Category: STARTUP ADVICE

Risk Now or Forever Hold Your Peace

Peter Cauton

risknow

The older we get, the more permanent our decisions become.

In high school, the biggest decision we made was probably what school to take (a lot of people I know didn’t have a choice in this matter as well), or perhaps what course to take.

We could then easily shift courses. A lot of people I know even shifted schools.

We also choose who to hang out with. This can change easily as well.

Then one day, we graduate from college.

Then we have to face the next big decision in our lives – what job to take.

Not quite happy with our first job, perhaps we transfer to another firm. It isn’t as easy as changing courses, but this decision is still flexible enough that for a lot of us, we do this several times in our first few years out in the corporate jungle.

By this time, perhaps our relationships deepen as well. Soon enough, we start getting invitations for weddings. One day, we ourselves get married. We often hear of a lot of stories of people getting “cold feet.” This is natural. This decision is permanent, so we take our time. We get anxious.

Meanwhile, our jobs take some sort of pattern. The sum total of our jobs and our experiences becomes our “career.” This is an over-arching decision that is difficult to undo. If we’ve taken on a “marketing” career, then we would think long and hard before deciding to become a programmer. The longer the career, the more difficult a potential career shift becomes. The more the investment, the more difficult it is to let go.

If at one point we realize the career path we’ve taken isn’t quite what fulfills us, this can lead to many a term-crisis.

Then we start having kids.

You’ve heard how this can change everything.

This changes everything.

Suddenly, you literally aren’t living for yourself any longer. Suddenly you’re thinking – I want to send them to good schools! But where will I get the money for tuition? I want to get them HMO coverage! What will happen if I kick the bucket? O gosh, does this mean I have to talk to that pesky life insurance guy? Where will I get the money for insurance payments? Who picks them up from school?! 

It’s a crazy, never-ending cycle of worry and planning and spending.

It’s also extremely fulfilling and a source of profound joy 🙂

At this point however, it’s extremely difficult to carry any form of risk.

Recently, I’ve been talking to a very accomplished friend of mine who’s just above 40. He’s contemplating the jump to entrepreneurship. Our lunches have gone on for about a year now.

In one of our lunches, I asked him, how much will it take to get you to make the leap? How much are your expenses?

With potential startup founders, the salary question isn’t “how much do you want?” but “what’s the least amount you can live with?”

The answer almost made me jump out of my chair.

I know he’s reading this – yeah dude, I almost fell off my chair – but my vast composure powers prevented me from flinching.

I told him, “No startup can accommodate that.” He nodded in slow approval.

In our subsequent talks, this amount became the sum we have in our minds for him to consider a jump. Financially at least, the distance he has to leap has become a Grand Canyon. Whatever startup he cooks up has to pay this amount.

We both acknowledge, however, that this isn’t even the biggest hurdle.

One lunch I was lamenting to him about this other person who was about to take the leap, but didn’t.

He told me:

“You have to give people our age some slack. We don’t think that way.”

I realized he was right. After 15-20 years of corporate, it’s just hard for people to re-imagine a career outside corporate. Even if the desire was there. 

In one of my earlier posts, I noted how a great number of the people I interviewed over the last nearly 20 years I’ve been in HR said “I want to create my own business,” when asked what their long-term plan was.

This just doesn’t happen often. The older we get, the lesser our ability to risk becomes.

Yes, some people get to invest in startups when they get older. But this isn’t a function of getting older. It’s a function of financial success and generating enough money to consider angel investing.The rule of thumb is that as an angel, you invest only 10% of your disposable income. (translation: by-the-book angel investors don’t really risk) Interestingly, a vast majority of angel investors I’ve encountered are ALSO entrepreneurs. Truthfully, I haven’t met anyone who’s a corporate lifer who’s now into angel investing. A number of older corporate folks leverage on experience and go the consulting route. But this route often lacks the ambition and scale of what a modern startup wants to do.  (translation: long corporate careers do not lead to startups)

My advice?

If you are under 35, have no kids yet, and you possess the entrepreneurial fire in the belly. Don’t wait. That fire has a shelf life.

Leap.

JGL Thursdays Unplugged v1 – So What Happened?

JGL Thursdays Unplugged v1 – So What Happened?

Peter Cauton

photo (1)

Last week, we held our very first Thursdays Unplugged in the STORM office in Ortigas.

I was with John, Gelo, and Ethel. We were supposed to be 5 people but the last participant couldn’t make it at the last minute. In retrospect, it was better suited for 4 people – more on this later.

So what happened? 

I had no idea what was going to happen, so it was a bit awkward to start – it seemed too intimate at first. Then I laid the rules – 15 minutes per person, with an ideal 5-minute pitch, and then everyone can supply ideas and advice.

And just like that, we started.

It was pretty cool. Everyone had a very different idea, with each at different stages of the startup process. One was entirely in the idea stage, one had its initial meeting with a potential client scheduled in a few days, and one idea was already contracting employees. I cannot disclose the ideas thrown in the meeting – but it was a fun discussion.

