurs. Owen’s startup is failing, and successful serial entrepreneur Samantha helps him by educating him on a variety of entrepreneurship lessons straight out of Lean Startup methodologies. There’s even a little bit of sexual tension and an angry wife. There are many analogies along the way that relate gambling and entrepreneurial risk. Good stuff!
 
All of this got me thinking about how gambling and entrepreneurship can be kindred spirits at times. They both involve investment, time, and of course, heavy risk.
  
Too often as entrepreneurs we embark on an entrepreneurial journey without clear goals in mind. How much of our own (or other people’s) money are we willing to invest? How much time are we going to commit? What is our risk mitigation strategy? Are we going all-in or are we going to hedge against the all-too-many risks facing us? How do we know when to stop because we’re out of time and money or know when we’ve been successful enough to stop?
  
These are probably the same questions that a gambler should ask themselves before hitting the casino floor. Maybe by answering these questions we entrepreneurs (and gamblers) can develop a better startup strategy – one that is goal oriented, one that defines the parameters of the commitment, and one that has at least some semblance of strategizing around the high risk stakes.
  
Maybe none of this will eliminate failure but maybe we can make the startup game more fun and give ourselves more time to find a way to win. Are you all in?