Category Archives: Entrepreneurship

3 reasons you need a co-founder or partner for your business

Rock climbing (B&W)

Rock climbing (B&W) (Photo credit: Wikipedia)

Not too long ago I begun interacting with the young founder of a web 2.0 firm. He’d done an impressive number of things – identified a key market need based on his own work experience, built a prototype, gotten paying customers, hired—initially part-time—subsequently full time coder and even raised a small investment from an accelerator. After our first interaction, which was mostly spent learning what he’d done already, what had worked and what hadn’t, we begun discussing business models and his intent to raise angel money.

Somewhere in the discussion I raised the question of “Do you intend to find to find yourself a partner or two?” You’d have thought I had slapped him, in the way he reacted. Once he got over the initial shock of my question, he was genuinely puzzled. While he never came outright and said it, I could see that he continued to be befuddled by my seemingly dumb question. “Why would I need a partner?” – the unasked question hung over the rest of our meeting. It set me thinking as well and here are three reasons – better decisions, stronger company and emotional support –  and  that I believe having a partner (or two or three) can help your startup.

Two heads are better than one Your business and you will do better, if you have another set of eyes, ears and all the grey matter that hopefully lies between them, available to you. While perseverance is one of the most critical things for business success, it always helps to have someone tell you that you are being pig-headed or this is the time to let go of a customer or an employee. Do you sign up to a particular deal, should you build that product or abandon it, should you borrow or raise some more money – all these decisions are easier and most likely better when made with another set of inputs, that a co-founder can provide. Advisors, consultants and mentors can play this role some of the time and can be useful in not being so close to the decisions, but they rarely have to live with the consequences of these decisions the way a co-founder or partner would have to.

Successful businesses require teams Having co-founders, finding and persuading someone else, to embark on the insane journey that building a business can be, is the first step in making your business successful. It is not just investors who look for a team – one with complementary skills, but potential employees and prospective customers all care about the fact that your company is more than just you. Sure there have been single founder companies that have been successful, but why make it more difficult than it needs to be to build your business. Yes, teams and successful ones can be built with employees, but they will never be the same as having a co-founder or partner who has a same stake in the outcome.

Entrepreneurship is lonely business Entrepreneurship is hard enough without having to slog through it on your own. Sure if you are lucky, family, friends even advisors or mentors can help make it a little less lonely. However, none of them can give you the time that a good co-founder or partner can give you. Even if your co-founder is very different from you, they’ll be able to better understand and empathize than anyone else about the challenges you face, the frustrations you feel and help smooth out the highs and lows that are inevitable in any startup.

Good design is in the details

Cover of "The Design of Everyday Things"

A couple of weeks ago, I wrote about the work of Donald Norman and his seminal book “The Design of Everyday Things” (the title itself was in true design fashion improved from the original “The Psychology of Everyday Things” or POET.)  I was also bemoaning that people seem to be far more familiar with Jonathan Ive, the much heralded (and recently knighted) designer of many things Apple, than with Don Norman and his now business partner Jakob Nielsen, who’ve been evangelizing human-centered design longer than most.

Of course reading The Design of Everyday Things has once again made me sensitive to good and bad design decisions that surround us and I wanted to share a couple of instances of poor design (or poor affordances, as Don terms them). Just the other day I swung by an ATM machine, tucked in next to a Food World store. And here’s what the greeted me at the door.

Push or Pull A sign that said PUSH but a handle that said pull. This is one of the first examples Don cites for cognitive dissonance – a fancy term for when what the sign says (push) doesn’t gel with what your brain says you should do (pull). Alas Don wrote his book more than 20 years ago and we are still grappling with this one.

Another favorite one of his is figuring out which switch (on a bank of switches) controls what light or electrical equipment in a room. Just this last weekend we sneaked away to Yercaud (an largely unspoilt hill station near Salem, Tamil Nadu). The hotel we stayed in was relatively new and the first thing that greeted me, as I tried to turn on the lights was this bank of switches.

The housekeeping staff, had to put a small sticker with a sign that read Fan. Given that there are only five switches, sure we can run through them quickly – however you’d have an irate spouse in the middle of the light if you turned a light on rather than the fan :( In this particular bank of switches, you can see the set up is a pair of switches (neither of which controls the fan) and the regulator in one block while three other switches in another block (one of which controls the fan). Ideally pairing the regulator and the switch into a single standalone block would have worked or having them at the very least on the same block would have provided a clear affordance.