Again, Fate intervened a bit because one person’s other business was in the same value chain as one of the ideas presented – so there was a lot of very concrete advice rendered.

Of course, the discussions went far beyond 15 minutes per person. I guess this was natural, because the startup ideas represented true passions of these individuals. Also, everyone else was eager to help out and suggest stuff, which was pretty nice. I was reminded a bit of the spirit of JGL’s Open Coffee.

What could be improved? 

Some adjustments have to made for this week’s version though:

1) 5 people in the room would have pushed the meeting to 8pm. Last Thursday, we ended at around 7:00 pm already, and I barely made it to dinner. With some rules, I think this could be managed though. This Thursday, we’ll limit the participants to 3.

2) There needs to be some pre-work done so the conversation during the actual session can go deeper. Just 3 questions:

a) What is your idea or problem? Explain in 2-3 short paragraphs.

b) What help or advice would you need?

c) Is there a website or deck we can view? Kindly attach/link.

3) We need to make sure we do not have coffee and chips. They do not mix.

4) There needs to be a timer on the table for guidance.

5) There needs to be an FB group page for follow-ups/updating/further sharing.

Who’s got next?

JC, Jode, and Jerome (ohmigosh!), see you this Thursday! It’s going to be fun!

I can’t make it on August 7, but we’ll have the next one on August 14. All 3 slots still open. Do email me to reserve!

 

Soft vs. Hard Entrepreneurship and What to Prioritize

Peter Cauton

HARD vs SOFT

You can divide all the elements of entrepreneurship into two distinct categories: hard and soft. Here’s what the HARD column can be populated with:

  • Valuation
  • Product-market fit
  • Lean Startup Methodology
  • A-B Testing
  • Seed, Series A, Series B, Series C….
  • Pivot
  • Runway
  • Dilution
  • MVP
  • Growth Hacking Strategies

Here’s what the SOFT column can be populated with:

  • Passion
  • Founder Dynamics
  • Culture
  • Maturity
  • The entrepreneurial spirit
  • Mentors
  • Perseverance
  • Following the heart
  • Following the dream
  • Motivation
  • Taking a leap of faith

Now, ask ANY successful entrepreneur what the reasons are for her success.

Do you think most responses will fall within the HARD category or the SOFT category?

Yep.

It’s interesting that despite having MOST entrepreneurial educational material out there focusing on the HARD part, it’s the SOFT part which will largely determine your entrepreneurial success.

Here’s another task: ask most ANY startup/early stage investor what factors they closely consider in investing in a startup. Watch those answers fall within the SOFT category.

In fact, I’ve a strong suspicion the first factor isn’t even in my list above – integrity. 

Does that mean the HARD factors are unimportant? Of course not. (I blog about a lot of those here)

It’s the order of priority that’s crucial.

Master the SOFT column first, and then the HARD column becomes that much easier to accomplish.

Inner before outer.

(Hit that subscribe button so you won’t miss a post and get access to insider material!)

Introducing Thursdays Unplugged – And Why I’m Limiting It to 4 People

Peter Cauton

While I like organizing events like Startups Unplugged or Open Coffee, where I really get my kick is when I go on one-on-one coffee-talks.

In the bigger events or in some of the speaking events I’ve done, I may be able to impart knowledge and help out, but obviously, the learning cannot be customized to the individual. Sure, after the event there can be informal networking and getting to know people, but I don’t really get to KNOW people that much.

This is why I like doing one-on-one coffee-talks.

More than just the startup idea, I get to know the entrepreneur’s story. I get to know his motivations. I get to read body language. I don’t just shoot from the hip and comment on just the idea. I can comment and help out on the journey, which I think is far more valuable.  True enough, I’ve had a number of memorable one-on-ones with certain people.

The problem is, over the past few years, doing these random one-on-one meetings has gotten to be quite challenging, given my schedule and where I live (Antipolo).

So here’s my proposed solution.

I know 2 posts ago I set a 10-man meeting next thursday. It’s pretty evident that it won’t be as intimate as I would like it to be.

Hence, I am reducing it to 4 people (so total in the meeting of 5 including me). I’ll also endeavor to this weekly and make it part of my workweek.

photo (2)
Perfect for five!

Here are some of the rules:

RULES FOR THURSDAYS UNPLUGGED

1) Venue and time

The venue will always be at the STORM Offices (Ortigas Center), at 5:30 pm. I would schedule it later to accommodate those coming from work, but I do want to go home in time for dinner. It would end approximately 6:30-645. There’s ample parking beside our building.

2) Unplugged

No powerpoint decks or demos. Let’s keep it simple and just talk.

3) Send me material

Do email me the idea or the problem at least 3 days before the meeting takes place. Be as concrete and concise as possible. If you have a deck or a website, this is where you should send it.

