Brooding on Matters | Travis T

What does it take to be an Entrepreneur

Posted on 1 September 2009 | No responses

I was recently reading an article entitled “What makes an entrepreneur?” and it got me to thinking, what does make an entrepreneur?  I see what Brandon is getting at in his article, but I would suggest that it really addresses, “what an entrepreneur makes”.  The seven points suggested would certainly be desired outcomes of starting a new venture, but what qualities, traits, or resources, does it take – or not take – to be an entrepreneur and actually start that new venture?

Entrepreneurs come in many shapes and sizes, but there is a stereotype that exists.  Some of these might include small business owner, risk taker, male, self-motivated, passionate, etc.  And ones stereotype might be influenced by the era that they grew up in.  I knew a kid growing up that was building websites in high school for local businesses, so in my mind he was an entrepreneur.  My father’s era might however think of entrepreneurs as Midwest farmers and ranchers, hardware store owners, or a gas station owner.

I’ll start by listing a few things that I believe entrepreneurs are not:

• Risk Takers – While it could be argued that certain aspects of entrepreneurship is riskier than taking a job with a fortune 500 company from a financial or stability standpoint, entrepreneurs are no more likely to gamble or take a chance than anyone else.  Successful entrepreneurs do a lot of analysis, research, and many times have years of experience in the industry prior to engaging in a venture.
• A Certain Gender – Male or female, there are no limits as an entrepreneur.
• A Certain Education – Many of the most successful entrepreneurs have little formal post secondary education, see Gates, Dell, or Ellison.  But for every of those, there is a Page,  Buffett, or Bloomberg who have a great deal of education.
• A Certain Age –  Again, there are no limits on age.  Warren Buffet got his start as a freshman in high school when he and a friend purchased a used pinball machine.  Sylvia Lieberman, on the other hand, got her start at the age of 90 when she had her first children’s book published.
• Dreamers (in an of itself) – Having an idea or dream doesn’t make you an entrepreneur.  A dream without the ability to execute is worthless.

There are certain traits that many entrepreneurs do share – though I’m sure there are examples on the contrary:

• Passion for their Product or Service – Many times the entrepreneurs that I see have a great deal of pride and passion for what they do.  This isn’t unique to entrepreneurs, but many times a trait linked to successful people.  They find and do what they are passionate about.
• Hard Working – There are people that just knock it out of the park and the idea takes off by itself.  Word has it that PlentyofFish founder Markus Frind at times only had to dedicate a couple hours a day to his company as it grew – that said I’m by no means accusing him of not being a hard worker.  He put the community that he built to work, thus reducing his involvement once his product was built.  The vast majority of entrepreneurs don’t have A+ ideas and execution, and thus have to work hard at their new ventures.
• Stick-to-itiveness – Most entrepreneurs face a few major hurdles (if not daily) on the way to building a successful company.  Herb Kelleher and Rollin King didn’t let a three year legal battle stop them from getting Southwest Airlines off the ground.   Most entrepreneurs are not easily deterred, in the vast majority of cases somebody else already has had your original idea, either they didn’t pursue it, or you need to find a way to do it better.
• Smart - While I mentioned that entrepreneurs may have any wide array of education, in most cases they are very smart.  They have a great deal of common sense, domain knowledge, and are savvy enough to turn an idea into a dollar bill.
• Eyes open to Possibility / Dream-weavers – Above I mentioned that entrepreneurs are not dreamers, but they are dream-weavers.  Maybe I’m being to literal, but I like to think that successful entrepreneurs are always thinking about and analyzing possibilities.  Those possibilities might include original ideas, the difference being that good entrepreneurs go after their ventures having properly planned and analyzed the opportunity.  Once they have a sustainable opportunity, they must develop the dream, and sell it to others.
• The ability to sell – Quite possibly the most important saved for last.  An entrepreneur must have the ability to sell a concept, sell the dream, or sell the product.  Paraphrasing John Doggett, a legendary business lecturer at the University of Texas:

The ultimate goal of an entrepreneur is to get someone to open their wallet, take out hard-earned cash, and hand it over to you.

That is usually harder than it sounds, and without it, most ventures will not go far.

How to make Rio (like) Margaritas

Posted on 27 August 2009 | 3 responses

There is no “limit three” here, but a few of these will rip your face off!

If you live in the Denver or Fort Collins area (or even Austin Texas now), you’ve likely had or heard of the Rio Grande’s famous margarita. The Rio, as most call it, is a Mexican restaurant that was started in Fort Collins, Colorado. Since then, six locations were opened in northern Colorado, and the most recent was opened in Austin Texas in the warehouse that the Real World Austin called home.

The recipe below probably isn’t the actual recipe that the Rio follows – but it tastes close. You see, the Rio has done a very good job of protecting the actual ingredients, and apparently the bar tenders (back in the day when they mixed from scratch) were sworn to secrecy.  I’ve experimented with the ingredients below, and believe it tastes very similar to the Rio’s margarita.  The drink contains a lot of tequila, and the optional ingredient of Tree Top apple juice does a good job of dulling the bitter edge of the tequila, if you wish.