The good news is that good design shows up in most unexpected places. The office provided me with a Tata Photon 3G broadband USB dongle. Most of us who’ve used any sort of USB dongles, whether memory sticks, Bluetooth, WiFi or broadband, have experienced the bother of losing the caps that come with them. Invariably once I’m done using the stick and remove it from the computer, I am constantly searching for the cap and usually end up just doing without it. The Tata Photon previous generation dongles suffered from this same short coming as I saw with my colleagues. However the latest dongle that I was provided, had a most ingenious solution – a wrist band that was strung through the cap – so not only was carrying the darn thing easier, but the cap even when removed stayed attached (and conveniently) out of the way, so that when it was time to stow away the stick, I don’t have to begin searching for the cap. Good design, like god is in the details.

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Finding a customer – Where do you start?

customer noticeOnce again, a question posed at Quora, “How can a straight out of college entrepreneur find clients for IT service based start up?” triggered these thoughts. As I have been recently looking at college startups, the entire issue of finding that first customer has been hovering in the background. When I cast my mind back to what worked for me at Impulsesoft, SiRF, Synopsys and Zebu, here’s what I came up with.

Referrals If you have [a] customer[s], start with them and ask for references. Any time an existing customer refers you, either to someone else within their company or others outside, it makes closing that deal a whole lot easier. Even when someone declines your services, you should ask them if they can refer you to others who may be able to use your services

Leads If you are a raw startup without a single client, then I’d start by making a list of every working adult you know – and reach out to them – with a one pager (if in print) or a single email, briefly explaining your offering in plain English, and asking them to introduce you to potential customers. As Esther Dyson, angel investor & writer suggests, ideally in your email, you’d write a brief email, that your recipient can forward after only having to add the name to the Dear [...] at the beginning and put their name at the bottom. Don’t forget to add every person you went to school, college or rock show with to this list.

Cold calling Despite claims that the world has changed and sales (& marketing) are not what they were, for a raw startup cold calling is a good way to both get a sense of what’s out there, what issues you will face when you try to sell (even with referrals) and refine your own pitching – of what problem you address and how what you offer is the right thing for folks. Best thing to do with cold calling is to have a fixed time each day (or n days a week), when you’d send emails or make phone calls to reach prospects. Cold calling is one of the hardest things to do and has low conversion rates, yet will serve you well in the years ahead. Check out The Complete Idiot’s Guide to Cold Calling by Keith Rosen

Networking/speaking/free services Offering advice, giving talks and a free hand out, such as a tip sheet at industry forums, to business groups or other networking forums is a great way to build leads. For instance if you offer services in network security, you’d talk about “Top 5 Security Risks to your Business” and provide a free checklist that people could use to audit their network security. This can of course be done on online forums as well such as LinkedIn answers or your own blog.

In bound marketing In many ways this is like networking & free advice but done with content on your own website as a means to deliver value that would drive traffic to your website. In other words bring customers to your site, particularly self-selected prospects, ones looking for a solution. Companies such as http://hubspot.com/ do a great job of both educating you about inbound marketing and providing tools to make it happen.

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When do I need a business model?

Business Model Concept

Image by Alex Osterwalder via Flickr

When this question was first posed to me, my immediate response would have been “At the very beginning.” However, upon a little reflection I realized that the answer needs to be a little more nuanced and is not nearly as self-evident as I reckoned. I’d still say  you should have a likely business model in mind, reasonably early in your startup’s life.

Of course, given the treacherous nature of the English language, it’s probably worth defining what a business model is.

Wikipedia defines it as

A business model describes the rationale of how an organization creates, delivers, and captures value

and in plain English, according to the fine folks at Walden University,

The term “business model” refers both to the way in which a business creates a product or service and sells it for a profit, and to any document that outlines the process. …The business model of a lemonade stand seems straightforward: make lemonade and sell it to passersby for profit.

Given all the talk of lean startups, I’ve met a number of folks who talk of figuring out their business model even as they roll out their product. Yet a number of sane heads seem to be be reminding us rightly, that a feature ain’t a product ain’t a business. To me fundamentally a business model is figuring out who is going to pay (& hopefully how much) for the service/product we offer. It could be the users, it could be their parents (in the case of children), their companies (for corporate/SMB), advertisers (for free consumer services) or the government – someone, somewhere is going to write a check or whip out a credit card or cash for your product or service.

