Project: Liftoff

At heart, I’m an idea guy. I love coming up with them, I love playing with them, and I love hearing about them — that’s why I went to TEDxUSC 2011. This year’s theme was “Actions Speak Louder,” and the speakers were all people who had come to believe something — and were doing something about it. Their speeches all showed how they crossed the boundary from thinking to doing, all in their own way, all in their own industry, from professors publishing, to motivated individuals starting non-profits, to the less-restrained and more-flexible starting clown colleges. At many start-ups, and for many entrepreneurs, the actions fall to the wayside, and the ideas keep your attention. There is no start, no changing the world. So it was great to hear about how all of these different people got to start. Everyone who doesn’t take the plunge has a different reason, of course. But the two I see most — and these are actually true of not just entrepreneurs but operating companies as well — are:

1. They’re too comfortable with the way things are
2. The idea is endlessly optimized

It’s a truism that the clients who have just lost their jobs, have gone into default on a loan, or who have just lost a key customer are more than happy to throw themselves into a new company or a new product; it’s the ones with good jobs, other successful businesses, or lucrative product or service options that end up being comfortable with where they are and end up letting an opportunity languish. Of course, it’s hard to criticize someone for focusing on something that’s working well enough. The root cause here often is that the client isn’t prepared to be honest about their own goals with themself — they talk a good game about doing something innovative, but it turns out that they really love to go home at 5pm, to spend their free time fly-fishing, and to accept a lower income in return for security. All valid goals, indeed, but too few people are prepared to admit them to themselves. Be honest: if you like things how they are today, that’s fine. Just own it. The other type is the client seeking perfection. As Voltaire said, “the perfect is the enemy of the good.” Of course, every idea can be continually refined and made better; for many people, this activity is just darned fun! And, again, good for them; but at some point in time, like the speakers of TEDxUSC 2011, you have to turn your words into actions, or all you’ve done is create words. Usually privately. In some document on your computer. That nobody else has the password to. Yeah, let’s not end up with that. Go for it. Take your first step. Don’t know what your first step is? Well, then, you need a business plan. Many people give the advice “don’t write your business plan, just start the business!” Done correctly, your business plan is how you figure out how to start the business. It’s not about grand ideas; it’s about your next step. If you know your next step, without a plan, then go for it. If you need to do some digging to find that next step — to turn your words into action — then a business plan can help you speak louder.

I think I mentioned that I recently took a vacation – a great trip around France, if you’re interested in the details. Of course, to get there, we flew. The way there we took Air France, but, on the way back, we flew Delta and saved a lot of money. Along the way, I saw several business lessons. Air France is pretty well-known as a premium airline. They offer good food and their in-flight entertainment deservedly gets high marks. Delta is the biggest airline in the world and offers your standard US airline experience – older equipment, bad food, and cranky flight attendants. Of course, that Air France ticket is a lot more expensive than that Delta ticket. Air France offers a premium, distinctive product that I can’t get elsewhere; does it  at a premium price; and hasn’t recently been tremendously profitable, because of relatively higher costs. That’s OK; they couldn’t be lower-cost and still offer the level of service that makes them distinct. Delta is low-price provider of commodity service that I can duplicate by flying any other airline, but they’re profitable because of their low costs. I can switch to anybody else and get at least the same experience, but, because Delta is so large, they have economies of scale and can offer that return ticket a lot cheaper than their competitors. You need to pick: cost or quality. Delta and Air France did. Even if you can do both, like Virgin America, your customers will talk about one, just as everyone always talks about the great experience of flying Virgin America with its food, in-flight entertainment, and distinctive cabin lighting. And you need to pick one and stick with it; the other won’t be sustainable for you. For instance, Delta put fancy wood floors in their bathrooms. I could tell they were nice, but we were flying older equipment and, years after these expensive floors were installed, they just looked dirty. Easy-to-clean plastic would’ve been better. It’s not a bad thing to be a commodity provider, undistinguished by quality. There will always be many customers who are price-motivated. If your exit is to be acquired, it may be smart to be a commodity. For instance, Northwest was a commodity provider. Initially, they had a defensible position because they served unique geography. Recently, Delta was able to buy them because Northwest offered exactly the same kind of commodity Delta did. Delta couldn’t acquire, for instance, Southwest, because that company is run too differently from Delta’s model to be integrated into their service. If you can imitate Northwest’s strategy, being a commodity may offer a unique benefit to you in the long term. But remember: few start-ups are actually low-cost. Southwest was a low-cost startup, but that airline is an exception because they have very unique business practices. Usually a startup appears to be low-cost because it’s small and can make low-cost, low-volume choices. When you increase the volume in which you provide your product or service, you suddenly find yourself buying the same expensive equipment that your larger competitors are spending their money on – and that is keeping their prices high. It takes practice and diligence to be low-cost. For many start-ups, going the premium route is more sustainable. And it can last too: just look at Air France.

I’m bad at going to the gym. Which is a pity, because it turns out that being in shape is so useful to doing good work. Going to the gym and sitting on the stationary bike for a half hour and then working through a weight rotation is, to me, just kind of dull. I don’t look forward to it, and so I don’t do it. Being an entrepreneur can be a lot like going to the gym – long hours of solitary activities you know you should do, that you’ll enjoy the results of, but that just aren’t fun. We all tend to put off those tasks and do the fun things, which is great until a vendor cancels your account for unpaid bills that you could’ve paid, you just didn’t find the time to handle. I get around the crowded-gym-is-lonely thing by going to classes. My gym offers many different classes, and it’s great to get to know the instructors and my classmates well. We all sweat through awful experiences like military crawls, sprints while fireman-carrying each other, and Turkish get-ups. Other people I know make friends with their fellow free weight fanatics, or join cycling groups. Working in a community really does help – that’s part of why everybody else goes to the office every morning. It’s easier to get things done when you’re not alone, and others can help you learn things you should know. Many entrepreneurs deny themselves those communal benefits by working solo. Sure, there’s a lot of excitement in going out and doing your own thing, but you do give something up too. Fortunately, the Internet gives us many ways to connect with other people. I took the time a few weeks ago to make a list of all of the startup and small business communities online that I could find easily. Here they are, in no particular order: • PerfectBusiness • Biznik • Entrepreneur Connect • PartnerUp • StartupNation • American Express OPEN Forum • Business.com • Business.gov Community • OnStartups • Yahoo! Answers • And, of course, LinkedIn I’ve tried spending some time on these, and a couple have already made me meaningful relationships. Give them a try, and tell me what you think. If you know others, then tell me about them in the comments!