4) Transparency and Non-disclosure

You will be sharing your idea/situation both with me and the three other people in the room. (Honestly, this should be okay with you. Stealth doesn’t work) However, this doesn’t mean you should go around spreading what the other guy just shared with you – so we will agree that whatever was mentioned in the room, stays in the room.

5) 5 and 10

We have an hour. Let’s do approximately 15 minutes per person. In the first 5 minutes, do tell us about your idea or your problem, and also your journey. Then let’s spend the next 10-15 minutes discussing.

6) Reserving a slot

Let’s do this very simply. Just email me at peter@juangreatleap.com to reserve a slot for a specific Thursday. First-come, first served.

7) Yep, it’s free

Nope, there’s no need for any sort payment. I just really want to help out in my own way (it’s not even sure if I will be able to be relevant and helpful to you). That said, if you feel obliged to bring some snacks for a group of 5, no one’s stopping you 🙂 (coffee will be on me, though). Just tell me what you’re bringing so there won’t be any duplication.

First one is on July 24. This is already fully-booked.

Next one will be on July 31. Two slots left.

Not yet sure if I can arrange one on August 7. I’ll confirm here in the blog.

Excited for the 24th! Will tell you how it goes!

 

 

 

The ONE book you need to read this year

The ONE book you need to read this year

Peter Cauton

the alliance

I’m a big fan of Reid Hoffman, Linkedin Founder and Silicon Valley Venture Capitalist.

When he released Startup of You, a few years ago, I gobbled it up and came away quite impressed.

He recently released The Alliance: Managing Talent in the Networked Age. Naturally, I grabbed a copy. As an HR guy who’s also an entrepreneur, the subtitle piqued my attention even more.

I chose to finish it off yesterday, during my Glenda-imposed house arrest when this tree blocked the only road going out AND took out the electric wires. (yes!)

tree

Now, I’ve read a lot of good books over the last few months. I’ve read a few page-turners (Hatching Twitter can only be described as Game of Thrones for Startups), but I don’t think I’ve read a book this year where I’ve had to pause SO MANY TIMES to imagine how some concepts and ideas could be applied to the companies I’m involved in.

If you manage people, in ANY firm, startup or 100-year institution, this is THE BOOK to read.

The book’s main thesis is that the model of “lifetime employment” so many managers still cling and hope for from their key people has now ben rendered irrelevant and obsolete. Think about your best people – don’t a lot of us manage them by trying to keep them (and hoping they stay) FOREVER in our firm?

The book also argues that the typical people processes we employ – like annual performance reviews – have now been rendered obsolete.

Instead, the authors offer an alternative paradigm – forging alliances with employees. The book urges leaders to tell employees – “help make the company more valuable and we’ll make you more valuable,” and doesn’t force the paradigm that the company’s vision should be only vision she breathes.

What the book does is that they go BEYOND the theoretical, and give very concrete ways The Alliance could be implemented. These guys make an awful lot of sense.

I remember all the key people I’ve lost – in my own startups and in the organisations I ran HR in. I do think this sort of paradigm could have helped a lot. It changes the whole way I look at HR – and coming from someone who has been living and breathing HR for quite awhile now, this is pretty substantial.

If you’re a startup owner or an organisational leader who worries a lot about key employee turnover, managing millennials, and creating great company culture, then grab the book now and start implementing its concepts.

 

I Forgot I Was On Vocation!

I Forgot I Was On Vocation!

Peter Cauton

photo

The past few months have been some of the most rewarding for me as an entrepreneur. At the start of 2013, we made a crucial decision to split STORM Consulting, my startup baby, into two, distinct, laser-focused firms: STORM Rewards was going to focus on flexible benefits. I was going to lead the efforts as its CEO. STRATA was going to focus on HR competency frameworks. The big difference here was that I really wanted to source an independent management team to lead Strata – I didn’t want to be involved in the day-to-day operations.

In hindsight, it proved to be a very pivotal decision. (yep, focus is everything)

Armed with a new business model which allowed it to offer Flexible Benefits for FREE to large firms, STORM more than doubled its client base and became the country’s flexible benefits leader in 12 short months. A learning junkie, I got to learn how to do two things: a) running an e-commerce firm (something STORM pivoted into with our new model), and b) truly scaling a firm. I am 3/4 into hiring a complete management team using internal revenue. Last week, I was in Cebu setting up operations to expand there. We’re also in the midst of a major fundraiser to fuel our efforts to expand into the region. There isn’t a shortage of interested parties. We will be in another country in a few months. That’s a statement I never thought I’d utter this soon.

Struggling out of the gate in 2013, Strata started 2014 with a risky decision. We decided to let 26-year old Dino Alcoseba, who started in STORM immediately after his graduation, to run EVERYTHING. It was risky because the usual service providers to the HR market are typically led by people decades older than Dino. With STRATA more consulting-heavy than STORM, and with management consultants usually being a lot more seasoned, the risk was real. However, with Dino’s proven record with us of being ultra-dependable, a leader, extremely coachable, entrepreneurial, and someone with a high degree of integrity, I heavily endorsed his appointment.