Ingredients:

• 3 ounces Jose Cuervo Gold Tequila
• 3 ounces Juarez Triple Sec
• 1 ounces Duffy’s Lime Juice
• ice
• margarita salt
• wedge of lime

and an optional ingredient of:

• 1 ounce Tree Top apple juice

Why Jose Cuervo Gold Tequila?  Apparently the Rio is the number one non-liquor store account for Jose Cuervo – so it only makes sense.   The real secret to the ingredients might be the Duffy’s lime juice, as Mike points out in his article Secret Lime Juice.  On Mike’s blog he suggests a couple places one might be able to find Duffy’s, in addition to the places he has suggested, I was able to find it at argonaut wine & liquor on 760 E. Colfax in Denver, just across the street from the Fillmore auditorium.

Whip up some chips and salsa, and enjoy!

Up next, a personal favorite when I used to live in Austin.  Trudy’s Mexican Martini!

Back into Revenue

Posted on 26 August 2009 | 1 response

When doing a potential business evaluation or analysis, one of the most difficult things to do is estimating a potential start-ups revenue.  I’ve talked in the past about putting together an estimated revenue stream for a start-up, and how sometimes you just have to go with your gut feeling.

What I have learned to do is to back into my revenue calculation, using a worst case scenario analysis.  I start by building a spreadsheet that has all of my revenue drivers – assumptions used to derive the revenue calculations.  I then build out an income statement, once again, using the revenue drivers to calculate the top line of the income statement.  Finally I build a cashflow statement that ties to the income statement in a couple ways, but primarily via the net income.

When doing a traditional business analysis, it’s easy to get wowed by the “estimated return”.  Some folks will do a sensitivity analysis on the estimated revenues, maybe the estimated expenses, and come up with equally wow’ing returns which do nothing more than distract you from the real question at hand – is this opportunity viable.  As I’ve mentioned, the problem is that while guestimating expenses and start-up captial requirements can be done with relatively fair accuracy, in many business plans doing the same for revenue isn’t possible.  That’s why this approach is so valuable.

So, once you have your revenue assumption sheet linked to your income statement and likewise linked to your cashflow statement, you can start the process of backing into revenue.  On the income statement, you can start by putting in reasonable expectations for expenses, taxs, etc.  On the cashflow statement, you probably have a reasonable idea of how much start-up capital you have access to, or will need to operate the company prior to having a stable revenue stream.  In addition, based on the net cashflow you can do some simple hurdle rate calculations such as net present value (NPV) or internal rate of return (IRR).

Once all of those things are set, then go back to the revenue assumption page and start entering assumptions until you get to a point where the business plan is just able to get by.  The spot where, “if at a bare minimum we are able to do this revenue, we can keep our doors open for business”.  This is really the make or break revenue of the company assuming that your access to start-up captial is limited to some ceiling.  At this point, you can now step back and take a holistic view of the revenue assumptions and projections and focus on the companies ability to meet those revenues.  The question then becomes about “can we make this revenue, or not?”.  Hey, if the company actually does 2x your assumptions down the road, congratulations, it’s a good problem to have!  But in your analysis, assume worst case, and back into the minimum revenue that you can derive to have a operable company (or opportunity you are willing to invest in), and if you have confidence that your company can meet those minimum requirements, you might have a winner.

The iPhone, AT&T, and Google voice

Posted on 20 August 2009 | 1 response

I was thrilled when I ran across this new Google application deemed Google voice.  I signed up and waited for better than a month before I got the email that I was good to go on voice.  This product is just another of Google’s many applications that commoditizes  the industries they touch.  Google Voice allows you to have a lifetime phone number (that you pick), and acts as a virtual call center where you can forward the calls to another phone, receive and send text messages, record voice mail and have it transcribed and emailed to you, listen in on a voice mail as it’s left, among many other features – all for free right now.

But it had to be to good to be true?  Yep, I own an iPhone and have a plan through the agless AT&T.  It doesn’t mean I can’t use Google voice on the iPhone, it just means that there isn’t a cool app that I can put on my phone to make the process easier to use.  You see, Apple and AT&T decided to reject the Google voice application and make it not available on the App Store.  Now, to use Google Voice, I have to open the web browser on the phone, navigate to Google voice, and then make a call or send a text message.  It’s not a great option, but out of spite one that I will start using.

Andy Kessler wrote a very good opinion article in the Wall Street Journal entitled Why AT&T Killed Google Voice.  I couldn’t agree more with the article, AT&T in its fight to control the pipe between you and your contacts is slowing technilogical progress.  In this article, Andy argues for four things long overneeded in the US:

• End phone exclusivity. Any device should work on any network. Data flows freely.

• Transition away from “owning” airwaves. As we’ve seen with license-free bandwidth via Wi-Fi networking, we can share the airwaves without interfering with each other. Let new carriers emerge based on quality of service rather than spectrum owned. Cellphone coverage from huge cell towers will naturally migrate seamlessly into offices and even homes via Wi-Fi networking. No more dropped calls in the bathroom.

• End municipal exclusivity deals for cable companies. TV channels are like voice pipes, part of an era that is about to pass. A little competition for cable will help the transition to paying for shows instead of overpaying for little-watched networks. Competition brings de facto network neutrality and open access (if you don’t like one service blocking apps, use another), thus one less set of artificial rules to be gamed.

• Encourage faster and faster data connections to our homes and phones. It should more than double every two years. To homes, five megabits today should be 10 megabits in 2011, 25 megabits in 2013 and 100 megabits in 2017. These data-connection speeds are technically doable today, with obsolete voice and video policy holding it back.

What should Google’s next course of action be?  I would suggest a deal that allows them to sell Android with data only plans.  That might slice into a piece of Apple’s pie.

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