The Entrepreneur's Manual by Richard White

(in progress - organization later)

Wealthy Founder Problem: Being wealthy is a significant handicap in a start-up situation. Almost all of our largest and best-run companies were begun by people who couldn't afford failure. Since they coudln't afford it htey didn't tolerate it -- and therefore succeeded. The hungrier you are, the less you will allow half-hearted attempts.

Milestones of a Start-Up:

1. Discovery of a viable market segment
2. Formation and development of an outstanding and well oiled founders team
3. Funding
4. Proper market penetration
5. Growth stages to industry leadershiop
6. Freeing of the founders so they may pursue their required life styles

Management By...

Management by objectives (MBO) means that executives set the company's objectives in clear view of every employee, so company goals come before individual's goals. In other words, it's the vision thing. Maxims:

• Surround yourself with highest caliber people.
• Enjoy the task of delegrating authority.
• Insist on planning for both yourself and your subordinates. Be jealous of your time and budget it skilfully.
• Have the courage to make decisions. Also have the courage to reverse them.
• Know your responsibilites in-depth. Assume the corresponding authorities.

Management by exceptions (MBE) means that one sets up standard processes to handle routine cases efficiently, with management time being spent only on exception cases. That management work is then naturally incorporated into an update of the standard processes through process improvement. MBE also includes a process for flagging important "exception" cases, such as too high a return rate or too many late shipments or too high an employee turnover. Maxims:

• Skill at recognizing problems is just as important as your ability to solve the problems once they surface. Implement control systems which "flag" problem areas before they affect effects.
• For every effect, there is a cause. Cure causes and the effects will be cured and remain cured.

Management by motivation (MBM) allows employees to make as much in rewards as they do in pay, but also includes many instant-by-instant intangibles like even-handed praise and constructive criticisms. Maxims:

• Nothing breeds success like success. Recognize successes (small, medium, and large) and compliment those who are responsible for them, and illuminate them for all team members to see and imitate.
• Let your people know you -- what you stand for -- and what you stand against. Have a short fuse for dishonestites, failure syndromes, insincerities.
• People who do things make mistakes. The more a person attempts, the greater number of mistakes you should expect.
• The best managers are outstanding salesmen.
• Success is comprised of both drive and ability. The function is multiplicative.

(some taken from Steve Colwell)

Foundations of Building a Company

Axiom One: In a free enterprise economy, there are always more dollars searching for viable and developed ideas than there are ideas searching for dollars.

Axiom Two: Your company must be the image of what your industry needs...the industry will not conform and be the image of what your company needs.

Oftentimes competition can't handle new upstarts. The old bromide, "That company really hasn't been in business thirty years...it has been in business one year thirty times."

Effective Output Efficiences: What percentage of output would you guess that most companies realize if everyone gave his fullest to his company?

Self-Discipline: The hurdles you must clear are unforgiving to the disorganzied person. Before you start each day, lay out the day's priorities and force yourself to stay on course.

Zest for life: Don't disguise your zest for living. Enjoy yourself openly.

Growth industry: Address a growth industry and your chance of getting VC increases by factor of 10.

Experience: Do homework on the industry you want to attack, but you needn't have all the experience most experts say you need. Indeed, sometimes fresh eyes and lack of experience in the industry is the helpful thing.

Lockerroom Lawyers: They say everything is illegal. If something seems logical to you, if it appears ethical, and if your actions will benefit all parties, you are probably safely within the law.

Establish Personal Mini-Incomes: Establish side personal streams of income to supplement your main job.

Axiom Three: Your sales price is totally a function of your product's value as seen by your customers. In no way is your sales price a function of your costs to produce your product. Fortune magazine launched at the height of the depression and the founders were extremely depressed about what price they could charge. They debated whether they should charge 15 cents or 20 cents. There was a printing error in the first issue, and the price listed on the cover was $1! Sales were greater than expected since the logic was, "any magazine that seels for a dollar in these hard times must be really valuable."

Develop Your Personal Requirements: Since your start-up is nothing more than a vehicle which will allow you to meet your life's requirements, your company must be in complete harmony with your personal life style needs.

Axiom Four: Your company's objectives must be in harmony with your inner self.

Select a Growth or Glamour Industry

Axiom Five: If the financial communities feel that an industry is a growth industry, they will invest in it heavily enough in years to come to make it a growth industry.

Axiom Six: If the financial communities feel that an industry will plateau and become stagnant, they will withhold essential funds and stunt that industry's growth's so that it will indeed plateau and become stagnant.

Market Gap Analysis

The process of determining which areas in the market have demand far exceeding supply. The challenge in this process is never finding gaps -- there are many of these -- but deciding which one to pursue. Segment your target market and then segment again. Focus, magnify, refocus, remagnify, refocus again, remagnify again, until the large growth industry is divided into handleable portions.

List the problems that exist in each of these segmented markets. Decide which of these meet your personal / business objectives.

Start testing the gaps -- figure out if there's really demand. Remember, 50-70% of your gaps may be mirages, 10-25% will probably be only targets-of-opportunity (not long term growth), and the balance, long-term viable gaps.

When asking people questions to figure out market gaps, use open ended / broad questions.

Do market research by doing trade show pre-sales (set up a booth and try to engage prospects based on sales literature alone) or "seminar jamming" (go in a group to a seminar and ask all the questions about whatever you want to talk about, de-rail it in favor of your desired sub-topic).

Develop Your Founders' Team

50-60% of your probability of success depends on the caliber of your management team.

Axiom Eight: First rate men hire first rate men, second rate men hire third rate men, these third rate men will then employo the builk of your company's employees who tend to be fourth rate people.

Axiom Nine: You need to attract talents, disciplines, and personalities which complement...not duplicate...each other.

Axiom Ten: Regardless of how large, how old, or how established your company becomes, there is room for only one management team. There should never be factions.

Theorem Two: It is essential that all of your managers have mutual respect for each other...and it helps a lot if they also like each other.

Some idiot at sometime must have said that you cannot receive both rfriensdhip and resepect at the same time from the same person. Respect and friendship aren't disharmonious. Familiarity breeds contempt is a false bromide. "You may either be respected or you may be liked but never both" is bullshit.

Tip: make co-founders sign various short agreements. Instead of one long contract, break it into several bite-size / easily understanable contracts (non-disclosure, expenses, non-compete, etc).

"Doves, sparrows, and other low flying birds flock together and can be caught in bunches. However eagles soar alone and must be gathered one at a time." - Ross Perot, on hiring the best

Interviewing candidates: Meet for bfast or lunch and observe his social graces - after all if you acquire a clod wdith no social graces, it's a minor handicap. After putting candidate at ease, ask, "So Joe, what do you want from this thing that we call life?" Pay attention to his ability to communicate, to be foreceful, and his mental organization. Other penetrating questions:

• When should a man be fired?
• I am your boss. YOu discover that I have a conflict of interests which I haven't dislcosed to our company and which is costing us 10% more in purchases. What should you do?
• How should we set up and sustain new product development? Who should be responsible for its administration?
• How should we motivate and sustain our non-key workers?

Thomas Edison liked to hire young engineers and scientsits to work in his laboratories because he felt the young mind was uncontaminated. Also, young people made him stay young.