This has taken from a lecture by Nir Barkat at entrepreneurship and hi-tech convention. The spokesman, Nir Barkat, was a technology entrepreneur and was one of the firsts in the world to develop anti-virus programs. He is now the mayor of Jerusalem which i assume required huge entrepreneur skills to succeed. Here are his words:
I want to simplify the entrepreneur process:
It isn’t simple to raise funds, but it shouldn’t prevent us to set in motion moves and as better we act, the funds will accelerate the process. We need to differentiate between the process itself to his acceleration (driven by funds). Today, it is very expensive to raise funds and its better to use the existing resources on our business.
First, we need to develop a concept that answers to some market need, after that prove its working on clients and online then develop a stable business model after we understood the costs, the costumer’s needs and the solutions. Idea – Sharpening – Testing – Pilot – Improve – Breakthrough.
There are two classic entrepreneurship approaches:
Technological- First developing the technology and then look for the clients.
Marketing- First learning the clients and their needs and only then developing the technology accordingly.
I act today (as the mayor of Jerusalem) by the second approach: First i talk and consult with the citizens about their needs and then i develop a plan for it.
Developing an idea:
Entrepreneur needs to search for paradigm shift, meaning recognize a change of the consumers behavior and take advantage of this opportunity. Take for example social networking- Mark Zuckerberg identified this change and gained great success with Facebook.
As for the ability to recognize paradigm shift, entrepreneurs has big relative advantage on big companies that drowned in providing their services…
From Entrepreneur To Manager
There is a big difference between an entrepreneur and a manager. Mostly after a year or two of business venture, we need to examine if the entrepreneur that leading, is also a good manager. Some of the different skills that a good manager needs are:
– Recruiting good employees.
– Laying out the path.
– Develop the business model.
– Develop the business growth.
Only third of entrepreneurs are succeeding to enter the manager suit, third understand they don’t understand it good enough (Google for example) and third simply discharged out… Too many gifted entrepreneurs are getting hurt because they don’t look at the mirror and know their limitations.
Developing The Business Model/Plan
The best measure of business success is the satisfaction of the client. When i was an executive in a venture capital fund, we saw lots of business plans and we recognized fast business plans written not seriously. In a stable model we can see clearly how much costumers are satisfied and how much not.
Entrepreneur tend to inflate numbers relatively to the market, income and expenses- Conservative approach is built from down to up- From what you managed to realize towards up and its not rely on dreams only.
I distinguish between different types of funds at the first stages:
1. Flexible and easy- Mostly small amounts, loans from banks, loans from parents and such. This should be enough just to proof the idea.
2. Intermediate funds- Private investors (angel investors). Establishing the initial idea and showing its work on clients.
3. Funds for growth- Venture capital fund companies. Due diligence of all the levels towards growth and establishment.
What The Investors Will Ask?
Why do you think you are better? Who else is in your field? Who are the major competitors? Why are you better from them? Naturally, investors focus on success stories which you will be compared to, and not to failures.