SEASON CLOSING

During the last 20 weeks we have covered three main sections in my blog: a selection of outstanding entrepreneurs, the top common skills found in successful entrepreneurs and the top common mistakes that entrepreneurs usually make in their new ventures.

It has been a great and interesting exercise. I am happy to see how the number or readers following my posts has been increasing steadily. I have received positive feedback and several ideas for improving future posts. In particular a comment made by one of my loyal followers points out the fact that it is great to read about all those concepts but he needs something more concrete, something practical that he can actually apply to particular situations. I thought that it was a great feedback and I plan to take it into account as probably many others would also appreciate this practical approach.

I have decided to take some time off to prepare and elaborate a set of study cases specifically oriented towards providing good practical training for startups. I am not sure at this point which is going to be the best format to implement this idea but I will figure it out during the next few weeks. I will probably "build a prototype" and test it before we go into “production”.

Based on this idea I will share with you my posts after the summer break. Thanks for your support during the last four months. I will be back early next September.

Have a great summer and all the best with your new ventures.

ENTREPRENEURS TOP COMMON MISTAKES (5) – running out of cash

We are at the end of the “common mistakes” section. This week I am going to present the most common among all the common mistakes: running out of cash.

You may remember that I already categorized this mistake in the section’s introduction post as the most critical one. So you realize that it is a dramatic combination: most common + most critical.

Cash management is not fun for most of us, yet it is essential. Protect your cash as a jewel. It is the most necessary instrument to continue pursuing your dream. It is actually the sap of your dream. Keep cash management in your top priority to do list.

When it comes to cash flow planning you have to make some important decisions related with how to finance your venture: Are you going to put your own equity to start operating? Do you need investors? Which portion of your business are you going to share? Are you going to be able to open some credit lines with your banks to mitigate punctual liquidity problems?

Each venture requires a specific analysis and specific solutions but there are some general concepts that can be applied in most of the cases:

1. Start lean. Apply lean management concepts. Don’t spend a single dollar that is not required. You CAN do more with less. Create a lean culture maximizing the output of every dime you spend.

2. Focus on developing and establishing your revenue stream. Spending money is pretty easy. For a new venture, generating revenues is much harder.

3. Don’t rush to escalate and grow. In some cases, after a first quick success, startups raise a significant amount of money from Venture Capital firms or other investors to support ambitious plans for growth. I haven’t seen a single company going into bankruptcy because they were not able to grow and escalate fast enough. I have seen many escalating WAY too fast without an established and sound revenue stream.

4. Set up a reliable method to measure and control cash. In cash management you cannot afford bad surprises. Follow up regularly. At least on a monthly basis. Much better if you follow up on a bi-weekly or even weekly basis.

The season is coming to an end… Next week I will focus the post on evaluating the last 20 weeks and start planning for the next 20.

For those who are following the blog:

Any advice or suggestions for the next season will be welcomed.

ENTREPRENEURS TOP COMMON MISTAKES (4) - Hiring the wrong people

If you have been following my posts you probably remember that the ability to build strong teams was one of the common skills of successful entrepreneurs. Nevertheless hiring the right people is a problem for many entrepreneurs. Let’s try to shed some light on this problem.

Usually the startup’s demands are enormous during its initial stages. The entrepreneur is probably covering five jobs at the same time. She is extremely busy and she needs urgent support in terms of human resources. As a consequence, she has to add a new task to the list: hiring people. And you know what? “This is something that has to be resolved quickly!!” The entrepreneur rushes to hire some folks to help her to grow the business. Companies are hiring people all the time… “Come on… it cannot be that complex!” Yet, it is very difficult to find the correct person for a specific job. You need to spend time and effort to do it right. If you are lucky it will take you a couple of weeks. In many other occasions you will have to keep actively looking for the correct fit for months. Yes, that’s right: months!!!

Make sure you don’t look only at the candidate’s ability to do the job. You have to find the correct attitude, correct culture, and correct values for your venture. This is important for every single company at any moment but is particularly critical for a startup during its early stages.

Take five minutes to watch this video clip in YouTube and think about the hiring process required to select this flight attendant. Believe me! This is not just an exception. If you have had an opportunity to fly with Southwest I am sure you would have experienced something similar:

https://www.youtube.com/watch?v=Jy0Yf1CAsuQ

Do you think they were looking for someone who could just do the job?

Let me share with you some of the rules I have applied during my career:

1. Never compromise. Define clearly what you are looking for and search and search and search until you KNOW that you have found THE candidate.

2. All in agreement. As soon as you have two or three people in your team ask them to participate in the hiring process. If any of the interviewers considers that it is a NO, it is a NO for all.

3. Avoid, if possible, full-time employees outright. Find a way to test how they perform and how they fit your organization before entering into a full-time contract.

4. If despite all your efforts and attention, you make a mistake, correct it immediately. Keep in mind that attitudes are almost impossible to change.

Thanks for reading!

ENTREPRENEURS TOP COMMON MISTAKES (3) – Living in your silo

Last week we explored the risks of “going blind by your own desires”. This week we are going to review the next top common mistake in my list that I have come to call ‘living in your silo’.

Living in your silo clearly jeopardizes your ability to see and understand what is going on outside. We all are usually inclined to stay within our comfort zone. This comfort zone creates a feeling of security. We know how things work there and we have certain degree of control over what is going on.

I would tell you that as soon as you feel comfortable it is time to get out of there. I haven’t seen any startups flourishing in a comfortable, calm and friendly silo. What I’ve seen are successful entrepreneurs getting out of their small rental offices or house garages and talking to clients to learn and understand more about their products and services. They have the ability to learn directly from customers which are the corrections that they have to apply to their original plan.

