Top 10 Mistakes that Entrepreneurs Make

Entrepreneur Week at Stanford University Just so I could relive my college days, I attended Stanford’s Conference on Entrepreneurship yesterday. The conference was just a one-day event within Stanford’s Entrepreneurship Week from February 22 – 29. (You have one more day left!)

One of the sessions I attended was Professor Jeff Pfeffer’s “Top Ten Mistakes that Entrepreneurs Make”. Pfeffer is a professor of Organizational Behavior in the Graduate School of Business at Stanford University. Judging from the packed classroom, he’s also a popular professor. With good reason too, it seemed. His lecture was pretty funny and engaging, with stories and personal anecdotes sprinkled throughout.

Though I jotted down a ton of chicken scratch, I was able to get Pfeffer’s top ten mistakes that entrepreneurs make:

  1. Too much CEO ego.
  2. Too little regard for the self-esteem needs of others.
  3. Too much time, attention, & emphasis on “strategy” & analysis, and not enough time on “execution.”
  4. Too little emphasis on the importance of people & culture.
  5. Too much belief in the saving grace of “miracle” technologies & “big brains,” particularly in high-tech fields.
  6. Too much emphasis on budgets & financial controls; not enough attention to customer satisfaction and employee attraction & engagement
  7. Not enough attention to and knowledge of competition & competitors, including tracking their sales & market share
  8. Too much emphasis on individual performance and too little attention to context & situation within which that individual performance occurs.
  9. Excessive reliance on financial incentives for alignment, motivation, & communication.
  10. Not enough consideration of or attention to underlying assumptions & feedback effects.

This is just a quick recap; he had a ton more information. I hope he doesn’t mind my posting these notes. I would guess not, since attending his lectures is an experience mere notes could never convey.

If you attended Entrepreneurship Week too, what did you think of the other sessions?

Internet Real Estate Fix & Flip Overview

The Dancing House in Prague Ah yes, the real estate fix and flip. What better way to make bank than by buying a cheap fixer-upper, fixing it, and selling it for a tidy profit?

But you know that already. What you may not know is that you can do this with web sites too. Yea. Web sites.

Here’s a quick overview. The formula is somewhat similar to fixing and flipping traditional real estate. The word “property” is interchangeable here; it could mean a house or a web site. Both are essentially real estate properties. One just exists on land while the other exists on the Internet.

  1. Evaluate the property

    Assess it’s current value (pageviews, unique visitors, search engine rankings, market strength, revenues, expenses, etc) and potential for growth (new market opportunities, ways to increase visitors, ways to increase search engine rankings, ways to increase revenue streams, etc). Unlike traditional real estate, there aren’t many fees involved in purchasing a web site. There are only transition costs, such as getting access to their servers and related accounts.

  2. Purchase the property

    Sites like the SitePoint Marketplace (the largest place for buying and selling websites currently) and VentureBoard allow you to browse what’s for sale and offer a bid. Just like in traditional real estate, hot properties get scooped up fast.

  3. Fix the property

    This can involve a wide range of activities, depending on your expertise and the property you purchased. Some may just need a boost in search engine rankings (which is where SEO and SEM come into play). Others need more innovative marketing techniques (like SMM or viral marketing). You can also do things to increase revenues (raise site fees, add additional revenue generators, etc), decrease expenses (lower server or content acquisition costs, etc), or increase quality traffic (better marketing, customer retention techniques, etc). Hopefully you had an idea of what to do before you purchased the property.

  4. Flip the property

    Put it right back on the SitePoint Marketplace or VentureBoard.

There’s a ton of stuff that goes into properly evaluating and fixing a web property. Similar to traditional real estate, there’s even a whole industry around teaching you how to do that. Mind boggling. And potentially quite profitable too, if you want to get into it. Even though the barriers to entry are low (any ole’ shmuck can do it, even you!), it’s still a relatively young industry and may have room for more players.

So what are you waiting for? Go fix and flip!

Online Business Incorporation Services

Briefcase Need to set up your business entity? Fortunately there are a number of online services to help you with this now. Quite a number, in fact.

How can you chose the right online business incorporation service then?

Here’s what I did. First, I found a bunch of them through simple Google (GOOG) searches. Then I decided to sort them by their Alexa rankings. (I also did a quick comparison against their Compete rankings.)