Once you have a business model you can then figure out how much money you will actually make – your revenues. Done right, you hopefully know what is it going to cost you to deliver it and how long before you can get it to operational breakeven (making more than you spend on a quarterly/monthly/weekly basis.) Of course if the numbers don’t add up in your revenue model, you return to your business model to tweak your assumptions, targets etc., till you can iterate to something that looks like a practical (or at least realistic) business model.

“There’s not a single business model… There are really
a lot of opportunities and a lot of options and
we just have to discover all of them.” Tim O’Reilly

Back to the question of when do you need this? I’d still say start with something as simple as “We’ll provide P for Q, which {Q,R} will pay for in the form of S.

A couple of examples might help illustrate this.

We’ll

enable consumers to discover relevant videos easily and we’ll make money through advertising” or
answer academic questions over SMS for high-schoolers.  Parents will pay for the service through subscription.
help solar installations achieve higher ROI. OEMs will license our technology or purchase our blackbox.

This is more a statement of intent than a full fledged business model. Before you go spend a lot of time, figure out whether the world (or at least your target customer group) actually has the problem you reckon you’re solving for them and is willing to pay for it. Once the market need and your product/service fit to that need is established you can return to working up a real business model, that will allow you to build a real business.

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Chefs & Ginger: Lessons for the Startup CEO

Gari (A japanese pickled ginger.) ???

Image via Wikipedia

One of the best kept secrets least discussed matters in the startup world is what power a CEO really wields. When you are one of the worker bees or even a vice president it seems that the CEO is this powerful fellow, who at times appears all-knowing. And even when he isn’t, he still seems to wield an unfair amount of power. It’s only when you get to be the CEO of your own startup — by accident, choice or default — you realize that the power of the CEO is all too illusory.

Sure you can TELL folks what they should do and you can mean NOW! but that doesn’t work too well nor get you too far. You’ll soon find out, what anyone who’s raised teens knows, that what you want and what you get can be two different things.

Recently as a friend and fellow entrepreneur and I discussed issues each of us were facing in our businesses, about getting things accomplished, it hit me suddenly. Ginger! There’s much leaders, especially new CEOs, can learn from good Asian chefs – especially in how they use Zingiber officinale – or ginger.

Ginger when used in small amounts, whether to flavor a favorite curry dish or to create a zing in your tea, elevates the dish and the entire culinary experience. There are few delights greater than having sushi with some finely sliced and pickled ginger – a near out-of-body experience when accompanied by wasabi. At the other end, a well made ginger ale or even a ginger chutney, despite being all ginger can be immensely enjoyable.

The trouble however arises when too much ginger is used in the tea or too little in the ginger ale, making both undrinkable and worse yet leaving a nasty aftertaste. Despite the taste risks too much or too little ginger poses, you rarely find Asian cooks using physical measures of the quantum of ginger they use. It’s all a subjective call and a visual appraisal honed through apprenticeship and experience.

It is the same expertise that leaders, especially of startups need to cultivate of when and how to use what amount of cajoling, pressure, suasion or even the occasional threat to get their work accomplished.

Of course both the chefs and chiefs can benefit from sharp knives, but that’s a story for another day!

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Discretion – a skill founders and CEOs need in spades

As parent of two teens, I’d like to claim that my wife and I never argue in front of them. I’d of course be lying. That being said everyone with children knows, that even if their kid can’t rattle off the 5 times table, they can recall every last word you said in your last spousal encounter, down to the tone of voice. And if you are [un]lucky, it will be saved for posterity in their biography.

Now as an entrepreneur, founder or CEO why should this story be relevant to you? Basically, this is a lesson on discretion – or the lack thereof – and how it can come and bite you in the rear!

As an entrepreneur, founder and especially as a CEO, you are going to having some rough times out there – being plagued by self-doubts, or worse yet certainty that you are screwing up. You will also wonder why you are doing what you are doing (or not) and is this whole thing a mistake? You wouldn’t be the first one to have had these thoughts nor are they likely to occur only once.  The question is what should you do when you are thus assailed?