I would encourage anyone who really wants to increase the odds of being successful to collect as much feedback as possible and as soon as possible. If you want a valid and accurate piece of information about your offer in the market you have to ask the right questions. Don’t ask the questions to get the answers that you want to hear.

I’ll give you an example.

Someone who wants to have a useful and valid response would ask:

“Would you pay $100 on a monthly basis during two years for using the app that you just tried?” (Of course you have developed a prototype that your potential customers can try)

If the potential client is honest you will have a valid data point.

On the other hand, someone who wants to hear what she already knows would ask:

“Did you like how quickly the app shows the info requested?”

If the response time is decent your potential customer will probably say yes. And you will conclude that the guy will pay a subscription of $100 USD a month for ever. “I am positive he will pay it. Come on… the guy was fascinated with the power of the algorithms I was able to develop. I knew he would love it...”

This may sound like a pretty stupid example, but unfortunately it is much closer to reality than it should be. Think about it and try to extrapolate the example to your real world. You need to know if the client will buy it; and why; and for how long; and what you could improve to make it more attractive; and any other aspect that could help you to present a better product in the market.

Remember to leave your comfortable silo, jump into the arena, ask the right questions and listen carefully and mindfully to any piece of information coming from those who will make you successful.

ENTREPRENEURS TOP COMMON MISTAKES (2) - Going blind because of your own dreams

I am particularly interested in this common mistake because, somehow, it requires a more detailed explanation than others.

If you have an idea that you feel passionate about, you sell it everywhere to everybody, you put together a great team, you are creative and adaptable, and you persevere in your path until you achieve your goal… It seems that there is no way you can fail…Yet, most of the startups fail. This is the REALITY.

I recently revisited the well-known book “Good to Great” by Jim Collins. In this book Mr. Collins presents the critical concepts which differentiate “good” from “great” companies. One of the concepts used in his book is totally applicable to our analysis:

“You always have to confront the brutal facts”

This doesn’t mean that you should lose faith, but YOU CANNOT LOSE SIGHT OF REALITY. Any entrepreneur should embrace what Mr. Collins come to call in his book the Stockdale Paradox:

“you must maintain unwavering faith that you can and you will prevail in the end, regardless of the difficulties, and at the same time, have the discipline to confront the most brutal facts of your current reality, whatever they might be”

In some cases, regardless of the entrepreneurs’ effort and dedication the project cannot be successful. There are many external factors that cannot be controlled: political or economic abrupt crisis; deep changes in regulation; even natural disasters. They may create new obstacles never considered before. In these circumstances, the entrepreneur has to be able to confront the facts, contain damages and reserve energy and resources for the next venture.

In some other cases there is no external negative factor and it is just the blindness of the entrepreneur not willing to see the REALITY that creates the obstacle. You remember that one of the most important skills required to be successful was creativity and adaptability. As soon as the entrepreneur recognizes one obstacle in her path, she has to be able to adapt the tactics of the battle being as creative as possible. In most of the cases the entrepreneur’s original dream HAS to be adapted to the reality of the industry and the market in which it operates.

I would like to suggest that you have a look at a video clip in YouTube related to our analysis. Please pay special attention to Guy Kawasaky presenting the idea of “building a prototype”.

https://www.youtube.com/watch?v=HHjgK6p4nrw

Although he is speaking about the software industry, the concept is applicable to any other area of business. We will talk about it in future posts…

Thanks for reading!

ENTREPRENEURS TOP COMMON MISTAKES (1) - Co-founding with the wrong partner.

When you are ready to start a new venture, you should consider very carefully the possibility of sharing your project with someone else. Co-founding has several advantages versus starting up alone, although the selection of your co-founder becomes a critical task.

Co-founding allows you to increase your initial startup capital. You can also look for someone whose skills complement yours. Co-founding with the correct partner generates a team work spirit which will be very beneficial during the first phase of your project. Your partner will be always ready to back you up in the case that you have any problem during this critical step.

When looking for your co-founder you can consider the following advice:

Make sure your personalities and skills are compatible.

Probably the most important attribute that you have to find is compatibility. You do not want to partner with someone who you can't get along easily with and you want to make sure that you share the same vision for your new company.

Define as early as possible how to share the equity.

You need to think about how much of the company you want to give to your co-founder. There is not a clear formula when determining how much equity you should give. It will be very dependent on what you really need from your partner and what she has to offer.

Consider a vesting schedule if possible.

When you offer a share to a co-founder, you can utilize stock options. This person doesn't receive the options immediately, but rather on a vesting schedule. She will receive a portion the first year, more the second year and so on.

Startup shares usually vest over a period of four years which means that you and your co-founder are making a long-term commitment.

Headstart Foundation, a non-profit focused on fostering entrepreneurship, has created a database, which helps entrepreneurs to identify potential co-founders. It now has more than 600 entrepreneurs registered with it. Arpit Agarwal, a director at Headstart, believes it is important to write down a co-founder agreement that includes each founder's stake and specifies what happens if a founder leaves.

Most investors are now pushing for a clear definition of stakes and roles to help deal with disagreements or break-ups.

Finding the correct co-founder may be a hard task.

Make sure you finally chose someone who you can definitely trust.

ENTREPRENEURS TOP COMMON MISTAKES – INTRODUCTION

Let's continue turning the wheel…

I am happy with the good progress that we are making:

I made some introductions in the first few posts. I presented several examples of outstanding entrepreneurs and I just finalized my selection of top common skills found in successful entrepreneurs last week. Now we are ready to review some of the basic mistakes that startups usually fall into. We need to learn as much as possible from them. Entrepreneurship is not about taking risks, it is about pursuing dreams by minimizing and controlling the risks as much as we can. Let’s do our best to avoid these frequent mistakes.