Why? Because I wasn’t able to find any articles comparing these services to help me make an informed decision. Therefore, I figured a basic popularity rating is better than nothing. Maybe a service that’s popular would have slightly better offerings and customer service—or at least have enough customers to teach them how to run a quality business.

Is that really true? Hardly, but eh, it was better than nothing.

The search results and rankings produced this list:

  2. MyCorporation
  3. BizFilings
  4. DirectIncorporation
  6. Active Filings
  9. Form-A-Corp
  10. The Incorporation Company

The top four sites ranked high on both Alexa and Compete. Below that and the rankings were quite different. This list is sorted by Alexa rankings only.

Then I looked at the top six. I originally examined just the top four, but decided to go +2 for more variety. Scientific? Hardly.
For a Delaware LLC, prices range from $99 – $199 with what appears to be a limited-time discount, or $149 – $399 normally.
Since this is owned by Intuit (INTU)—creator of Quicken, QuickBooks, and TurboTax—I assume they have a fair amount of business knowledge. For a Delaware LLC, prices range from $288 – $488.
Advertised heavily in entrepreneurial publications, they offer a lot of useful articles and tips on business incorporation. For a Delaware LLC, prices range from $99 – 329.
Though their site isn’t much to look at, they seem to have quite a few free extras. For any state and entity type, prices range from $139 – 288.
They also own the domain name, so they could be ranking high simply because of effective SEO. These guys only offer business incorporation services for Delaware. For any entity type, prices range from $189 – $598.
Active Filings
Also not much to look at, they seem to be on the more expensive side. For a Delaware LLC, prices range from $289 – $589.

It would seem to me that MyCorporation, BizFilings, or DirectIncorporation seem to be as good a pick as any. Disclaimer: I am involved with businesses that have used BizFilings and DirectIncorporation. Since MyCorporation is from Intuit, I’d consider using them too, though they’re a bit pricey. could be a fair budget choice as well.

Another disclaimer: There are obvious problems with this method of selecting an online business incorporation service. For one, this favors sites that have good SEO resources. There could be a great service that’s not listed on the Google search results. This also doesn’t compare actual quality factors—or define what those quality factors are. Unfortunately, business incorporation isn’t a common multiple-use service, so few people would be in a position to do an in-depth comparison. However, if anyone has any anecdotes or experiences about these services, I’d love to hear about them. Perhaps this could be the start of such a comparison.

UPDATE 3/14/2008: Corrected entries for and Removed my error in stating that redirects to; it actually redirects to Thanks for the correction, Frank!

The First Four Months

It’s one of the first questions asked of me. “What have you been working on?” You see, I’ve been visiting family & friends over the holidays, and they’re all curious about what the first four months of my entrepreneurial ventures have been like. Naturally.

So here’s what I’ve been doing: adjusting, vacationing, learning, researching, and building. In that order.


A friend had warned me that the first few weeks would largely be a transition period, where I’d have to adjust from a corporate-directed schedule to a self-directed schedule. He was right. Settling down into a routine where each day was, and is, entirely unstructured can be a challenge. That’s also the beauty of working on your own too. Your schedule is now entirely in your own hands, for better or worse.


After years of working for The Man, I also decided on some R&R. So I took a trip to Vienna, Budapest, and Prague. It was incredible. This trip, along with another to Hong Kong and Tokyo earlier this year have given me some business ideas as well, wink wink. Oh, and I also did a week in Hawaii and a month in New York City. Vacationing is fun!


When I left my last employer, I adopted the philosophy of being a mental sponge. This means keeping my mind wide open and trying to absorb as much knowledge as I can, from everyone around me. Also: I read ferociously. I attended Lunch 2.0 meetings. I met new people. I talked to former co-workers and fellow ex-coworkers. And I delved deeper into the world of investing, search engine optimization (SEO), online communities & blogging, and social media marketing. It’s fun being a mental sponge!


I didn’t quit my job with a specific business idea in mind. Instead, I quit with a handful of ideas and the desire to research each for viability. Some I share online, others I share with friends. Some ideas take days to properly assess, others take weeks, especially those that involve some kind of market testing. In doing so, I’ve discovered that ideas themselves are relatively easy to come up with and sharing an idea with the right people can infinitely strengthen it. Sometimes those people will offer advice, play devil’s advocate (which is extremely helpful), or even offer to join me in making it happen.