Dino started the year off landing no less than three 7-figure projects and one 8-figure project for STRATA (with significant help from COO Orvin Hilomen and HR wonder-boy Mico Subosa). In one quarter. He also has raised his game, showing a strategic side of him I’ve never seen, and most importantly, showing a genuine care and interest in the members of the team he was building.

As an entrepreneur, I should be on cloud-nine. But there was something missing.

Don’t get me wrong, I am extremely happy and feel extremely blessed for all of this. Some part of me WANTS me to be satisfied with this.

However, I felt like Tom Cruise near the end of Jerry Maguire when triumphant Cuba Gooding was surrounded by reporters. I was supposed to feel awesome. It WAS awesome. Still, I felt terribly incomplete.

Screen Shot 2014-07-13 at 11.07.35 PM
It was shocking not to remember after years of mindlessly logging in

“When are you posting again?”

I had been avoiding any talk of Juan Great Leap for months now. It took me 5 tries to remember the right username-password combination to access this WordPress account. I would brush off queries as to when the next blogpost would be, or when the next Open Coffee would be. I would indefinitely postpone requests for a coffee-chat or a Skype session with dozens of people. I would ignore internal moments of inspiration for a new blogpost. I’d ignore all of these, rationalizing it with thoughts like:

“I had done my part”

“It’s now time to concentrate on my own firms.”

“I’ll do it next month.”

“I’m busy with more important things.”

“Why do I need to spend several hours writing a post when it doesn’t make me a centavo?”

But that gnawing feeling would come to haunt me every so often, accentuated by the occasional “when’s JGL coming back?” comment.

That made me think.

What is my purpose for JGL anyway?

Is it a medium to share my thoughts? To network? To better my brand? To help? A medium for a frustrated writer?

I then got around reading this and this, which, reading now, I almost feel comes from a different person.

Juan Great Leap was is the central medium for my vocation.

The reason I felt incomplete as an entrepreneur was precisely because my vocation wasn’t to be just an entrepreneur. It was to help others find their own vocations in this brave, new, fascinating world, where one has a lot more choices than to be a corporate cog.

I felt incomplete because I wasn’t following His plan. The Strata experience exacerbated this incompleteness even more, because seeing Dino finding himself and develop into his own brought such an intense feeling of satisfaction in me.

I think this incompleteness comes to us in many different forms, called by many different names:

“quarter-life crisis”

“mid-life crisis”

“existential angst”

“something is missing”

“why the heck am I not happy?!”

“I feel detached”

I believe God has a plan for all of us. It is a beautiful plan – one where all our talent and faculties are used to the fullest. Where we feel whole.

God tries to give us clues as to what it is. We see glimpses of it in our innermost desires, in our unique gifts and talents. We feel a bit of it when we find ourselves in situations where we can clearly help others with our gifts, where we cease noticing time and find ourselves in the “zone.” It is when we feel not merely happiness, but true, inexplicable joy.

It is when we are doing what God BUILT us to do. So naturally, there is a FELT alignment when we are on the right path, and a FELT misalignment when we are off the path.

Steven Pressfield and Seth Godin call this doing your “art” (as opposed to doing a job). I call it pursuing your vocation.

And I almost let it get away.

reset

Do allow me to start over.

There’s so much I’ve learned in the last 6 months which I absolutely need to share with you. New insights. New paradigms. New strategies.

But let’s start small and simple. Starting small and simple has worked tremendously for me.

First, you can now expect regular updates from hereon. Let me ease into this again.

Second, I want to organize a quick, intimate get-together – largely because I want to meet some people who have recently reached out to me wanting to do a coffee-chat. There are around 5 of them. I’m opening 5 more slots. I just want to meet 10 people in an intimate setting. Criteria: you need to be someone who has a clear startup idea and needs a bit of advice or you need to be a current startup entrepreneur with less than 1 year experience who needs a bit of advice. It also needs to be okay with you to share your idea with the rest of the people invited.

Email me your idea and your background. If things check out, you have the slot. First 5 people to email (and fits the criteria) gets in. Coffee will be on me. I’m thinking of scheduling it next Thursday night, July 24. We can meet at the STORM offices along Julia Vargas.

Let’s do this.

Building a B2B Startup? Here are 5 of the Most Crucial Lessons I’ve Learned

Building a B2B Startup? Here are 5 of the Most Crucial Lessons I’ve Learned

Peter Cauton

Building

I hope my previous post got you more interested in taking a longer look at building a Business-to-Business (B2B) startup.

If you’re interested in plunging into one, here are 5 of the most crucial lessons I’ve garnered in building B2B’s for almost one decade now (Can’t believe it!):

incomplete

1) Doing Lean Startup? You cannot use a traditional “MVP”

If you aren’t familiar with Lean Startup Methodology, then please buy Eric’s book as soon as you finish this post. Essentially, the book says that you have to validate your assumptions about the product and the market systematically before you spend money on building.

