Monthly Archives: October 2013

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Your Investors are Not Your Friends!

A typical startup investor

I don’t mean to say that investors are bad people; some of my best friends are venture capitalists. It’s just that most founders don’t realize that a good VC always has his investors best interests at heart, and those interests do not always line up with the interests of venture and certainly not with those of the founders.

Unfortunately, these conflicts usually only come to light when additional funding is to be raised and/or the start-up is not living up to expectations. New investment terms might strongly favor the VC over the founders, and more often than not, the investor’s guarantees of follow-on investment evaporate if the venture does not garner the interest of other investors.

At that point, founders are often blindsided by what they see as a betrayal of trust, but it’s usually just a misunderstanding of allegiances. You investors will always be on your side provided that it is always in their best interests be be so.

Your investors can provide a great deal of useful advice. But always remember, as a founder your obligation is to all the stakeholders and not a particular investor. No one cares more about your company than you, and it is your job — not your investor’s — to look after the interests of all your stakeholders.

Freelancers & Entrepreneurs

Happy FreelancerMany people use these terms interchangeably, but they are radically different. I’ve been both a freelancers and an entrepreneur at various times in my life. Both can be a good way to make a living, but the difference between the two  is important.

It has nothing to do with size, capital or available resources. It has to do with focus.

Freelances make money by performing a service directly — programming, web design, consulting, etc. If you are a freelancer, you make money when you work. When you stop working, you stop earning. Your primary concern is getting more work for your and your team to do.

Entrepreneurs, on the other hand, focus on building scalable systems. If you are an entrepreneur, most of your work will not generate much direct revenues. This is because once your activity starts generating revenues, your primary concern is how to remove yourself from the process.


Enter at Your Own Risk

Enter at your own risk

Japan market entry is tricky for disruptive technology. I recently met the local representative of a successful US start-up. The local rep had convinced headquarters that the Japan product needed to be launched under a different name, with a different look and feel, on a local infrastructure, and be managed by the Japan team.

I’ve seen this countless times. The local rep is happy to keep taking the parent company’s money, but if business really takes off, the representative will take ownership of the brand, clone the technology and launch a competing service.

A small foreign company simply cannot enforce their intellectual property in Japan.

Never give up your brand!