What you should NOT do is share it with your partners – immediately or without reflection. Usually it’s best shared with someone outside your founding team – a friend, an advisor and if you are lucky, with a spouse. This last can be tricky and deserves a whole another blog post.

I have worked in and with multiple startups and started two of my own, where the founders were friends, sometimes having known each other for many years and other times, been colleagues who’d worked with each other. Almost in all cases the co-founders had been friends before becoming business partners.

And in almost everyone of these instances, when one or more founders have been plagued by self doubts, voicing it without forethought to other founders or senior staff has caused immense grief. Not unlike arguing in front of the kids (or other 3rd parties) who have no context on my wife and our deep abiding love or other ongoing issues :)

In every case, talking about it with a non-stakeholder first would have done away with much thrashing and grief that otherwise ensued. Talking it out with a third party always worked better – in terms of achieving distance which helped in gaining clarity and perspective before looking for answers.

Many a times, our self doubts maybe no more than a fleeting moment of vulnerability – or the result of a bad day or week, a setback. We may bounce right back. At other times, they may be grounded in facts – in that we are operating at the limits of our ability or capabilities, personal life (or the lack of one) may be intruding into our professional lives or we may be avoiding a critical set of actions/decisions at work to avoid unpleasantness.

And if there are real issues at play that need to be brought up to your partners, it should not be done in a flippant comment or regrettable aside that can be misconstrued or worse. It can be presented with some distance and perspective that you’d have gained in discussing it with a non-stakeholder first. This alone is a good reason to seek out a mentor or advisor, but almost any friend, who’s not involved in your business and has no axe to grind will do.

So the next time you think of making a casual remark to the other founders, especially those who are your friends, bite your tongue. You are a parent – or at least need to behave as a responsible one – if you want to keep the job!

10 books every entrepreneur should read

Book piles in the wild 5

Image by Andrew B47 via Flickr

A question “What books should Indian entrepreneurs read” on Quora set me thinking. The good news is that Indian entrepreneurs should read, for most part books that entrepreneurs anywhere would do well to read. The trick is picking the 10 or fewer, that would make reading (or starting) seem not so daunting and that you’d have a snowball’s chance of completing. My own recommendations (& favorites) include the following. Much like a travel guide that tells you what to see if you have only one day in Paris, a week, a month or more, I have attempted to bin them in an attempt to bring coherence and priority.

Plan to ready only ONE book

  • The Effective Executive by Peter F. Drucker: Forty years after its first publication, this book, like good wine, has aged well. If you are going to read only one book, this should be it. Even if you are only contemplating to be an entrepreneur, you should read this. You’ll do better in any role with this one.

If you can squeeze in two more
Particularly for tech founders and any first time entrepreneurs, knowing about sales and design, particularly as it related to customers, these two books work.

  • Selling the Wheel by Jeff Cox and Howard Stevens: Most entrepreneurs are surprised when they build something and the world does not beat a path to their door on its own. This novel is the gentlest way to get acquainted with selling.
  • Design of Everyday Things by Donald Norman: How many times have you had to re-print your document to get the two-sided printing working? Or needed to paste instructions on your copier or building door. Before we build it – anything – it would be nice to understand what folks are trying to get done.

Now you are on a roll, here are three more
Now its time to hear others’ stories and to see what part of it is relevant to you.

  • Growing a Business by Paul Hawken: The first person conversational tone of the book speaks from the heart and is as applicable today as when it was written more than a decade ago.
  • Founders at Work: Stories of Startups’ Early Days by Jessica Livingston: this is probably the newest book in this list – and one that I am still working my way through. The breadth of entrepreneurs covered alone would make it worthwhile.
  • Made in Japan – Sony’s story by Akio Morita, Edwin M. Reingold and Mitsuko Shimomura is a timeless story of innovation, perseverance – that’s particularly relevant from Indian entrepreneurs trying to enter global markets

If you are still with the program, these can help you round it off

Bonus number ten
If you got this far, you need to read a darn good yarn of how a set of engineers got a new machine built.

  • Soul of a New Machine by Tracy Kidder – this book helped the author land a Pulitzer prize – a non-technical journalist covering the story of how Data General went about trying to beat Digital at the microcomputer game. Human drama and much that goes on in the name of startup success.