Specifically, it suggest building a “minimum viable product.” This is basically a bare-bones version of your eventual product (which won’t cost you much) that you can show to potential clients in order for you to get valuable feedback which you can then use to develop the product further. Typically, this “MVP” would consist of just approximations of the actual product that could show potential clients. Here are 10 examples. 

You CANNOT do an “approximation” with a B2B when you’re selling to a corporation. Companies will simply not pay for anything which isn’t ready. They cannot risk it. (Unless the CEO is your brother or its a smaller company and your product is something they desperately need)

(And no, application developers, you won’t be able to fool them with a wireframe demo – they will ask you to click on everything to see whether they work)

So yes, you do need to spend earlier on product development than you would do on a B2C product.

What you could do to balance this out is to spend more time getting data on the PROBLEM you are trying to solve.

Is it really a problem? What are the specifics? How MUCH is this problem costing companies?  What price point would it get bought? Is it a painkiller or a vitamin? 

Talk to boatloads of potential customers to get problem validation. Not only does this serve as a data-gathering exercise, but its a customer development exercise as well – you are priming all these people in buying from you (once you have a working product).

mutliple

2) Remember, you are Selling to 2-3 different people

This is what we quickly found out when I started selling in my first startup, STORM.

We sold an HR product, so we built a pitch to the HR Head. After getting approval from the HR Head? Turns out we then had to present a cost-benefit analysis and present it to the CFO. Then another presentation to the CEO (with the whole EXECOM).

You will need to incorporate the paradigms of different people in the organization you are pitching to.

Usually, you have to pitch to the functional head of the department which will end up using your product. Then, there has to be a pitch to the one who will disburse the funding, which (if your product isn’t a finance product) is likely to be another person. Sometimes, the USERS of your product will differ from the functional head, so you will have to get their approval as well.

Put yourself in the shoes of each of these people and customize your pitch appropriately.

Some questions they WILL think about when doing the buying decision:

How will this help my department?

Will I look bad/get fired if this fails? (this is an underrated one – everyone is thinking of this!)

Can I trust these guys to deliver?

Will this help the bottom line? Can I just accept that proof as gospel?

Will this make me do even more work?

Can this further my career?

due

3) Be sure you ALWAYS have enough cash on hand for the next 6 months of overhead

I remember when we built STORM, we wanted to pursue a service arrangement wherein we would bill the client every month (instead of a one-time, big-time approach). We figured this was best for cashflow management and put less pressure on sales.

Never did we anticipate that we would get delays of 60-90 days for payment! While we had safeguards in the contract for late payment (stopping the service, steep penalties, etc), we  quickly found out it would be very dangerous for us to make good on these penalties, after all they would endanger our relationship with  the hand which feeds us.

As a new startup, you would seldom have bargaining power in asking clients to pay on time. As a result, cash flow would usually be worse than you expect.

Plan accordingly.

friends

4) Get a natural networker in your founding team

A rather LARGE percentage of the clients you will land in B2B will be as a result of networking. It helps a lot if you would have someone in your founding team who can network well with MANAGERS in the industry, or better yet, ALREADY has a network.

Why?

Its extremely difficult to do a B2B sale organically.

You know, something like sending an email addressed to the “HR Head,” only you need to send it around 10 times to irritate the HR Head enough that he will ask one of his subordinates to talk to you. Then you will be at the mercy of a person who is 2-3 levels below the actual decision maker. Now you have to follow up with this person around 10 times again so he can tell his boss “these guys are ok to talk to.” Then you will go back to trying to get a meeting with the boss. If you do manage to one day get the HR Head to endorse you, you will now have to do the whole shebang with another department – finance.

This looks like I’m kidding/exaggerating, right?

Easiest way to not get yourself in this pickle? Get endorsed by someone with some authority in the office.

The difference is night and day. A great endorsement can get you right to the decision-maker in your first visit.

Get a networker in your founding team. It’s worth the equity.

gold

5) References are gold. Invest in them.

Pitching to a potential client?

The following is the question companies are MOST EAGER to ask you:

Who are your other clients?

Followed by:

Can we call them?

TRANSLATION: We don’t trust you! You have to prove to me I can trust you!

So – be sure you strategically gather and document references.

First and foremost thing to do here? Always keep your promises. If you do what you promise to do, then your current clients would not hesitate in giving a good recommendation.

Document these and spread them as widely as you can through different mediums. Some quick tips:

A) ASK for references. No one would volunteer them. You have to ask for them. Ask ALL your clients for references. If they delay because they say they don’t have time, then volunteer to MAKE one for them that they can then just validate and accept as theirs.

B) Be creative. You can, for example, give a discount if your client agrees to do a reference video (“these guys are so good!”) to be posted on your website.

c) Create a referral to incentivize your current clients to refer other clients. This can even be an incentive for your current service – for example, for every client they refer (and you land), you could give a 5 percent discount to their current monthly service fee.