Here is my selection of top common mistakes:

1. Co-founding with the wrong partner.

Finding the right partner is a critical question. If you make a mistake with this selection you are likely to suffer a lot of bad and painful headaches. You need someone who you can work with, someone who you can openly disagree with and at the same time have constructive discussions.

If you are able to find the correct partner you have a great opportunity to complement your skills. Nevertheless keep in mind that is better to be alone than to have a partner who you are not able to work effectively with.

2. Getting blind by your own dreams.

Launching your new venture should be a conscious decision. This decision should be exempt of any emotions and it should be based on facts. Getting emotionally attached to your business idea may jeopardize the whole project. Get your idea validated with facts rather that counting only on your gut instinct to move forward.

If you find signs telling you that it won't work, pay sufficient attention to them. Perhaps it is the moment to redefine your strategy or even minimize your losses and start thinking about the next opportunity. Don’t lose objectivity!

3. Living in your silo.

Get out of your office and talk to potential customers. Ask for feedback constantly. Normally they have the key which allows you to discover what is going to work and what isn’t. Don’t stay in your comfortable silo pretending that you know that everything is going to work out. Your customers have to let you know…

4. Hiring the wrong people.

Do you feel that you spend more time explaining how to do things than the time it would actually take you to do it?

Do you suffer problems aligning your employees or partners with your vision?

Do you get overwhelmed with personnel problems when you should be focusing on your clients?

You may have hired the wrong people for your venture…

Unfortunately this is a common problem in many startups.

5. Running out of cash.

This is the most critical mistake among all those presented. If you run out of cash, the game is over: R.I.P.! In business there is a very limited tolerance to this problem.

This is something pretty obvious for everyone yet it is one of the most frequent reasons why companies have to close the door. If your income or cost forecasts are shown to be wrong and you don’t have enough reserves to offset the difference your situation will probably be very precarious.

During the following five posts we are going to analyze each of them in more detail. Let’s start thinking about what my ideal co-founder partner would look like…

Entrepreneur top common skills (5) – Persistence and Resilience

I am going to finalize my selection of top common skills with what I have called persistence and resilience.

I haven’t seen a single venture in business that is exempt of obstacles. They will appear sooner or later, in an unpredicted or predicted manner, but it is certain that they will show up.

An entrepreneur is always ready to face difficulties. Somehow the entrepreneur is expecting them. He (or She) develops a sort of “battle mode” that allows a quick and determined reaction against a new obstacle standing between him and his objective. He battles and eliminates the obstacles just to keep going. This is the nature of entrepreneurship: keep going toward the objective regardless of how many trenches you have to overcome.

It has been said that men become great mariners when sailing in troubled waters, not in calm seas. Every venture has a number of storms ready to hit the entrepreneur. These storms will be typically weathered with limited resources but in most of the cases with successful results. The crew becomes stronger and continues the voyage…

Entrepreneurs really become tough people; tough fighters. As a result of all these battles they develop significant strength, self-confidence and maturity.

There is a motto that I learnt years ago which I find inspiring: “when the going gets tough, the tough get going”. I have repeated it to myself so many times since I learnt it…

All that said, in some cases the best (and toughest) decision is to turn out the lights and close the doors. Unfortunately this is how many business ideas end up. For those persistent and resilient entrepreneurs that we are talking about this doesn’t mean defeat. It means a great opportunity to learn invaluable lessons. Lessons that will be applied to the next venture.

At the end of the day, entrepreneurship is a lifestyle. It is a mindset. It is about a strong desire to succeed; a compelling reason to keep going.

Next week I am going to start evaluating some of the most common mistakes. I am going to speak about those mistakes that should be avoided in order to be successful in a new venture.

Keep reading!

Entrepreneurs top common skills (4) – Creativity and Adaptability

We have been making good progress reviewing the skills that are commonly found in successful entrepreneurs. Today we are going to look into creativity and adaptability. These two concepts come together when we talk about entrepreneurship. We live in a changing world. Our modern world is changing more quickly than ever and the ability to create new ideas, adapt ourselves and adapt our ventures to this changing world is key to being successful.

Probably one of the most unique traits that every entrepreneur has is the talent to recognize opportunities that others do not. They are able to understand a problem that exists for consumers or a need that has not been yet resolved and they “create” a solution. Usually this solution requires to be adapted as it is being implemented. Here is where creativity and adaptability tie together: the entrepreneur has to be creative again to adapt the original idea taking into account the new circumstances as they appear.

I recently read an article in www.businessnewsdaily.com that presented the idea that creativity is a bigger indicator of success in life than intelligence. This is an interesting concept although it is clear that not too many institutions or business are worried about how creative their future students or employees are. It is true that creativity is something difficult to identify and even more difficult to quantify.

Something also interesting to be mentioned is the fact that creativity needs some structure to gain traction. Not really too much structure, as it may jeopardize the spontaneity, but enough to guide the process toward the correct result.

I am going to list some of the most common techniques used to stimulate creativity:

(1) Brainstorming

(2) Brainwriting

(3) Method of Creative Orientation

(4) Method of Creative Confrontation

(5) Method of Systematic Structuring

(6) Method of Systematic Specification of Problem

I will write a post in the future to review these methods. Very interesting ideas if you want to become a little more organized in your creativity process.

Finally I would like to share with you something that I find remarkable. In many cases creativity appears best at the intersection of disciplines. Most impacting discoveries occur when two or more disciplines work together. Usually more than working together is arguing together. Looking at the same problem from different angles frequently creates conflict. This conflict may bring the inspiration for a new solution. Had it not been for the fusion of these different opinions and knowledge the new solution would have never been imagined.

