Bob Dorf was on hand, early April, at Stamford Startup Weekend to speak to attendees and offer advice. A general partner at Stamford-based 1to1 Ventures L.P. and lecturer at Columbia Business School, Dorf is co-author of “The Startup Owner”™s Manual” with Steve Blank.
Dorf shares his thoughts on entrepreneurship with the Fairfield County Business Journal.
What struck you the most at Stamford Startup Weekend?
We always knew there was sort of a latent startup community here in Fairfield County, but it was sort of in little pockets here and there.
To see this group of what had to have been 150 entrepreneurs, all together talking and exchanging ideas and business cards ”“ to form really the nucleus, if you will, of a real entrepreneurial ecosystem here in Stamford ”“ was just very exciting and energizing to me and I”™m sure to the people who spent a couple years trying to get it organized and get the space nailed down and get it going.
I thought the Startup Weekend ”¦ was just a great way to launch the incubator and the whole Stamford Innovation Center ”“ to plant a flag in the ground that says, ”˜If you need to jump into the entrepreneurial ecosystem, this is the diving board.”™
The reason so many startups grow up in Silicon Valley is because all the elements of potential success are there ”“ the engineering, the financing, the lawyers who know how to do term sheets, the seasoned entrepreneurs who can mentor young founders, as well as the tech infrastructure support.
To see that all come together in one place in one night was really quite an achievement and I think offers a fabulous boost to somebody thinking about either starting or launching a business, and not having to get on the train and go to New York to do it.
And my god, most of these resources are really here. There were some bank people there and lots of lawyers looking for startups that needed help ”“ all of the elements were really there.
What is the one resource you would add or bolster to Fairfield County”™s scene?
It”™s really access to ”˜small money,”™ value-added investors. In other words, someone who is an experienced entrepreneur who”™s either cashed out or retired and likes helping other entrepreneurs, and is willing to write a $25,000 or $50,000 check to help a business get off the ground, just enough to see if there”™s really some traction and a real opportunity there.
That person is writing a check not for founders”™ salaries or for lawyering or things like that, but for, ”˜How do I bring this business to life as quickly as possible to get customer feedback to the business and evolve the business to get it ready for prime time?”™
There were hints of that ”“ there were two guys from my temple, who coincidentally were there. They”™re both serial entrepreneurs and angel investors and they were sort of wandering around talking to people, not advertising or promoting the fact that they might be able to write a modest check and give real good business advice, but that”™s what they were doing. ”¦
I think probably the biggest weakness in the group was a lack of business seasoning. Sadly as a result of the employment situation, some percentage of those entrepreneurs are there thinking about doing a startup because they don”™t have or can”™t find a good job, which is not typically the right reason to do a startup. You should be doing a startup because something is reaching down your throat and grabbing your heart and saying, ”˜you got to do this.”™ Like 10 years ago, when people were between jobs, they would say, ”˜well I”™m a consultant,”™ which was sort of a euphemism for ”˜I”™m looking for a job.”™ The new euphemism for ”˜I”™m looking for a job”™ is, ”˜Well, I”™m working on a startup”™ ”¦
There”™s a certain sort of passion or devil-may-care or invincibility that an entrepreneur needs to have to get him or her through the tough times, which are always going to be there. And so if you”™re doing a startup either because you have a great idea and your passionate about it and you just want to drop everything and create the next Google or Facebook or whatever, that”™s great; or if you”™re ”˜gee I can”™t find a job in astrophysics so I”™m going to try to invent something ”“ that”™s sort of less great but still sort of a catalyst for doing a startup. But almost every one of these people needs mentoring and coaching and people who”™ve been down this path before, because there”™s no straight line to success. ”¦
What is the age-old, repeating-the-mistakes-of the-past error by entrepreneurs?
I think the age-old one is the presumption of success: ”˜I”™m an entrepreneur. I solve problems. My job is to run through brick walls. No matter what, I am going to make this a successful venture.”™ So they ignore sort of warning signs like, ”˜Gee I thought customers were going to rush to buy this and it”™s a much harder sell than I thought. What do I need to rethink or change or whatever? But the invincibility of entrepreneurs is the age-old problem, which is why often when an entrepreneur is successful and the company really starts to grow and the investors say, ”˜Wow, we may really have something here,”™ typically that entrepreneur is no longer deemed qualified to run the company and they bring in a suit ”“”“ a seasoned, serial CEO, hired-gun type ”“”“ and push out the founder who has made this into a viable business because its time for adult supervision.
That”™s sort of the old one I think ”“ the ”˜I don”™t listen to too many people, I just do my thing and when I hit a problem I”™ll figure it out”™ ”“”“ particularly in ”¦ not listening to customers.
What”™s the new error?
The more contemporary problem, if you will, I think really hit me when I was talking to a young woman ”¦ (who) came up to me and told me how great her product was, and so on and so forth. She made what is really the most pervasive mistake I”™ve seen in the last couple of years and that is spending all the time, energy and money on the product itself. ”¦ The thing that really drove it home for me was (her saying), “I”™ve been working on this for 18 months. I”™ve hired the best developers. I keep making it better and better and better!”™
How many customers have seen it and touched it? ”˜Oh we”™re not ready for that yet.”™ A total focus on the product without recognizing that product is one of a bunch of elements of a successful business. Knowing who your customer segments are and how to pitch to each of those segments, is a vitally important element. Understanding the competitive set and how your product fits in that competitive set and what”™s your unique selling proposition is another critical element. What”™s the channel I”™m going to sell my product through? Is the channel going to take all my profit or is it going to get me enough volume where I can still make money? How am I going to get customers? Am I going to use blimps and billboards on I-95 or am I going to use Google AdWords? Where are my customers going to come from and once they come, how am I going to keep them and grow them, and at what cost to my gross margin?
So the most recurring mistake I really see is, head down on the product and ignoring all the other elements that make a business a business that is successful. ”¦
I don”™t really care how beautiful your user interface is or how great your features and functions are, because the technology has advanced so much that in a matter of a couple of days a couple of bright engineers can glue together a prototype of almost anything other than maybe an antigravity machine or a instant weight-loss pill.
Companies don”™t fail anymore because of the lack of technology ”“ they fail for the lack of customers. And if you don”™t start looking at that the day you are writing your first line of code, you really are doing yourself a horrible disservice that often can result in premature death. ”¦ There”™s nothing more important than getting out of the building and talking to customers to make sure that they buy your guesses as to what the business is going to look like.
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