5b. Bend over backward for your first client

The very first client is EXTREMELY crucial for a B2B firm. This is for obvious reasons – they will serve as your very first reference. In a very real sense, your survival will most probably hinge on how you perform with your first client.

They are naturally very tricky to land – to work with you means they are subjecting themselves to being the guinea pig.

So do bend over backwards for this first client. Mitigate the perceived risk for them. Give a massive discount (I actually recommend giving it for free, in exchange for detailed reference material).

But aside from pricing, give them your ALL –  your ball-busting, never-have-you-worked-this hard, absolute 1000%. Give your first reference something great to talk about.

Six Powerful Reasons Why Your Next Startup Must Be a B2B

Six Powerful Reasons Why Your Next Startup Must Be a B2B

Peter Cauton

To B2B or not to B2B? Ah. This is the question.

For me the answer is clear. With all things being equal, if you are a Philippine-based startup, you should try building a B2B first.

Let me get my obvious bias out of the way first – I am primarily a B2B guy. Most of startups I’ve been involved with – STORM, Strata, Stream Engine – have been B2B’s. (the notable exception is JGL)

Waitaminit! What do mean by B2B again?

You can generally classify as startup as being a B2B (Business to Business), as opposed to a B2C (Business to Consumer). A B2B company sells to other companies (also called enterprise business), while a B2C sells its wares directly to consumers.

I think there is an underlying reason for my own preference as well – I just find it a bit easier to build a B2B.

Here are six huge reasons why.

twotango

1) More than Two Can Tango

For direct consumer businesses, you mostly either have to be NUMBER ONE or NUMBER TWO to be  successful in a certain market segment.

Think about it.

Why has it been so difficult for a third telco to get established? Why has it been forever Mcdo versus Jollibee? Apple vs. Samsung? Coke or Pepsi? Jobstreet vs. Jobsdb? Nike and Adidas? There are countless examples.

In fact, for a HUGE number of  B2C industries, there’s only space for one or two players.

But in B2B?

You can secure a certain segment of the market as long as you can service them well.

This time, think about how many ad agencies there are, or headhunting firms, or IT development firms.

There are a lot, right? And yes, they’re able to co-exist.

B2B might not be sexier (for some at least), but its a hell of a lot safer.

hands

2) Experts Everywhere

I was DEEP in HR Management for ten whole years. I finished an advanced degree in basically HR Management. I know it well.

What’s the great thing about about knowing things well that from an entrepreneur’s lens?

I know a LOT of problems companies face when it comes to HR.

I can probably rattle off 20 different HR-related problems which companies are struggling with.

And of course, problems are where startups are born. That’s literally 20 startup ideas (which I mistakenly tried to pursue at the same a few years back – but that’s another story)

Guess what? Dive in Linkedin and there will be scores of people like me in a variety of different fields (sales, supply chain, finance, customer service, etc…) in a variety of different verticals (medicine, real estate, education, etc…). Heck, if you’re from corporate, over 30, and you’re reading this, chances are YOU are a subject matter expert who is knowledgable about big problems in specific areas.

Some of the best ideas for startups will come from these people. And there are a ton of them.

unlock

3) Funding Is Obtainable

While it may seem that funding headlines are always dominated by B2C’s (quite natural, because on the average, the addressable market for B2C’s would seem larger than B2B’s – and this return potential excites VC’s), you WILL get funding for a great B2B idea if you raise money for it.

Just last year, Kalibrr raised a ton of money. So did Payroll Hero. B2B firms.

I’ve had first-hand experience in raising fundraising last year as well, with both STORM and STRATA getting Series A funding.

You can also check out the portfolio pages of Kickstart and Ideaspace and see more B2B’s.

You got a sound B2B idea? There are a LOT of people who can help out with startup capital.

phil eco

4) Companies Are Flush

Over the course of the last 12 months, we’ve been hearing headlines like:

“The Philippines will be a top 50 economy by 2050!”

or

“Execs bullish on Philippine economy!”

Who’s feeling this sudden abundance?

Go have coffee with your friends who dabble in the stock market. They’re probably smiling. Most likely they have spanking new shoes.

Boatloads of companies are killing it in the stock market.

Businesses are flush. Companies who are flush tend to invest more – and tend to be just a tad more interested in improving things. Or even trying out new stuff, like you know, startups.

What does the first “B” in “B2B” stand for again?

Go where the money is.

Adding this one quickly: I remember when we first started Mobile Academy, we wanted it to be aB2C  – a place where anyone can learn about how to create a mobile app. We did “lean” methodology, developed some quick mobile courses and threw them out into the market, seeing who would bite.

We quickly realized  who the market was. Direct consumers waffled at our prices, with a good number saying they’d much rather learn on their own than pay up.

After a few weeks, some tech firms heard about our courses. Boom. Booked a whole class full, just like that. Then another.

I think experience can sum up this whole post.

bronto

5) Dinosaurs Create Opportunity

You know one thing I’ve seen in my years servicing and selling to corporations?

