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Business Innovation: Entrepreneur Quality Improvement Needed!

quality improvement, business quotes, business tradeskill

But it’s NOT Monopoly Money!

Apparently venture capital needs some quality improvement… in entrepreneurs.  It seems that even venture capitalists like Mark Andreessen, Bill Gurley and Fred Wilson are sounding the alarm. There are a lot of young entrepreneurs who aren’t really grasping numbers.  A lot of investor money is being spent by startups at very fast burn rates, and not at all wisely.  Alyson Shontell, in a post for Business Insider, explains:

Fred Wilson agreed with Gurley, stating: “We have multiple portfolio companies burning multiple millions of dollars a month. Thankfully its not our entire portfolio. But it is more than I’d like and more than I’m personally comfortable with.”

Wilson’s firm has invested in companies such as MongoDB, Twitter, Foursquare, Zynga and Tumblr. Gurley’s has invested in Snapchat, Uber, OpenTable and Yelp. Now Andreessen, who’s an investor in Pinterest, Foursquare and Fab, also says the tech world should be worried.

Last week I wrote a post about choosing the right business college, pointing out that the amount of venture capital raised by a school’s entrepreneurial alumni isn’t a very good selection qualification.  Now I’m saying this: some entrepreneurs lack even the fundamental business tradeskills.

What’s the quality improvement that’s needed?  Unfortunately, it seems that a new crop of entrepreneurs are forgetting the goal (creating a profitable business) and focusing on a milestone (securing the next round of venture capital financing). They’re being financed by an investor community swinging between greed (the Next Big Thing) and fear (not being invested in the Next Big Thing).  They’re aided and abetted by pundits anxious to herald success using easy-to-quote criteria like funds raised, before the marketplace’s profit/loss verdict is in.  Even the academic community is piling on, offering “entrepreneurship” courses consisting of writing a business plan that will assure… a round of venture capital financing.  Simply put, these entrepreneurs aren’t grasping (the right) numbers; they’re below-critical-mass skills need some quality improvement.

We can choose to be a part of this particular “bubble cycle” and hope that we’re not the last startup to be capitalized before the next reversal.  Or, we can choose a different growth model that that will survive the worried exuberance of venture capitalists today, and their cheering sections in social media and academia.

Harsh words?  Yes.  Straight business talk?  Yes, as well, and here’s why.  I’d like to hear that you (a) survived and (b) made a profit.  You and I (and these would-be entrepreneurs) need to grasp the numbers of business.

I’ve recommended this book before, but ‘Growing a Business’ by Paul Hawken is the best start-up guide I’ve ever read for entrepreneurs who’ve chosen to travel a different path.  You can get it cheaply (starting at $3.10 plus shipping) at www.abe.com.  I’d get an old fashioned paper copy to keep on the shelf, highlight passages and make notes in the margins… it’s that good.

Want to Immediately Read About What Every Entrepreneur Needs to Know?

Why is ‘Growing a Business’ such a classic business book?  Here’s Paul Hawken to answer the question, “what is tradeskill“.  Then, you can read a short description of tradeskill here.

Now that you’ve read about the critical importance of business tradeskill, you can learn what these entrepreneurs haven’t: how to grasp numbers.

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3 Comments

  1. Carol Orris says:

    I think that often times quick success leads to a quick demise where businesses are concerned. The end goal is a log living, profitable business, not just a quick burning flash in the pan. You emphasize grit and determination in your posts, and I think that this is the key to success. Thank you for the book recommendation. I will definitely check it out! Maybe you could do a post on must-have books for entrepreneurs ?

    • Chris Chadbourne says:

      Good heavens, Carol, the digital forest is thick with posts listing must-have business books. Do you really think there’s room for another one? Especially one that doesn’t list the trendiest flash-in-the-pan pundits?

  2. Commenting on your quote,

    “Unfortunately, it seems that a new crop of entrepreneurs are forgetting the goal (creating a profitable business) and focusing on a milestone (securing the next round of venture capital financing). They’re being financed by an investor community swinging between greed (the Next Big Thing) and fear (not being invested in the Next Big Thing).

    Nothing rang so true. It’s like working a seasonal job but thinking it’s full-time. What’s going to happen after Christmas? The same thing goes for entrepreneurs looking for the next big thing. It may or may not come – and when it does.. how long will it last? How much money will be wasted to move an inch? It’s always a shame to see people jump the gun.

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