Over the weekend I had the privilege to interview Martin Zwilling, CEO & Founder of Startup Professionals. He is also a Callaman Ventures Board Member and Executive in Residence; Advisory Board Member for multiple startups; Arizona Angels Selection Committee; Entrepreneur in Residence at ASU and Thunderbird School of Global Management.
I have known Martin since August of 2009. I have emphasized again and again on my previous postings how important it is to reach out to your peers within your niche. I’ve reached out to Martin and asked him to share my post, 21 Words All Entrepreneurs Must Eliminate To Be Successful, with his readers. Not only he got back to me right away, he also agreed to share my post with his followers on Twitter. Since then Martin and I kept in touch.
Martin has a lot of experience with startups. I thought it would be beneficial to all of you to hear from him. Below are few questions I’ve asked Martin. Martin also helps many entrepreneurs through is blog, Startup Professionals Musings. He blogs daily on various topics to help today’s entrepreneurs.
In your opinion, what does it take to be an entrepreneur in today’s world? (new technology, internet, etc).
The first challenge for any entrepreneur is to identify a real “need,” and then build a solution. Too many invent or fall in love with a “technology,” and assume everyone will want it. That’s a “solution looking for a problem,” and these usually fail. The second challenge is to make a business out of it – how do you make money?; who will buy it?, etc. The Internet social networking model, like Facebook, has convinced people that most things ought to be free, with businesses making money on the advertising. That model doesn’t work for small start-ups, and makes it tough for them to survive.
How difficult is it for an online entrepreneur to get initial funding through an angel investor (any investor)?
Getting initial funding from angels or any professional investor is very difficult. All now expect you to have something already, like a product built, a few customers to prove the business model, and significant “skin in the game.” That means initial funding usually comes from the entrepreneur, or FFF (friends, family, and fools). The myth that you can sketch out an idea on a paper napkin, and investors will throw money at you, is gone (unless you have a successful track record several times over, or a rich uncle who is an investor)!
What does it take to secure funding in today’s internet world?
In today’s internet world, you still need to start with a written business plan, and a strong team. Investors actually fund people first, a good plan second, and the idea last in priority. In all cases, networking to find investors is very important. Emailing your idea to hundreds of investors, or using Twitter and Facebook, is a waste of everyone’s time. Go to local business association meetings, talk to executives and potential investors, and ask their help to get an introduction to VCs, Angels, and potential business partners.
Who will they be competing against?
You compete against a thousand other peers, because the entry cost of providing a solution on the Internet keeps going down. Years ago, it cost a million dollars to develop a reasonable e-commerce site, now web design tools and platforms allow you to do it for a few thousand dollars. That’s both good news, and bad news, since almost anyone can jump into the game. Of course, you also compete against the “big gorillas” of the Internet, like Google, Yahoo, Travelocity, and many others. If they see you are getting traction with your new idea, they can jump in quickly with huge resources and kill you.
What is the one area that an entrepreneur MUST focus more on when writing a business plan?
I look first for a clear definition of the problem being addressed, and how your solution relieves the pain. Most business plans I see start right out talking about their solution, and how everyone will “want” one. “Nice to have” is not good enough – you can’t create real change until the pain level is high enough. The first page of your business plan better be your “elevator pitch” and it better have the “grabber” or investors won’t look for page 2.
In your view, how can an online start-ups get funding and where should they go to get it?
In my view, a lot of online start-ups don’t need funding, because the entry cost is so low. If they start by asking for $500K or $1M, they won’t get it, and they will lose all credibility, because it shouldn’t cost that much. In general, online start-ups should go to friends and family first, and then to local Angel groups if their needs are greater than $100K, but less than $1M. Angel groups are easily found online through www.angelsoft.net.
Do you get a lot of online start-ups for your help?
Yes, I talk to many of these. Often they just need pointers to resources, like how to incorporate, or how to build a business plan, or where to find Angels. These are the questions I try to answer with my blog articles, or via email, Twitter, Facebook, or LinkedIn. Sometimes they need real help writing a business plan, or making sure it’s adequate for funding discussions with investors. That’s what I do.
If you want to leave one message with entrepreneurs, what would that be?
I think the Internet is a huge opportunity for new entrepreneurs – it doesn’t cost so much to start, it’s changing rapidly so there is a great acceptance of new and better ways of doing things, and it scales instantly to worldwide, so the potential is unlimited.
Do you have any businesses online that generates revenue? What was your first effort online in business?
My current business, Startup Professionals, Inc., is an online mentoring and consulting business that is my revenue stream. This is my first online business, but I have had “brick and mortar” businesses, as well big-company executive experience with IBM, First Data Corp, Fujitsu, and others.
How much time do you spend on the internet daily?
I spend at least a couple of hours a day, sometimes much more, writing blog articles, answering questions on Twitter and Facebook, and trying to absorb the wealth of information that rolls out daily from all the other online sources.
How did you get started? And what was your first gig?
Many years ago, I was on the team that developed the IBM PC, so I’ve been on the Internet since it started. I really only started mentoring entrepreneurs and start-ups a few years ago as part of my “give back” to local universities and business groups. It was so much fun that I decided to start my own company Startup Professionals, to see if I could make it a business. I’m a strong believer that your business should be fun. My first gig was joining the Advisory Board of a local new job site for Baby Boomers.
What would your advice be for someone looking to make money on the internet?
My advice is that making money should be part of everyone’s motivation, but it should not be the primary motivation. Your primary motivation should be to solve some people’s problem, show people a better way, and get a sense of satisfaction. If your primary motivation is to get rich, you may be short-changed.