So don’t avoid the difficult discussions with those who disagree with your ideas. They may have the key for your success. You just have to listen carefully and give them a chance to tell you how they would improve your venture.

Next week we will tackle the last skill of my selection: Persistence and resilience.

That is going to be a good one…

Entrepreneurs top common skills (3) – Team Building

Many of the best examples of successful entrepreneurs I know about started their ventures with a DIY concept. They got the idea, they mulled over it, they created a vision for their project and they started working on it. Eventually they generated revenues and they were able to prove that the idea was profitable and it had a chance to become a real business.

This is a very exciting moment for an entrepreneur. You have worked hard, usually just on your own, to demonstrate, usually just to yourself, that IT’S GONNA WORK!!!

Up to this point everything has been handled by the entrepreneur. But there is a whole new world from this phase to the next one: if you want to increase your revenues, you need to grow and you definitely need PEOPLE to help you. You need to start hiring employees.

This is a threshold that every startup has to tackle and it seems to be easier than what it really is. Bringing great people on board is one of the most critical requirements of every company to be successful. The entrepreneur has to identify, attract and select the employees that will help him to expand his business.

Finding the correct technical skills and education is not usually the problem. The key factor is being able to find people who match your company culture and values. The entrepreneur probably has not formally defined at this point a set of values and a culture description for his project. But without any doubt they already exist. They exist as they are intimately embedded within the entrepreneur’s personality.

So, here is the challenge: You have to find skilled and educated people for the job and they have to perfectly match your culture and values.

Most of the existing hiring methodologies are focused on the first part of the challenge but they almost ignore the second one. I am going to present two examples that are just brilliant in identifying the alignment between the candidate and the company values and culture.

Let’s have a look at Zapoos. For those who are not familiar with this company it is one of the greatest examples of successful online retailers in the world. They started selling shoes in 1999 and nowadays the company sells a wide variety of products.

If you have the time, watch Zapoos’ CEO, Tony Hsieh, in this video explaining how they hire people for their organization. I hope you will find it self-explanatory:

https://www.youtube.com/watch?v=_BpWz-vw35M&app=desktop

Southwest Airlines is another great example of a company that has been able to create and maintain a unique culture for many years after its creation. Every new employee who joins the company is expected to contribute to this culture. For them the costumer is the most important part of the company and they demonstrate it on every possible occasion they have.

A couple of quotes to finalize today:

“If you want to build a ship, don't drum up people together to collect wood and don't assign them tasks and work, but rather teach them to long for the endless immensity of the sea.” - Antoine de Saint-Exupéry

"Coming together is a beginning. Keeping together is progress. Working together is success." - Henry Ford

Coming next week: Creativity and Adaptability

Entrepreneurs top common skills (2) – Excellence in Sales

There are many reasons why people choose a sales career. For some of them, a sales job is the best option to use their social and business skills. Others decide to work in sales because it allows them to travel on a regular basis and, at least in the short term, it is fun and interesting. A sales job is usually well paid, which means that valid candidates who are not sure if it is the career for them end up choosing this option.

For entrepreneurs, deciding if they want to be in the sales business or not is not an option. It is a must. “Selling” is part of every entrepreneur’s DNA. Before even thinking about a new product or service they are thinking about how to sell it. They will start creating a sales pitch before they know exactly what they will finally deliver. It will be the feedback that they receive from potential customers or friends what will help them to refine their first ideas.

Successful entrepreneurs excel in sales. They don’t need a very sophisticated training. They eventually don’t have an elaborated Marketing Plan for their business. But they just cannot stop selling! Their passion, creativity, self-confidence and persistence will boost them to sell whatever they are working on.

Great entrepreneurs are those who are able to give customers what they want. In some cases they are even able to let the customers know what they want. They are constantly following up their ideas and they build strong and trustful relationships with them. This allows them to cement long lasting relationships.

In some cases I have seen entrepreneurs use a motto that they use as a “mantra” when talking to customers. Some examples are:

“Let’s talk about building our business together”

“Our goal is to help make your project a success”

I have even seen some of them using a motto as a signature of their emails (I love this one):

“Success is helping others to succeed”

Next week team building abilities…

Entrepreneurs top common skills (1) – Passionate Leadership

It is commonly assumed that successful entrepreneurs are driven by money. Nevertheless in my opinion, most of them would tell you that they are motivated by a passion for their product or service. They are passionate about the opportunity to solve a problem and make life easier, better, or cheaper. They will end up making money in due course, but it is not the main objective in their lives.

When talking to successful entrepreneurs you quickly realize that they all share a common trait: an intense and compelling emotion, a strong desire, a deep enthusiasm for their projects. And you know what? - This is contagious. They start leading with passion from the word go when talking about their endeavors. This is how passion works amongst entrepreneurs.

This passionate vision about the future allows them to naturally create a mission for their projects and mobilize others to contribute in many different fashions. It creates a sense of belonging, a shared belief, a shared passion.

I can tell you that I haven´t met a single entrepreneur up to now who wasn´t fueled with a powerful passion about what he was doing.

Let me share with you a couple of the examples that I found inspiring:

Henry Ford was indeed a “passionate leader”: he just kept going, despite business failure (the Ford Motor company was actually his third attempt to start an automobile manufacturing company), and others’ dismissal of his ideas. His passion finally led him to achieve his dream.

Another great example of passionate entrepreneur is the African-American Oprah Winfrey. She is well known by “The Oprah Winfrey Show” which was the highest rated program of its kind (talk show) in history. It rated number one in the US from 1986 to 2011. She is considered one of the most influential women in the world. Today she continues driving her business with the same passion that she showed in the early years. We have to admit that over 25 years of constant passion is something remarkable.