A number of them do things very, very, very inefficiently.

Some of them hire full-time encoders.

Some of them (actually, a LOT of them) use mammoth, outdated “legacy” systems.

Internet Explorer 5 (!) anyone?

Some of them don’t take advantage of mobile technology, even if there’s a big, obvious advantage in doing so.

A lot of them don’t understand tech and social media.

Opportunities abound.

chicago
(nope, couldn’t find any appropriate picture, so I ended up with the most obvious one – I love 80’s music anyway!)

6) Hard Habit To Break

So how does a B2C company lose a customer? He or she just stops purchasing if and when she feels like it.

If you’re a B2B, it’s MUCH more difficult for a client to drop you. For starters, deals are usually governed by contracts. These typically span 1-2 years.

They also KNOW you, so they’re going to have to tell you to your face that they’re not renewing your service. That’s MUCH more difficult

One other thing? They’re not using their own money to make the purchase!

So you know, unless you completely BOMB and make them look bad, you are MUCH MORE LIKELY to keep a business client.  Companies are creatures of habit. Once they get to get used to being serviced by your firm, you become a hard habit to break.

(Of course, what we missing in this discussion is a very key ingredient – what you are passionate for. But again, all things being equal – if you had one solid B2C idea and one solid B2B idea with roughly the same economic potential? For me, it’s a no-brainer.)

(While this post explains WHY you have consider building a B2B, you can find some crucial suggestions on HOW to build B2B’s in this post.)

How Failing 2,032,198 Times Helps You Succeed

Peter Cauton

fail

We’ve heard it so many times for entrepreneurs – how you have to know how to fail in order to succeed.

I wanted to dissect how exactly this is so.

How exactly does failure help you succeed?

My first instinct in answering this question is to look at my own entrepreneurial journey.

Has failure helped me?

When asked this question, my reply is almost immediate – yes, it has helped me tremendously. It’s not just because of the sheer learning that happens afterwards (though this is big as well, and is the basis for the lean startup movement)

The great thing that failure has given me is the stomach for it.

Having failed so many times before and knowing first-hand what the consequences are, I am mostly unafraid to try things out for the first time. I think this is where I get one of my strengths as an entrepreneur.

I would ace the question:

“when was the last time you’ve done something for the first time?”

Recalling just this year, I could easily name 20 things I’ve done for the first time (entrepreneurially, at least).

But thinking about it, this wasn’t always the case.

I remember a time when I was deathly afraid of failing, when I would rarely step out of my comfort zones.

So how did my paradigm shift come to be?

I remember after my college graduation, I decided to teach for a year. All my college friends went corporate. Naturally, I had the lowest salary in our group. Sure, I told myself it was the noble thing to do and I got to practice my speaking skills, but in truth, this bothered me. Knowing what I earned, I remember my friends would sometimes offer to pay for me when we went out. Inside, this killed me.

Upon transferring to corporate, I got a much larger salary. But then, tragedy struck as my family went through a big financial problem (which would drag on for a long time). Of course, I volunteered to help out and put in my share on the table.

So for a good number of years thereafter, I would work hard, get salary increases, and then see a chunk of it transferred out of my account. I had to find a way to make do with what I had.

In retrospect, these events transformed me.

I knew what swallowing pride was like. I knew what losing money was like. I knew what working very hard and not getting rewarded was like. I knew how to scrimp and live simply to make ends meet. I knew what failure was like.

So when faced with a decision where the risk involved failure? (a potential loss of money, reputation, comfort) As long as I found the reward side worth it, I would find myself taking the leap.

worstmistake

There was one particular instance in the founding of STORM where I think this all came to a head.

Back in 2005, Pao and I invested 30K of our money incorporating STORM. Ignorantly, we went (almost) all-in with one strategy: we spent most of the money arranging Flexible Benefits learning seminar. We thought we could pull in a few clients from the event.

The seminar was quite packed, but was a failure. It was a failure because when we met with the customers, we found they were expecting a fully working online platform.

EricRies-TheLeanStartup
Where were you in 2005 Eric Ries?!

We estimated it would take us a full year to technically develop the necessary system with our resources. The problem was, we only had a month’s worth of salary, since you know, we spent it buying food and wine for our guests in the learning seminar.

That would have been it. The decision WAS the wrong one and we dealt with failure and its consequences.

I never really considered folding right then and there, which, in retrospect, I now find interesting. (we had ONE MONTH runway left and had NOTHING)

Instead, Pao and I had that fateful meeting in that small cafe in Renaissance and did a pivot. We designed a new product in that meeting (an online survey tool, predating all the online simians), which Pao (incredibly) developed in a month. That became the basis of a very profitable business line which we rode until our Flexible Benefits services were profitable.

It wasn’t exactly smooth sailing after. We failed so many times after. I remember that time when I was praying to God and I felt so sure we would land that big account we were putting most of our eggs in. We didn’t. I remember putting up startups which failed and lost money. Or when people I trusted would lie to my face and betray me.