It is hard to pick a finite list and any such list if likely to be highly subjective. You will notice I have not picked any Indian entrepreneurial stories – its just that they don’t figure in the top 10 – in which itself only one book younger than 5 year old figures. This is in a sense a foundational reading course rather than here’s how some specific company has done it, in India or overseas. It is important in the first instance to read – which I am still surprised how many tech folks in India don’t seem to read and freely admit to not doing so :).

Happy reading!

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Who’s pain are you trying to address?

Regions of the cerebral cortex associated with...

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In the last two months of 2010, I participated in a number of meetings with founders of startups – as an adviser, reviewer or investor. Interestingly in nearly every one of these meetings the same questions kept coming up.

In particular four different companies  –  two nascent startups and a couple in their early tweens – were facing eerily similar issues. Despite the startups being in very different spaces,  the varying ages of their endeavors and having  smart and motivated founders – they were all trying to come to grips with the lack of market traction. This despite a great deal of time spent talking to prospective customers, partners, building and launching working prototypes.

I must admit after the first couple of meetings it appeared they were having different problems. In one, a marketplace that was not getting suppliers nor buyers off the starting block, in another focusing on the technology to the exclusion of all else, and yet another having a solution looking for a problem. However by the time the fourth meeting rolled around it was plenty clear, that all of them required a sharp focus on answering the question

“Who is your target customer?”

and more importantly,

“What pain are you trying to solve for them?”

Two years into our own start up, we find ourselves returning to this question with reasonable – some would say troubling – frequency. When we got started on dog-earz, the newsletter tool for the rest of us, we defined our target customers as “marketing & sales folks in SMBs” and the pain we were trying to solve for them was How to keep in meaningful touch with everyone in your Rolodex, even if there wasn’t a deal on the horizon.

Of course it helps, if your target customers actually exist (ours did) and are accessible (a little more difficult) and truly felt this as a problem (not clear). Our solution seemed more a nice-to-have vitamin rather than make-my-pain-go-away Aspirin. We hung in there, as we felt we were target users ourselves. With time it was clear that we’d better solve their pain rather than imagine that they will behave the way we’d. Seems obvious in hindsight, doesn’t it?

Things are not always as evident as we’d like them.  I once had an opportunity to talk to Phanindra Sama, founder of redBus.in about his understanding of what pain they are solving for their customers.  Phanindra shared his view that the pain his customers felt was not in purchasing bus tickets – as I’d have thought. In fact it might still be more convenient for a traveler to call someone to hold a ticket and pay for it at time of boarding – only one phone call needed, but it is the absence of reliable information – as in how many buses, when and at what price or location will leave from Bangalore to Chennai (or better yet from Jalandhar to New Delhi?) that was the customers’ pain point.

Ask yourself these two questions, repeatedly and validate them by getting out of the office and asking your target customers about their pain points. Once you nail this down it makes, at the very least, decision making a whole lot easier. Knowing this is of course only a good start, but not knowing can kill your business.

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Don’t cheat yourself, by aiming too low!

You want us to pay you $120,000 and I have a quote here from your [much larger] competitor for $30,000!

3 Card Monte

Photo Credit: djfunny via Compfight

In our first startup, just as we had built up our reputation in a niche, we encountered competition from a larger Indian firm at one of our major customers.

The purchasing manager had become a good friend and didn’t mince any words. We did bag the deal, still at over three times what the competition had quoted but not without with some fancy footwork.

I am sure our competitor would have broken even, at their quoted price, but they could have both bagged the deal and made a very nice profit at half our bid. By bidding so low, they queered the pitch not just for us but intrinsically undermined the value of what they were delivering.

Their eagerness to win this account, while understandable, needlessly drove down the profitability of future deals for all of us. And this was with a technology firm! This was the first time that I realized how short-sighted it can be to lower value by charging far too little.

This experience brought to mind, how other visionary entrepreneurs – often self-made men brought a different perspective to building businesses.

I had three rupees in my pocket when I first landed in Madras.

It was hard for me to visualize my father arriving in the city as a penniless high school graduate and reconcile it with the globe-trotting CEO that I had grown up with. At least two other folks of his generation that I know well personally came to Madras with less than 10 rupees in their pockets — from Gujarat in one case and Kerala in another — and went on to build multi-million dollar business empires, in plastics and publishing.