And to finalize this post let me introduce two quotes about the subject that I found brilliant:

“There is no passion to be found playing small - in settling for a life that is less than the one you are capable of living.” - Nelson Mandela

“Passion is energy. Feel the power that comes from focusing on what excites you.”- Oprah Winfrey

Next week something about sales…

Entrepreneurs top common skills – Introduction

Now that we have seen some of the greatest examples of entrepreneurs in modern times I am going to introduce the next cycle of my blog, which consists of five posts describing those skills that are commonly present in successful entrepreneurs.

Each entrepreneur is truly unique. Each one has his own particular set of skills and attributes. Nevertheless, there are some skills that always play a major role in the entrepreneurial success. This is my “top five” selection:

1. Passionate Leadership

Entrepreneurship is about passion: Passion for your vision; passion for your goals; passion for driving your business to the next level. Leading a project with passion definitely makes a difference.

2. Excellence in Sales

All successful entrepreneurs excel in selling. They are always selling. Every single occasion is adequate for it. They are always either selling their ideas, products or services to customers, investors or employees. Excellence in selling may be the most critical skill in entrepreneurship.

3. Team building

As soon as the new venture takes off, the entrepreneur needs to find the right people to manage the business. Finding, hiring and getting the loyalty of the best professionals is not an easy task. It takes an enormous effort and dedication but is always worth it. Successful entrepreneurs will systematically create strong teams around them.

4. Creativity and Adaptability

Perhaps one of the most unique characteristics that entrepreneurs possess is the ability to recognize opportunities that others do not. They will perceive a problem that exists and they will create a solution.

Adapting to different circumstances is often necessary to be able to operate, especially as a new startup. This flexibility also includes the ability to incorporate feedback effectively and to learn from setbacks.

5. Persistence and Resilience

Every startup will inevitably have ups and downs. Nothing usually works as expected first time round. In fact, a lot of things will not work out at all. Entrepreneurs cannot get discouraged if an idea fails. It’s just the nature of the game. They just get up and keep trying again and again. This skill enables the entrepreneur to keep going when the outlook is bleak.

In the next five posts we will dig deeper into each of these skills and we will learn more using some good examples.

Keep up with the reading…

Those who stood out (5): Herbert D. Kellenher

The entrepreneur

Kellenher was born on March 12, 1931, in Camden, New Jersey. He received his bachelor’s degree from Wesleyan and his law degree from New York University. He started his career practicing law before relocating to Texas with the idea of starting his own law firm.

In 1967, Kellenher along with one of his clients, Rollin King, co-founded Southwest Airlines. They envisioned a revolutionary business model for an airline company at that time: eliminating all the unnecessary services and utilizing secondary airports in order to offer the lowest fares in the industry.

In 1981, Kelleher became president and CEO of the company. He was a charismatic and dynamic leader boasting a great reputation among the company's employees and media.

In 2007, Kelleher announced his decision to step down as chairman and resign from the board of directors. He remained a full-time employee until 2012.

Herbert Kellenher has received numerous awards in recognition of his impressive professional career. He has been considered one of the most influential leaders in the airline industry.

The Company: Southwest Airlines

Southwest Airlines Co. headquartered in Dallas, Texas, is a major U.S. airline and the world's largest low-cost carrier. The airline was established in 1967 and adopted their current name in 1971. The airline has 44,831 employees as of December 2013 and operates more than 3,400 flights per day, carrying the highest number of domestic passengers of any U.S. airline. Southwest has scheduled services to 89 destinations in 42 states in the US and Puerto Rico.

Southwest Airlines mainly operates Boeing 737’s becoming the largest operator of this Boeing model worldwide with over 550 aircrafts in service. Each of these 550 aircrafts operates an average of six flights per day.

In May 2011, Southwest acquired AirTran Airways. The integration of the two carriers is expected to be completed by 2014.

Southwest Airlines is the fifth-largest airline in the United States and the only one to turn a profit for 40 consecutive years.

The financial statements of the company in 2012 presented $17 billion USD of revenues with $421 million USD of net income.

Key takeaways

What does Southwest do better than anyone else? It keeps things simple and consistent.

Let’s summarize the factors that have been considered essential to the company success:

1. One Plane Fits All

Southwest flies almost just one plane type, the Boeing 737 series. That simplifies maintenance, reducing significantly the cost—spare-parts inventories, mechanic training, etc

2. Point-to-Point Flying

Most of Southwest flying is nonstop between two points. That minimizes the time that planes sit on the ground and allows the average Southwest aircraft to be in the air for more than an hour longer each day than a similarly sized jet flown by a carrier using the existing network hubs.

3. Simple In-Flight Service

There is just one class of service, a decent coach cabin that is slightly more spacious than those of Southwest's competitors. There are no assigned seats. There are just beverages and snacks available. Keeping it basic allows Southwest to decrease costs and offer more competitive tariffs.

4. No Frills, No Fees

The airline only sells one-way fares and only in a few price levels. Prices are all-inclusive too: Southwest doesn't have fuel surcharges, doesn't charge for ticket changes, and continues to permit travelers to check two pieces of luggage for free.

5. Strong Management

Despite the non-executive image that Kelleher offered to the public, the company is built over strong and disciplined foundations. Management ranks are lean, but well compensated and extremely productive.

6. A Happy Workforce

Southwest has never had a strike. The company is offering one of the highest salary and benefit packages in the industry. Since Southwest has about 30 percent fewer employees per aircraft than its network competitors, it has the lowest cost per mile of any of the major carriers.