I know failure. I’m still afraid of it, but since I know I can take it, I don’t mind taking risks, or doing something for the first time.

thomased

My advice in all of this: don’t spend your days avoiding failure. There are tremendous advantages of knowing failure directly.

These advantages are quite evident in the stories of practically all successful entrepreneurs I know. This is why it’s very easy for entrepreneurs to share “war stories.”

In our time now, we see winners lauded like never before (and failure more scrutinized than ever before) We see comfort and pleasure being considered as THE primary objectives for a lot of people.

I think this is dangerous, because it leads to a life when the easy path is always chosen. This is NOT the path to any kind of success. We have to get used to taking leaps.

Sort of like this guy.

(Want to hear from like-minded people sharing war stories and ideas? Why don’t you check out JGL’s next Open Coffee session? You can register here!)

STOP CHRISTMAS SHOPPING! (and other different ideas to help Typhoon Yolanda victims)

STOP CHRISTMAS SHOPPING! (and other different ideas to help Typhoon Yolanda victims)

Peter Cauton

yolandapic

Coming from a weekend retreat, I only recently saw footage of the utter devastation wrought by Yolanda. For a good hour, my wife Pauline and I were just silently watching, with a hand on our mouths. I’ve never seen this kind of footage from Ondoy, Habagat, or even the recent 7.2 Bohol earthquake.

It was heartbreaking.

I have some friends with families in the regions affected who still cannot call to confirm whether or not their loved ones are alive or not.

It was also particularly shocking to see our countrymen resort to looting. I think this is the very first time I’ve heard of this happening, even if we seem to be hit by a disaster every quarter. This is one proof for me why Yolanda is unprecedented.

(this morning’s Inquirer headline confirmed this: The Worst Disaster To Hit PH)

I don’t think we’ve ever been hit this way. Not like this.

So you know what?

Let’s respond with something unprecedented. 

Let’s respond radically. Let’s give till it hurts. (because a massive amount of people are hurting at an unimaginable, exponentially higher rate)

Here are some ideas:

stop

STOP CHRISTMAS SHOPPING

Instead, give them cards that tell them you’ve donated in their name. Better yet, give those “I donated ______ to Typhoon Yolanda in your name” cards NOW as an early Christmas gift. Then, very importantly, encourage them to do the same.

The gifts you DO get during Christmas? Donate them. Better yet, tell your family and friends now NOT to give you a gift and donate the proceeds instead.

Perhaps we can all spend Christmas in a humbler, more austere way. (you know, like Jesus did)

tell your boss

TELL YOUR BOSSES YOU WANT TO DO MORE

Is your company doing enough to help out? If not, stop being a silent mouse and tell your boss. He should listen earnestly and at least hear you out. If not, then this is your big sign that YOU SHOULD RESIGN. You can suggest ideas like calling work of for a day to volunteer, or asking employees to donate a day’s wage.

strengths

GIVE ACCORDING TO YOUR STRENGTHS

Think like an entrepreneur and play according to your strengths. If you have a lot of money, then by all means, give until it hurts. But one can give so much more than just cash. Are you a gifted writer? Then write and stoke the hearts of hundreds to give even more. Can you cook well? Then cook simple food with flair (say, fancier-than-usual lugaw) and organize a charity dinner at P2000 a plate at your house. Do you have a great social media network? Then help your friends the writer and the cook. You can be creative with your giving.

clothes

DO A COMPREHENSIVE HOUSEHOLD AUDIT

I’ve never seen an efficient house which optimally everything it contains. Go around your house and do a quick audit. All the clothes you’re not using (and yes, when you do lose those 20 pounds, just reward yourself and buy new clothes), all the kitchenware you’re not using, all the toys who are Toy-Story-Dreaming to be played with – don’t give yourself time to think: just pack them in a box and donate them.

(photo from www.philstar.com)
(photo from http://www.philstar.com)

THINK LONG TERM – DO NOT FORGET ABOUT THE CORRUPTION

There is one sick set of people who actually might find this carnage good news – the ones who would want us distracted from the recent whisteblowing going on in the government, especially concerning the recent Napoles hearing. This has EVERYTHING to do with our disasters.

Time and time and time and time again, we something like “the disaster could have been minimized if we had better infrastructure.” Unfortunately, as long as Rolexes and Porsche’s are being bought instead of bridges and buildings, we cannot hope to maximize our level of preparedness. Do not forget. Exhaust all means necessary to prevent corrupt people from taking office. Exercise your right to vote.

PRAY UNCEASINGLYpray

If you typically pray mostly for your own problems, then it’s a very good time to start praying for others. Pray for those who passed. Pray for those who survived them. Pray for those who have no one to pray for them. Pray often. Pray like you’ve never prayed before.

Remember, this time, RESPOND UNPRECEDENTEDLY.

(Be a blessing! If you found this post and the ideas it contains to be helpful and you think they will be helpful to others as well, then SHARE unprecedentedly!)