I am certain that there are thousands of such unacclaimed, self-made men who started with little more than a dream and a great deal of determination, who through their hard work spanning decades, unwavering vision and a few lucky breaks have built successful businesses. A thousand mini-Reliances and Future Groups, as it were. This is the part of India and Indian businesses that makes my chest swell and gives rise to my unending optimism about India.

Yet our everyday experiences seem to bring us in contact not with these modern day Dick Whittingtons but with seemingly short-sighted tradesmen who are interested in making a quick buck, even it means burning bridges.

“The samples he sent were exquisite. My clients loved the color and quality of the granite — so distinct from the Italian stone they were used to.”

My friend, a mining engineer and consultant spoke of his experience helping buyers in Taiwan source stone from India.

“So you can imagine their shock when they received the first container load and most of it was second-grade and a good deal of it damaged. Having paid for the shipment with a letter of credit they had little recourse.”

My friend shook his head; the very recounting of the story was painful for him.

“And these were clients who were capable of moving hundreds of containers a month. The short-sightedness on the part of the seller to make a quick buck on the first container hurt not only his ability to sell again but set back the reputation of all Indian stone exporters.”

I wish I could claim this was one rogue trader. Alas, I have heard the story repeated – for leather goods, for handicrafts and pottery, bedsheets and linen, food grains. We seem to have honed the bait and switch to a fine art. Delivering good quality samples or first shipments and, once the buyer places a large order, shipping a lesser grade or worse to make a quick killing.

Of course this kills any chance of further business from that client or long term growth. And all too often damages the reputation of an entire segment or even the country as a whole. Why do we do this?

Lest we conclude that it’s just businesses that buy from Indian firms that face these challenges, consumers don’t have it a whole lot easier. Sure we’ve all read about how the Indian consumer is price conscious and finicky — businesses that don’t give them what they want are unlikely to survive, let alone thrive.

However, the demand-supply mismatch is so pronounced in favor of suppliers that most Indian businesses are able to get away with poor quality and all too often poor service.

As a reader of the Wall Street Journal recently put it “[their] focus [seems to be] on getting as many bucks as they can out of customers the first time they deal with them as opposed to cultivating repeat business. At least that is how I felt after paying 455 rupees for a beer at a pub in Khan market last week…”

The sort of behavior we are prepared to condone in our politicians — who after all may not be in power after the next elections — of making hay (or moola as may be the case) while they are in power, seems to infect many of our business folks, especially small businesses. This is particularly galling given our avowed belief in the concept of karma and a spiritual span of more than one life time.

This is why I have taken to hanging out at the railway station trying to spot the next Dhirubhai Ambani or someone like my dad so that my faith and belief in the visionary, long-term oriented Indian entrepreneur is restored.

A variant of this article first appeared in the Wall Street Journal online.

Who else is inside your entrepreneurial head?

57/365 "Here by my side an angel. Here by...
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Seth Godin recently wrote a post titled “Is this noise inside my head bothering you? ” about the many voices that operate inside our head. Seth characterized the voices in roles varying from an artist to a zombie. Terri Lonier, author of the Working Solo newsletter, added a time component of the past, present and the future in her response “Who’s inside your head?

This naturally lead me to think, “Who else is inside our heads?” Here are a few characters you are likely to encounter daily, mostly from your past.

Your parents A great deal of how we think about things, has been formulated at the parental knee, the family dinner table through all those years you spent at home. So when you find yourself agonizing over “I’ll never be able to get it done” or “I’m just going to have to hold firm, if I am to get what I want” this may be the voice of your parents (or teachers). As with all humans, they were likely right, about as often as they were wrong. So recognizing when you are playing a parental script versus when you are consciously thinking things through is important.

Your managers Most of us have had the good fortune of having worked for one or more great managers. And all of us at one time had that manager from hell – maybe not pointy-haired – but close enough. So when we deal with people particularly and problems that arise with the powers-that-be, its likely our managers turn up in our heads.

Your hereos We’ve all been faced with tough choices. Be it walking away from an ethically challenging situation or having to make a hard choice between work and personal life or letting go of a co-founder. The more honest among us ask out loud “What would ____ do?” fill in with your favorite hero – Jack, Steve, Gandhi or Jesus.

As entrepreneurs we’d like to believe we are smart, motivated  go-getters and we likely are. But knowing that many a times we come up with an answer, it’s worth reflecting who’s voice it is we are hearing.

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