7. Aggressive Fuel Hedging

Fuel prices now represent around 40 percent of an airline's costs. Southwest Airlines has implemented an aggressive fuel-hedging program that has saved the company an estimated of $3.5 billion in an environment of rampaging fuel prices.

Amazing innovation within a mature and developed industry...

Those who stood out (4): Muhammad Yunus

The entrepreneur

Yunus was born in June 1940 within a Muslim family, in the village of Bathua, which today is part of modern Bangladesh (INDIA).

In 1944, his family moved to the city of Chittagong, and he attended Lamabazar Primary School. In 1957, he enrolled at the Department of Economics at Dhaka University and completed his Bachelor’s degree in 1960 and his Master’s degree in 1961.

He started working as a lecturer in economics in Chittagong College just after his graduation and he was able to start up a profitable packaging factory at the same time.

In 1965, he received a Fulbright scholarship to study in the United States that allowed him to obtain his PhD in Economic Development from the Vanderbilt University in Nashville, TN, in 1971.

When he returned to India he observed the devastating effects of the famine of 1974. He became involved in poverty reduction at that time and established a rural economic program as a research project. He discovered that very small loans could make a tremendous difference to a poor person. He envisioned a new business model based on tiny loans with a reasonable interest rate for poor people. Ultimately the model became extremely successful proving that the microcredit concept is able to help poor people to create a better future for themselves and their families.

In October 1983, the pilot project grew into a fully operational bank for poor Bangladeshis. It was renamed Grameen Bank, (meaning “Village Bank”). The bank has demonstrated to be a useful instrument to provide opportunities for the poor people in India.

Muhammad Yunus was awarded the 2006 Nobel Peace Prize, along with Grameen Bank, for their efforts to create economic and social development.

The Company: GRAMEEN BANK

The Grameen Bank is a microfinance organization and community development bank founded in Bangladesh. It offers small loans (known as “microcredit”) to the impoverished.

Grameen’s objective has been to promote financial independence among the poor. Yunus encourages all borrowers to become savers, so that their local capital can be converted into new loans for others. Since 1995, Grameen has funded 90 percent of its loans with interest income and collected deposits. Grameen converts the deposits made in the villages into loans for other people in the same villages.

Grameen has diversified the types of loans it offers. It supports hand-powered wells and loans to support the projects of Grameen members' immediate relatives. It has also expanded into seasonal agricultural loans and lease-to-own agreements for equipment and livestock.

The bank has set a new goal: to make each of its branch locations free of poverty, as defined by benchmarks such as having adequate food and access to clean water and latrines.

Grameen Bank is best known for its solidarity lending system. Each borrower must belong to a five-member group. The group is not required to give any guarantee for a loan to its members. Repayment responsibility rests solely on the individual borrower. The group oversees that everyone behaves responsibly and no one gets into a repayment problem. There is no default liability therefore the group members are not obliged to pay on behalf of a defaulting member. In practice the group members often contribute the defaulted amount with the confidence of collecting the money from the defaulted member at a later time. Such behavior is encouraged by the bank as it does not extend further credit to a group that has a member in default. The system has expanded quickly and now is used in more than 43 countries.

As of October 2007, the total number of borrowers reached 7.34 million; the Bank had a staff of more than 24,703 employees; its 2,468 branches provided services to 80,257 villages; the bank distributed $11.35 billion USD in loans, The global number of potential micro-borrowers is estimated to be 1 billion, with a total loan demand of $250 billion. The present microfinance model is serving 100 million people with $25 billion of loans.

Key takeaways

Yunus was not the first one that came up with the idea of small loans to the poor, but he was the first one who showed to the world that it could work on a large scale.

Let me list the principles that Yunus has embraced during his career and which today are source of inspiration for most of his followers:

1. Set forth an inspiring vision and stick with it.

2. Innovate. Challenge the prevailing wisdom.

3. Build a team that owns the dream.

4. Communicate. Relentlessly communicate within and beyond the organization.

5. Be Flexible. Change strategies, goals, and tactics as needed.

6. Be patient and persevere. Sometimes you have to wait.

7. Embed your values into the organizational culture.

8. Brand yourself and your organization.

Yunus continues actively launching new initiatives. You can check his last one following this link:

Yunus center Social Business. http://www.muhammadyunus.org/

This man has truly made an impact on our world.

Those who stood out (3): Ken Iverson

The entrepreneur

Kenneth Iverson was born in September 1925 in Downers Grove, IL. He received a Bachelor of Science degree in Aeronautical Engineering from Cornell University and later on he earned a master’s degree in Mechanical Engineering at Purdue University. He worked for several companies before he was hired in 1962 by Nuclear Corporation of America to run its steel production business. Despite the good results that Iverson was able to achieve in his division over the following three years, the Corporation was destined toward bankruptcy, due to the fact that all the other divisions were losing a significant amount of money.

In 1965, in a desperate attempt to save the company, Iverson was appointed CEO and President of the Corporation. He accepted the challenge and was able to build, almost from scratch, one of the most successful manufacturing businesses in modern US history.

The Company: NUCOR CORPORATION

Nucor is headquartered in Charlotte, NC. The Company became known worldwide as one of the most audacious and innovative in the manufacturing industry. Iverson was able to develop a new steel production system based on the “mini-mills” concept. As opposed to companies operating integrated steel production with blast furnaces, Nucor started using electric arc furnaces to melt recycled steel scrap. The company installed its first electric arc furnace in a new plant in Darlington, SC in 1968 and Iverson was able to rapidly expand the business across the country. Today the company operates 23 steel production mills, with a capacity of up to 25 million tons a year.

