The economic climate these days reminds me of the famous line about the weather at the “Crosby Clambake” golf tournament (now the AT&T Pebble Beach National Pro-Am) held each February on California’s Monterey peninsula, in unpredictable conditions that shift quickly from sun to cold and rain: “There’s plenty of it.”
So it seemed a good time to get out a barometer and ask what the &!#@* an entrepreneur/startup should do in today’s climate? Is the economy really on the rebound? If so, is it time to change strategy? Should companies, say, get more aggressive about hiring people or expanding? Maybe they should court a suitor or investors because deal terms are improving? Or maybe not—maybe you should just stay the course.
[The X Factor is a mostly weekly column featuring conversations with local innovators, entrepreneurs, and investors that mostly runs on Tuesdays. This is an exception.]
I put my queries to four Xconomists, all experienced and highly successful investors, entrepreneurs, and business executives. No one pretended to have figured out whether the economy is rebounding or not. As serial entrepreneur-turned-VC Carmichael Roberts, now of North Bridge Venture Partners, put it: “It is impossible to tell what the heck is going on right now and whether we’re starting to recover or not.” The market, he says, is “too sideways.”
But that didn’t mean Roberts et al didn’t have some valuable advice and insights about what entrepreneurs should do in the current weather. All felt that for the foreseeable future, the climate would be fundamentally different than in recent years—and so should a company’s business strategy. As Boston Scientific co-founder John Abele says: “If you think the same strategy that worked before the meltdown is going to work now, you’re not living on earth. This is a different world, probably similar to the what this was 30 to 40 years ago, and it requires a different mindset.”
Their advice and insights, laid out below, focused largely on how to change your mindset. The ideas run from being extremely flexible about business models to asking tough questions about your business and its value to customers—and about your customers and investors and their value to you. Much of their advice has to do with entrepreneurs raising money in this climate, but parts are also relevant to executives of established companies.
John Abele, co-founder and director, Boston Scientific:
Be willing to make hard assessments—and be flexible with your own models.
“You got to do some slicing and dicing,” says Abele. “Some things are going to be more valuable in a constrained environment,” he says of today’s climate. “A number of things are going to be less valuable.” This includes your own products and your customers, and you must be prepared to adapt your model and offerings to take advantage of what will be most valuable. “A lot of people get trapped in their model and seem to have difficulty moving beyond that,” he says.
For instance, Abele is the owner of the Kingbridge Conference Centre & Institute outside Toronto, which is focused on better ways to conduct meetings and conferences to facilitate collaboration and education, among other things. “So one of the categories we focused on was infrastructure, for example power companies, that will have to do a lot of education to accommodate changes in regulation and technology,” Abele says. “They will be even more valuable to us, particularly if we have special education packages.”
Similarly, a medical company might look at its customers and prospective customers to determine which will be best off in the current climate and then ask whether those customers will … Next Page »
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