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A Great Time To Start a Business?
After the Bubble, It’s All About The Blocking And Tackling

Four Basic Building Blocks

“Four very different entrepreneurs with four very different companies, all faced, in one way or another, the same challenge areas,” noted moderator Larry Robertson in summarizing the session. What are some of the common threads?

1. A deep commitment to the vision. Are you ready to sacrifice 14 months without a salary?

2. Personal honesty about what you do well versus what you don't. And finding the balance between what you do well and what the market needs and values.

3. There is not a single magic solution to any of these common questions. Despite similar challenges, each entrepreneur answers them in their own way.

4. Whether you know it ahead of time or learn pretty quickly off the bat, you’d better know what you're doing.

(Chevy Chase, MD -- October 23, 2002) Set aside the gloom and doom headlines about the economy. According to Mario Morino, now is actually a great time to start a business. It’s not an easy time, mind you, but that’s because true entrepreneurship is never easy. It is a great time because expectations are back to normal, capital expenditure budgets are slowly creeping back up, there’s a flight to quality, and, most of all, the illusions of the 1990s bubble have been replaced by committed entrepreneurs and fundamental business principles.

Morino spoke at this morning’s Netpreneur Coffee & DoughNets meeting, wrapping up for a panel of young entrepreneurs there to discuss “Blocking and Tackling: Operational Challenges for Startups.” The panel—which included Alba Alemán, President of Cairo Corporation; Prashanth Boccasam, founder and CEO of Approva; Don Britton, founder and CEO of Network Alliance; and Duke Chung, co-founder and CEO of Cyracle—spent the hour exploring fundamental issues in bootstrapping an early-stage company.

It was a natural foundation for Morino’s message, covering a variety of issues and responses in five key areas: moving from concept to an actual business model; identifying and validating the market; building a team with very little money; attracting customers when you have none; and knowing the right time to seek outside funding. The secret, said moderator Larry Robertson of Lighthouse Consulting, himself a former entrepreneur who now advises young companies, is in anticipating the common, fundamental challenges that all entrepreneurs face.

For Alemán, one of the keys is putting things in writing. “We wrote down our plan before we started the company,” she said. “The financial models of that initial plan get looked at and revised monthly. The other parts of the plan get reviewed and revised every six months. We track to the plan, but the financial models that we developed back then are still in place today.”

Boccasam, a serial entrepreneur now on his second company, is a stickler not just for writing things down, but for doing it in quantifiable ways. “What you can’t measure, you can’t reward,” he said, explaining why he creates checklists for important issues such as management team, product idea, competition, and risks.  

“Take the six key metrics you think you need to have and grade yourself on them,” he suggested. “We do this at every board meeting.  I put up a slide and say, ‘This is how we’ve progressed from the last board meeting to this one, and this is how we grade ourselves.’ It helps people focus on the places where you need help, and, if they can't be a part of the solution, then they aren't adding any value.”

Two other common areas of “blocking and tackling” for entrepreneurs are finding good advisors and the necessary funding to grow. They’re closely related for Chung, whose company has avoided the venture capitalists so far in favor of an entrepreneur-cum-angel who is now Cyracle’s chairman.

“You want the right people on your board and your team to help you take it to the next level,” he advised. “Working with an angel, especially one who has done it before, is, I think, even more important than the money itself. Today we have a board of advisors with more than 20 people who are great industry leaders. If it wasn't for our chairman, half of them wouldn't be on our board today.”

There are many opinions on what kind of money to take when, and Boccasam offered some downsides to both angel and VC funding, but no one argues with the idea that the best kind of funding—the kind people seemed to forget about in the 1990s—is income from customers. Britton built his company through revenue, slowly, by leveraging existing relationships and his experience in the market.

“It all comes down to getting that first customer,” recounted Britton, “getting them to trust us, and building that relationship. Then take as much care of them as you can. They start becoming evangelists for you and help sell your product.”

Working in the services industry, where funders have little or no interest in investing, meant that Alemán had no choice but to bootstrap, and to focus on good cash flow management. “It’s about not spending until money is received,” she recalled, “as well as all sorts of creative mechanisms to increase how quickly payments are coming in and slow down how quickly payments are going out. For 14 months we did not take salaries, we lived off our savings. You're talking about draining and depleting your entire savings on the vision, on the belief that this is doable, and that this is going to return something in the end.”

And, according to Morino, that’s what makes today’s entrepreneur different from many in the bubble period of the late 1990s who thought there would be no risk. “If you don't have capital, do you know what you do?” he asked. “You either go without salary or you work another job. Then, the other 16 hours, you work on this job. That means you don't sleep a heck of a lot. But it's the price. You either want to pay the price or you don’t.”

For Morino and other veteran entrepreneurs, that’s what entrepreneurship has always been about. When you compare today’s economy to the dotcom feeding frenzy of the late 1990s, conditions may not look so good, but that was an aberration. Compare it instead, as Morino does, to normal, pre-boom years and things are actually much better, especially in the Greater Washington region. Then you can see why—for truly committed entrepreneurs like Alemán and the other panelists—now is a great time to start a business. Not perfect. Not easy. But not bad.

Morino offered pointed suggestions for how bootstrapping entrepreneurs can survive and grow under current conditions, including his take on how the technology sector is slowly beginning to trend upwards again. They are captured with the comments of all the speakers in the transcript and video of the event. But you can sum it up this way: “Those who can, do,” said Morino. “Those who don't, choose not to. It's all about execution. The world is full of ideas, but not full of people who deliver. An entrepreneur delivers.”

Morino then moved on to explain more about why the Morino Institute would soon be sunsetting Netpreneur, a program that served as a sparkplug for entrepreneurship in the region for more than five years and the host of these events. The details came in an email he had sent the day before, and now he took the time to elaborate.

In many ways, he said, it was the kind of tough decision entrepreneurs have to make every day—a matter of focus that did not bear on Netpreneur but on his ability to commit totally to efforts in venture philanthropy and improving the lives of children of low-income families. Although the Netpreneur organization is sunsetting, Morino and the team are working to see that its benefits, services, and achievements live on through other individuals, groups, and the community at large.

Said Morino, “In its essence, Netpreneur was one thing—an organic network. It wasn't a program or a Coffee & DoughNets, it was the people who stayed involved. You've created networks, sub-networks, small networks, and contacts. That is what has to live on. Since I walked in here, three of you came up and asked how you could help keep it going. The opportunity for you, if you want it, is to step forward and let it grow organically yourself. If you care enough, you'll let it work that way. Do you want to do it or not? It's your choice this time. We'll help you do it.”

Copyright 2002, Morino Institute. All rights reserved.



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