With $19.4 billion USD of revenues, $510 million USD of net income and 20,400 employees, Nucor is currently the largest steel producer in the USA.

Key takeaways

Iverson has been credited for establishing a set of values that were essential to succeed. Let me present those which I consider to be the most relevant:

Lean corporate staff. While most big companies end up bearing heavy corporate structures, Nucor sets up new standards and manages the whole company with no more than 50 corporate staff. It is one of the leanest corporate set ups of any of the fortune 500 companies.

Decentralized leadership. Each Nucor facility operates with significant autonomy. Each plant is accountable for its own results with minimum interference from the corporate head office.

Compensation - highly dependent on performance. This concept is implemented at all levels with top executives having the highest percentage of their pay at risk. If the company performs far beyond the industry standard, employees, from top to bottom, get paid accordingly. Historically speaking, the company has been able to attain an incredibly high productivity ratio (tons of steel produced by employee), leading to the employees receiving an incredibly high compensations for reaching the objective.

No privileges for anyone. No executive dining room, no parking spaces, no company cars, no special treatment… Everyone is in the same boat, rowing in the same direction, at the same pace with the same goals.

These guys are a worldwide reference. I have to admit, that coming from the manufacturing industry, I cannot feel anything but admiration for this company and particularly for the entrepreneur who thought up a utopian vision and was able to make it real.

I invite you to visit its web page and enjoy learning a little more about it: www.nucor.com

Those who stood out (2): Sam Walton

The entrepreneur

Samuel Walton was born in March 1918 in Kingfisher, Oklahoma. Early in his life Walton and his family moved to Missouri, where he was raised. He was a great student and a good athlete. Walton quarterbacked his high school football team and was an Eagle Scout. He graduated from Hickman High School in Columbia, Missouri, in 1936 and enrolled at the University of Missouri in Columbia, where he graduated with a degree in economics in 1940.

Just after college, Walton took a job in Des Moines, IA, with the J.C. Penney Company, where he got his first experience in the retail industry. He served as an Army captain in an intelligence unit during World War II. Walton returned to private life in 1945 and acquired his first store: a Ben Franklin franchise in Newport, Arkansas. Walton, together with his younger brother, James, came to own 15 Ben Franklin stores. Walton desired to further expand the business toward rural areas but the Company management ignored his ideas. That prompted him to strike out on his own.

The Company: Walmart

In 1962 Walton opened his first Wal-Mart store in Rogers, Arkansas. The Company growth was impressive. By 1976 Wal-Mart was a publicly traded company with a share value worth $176 million. By the early 1990s, Wal-Mart’s stock worth had jumped to $45 billion. In 1991 Wal-Mart became the US largest retailer.

Today Walmart has over 11,000 stores in 27 countries. The company operates under the Walmart name in the United States, in all of the 50 states and Puerto Rico. It operates in Mexico as Walmart de México y Centroamérica, in the United Kingdom as Asda, in Japan as Seiyu, and in India as Best Price. It has also operations in Argentina, Brazil, and Canada.

The preliminary results for 2013 are showing $469 billion in revenues with a net income of $17 billion. With an amazing number of 2.2 million employees, Walmart is one of the greatest examples of entrepreneurship in modern times. Walmart is currently the world largest public corporation when ranked by revenue, and the world largest public corporation when ranked by number of employees.

Key takeaways

Walton managed the business following his famous 10 golden rules. I am going to point out what in my opinion are the three most significant rules and let you explore the rest using a link to an article that presents all of them.

Commit to your business.

Walton was 100% committed to his business. His job was his passion and he was able to motive those around him by example. He always stated that you need to work passionatly to be really successful.

Exceed your customer’s expectations.

Walton managed the business focusing constantly on “Customer Satisfaction”. He was able to create this vision across the whole organization and it offered direct results. Satisfied customers always come back to the store.

Swim upstream.

This one is probably my favorite one. Walton broke conventional approaches. He went against mainstream ways of tackling problems. Although he received numerous criticisems for his decisions he kept on pushing the limits and going beyond what was considered appropiate at the time.

Based on the results we have seen, perhaps he should be given credit for his unconventional ideas.

You can have a look at the rest of his rules using this link:

http://www.powerhomebiz.com/leadership-management/success-tips/sam-walton-10-rules-for-building-a-successful-business.htm

Those who stood out (1): Fred Smith

The entrepreneur

Fred Smith was born in 1944, in Marks, Mississipi. He attended high school at Memphis University School and in 1962 entered Yale University. He started showing signs of entrepreneurship at a very young age. As a teenager he was able to become an amateur pilot as a result of his great interest in flying. While attending Yale he presented a paper for an economic class outlining the basic ideas for an overnight delivery service. At that time the idea was considered as unfeasible. Yet it was his first vision of the business model that would completely transform the express delivery services worldwide. It was the seed for his company.

After College, he served two tours of duty during the Vietnam War: First as a rifle platoon leader in the U.S. Marines and secondly as an air controller. This experience would greatly influence his career. He got the opportunity to see the complex logistic organization in the military. During this time he developed the leadership and discipline skills required for a Marine captain. Skills that he would use afterwards to lead his venture.

Excellent visionary and hard worker, Fred Smith is one of the most recognized entrepreneurs of our time. Among many awards, we can remark: "CEO of the Year 2004" by Chief Executive Magazine and the 2008 Kellogg Award for Distinguished Leadership, presented by the Kellogg School of Management.

The Company: FedEx Express

In June 1971, Fred Smith founded Federal Express (commonly known as FedEx). Based in Memphis, Tennessee, the Company was able to start offering express delivery services to 25 main cities within the US with a fleet of 14 Falcon jets (DA-20) two years after of starting up. Despite severe difficulties in its first years the Company was able to expand the business and become the leader in its field and a reference in the industry.

