If the idea isn’t working, can it, and start anew.

Once we had the pleasure of listening to a successful entrepreneur give a talk about how he made it, and how some of his friends who also started companies were faring. Long story short we got to talking about two good friends of his who had started companies years ago. One was now a very successful energy mogul, whereas the other one was still trying to get the idea he had all those years back off the ground, kept on funneling resources into it, he was undeniably unforgiving to his idea. How could his idea not work, after all he had thrown so much time money heart passion and soul into it? Simple answer, it just didn’t.

And when your entrepreneurial idea doesn’t work, the only thing to do is kill it, bury it and move onto the next one. If it doesn’t work, no big deal, the next one will, and if not that one, the one after that, and if not that one…. well… eventually something should hit. But people – they get overly attached to their ideas, they think that the one idea they have and devote resources to will change the world or something here, something there.

Most wont, and the best thing to do is to test it, launch it, if it doesn’t take off. Kill it. Your time is more valuable than the resources you’ll invest into bringing something inherently broken to market.

But how can you identify if your idea is a good idea other than that your friends, and family tell you it is? Follow these simple rules.

1. Does it satisfy a market need?
2. Is it scalable?
3. Who is my market?
4. What are my competitive competencies? Where do I excel?
6. Is my idea really that amazing? If not, it’s no big – more money gets thrown at mediocre ideas with great people than vice versa.

So before jumping into the fire, ask yourselves those few simple questions.

Tackling South Africa’s Entrepreneurship Roadblocks

The first paragraph of a report published by the University of Cape Town: General School of Business in 2002 reads as follows.

South Africa is less entrepreneurial than other developing countries, a fact which could impact negatively on the country’s economic growth and job creation prospects. According to the 2002 Global Entrepreneurship Monitor (GEM), released at the United Nations last week, South Africa is below the average rate of entrepreneurial activity when compared to the 36 other countries taking part in the survey and ranks lowest of all developing countries including Chile, Brazil, Mexico, India, Argentina and Thailand. [i]”

Which poses a very important question. Why is that? And have things changed under Mbeki and Zuma? For the most part, a lot of people would say no, while others hope that the upcoming Wolrd Cup will be the answer to all their problems. We know that this is however not so, and it is necessary to identify and remedy the various problems that plague South Africa’s entrepreneurial climate and provide a clear path for future entrepreneurs to have the environment necessary to actualize their business ideas and to foster development in new enterprise.


Charting the Bureaucratic Red Tape – The report “Counting the Cost of Red Tape” – November 2004 identifies the first and by far the most severe of the problems associated with entrepreneurialism in South Africa is just this, red tape. Decentralized regulatory environment, lack of information, and high costs all create a climate that is disadvantageous to the entrepreneur.

A life less Educated – deeper problem rests in the lack of skilled labor. Companies cannot adequately grow if labor requirements for growth are not met, training of individuals is an option, and the South African government has made stipends to foster training within organizations, however, the lack of information regarding these programs, and the risks that entrepreneurs are taking by creating their own businesses coupled with risk associated to the expenditure of time for training has to be taken into consideration as well; here we talk about local based SME’s – if you’re looking at something akin to an international business model, the problems run even deeper, especially considering many well educated South Africans have emigrated abroad diminishing the country’s talent pool.

Show me The Money – While there is plenty of capital in South Africa, the problem rests with acquiring it – aside from X seed funds are far and between – and BA / VC activity heavily lags behind other growing companies.  There are however a few initiatives for Entrepreneurs worth looking into.

The Small Medium Enterprise Development Program (SMEDP) – a cash, tax free, grant for new investment and major expansion project. It is capital investment based and is receivable over a three year period, with a maximum level of R100m for the level of qualifying assets.

A Foreign Investment Grant (FIG) – Coexisting to the SMEDP, the FIG is available to refund relocation costs of plant and equipment shipped to South Africa from abroad.

Skill Support Program (SSP) – a supplement to an approved SMEDP project which provides subsidies to training and personnel development costs. It is provided in conjunction with the South African Department of Labor [ii].

And although they are there, they are also subject to the same problems of red tape.

Where the Roads Have no Names – Infrastructure is key to any economy and more so a growing one. But aside from road and rails, what South Africa needs more than anything is an adequate IT infrastructure. Drastic changes, deregulation, and private investment in the sector are key in facilitating easier access to information by and for potential entrepreneurs; speeds, lowered costs, and widespread access are KSF’s (Key success Factors) to fostering any real business development in the country.

How do we tackle these issues and help foster growth in entrepreneurial activity within South Africa? We’d like to as you, and we’ll have our own answer this coming Monday.

[i] http://www.gsb.uct.ac.za/newsletter/newsletterArticle.ASP?intArticleID=54
[ii] http://www.dectra.co.za/

Tips to winning seed competitions – disrupt.

There’s something to be said about not listening to your teachers, and there’s something about entrepreneurs that makes them not fit the average mold. So if you happen to find yourself at the next seed _enter_name_of_competition_here_ remember one word.


Sure it may be the next “synergy” but even ten years after synergy went out of  style it still means something. Disruption is now that which is in. But what’s it mean?

It’s not interrupting the class but it’s a plane that your project, you and your presentation should exist in. Esoteric description aside, it should challenge something of the status quo and provide a solution to that status quo, it should challenge everyday conventions, not augment them or add to them. This is disruption.