Being an ardent multitasker and workaholic, I’ve also been building a few online businesses in between vacations and everything else. I’ve been helping some friends out in various capacities, from web design & development to technical & project management. There’s nothing to announce right now, but they’re fun projects with good potential.

The Next Few Months

So what next for the next few months? Well, I’ve been debating between two fundamental business/life strategies: the Big Bet and the Four-Hour Work Week.

The Big Bet is where you throw all of yourself into that one great business idea; it’s running your own start-up; it is what most entrepreneurs in Silicon Valley are doing. The Four-Hour Work Week is based on the book by the same name and is where you build up a number of passive income generators with the goal of minimizing your workload.

Over the holidays, I’ve decided on my business/life strategy. I’ve decided to do both, serially. First, I’m going to build enough passive income generators to cover basic expenses like rent and groceries. Then I’m going to jump wholeheartedly into a Big Bet.

What will be that Big Bet? Hmmm! wink wink.

Happy 2008 everyone!

Biz Idea: Board Game Cafe

Board Game My friends and I love board games. My friends and I love cafes. So I thought, why not combine them both into a board game cafe!

The Business Model of Current Cafes

The current cafe business model is basically to sell you coffee and snacks (and occasionally, other things too). The more in-and-out customer traffic they get, the more sales they make. Although many cafes go out of their way to create a cozy, homey environment to attract lounging customers, this can actually hurt their bottom line.

For instance, cafes with free wifi will undoubtedly attract cafe wifi moochers. That’s good and all, if the moochers make occasional purchases. But as one Seattle coffee shop discovered, removing free wifi decreased lounging customers (more specifically: cafe wifi moochers) and increased sales.

So how about this as an alternate cafe business model: make money from customers who lounge around in your cafe. How? By offering board games!

Game Night at Yahoo!

Here’s another way to look at it. Randy Farmer, a Community Strategic Analyst for Yahoo! (YHOO) started a casual Game Night at Yahoo! last year. It’s free to anyone in the California Silicon Valley area. New members can join through their mailing list, South Bay Boardgamers, then play a large variety of board games at Yahoo!’s offices in Sunnyvale, CA.

Back when I was a Yahoo! employee, I’d occasionally see several dozen boardgamers happily socializing and playing in the Yahoo! cafeteria. The energy was enticing and exciting.

This is proof of an audience for board games. Now say they could also play on weekends in a nice, cozy, homey cafe, complete with coffee and snacks. Not only would it be a good wholesome family-friendly evening, but it would be a great way to meet new people too. There are lots of singles and new residents in the area, many of whom may be, or could grow to be, board game enthusiasts.

Monetizing the Board Game Cafe

Aside from coffee and snacks, this cafe could offer:

Board game table rentals
A group of customers could select or reserve a table and a board game from the cafe’s library. The table would be rented at an hourly rate that varied depending on the day of the week. Perhaps it could follow a bowling lane rental model, or something similar. The group could specify that the table is “private” or “public,” where public tables would allow walk-ins to join at a pro-rated rate. Tables would vary in size and be expandable, from small one-on-ones to large groups.
Board game tournaments
Once the cafe was somewhat established, weekly or monthly tournaments could be held. These would allow singles the opportunity to band together and compete for prizes, such as gift certificates, additional time, or cash. Teams and guilds could be formed too. Some tournaments could take on themes, such as a AD&D Halloween, WWII Week, or Star Wars Wars. Companies can also reserve the cafe for team outings or team-building games.
Online Network
An online supporting network would allow customers to view their accounts and subscribe to various rental schedules (such as a flat fee for unlimited usage per month). They could also form guilds with other members and track their winnings and losses from tournaments or private games. Members could purchase time or subscriptions for other members as gifts. New members could also be randomly selected on occasion for a game together, based on their game preferences and experience.

The Business Challenges

There are many business challenges to this idea. They aren’t insurmountable, but are reason to approach this with some caution.