Today the FedEx is delivering packages and freight to more than 375 destinations in nearly every country of the world. FedEx is the world's largest express transportation Company.

With $39.3 billion USD in revenues, a market value of $30 billion USD and over 255,000 employees across the world. FedEx is one of the greatest examples of success in the entrepreneurial world.

Key takeaways

First of all F. Smith was able to create a vision as to what the future of express delivery services should be. Fast, efficient, accurate, 24h door to door services. That was amazingly innovative at that time.

Secondly it is remarkable how he was able to overcome all the difficulties that he encountered during the first years of operation. Just in the first two years the company lost nearly $29M USD. He was convinced that the company would become profitable and he continued pursuing his dream without any qualms. Ultimately FedEx become one of the most profitable companies in US history.

Finally I want to point out the company culture that F. Smith was able to generate as a critical factor to its success. This culture inspired a profound loyalty to the company and its founder. Smith operated his company using a basic concept that he called P-S-P: people, service, profit. The three elements work together in a circle, each one supported by the others.

A little bit of planning

Once I have covered the necessary introductions about myself and about my blog and I have also offered some hints about what the content is going to look like, I would like to do some planning before I start digging deeper into the subject.

During the next 20 weeks, I will be uploading into my blog one post per week. First of all I am going to dedicate five posts to my selection of the greatest entrepreneurs of our time. Obviously this is going to be absolutely subjective and I am sure many of you will have different preferences. I will be looking for some inspirational examples, outstanding achievers, unique people who changed the world with their passion and vision.

Secondly I will address in the following five posts the most relevant behavior and attitudes that we usually find in successful entrepreneurs.

I will continue with the five most common mistakes that lead to failure. We will present some lessons learnt that we cannot ignore if we want to minimize risks. And finally we will draw some conclusions and provide some guidance for those considering to jump in and to launch their very own projects.

I will usually share my new posts every Sunday. I hope you will find them useful. Don’t hesitate to give me feed-back. I am already looking forward to receiving your comments.

The ball is rolling…

About entrepreneurship - Warming up...

This is my first post about Entrepreneurship and I would like to start by presenting some basic ideas on this concept.

What does it take to be an entrepreneur? Is everybody able to be one?

These are some of the questions that we hear very frequently when we talk about the subject. Let’s find out a little more about them.

Entrepreneurship is a human condition. As a result, human beings are constantly looking for ways to improve their ‘status quo’; they are always willing to create a better space to live, a better future for their children. However success is not always achieved and sometimes problems are encountered. Nevertheless the spirit mobilizing their course of action is clearly related with entrepreneurship.

I believe that we all have an entrepreneur inside each of us. Depending on our education, our personal situation, the references in our lives, we may exteriorize the spirit or keep it secretly hidden. In this case it takes a specific and relevant event in our lives to awaken this spirit.

We are used to success stories associated with big companies that achieved great notoriety and publicity in the market place. Everyone would see Bill Gates at Microsoft, Steve Jobs at Apple or Jack Welch at GE as great entrepreneurs. Without doubt they are great examples. Yet, I am more interested in talking about the standard entrepreneurs. Those who are fighting hard to introduce their first product into the market, those who are struggling to raise some money to scale their portfolio of services or to launch their companies to the next level. These entrepreneurs may not become the next Steve Jobs but could have a great impact on his surroundings and a major influence on their own destiny.

There are many of these out there. During my next posts we are going to learn more about them. We are going to analyze their behavior patterns. We are going to find out some of the common mistakes that led to failure and some of the key factors which increased their success rate.

More coming next week…

About this blog

This blog is one of the most interesting projects I have ever started. I have been mulling over this idea for at least two years and finally I am ready to take off.

Entrepreneurship and Innovation. Two magic words. Two big tractors of growth, improvement and progress. Two captivating concepts. Both are worth exploring to better understand key ideas which are important to our society and life.

With the experience that I have been able to gain over the last 20 years I think I can share good examples and reflections about the subject. I hope I can also illustrate my posts with some of my colleagues’ most interesting experiences. I have been very fortunate to meet great entrepreneurs and innovators who will serve as an inspiration to explain some of the concepts that we are going to be dealing with.

This project intends to be a journey where I hope to share the most interesting aspects of innovation and entrepreneurship that I have come into contact with through study and professional experience.

I am planning to dig into some of the basics to really understand what is underneath entrepreneurship and innovation. I will be thrilled if you join me on this exciting journey which I hope you will enjoy. Please feel free to contact me in you have any suggestions. First post coming soon…

About the author

Enrique Teruel was born in March 1970 in Pamplona, Spain. He was the youngest son in a family of six children. Due to his father’s entrepreneurial spirit he was exposed to different business initiatives very early on in his life. He was able to participate and learn from several startups that in most of the cases introduced innovative products or services in the market. Although as a teenager he was inclined to start his own business, he was spurred by his parents and brothers to go to College to study Engineering. He obtained his degree in Industrial Engineering and started his career working in a large industrial family business. He worked as a sales Engineer developing new clients and products in different Countries. After several years he went on to work for a multinational American Company with operations in Spain, where he gained experience in Quality, Processes and Manufacturing. Finally he joined a startup in the Renewable Energy Sector, where he held different posts as Plant Manager, Industrial Director and Global Operations Director. Today he continues working actively in the same project leading the Company´s business unit in North America. In his spare time, he is actively studying and writing about entrepreneurship and innovation.

LinkedIn profile http://www.linkedin.com/pub/enrique-teruel/8/aab/198