Frugality – The Cornerstone to Good Start Up

I recently read Bruce Piasecki’s book Doing More With Less.   Much of what he said, I agree with – especially for lean start ups.

i have often seen startups that have too much money.  This can create a waste.  The more money, the less the efficiency it seems.  In the case where speed is critical, then sometimes this is required.

“Too much excess (dampens) creativity”.  Scarce resources encourage creativity.  And creativity is the stuff of great companies.

Doing More with Less draws heavily on Ben Franklin’s writing and teaching.  (It is ironic that Ben Franklin who is known for frugality is on the $100 bill).  I do not particularly like the way we put some people on a pedestal and others are all bad.  Personally, I believe we are all some good and some bad and we can simply work on ourselves to become more good.

Frugal is not cheap.  It is getting value for what is spent (be it money, time, attention, etc).   Doing more with less talks about doing more with less money, less time, less carbon and less of everything.

I liked that the book was not only about making more money but it did speak of the social good.  And much of frugality (less consumerism) does help the world.

Frugality is often tied to work ethic(another key success factor in start ups).  Perhaps this is because work ethic is tied to time use and I am a big believer in proper Time Management (I even wrote a book on it)

An example of a great frugal startup that Canrock invested in is American Health Journal.  This is a website with a number of interviews with doctors on everything from blood disorders like sepsis, what is elastography to what are the dangers of obesity.  The videos were originally aired on PBS (so the production quality is way higher than most internet video).  This longer segments were edited down (internet users prefer 4 minute segment – not 30).  This is a good example of frugal re-use.  Karma411 did the website – thus using existing resources.  And we used SEO Pledge (again – in house) to help get those videos found in Google.

Think frugal for good start up.

Jim Estill

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Its all about Leadership

One of the screens we put our investees through are the “are you the right people” screen.  Great ideas without good people simply do not thrive in our experience.  The challenge is to screen for this.

We are looking for CEOs who are:

1 – Coachable and open to input.

2 – Constant learners.  Willing to learn and grow.

3 – Scalable.  Through the early start up stage, things change quickly and the type of leadership needed also changes.  It is tough to move through the steps.

I read a book by Ken Blanchard and Mark Miller called “Great Leaders Grow – Becoming a Leader for Life.”

Great Leaders Grow is written “storybook style” – not my favorite style but it does get the point across.  And I like that it is short since this means more people are likely to read it.   Someone once said that great leaders are great readers which I fear is lost in the age of Twitter etc.

Quotes from the book:

“Anytime you influence the thinking, beliefs or development of another person, you’re engaging in leadership”

“Great leaders don’t think less of themselves; they just think of  themselves less” (this was in a chapter called learning to serve)  Later in the book ” Trying to help you –  helps me.”

” My capacity to learn determines my capacity to lead. If I stop learning, I stopped  leading.”

” Many leaders fail to gain knowledge because they have too much to do –  they’re going too fast and trying to accomplish too much.”  (this is partly why I am such a Time management nut.   I always advocate spending time on the important and not just the urgent.)

” If you get too busy with your job to grow, your influence in your leadership will stagnate and ultimately evaporate.”

” Wisdom is the application of knowledge, discernment, insight, experience, and judgment to make good decisions when the answer may not be obvious.”

The book uses an acronym space–GROW:

Gain knowledge.

Reach out to others.

Open your world.

Walked toward wisdom.

I agree with the thesis of the book which is captured in the title – Great Leaders Grow.

We are pleased that one of our investments, LoadnVote has launched (similar to HonestlyNow but more contest and younger demographic)

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Ownership Thinking

I read a great book – Ownership Thinking – How to End Entitlement and Create a Culture of Accountability, Purpose and Profit by Brad Hams.  It got me thinking about the differences between successful businesses and those that struggle.  It also tied in well to my thoughts on success culture.

The book was dedicated to Ayn Rand (of Atlas Shrugged fame).  Atlas Shrugged is a must read for any entrepreneur.  Dedicating it to Rand does indicate the leanings of the author.

Ownership Thinking started with Hams personal story which hooked me even before getting into the book.   Hams is a constant learner like me.

One comment he makes is “share the insomnia” which I thought was good.  Basically, get others in the company to care as much as you do.