Video Games
There’s a growing trend of video & electronic game usage. It’s arguable that board games have social benefits over the faceless screen of a monitor, though the video game industry is booming. If this trend continues, board game demand may drop and kill the profitability of this business. And if a niche survives, would it be large enough to sustain such a cafe? Or could a retro revival take place to reintroduce board games to the public?
Price Point and Margins
The rental rate would be an important determinant of success. How much are people willing to pay for playing board games in public vs in their own homes? Game Night at Yahoo! shows some demand for playing in public, especially when it means expanding your circle of players. The price can’t be so low that it doesn’t cover the costs involved (board game sets, employees, rent, etc) and can’t be so high that it drives away customers. Research would be needed to determine the right price point.
As with any retail business, the location is crucial for success. Great locations mean high rent, however. Are the profits of this business enough to cover the costs?

Since this business idea would require relatively high capital costs (rent, furniture, materials, employees, training, web site development, point-of-sale infrastructure, etc), the break-even point may not come for a while, perhaps years?

Could this business become one of those successful trends that grows into franchises across the country? Or is it a labor of love, a hobby business for someone who doesn’t need the money but has the time to do this? I don’t know, but I dig the idea. And so, perhaps, would some of my friends!

Need to do a Patent Search?

Marine mammal communication device patent You’ve got a great idea. It is, or involves, an invention that you believe is new and unique. Sounds like you’ll need to do a patent search!

Those don’t have to be the only reasons to do a patent search, however. According to the McKinney Engineering Library at the University of Texas, there are other benefits:

  • getting a general idea of how an application and patent is structured to help in the preparation or your own application
  • learning more about a new field
  • for market information
  • competitor tracking
  • technology tracking

Searching for a patent in that humongous sea of complicated patents can be daunting. Fortunately, the William and John Schreyer Business Library of Penn State University offers a patent searching tutorial.

How daunting can this process be?

For example, patent examiners at the United States Patent & Trademark Office (USPTO) spend about twelve hours investigating each patent application to determine whether the invention it describes is patentable. During that time, the examiner consults an average of thirty-eight databases containing patent and non-patent literature to determine whether the invention has ever before been described.

Daunting. It’s worth checking out that tutorial if you’re going to do a patent search yourself. If not, you can hire a patent attorney.

But what if you’re bootstrapping? According to Inc. Magazine’s article “Can You Get a Patent without a Lawyer?“, the answer is YES. “Patent searching is confusing at first, but can be mastered with practice,” writes the author. “It is a research rather than a legal skill.”

Where can you begin your bootstrapped patent search operation? Why, online, of course! Here are some handy online patent search engines:

Good luck with your patent search!

Brainstorming Business Ideas

Coming up with business ideas is easy. Relatively speaking, that is—relative to setting up a business and keeping it profitable.

Here are several brainstorming methods you can use to come up with business ideas.

The Problem & Solution Method

Examine your life and your everyday activities. Are there tedious chores that could be made easier? Are there complicated actions you can’t do, but wish you could do? Are there undesirable activities that could be done by someone or something else?

Carry a notebook with you everywhere for a week. Write down every painful problem you see. Ask your friends about problems they face too. Every problem is a potential opportunity, ripe for solutions that could be made into profitable products or services.

The Market-First Method

Choose a specific target market you want to serve before even thinking about a product or service. Understand that market’s demographics, psychographics, behaviors, beliefs, needs, wants, and problems.

Put yourself in their shoes. If you can, try to live and breath their lifestyle for a week. Immerse yourself in that target market. Watch them, study them, interview them. Take note of everything they say. How do they think? What problems do they need solved? What do they need, what do they want? Keep an open mind for potential opportunities.

The Personal Strengths Method

Analyze your innate talents, learned skills, and experiences. If you’re working with others, analyze your collective strengths. Take psychological tests (like those offered in Now, Discover Your Strengths and other similar sources) to help determine your core aptitudes.

What kinds of products can you build, or services can you offer, with this collection of strengths? What kinds of businesses play to your assets? Chances are, you will be much more successful with a business that utilizes your strengths, even if the idea already exists.

The Mix & Match Method

Take two seemingly unrelated concepts, products, or services and see if you can combine them. They can be across distribution channels, packaging styles, branding styles, ergonomic designs, target audiences, core features, core attributes, and even base materials. Make a list of existing concepts and mix & match them systematically, analyzing each pair for viability.