That is your project – now how about you? First and foremost, don’t get boggled down by others – think of yourself and try and make yourself stand out. Be it engaging questions, or coming in on the left flank when everyone else is preparing on the right, it’s putting yourself in the mentor / judge / audience’s eye – by intelligently – you got it – challenging convention.

Finally, presentation – the majority of presentations will typically focus – intro – contents – body, and have text and a few images. While this can convey your message, having too much text on your slides especially if you’re presenting your concept can work heavily against you. Why you ask?

Think back to the last time you sat through a presentation – was there text on the slides, did you listen to your speaker or did you read the sides. If you listened good for you – most people will read. Try a mix, or better yet, have no text at all. Steve Jobs, you know that Apple guy, does not use text in his presentations. Why?

Because they take away from his – on stage – presence for lack of a better word, simply put he stands out. Text is boring, conversation is interesting, and more importantly engaging. And when we say engaging – your audience needs to be involved. This doesn’t necessarily mean a Q&A – typically in the 5 minutes you have there’s no time, but that’s not to say that something can’t stir inside them.

Emotion is a powerful tool. Understand it, and use it. And remember, disrupt, disrupt, disrupt.

Knowing your customer – the key to successful design

More often than not you will see features and ideas developed and implemented int0 products that serve no purpose whatsoever, they may be nifty little things such as a fingerprint scan to bypass the password on your mobile app, of they may be a peripheral port on an some electronics that serves absolutely no purpose other than being there. Why do we put them in? To make the product cooler? To make it future ready? For 5 years down the line? Most of the time, all these extra features are useless, and here’s why.

Let’s look at it this way.

  1. What real purpose do these extra features serve? And
  1. How do your customers, or how will your customers engage your product and/or service.

Often times when designing your product or service you’ll want to add in additional “doo-babs” because they’re cool, or will make your product stand out from the competition, or will allow for the eventual possibility of expansion five years down the line. But in reality, will any of this provide an added benefit or is it just some kitsch that cost you time and money to develop? And how do you know if a feature is necessary, well this second part comes down to knowing your customer.

Who is your customer, how does your customer engage the product or service – what is the value that your product or service offers your customer.

Let’s look at the mobile fingerprint concept which recently came up in conversation at an entrepreneurship meeting that I attended here in Barcelona. Sure, it’s a nifty little feature that substitutes the login/password combo of a mobile application, but what does it add in terms of functionality. Not much. But what does it take away in terms of time & resources?

Implementing a traditional login/password combo takes about 5 minutes worth of work, fingerprint recognition, in all likelihood a bit more – in fact probably a lot more.

The time that it took the programmer to develop the fingerprint recognition would have been better spent working on a core function of the software or making sure that the software is bug free, and if that had already been completed then time to market would have been decreased. Lower time to market, the quicker your company starts earning ducats.

Just because a feature may seem “cool”, it’s not necessarily a key component. Will something like a fingerprint password scan make the customer use your product over your competitions? Personal privacy issues aside, probably not.

What will make them use it over the other is the value it offers. Software developers often go beyond themselves and develop really cool but really useless technologies – i.e. aforementioned fingerprint login. But logins and fingerprints aside, they’ll often develop feature heavy applications where the end user will simply want a stripper down version. Meaning, the end user will typically not engage a phone for more than 15 seconds – aside from a flight, a bus ride, or a few hops on the metro. They want their info, they get their info, and they exit the application.Wham, bam, thank you ma’am. A good example of a stripped down version of a software is 37 signals – all they provide are the basics, and leave the hoopla out of it.

By developing 50,000 features into that application that are for the most part an unnecessary expenditure, you’re wasting money, resources, and time, but more importantly you’re not thinking how the customer will use your product.

At the end of the day successful design is not about “cool” but about “functionality” and that applies to anything from mobile applications, to chairs, and cars – and once that functionality is in there, well then you can add in the cool.

Y Combinator’s 8.25M USD fund proves success but will the model transfer to other industries?

Y Combinator’s new 8.25 million USD fund shows that it’s funding model is definitely successful, but the question is can it transfer to other industries?

While Y Combinator may be focused on the web (and by we include mobile as the lines are ever more blurry), this new 8.25M fund shows that Y Combinator’s new approach to investment shows merit. The question however is, can those similar practices be transferable to other industries?

Typically an investment of up to $20k ($5,000 + $5,000 per founder) isn’t exactly big bucks and typically won’t provide sufficient capital to hire a team, program whatever, and devise a strong media campaign. What it does is give the founders of said startup enough cash to live for three months and develop the idea while having their hands held by the incubator.

Specialized business training on the go, or more likely during the building stages? Absolutely, look at the successful entrants, all programmers with little to no business experience, but now with successful companies, Reddit, ClickPass, Zenter.

However, this is the web, where businesses are easily and quickly scalable, but how about if we were to apply the same model to clean tech, could a micro investment also work?

Aside from what is undoubtedly the higher cost of a prototype, the model should be transferrable. Why? Because the recipe is the same.

Inexperienced Engineer in Business + Good Scalable Idea + Capable Mentoring = Higher probability of success

The only difference then is, how much money will a non-web company need, and what is the exit?

First off, we are definitely looking at larger figures of 50-100k+ per clean tech project total seed investment – longer lead times, longer, development times, and longer to market times. Not to mention of course that sales and profit generating activities typically will require more effort but should those same hand holding techniques be applied to a different tech sector we could very well see a paradigm shift in the way we go from prototype to market, and more so how early stage non web companies get financed.

Would be interesting to see if anyone will pick up on such a model in the coming 3 years.

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