Summarizing some of the key points:

Great companies have the right:

Incentives (that become self funding)

Education (train people well)

Measures (measure what counts)

People (in the end, success is all about the people)

 

Great Companies:

Care

Have Fun

Have High expectations

There are good chapters with practical ideas and things to implement like Rapid Improvement Plans (RIPs he calls them) and Huddles.

The job of any entrepreneur is to choose and create the right culture.  As a company grows I always say “coach on culture but let your people make decisions”.

 

Jim Estill

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Long Island as the next Silicon Valley?

It is possible says The Long Island Index, a project of the Rauch Foundation, which has released the first Long Island Innovation Index at Farmingdale State College by Collaborative Economics, Inc. On Wednesday January 18, 2012 key players came together in panel discussion to expound upon this possibility.

“Long Island has all the ingredients necessary for building technology companies; we can point to clear successes in the last ten years,” said Mark Fasciano, Managing Director, Canrock Ventures, LLC and one of the panelists at the launch. “But to promote successful technology commercialization at a bigger scale – a scale that would represent meaningful growth to an economy of 2.8M people – we need sustained cooperation across leaders in research, capital, and entrepreneurship. I have seen this start to happen.”

Don’t believe it yet?

The facts:

  • Long Island has world-class assets: research centers such as Cold Spring Harbor Laboratory, Brookhaven National Laboratory, top-notch universities churning out top talent, and research and development capacity
  • Federal investment is increasing
  • Small Business research grants are increasing
  • Patents are increasing
  • Entrepreneurial Organizations such as Canrock Ventures are growing and creating more jobs
  • Long Island’s Entrepreneur Space, a 12,500-sq. ft. city-sponsored food-manufacturing and business incubator in Long Island City
  • The launch of Long Island’s new Build a Better Burb website

What needs to happen:

  • Collaboration of Long Island research centers, entrepreneurs and government leaders on efforts like building affordable housing so top talent stays, education of youth for next-generation jobs
  • The public will to support and increase awareness of this momentum in such plans as the transformation of the Hicksville Long Island Rail Road station into Thought Box link to this in old bog, a high-tech startup hub, complete with residential, commercial and industrial components

An example to look to: San Diego. Keynote speaker Mary Walshok relayed the successful story of the city transformation:

“What the San Diego region’s experience suggests is that regions can successfully transform their economies when they develop a consensus about where they want to go and what assets they have to leverage and what gaps they need to fill to get there,” said Ms. Walshok. “Collaborative strategies and co-investment are then possible. This report suggests Long Island is clearly poised for transformation.”

The Future:
If everyone plays well together and continues to seek a common goal using resources wisely, there seems no reason for Long Island not to make this transformation.

“This report actually shows that there has been serious movement toward creating a new innovation economy on Long Island,” said Nancy Rauch Douzinas, president of the Rauch Foundation and publisher of the Long Island Index. “We must now work together across sectors to make the smart choices that will build the public will to support this progress.”

Stay tuned.

Information Source/Related Article

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Long Term Thinking

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Canrock is a VC fund so it might seem odd that I would post  something that knocks venture capitalists  but here goes.

Most venture capitalists think too short-term.   Great companies are not built overnight.   They are not built in a year and in most cases they’re not even built in a decade. It can take decades to build a great company. (One principle that I ascribe to in my time management teachings is people tend to overestimate what they can accomplish in a day or a week and underestimate what they can accomplish in a year or a decade.  But  I digress)

It would be presumptuous to call the company that I founded (EMJ) a great company but  In my heart I certainly felt that it was.   It took us 25 years to build a $350,000,000  company.  It  took more than two decades.

Everyone likes instant gratification. Venture capitalists, perhaps more than some, because many venture funds have fixed lifespans (Canrock  included).   Their investors expect to get their money out in a very finite time.   I believe this thinking can  cause companies to not achieve the greatness they deserve in some cases.

One thing I like about Canrock  is most of the capital is mine and my partners. To some extent this allows us to think longer term than some other venture funds.

For companies to grow long-term they need:

1 –  To think long-term.

2 – To be profitable and cash flow positive.

3 –  To be able to manage any investors’ patience.

I encourage all venture capitalists and entrepreneurs to consider thinking more long term.

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