For example, mix the concept of fast food and package delivery and you have overnight shipping services. Match a photocopier and a telephone and you have a fax machine. Add friend networks and the internet and you have online social networks.

The Importation Method

Travel the world. Take note of all the products and services you see. Consider how each could be imported back to your country. You could create a whole new company doing the same thing. Or you could become the sole distributor/provider in your region for the original company.

The world is rich with ideas, especially in cultures very different than yours. Some imported ideas will need adjustments to adapt to the local market. Others will need experts from the original country to make it happen. Be aware of potential international copyright laws as well.

The Lateral Thinking Method

Look at an existing problem and apply lateral thinking principles to its solution. Shift your thinking and redefine the problem. Consider alternate possibilities, no matter how far-fetched or frivolous they may seem.

This riddle is an example of lateral thinking: “A man and his son are in a car crash. The father is killed and the son is taken to hospital. When he gets there, the surgeon says ‘I can’t operate on this boy—he is my son!’ How is this possible?” The answer involves shifting perceptions to allow alternate possibilities. One such answer is: the surgeon is the son’s mother.

The Godin Method (or The Edgecraft Method)

Seth Godin, author of Purple Cow and Free Prize Inside, writes about creating remarkable products or services and the art of Edgecraft. For many businesses, remarkable marketing and branding help garner success, even with products and services that aren’t new.

Edgecraft is the concept of “going all the way to the edge” of an existing product or service. It means looking at an idea and adding a special twist, a unique element, that makes the original idea remarkable. Godin says it’s more than just a gimmick or product differentiation, it’s turning the idea into a Purple Cow (something that people will remember and talk about).

The Christensen Method (or The Disruptive Innovation Method)

Clayton Christensen, author of The Innovator’s Dilemma, The Innovator’s Solution, and Seeing What’s Next, writes about sustaining and disruptive innovations in the high technology markets. His definitions of disruptive innovations can be a great source of ideas as well.

Disruptive innovations are new products or services that fundamentally change an industry, oftentimes shaking the top companies from their pedestals. There are two types of disruptive innovations: low-end disruptions and new-market disruptions.

Low-end disruptions
These serve less demanding customers with low-priced, relatively straightforward offerings using low-cost business models. Look for markets with over-served customers and offer a simpler product or service.
New-market disruptions
These serve new customers by making it easier for them to do something that previously required being or hiring specialists. Look for unfulfilled needs and create new products or services for them.

The Borrowed Ideas Method

There are lots of sources of free ideas all around you. The web is especially full of them. Some sources are:

See, isn’t that easy? What are other methods or sources you use for your ideas?

Flaky People in Start-Ups

A friend recently asked me, “How do you deal with flaky people when you’re in start-up mode?”

My answer: Don’t.

When you’re just starting up a new business, the people you choose will be absolutely critical to your long-term success. These are the seed people, the grandparents of your business, the ones who will set the pace for generations to come.

A start-up requires an incredible amount of work. It’s not for the faint of heart. A flaky person is not someone with a strong heart—at least, not for your business. Why would you want someone who only cares half-heartedly about success?

There are exceptions, of course. Perhaps that person’s skills are extremely rare. Or that person is already loaded with prior commitments. What do you do then?

Then it becomes a matter of motivation and task management. I’ve already written about motivation. Here are some tips on managing the tasks of a flaky person.

(In this definition, a “flaky” person is one who is unreliable, may not complete tasks on time, and may even forget some of those tasks.)

  • Be clear and direct about expectations. Put them in writing (an email is fine).
  • Get that person’s buy-in on tasks. Have that person agree (verbally or in writing) to the tasks.
  • Set clear timelines and deadlines. Make this schedule visible to the person.
  • Communicate often, even to the point of over-communicating. Repeat the tasks and deadlines.
  • Hold regular, predictable, and frequent checkpoints. The checkpoints can be short and succinct.
  • Give feedback immediately to the person, especially if performance is an issue.
  • Have a back-up plan for an alternate resource.

In my opinion, working with a flaky person in a new business is very, very risky. Personally, I wouldn’t do it. But if you have no choice, hopefully these guidelines can help. Good luck!