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Liz Lange launched her eponymous line of fashionable maternity clothing in 1997. Within eight years, the company grew to over $10 million in revenues, secured partnerships with Target and Nike, and established a cult following said to include the likes of Cindy Crawford, Gwyneth Paltrow and Kate Winslet. In the process she changed the way women, retailers and the media think about maternity wear, despite the fact that industry experts told her it would never work. Liz Lange also bootstrapped her way to success. Here’s how she did it:
UpStart: “How did you build a multi-million dollar brand with limited startup capital?”
Even the greatest athletes need help from the sidelines. The same is true for founders. That’s why I recommend that founders build advisory boards. Here are a few insights on advisory boards for startups:
1. What an advisory board is, and isn’t. Don’t confuse advisors / a board of advisors with directors / a board of directors. As a CEO, the board of directors is your boss. Directors take a formal role in overseeing the business, often representing shareholders, approving budgets, and deciding who should act as CEO. In contrast, advisors work for the CEO. Advisors provide feedback, advice and introductions to investors, customers, and business partners – as needed.
Top MBA programs go to great lengths to prepare students to be successful entrepreneurs. But for some reason, many don’t teach sales – one of the most important skills for founders. When you build a business, you sell constantly. You sell to bring on partners, customers, investors and employees. You sell when you talk to the press, go to trade shows – even when you chat with the person next to you on a plane or at a cocktail party.
So, what do you need to learn about selling? Here are a few basic tips, brought to you via the school of hard knocks:
1. Call on the right customer. No matter how good you are at selling, you’ll probably get nowhere pitching to a customer that’s a bad a match for what you are offering. Instead, do your homework. Network your way to ex-employees, investors, suppliers or other people who can give you the inside scoop. Learn about the company’s goals, the challenges they are grappling with, and the approaches they’ve tried in the past.
A friend and business partner, Beth Schoenfeldt, from Collective-E, just asked me a couple questions about bootstrapping for a webinar. I thought you might find the Q&A helpful:
Beth: Can you name any big brands that were originally started by bootstrapping?
David: Apple, YouTube, Facebook, Yahoo, Microsoft, Google and Whole Foods all got traction via bootstrapping before raising significant outside capital.
Beth: What are a couple great ways to get services or products for less?
Many founders struggle through product development, fundraising, sales, and team building and think they’ve got it made. But when it comes time to lead and manage the troops, they find themselves clueless. Here are a few tips to consider:
1. Leading and managing are different. Leading is about sharing your vision for the future, and getting your team motivated to make it happen. Managing is about making sure everyone is doing what they should, the way they should, on a day-to-day basis. Every company needs both. That said, some founders are great at both, while others find they are better at one than the other, and a partner or key lieutenant to fill in the gap.
Dany Levy is the founder and Editorial Director of DailyCandy, a daily newsletter with insider advice about style, food, fashion, and fun. Dany started DailyCandy in 2000 with a simple vision: one thing in your inbox telling you what to do that day. In 2008, Comcast acquired DailyCandy for a reported $125 million. Today DailyCandy has over three million subscriptions. Prior to founding DailyCandy, Dany worked for New York Magazine and Lucky, and wrote for The New York Times, Martha Stewart, and Vanity Fair. Dany is a graduate of Brown University.
UpStart: How did you make use of a business plan at DailyCandy?
Dany Levy: “A business plan should evolve depending on the stage of a business and on the audience it’s written for. I started DailyCandy myself, at my kitchen table, with no employees. At that point, my business plan was just for me. It was a two page document describing what DailyCandy was, to help me clarify and narrow down what the product should be. That plan helped me stay focused, but it also left room for flexibility. I just concentrated on writing great editorial, and spreading the word. A year later, I developed a more comprehensive business plan, as I began to sell advertising and court suitors. Still, I kept it short. I figured investors needed to “get it” after the first few minutes. As the business grew, and I took on institutional investors, I needed more detail, like financial projections and strategies for marketing and sales.”
Moshe “Mo” Koyfman is a principal at venture capital firm Spark Capital, where he leads investments in Web services such as www.aviary.com. Prior to joining Spark, Mo spent six years at IAC, most recently as Chief Operating Officer of Connected Ventures, parent of CollegeHumor.com, Vimeo.com and BustedTees.com. Mo is a graduate of The Wharton School and The College of Arts & Sciences at The University of Pennsylvania.
UpStart: “What do you look for in a startup team?”
Mo Koyfman: “A great team is the first thing I look for in an investment opportunity. Successful businesses are built by extremely talented people and that’s where my investigation begins. I specifically like to see great co-founders, as there seems to be a unique chemistry that develops with the right mix of leadership at the helm. If technology is an integral part of the product, I also like to see at least one of the founders with a strong technical background. It’s certainly ideal if they’ve had prior success, but not a prerequisite. And it’s important that they’re still hungry, no matter how successful they’ve been previously. I also look for a balance between tenacity and passion on the one hand and a willingness to listen and learn on the other, as many mistakes will be made and the company will undoubtedly have to hear their users / customers and pivot over time.”
Tommy Hilfiger is the founder of Tommy Hilfiger Corporation. An entrepreneur from his earliest days, Tommy skipped college to run a string of retail stores in upstate New York. He later turned down highly sought-after fashion design job offers to start a company of his own. In 1995, Tommy was named Menswear Designer of the Year by the Council of Fashion Designers of America. Three years later Parsons School of Design named him Designer of the Year. By 2004 Tommy Hilfiger Corporation had over 5,000 employees and revenue of more than $1.8 billion. Private investment company Apax Partners acquired the business in 2006.
UpStart: “What does it take to be a great entrepreneur?”
Tommy Hilfiger: “I think skills and personality traits are more important than background. I never went to college or design school, but I had passion, drive, and resourcefulness in droves. When I launched Tommy Hilfiger Corporation, I wasn’t trained in the conventional rules of business, but that worked to my advantage. I experimented. I made bold moves. And I adapted as I learned. I credit much of my success to my drive to win and my fear of losing.”
At business school, we played a silly game called buzzword bingo. Before a professor arrived, students chipped in a buck in exchange for a bingo card with words like “value-added”, “synergy”, “seemless” and “share of mind”. When a student mentioned your word in class discussions, you circled it on your card. If you got enough words for bingo, you raised your hand, and made a comment incorporating an embarrassing phrase that pays, like “I read this (homework) on the toilet…”. Back then, it was just a juvenile way to amuse ourselves and bug the professors. But the undertone was on-target: Showing people how silly they sound when they use buzzwords.
Overuse of buzzwords are just one example of ways people muck up their business writing. Here are a few tips:
1) Stop following the herd. In “Why Is Business Writing So Awful?” Jason Fried argues that phrases like “full-service solutions provider” and “value-added services” are overused to the point of being generic. “A quick search on Google finds at least 47,000 companies describing themselves as full-service solutions providers…,” explains Fried. “When you write like everyone else and sound like everyone else and act like everyone else, you’re saying, ‘Our products are like everyone else’s, too.’ ”
Of all the things founders worry about when starting a business, losing money is often at the top of the list. Here are a few ways to limit financial risks for yourself, and for your investors:
1. Take a phased approach. Plan your business in time segments, like months or quarters (4 months). Set specific goals for each phase, with budgets, and ways to measure your performance. That way, you can stop every once in a while, take stock of how you are doing, and decide how to proceed—without any nasty financial surprises.
2. Track all expenses. If you don’t measure it, you can’t control it. A simple way to do this is to use a dedicated bank account and credit/debit card, so you’ll have all the numbers in one place.
