Don’t anybody get their bloomers in a twist. This is my version of a post entitled Top 10 lies of Entrepreneurs by Jason over at Signals vs Noise, who is quoting Guy Kawasaki (formerly of Apple and author of How to Drive Your Competition Crazy) in his post entitled Top Ten Lies of Entrepreneurs. These posts covered the top ten problems seen in software startups who were pitching for venture capital. If you’re a designer in search of venture capital, watch these pitfalls. It’s amazing how much software and designer start ups have in common. My version of the questions appear in bold, Jason’s content appears in quotes and is edited for context.
1. I project my first year sales will be 5 million and this is a conservative estimate. I actually had someone tell me this.
Like Guy says, an entrepreneur has no idea what her sales will be. Projections, like fortune telling, are a waste of time.
2. WWD says our market will be $5 billion in 2010.
Who cares what [WWD] says – [WWD] isn’t giving you any of that $5 billion.
Just because a prognosticator forecasts growth in your industry doesn’t mean you’ll pick up a slice too. Too much is riding on execution.
3. Saks is interested in my line. This can mean anything from “I know somebody who knows a Saks buyer” to wishful thinking of where they’d like to place their line. Department stores are not the ideal customer for a designer-entrepreneur, not at the outset. If you plan and set up your business in order to service department stores, you’re going to be bleeding money from every orifice.
Never bet your business on one customer. Ever. Never give preferential treatment either. Every customer outta be the same to you or you’re going to start favoring the minority instead of the majority.
If you’re selling to a large department store (without a factor), anybody who lends you money will know you’ll be sitting on accounts receivables for 6 to 9 months and they probably won’t want to wait that long to see a return.
4. I’m hiring a contractor and pattern maker as soon as we get funded. To say your contractor or pattern maker aren’t on board yet means you don’t have production in the pipeline. There is no way you can develop a project plan if you haven’t priced the cost of production which can only be done through sampling. The project plan comes first, before the business plan.
Further more, it’s an empty promise. You can’t control other offers other people may also have while waiting for your precious funding to come though.
5. No one is doing what we’re doing. I must hear this every day, usually in conjunction with descriptions such as “edgy” (I move that we strike that adjective from the dictionary, it’s everywhere so it doesn’t mean anything).
It’s exceedingly rare that you’re 1. the only person whose thought of that, and 2. the only person doing something about it. It’s possible you are, but highly unlikely. Don’t bank on it. Like Guy says, “As a rule of thumb, if you have a good idea, five companies are going the same thing. If you have a great idea, fifteen companies are doing the same thing.” As an extension to 5), I’d also say that even if you are the only one doing something, it won’t be long before someone else comes along and does what you are doing.
6. No one can do it like I’m doing it. I’ll never forget this one. This designer was gluing stuff onto blank tee shirts. I say “stuff” because I wasn’t sure what it was but it looked like things you’d find on the ground outside of a dumpster and no, I’m not kidding.
[Fashion] is a commodity these days. If you can do it, someone else can do it. And it’s likely they can do it better. What really makes the difference is design, execution, clarity, passion, and the overall customer experience.
Trust me, anybody else can do what anybody’s doing and probably do it better -to say nothing of already having the money to do it. It may not be common but it’s out there. Most start ups don’t shop the market fully.
7. You’d better decide quickly because ______ is also interested in my line.
If you cry wolf you better be ready to rescue yourself.
8. My competitor is too big/dumb/slow to be a threat.
Fear and fire are good things when it comes to being an entrepreneur. If you don’t think you can be beat by the big guys you better think again. Yes, they’re slower, but they may be slow enough to watch what you’re doing, learn from your mistakes, and then clobber you down the road. I still think small has major advantages in the world of [fashion] but you better be humble if you want to play this game.
Never describe a line you aspire to hang with as a competitor because it implies you think you’re on their same level. They’re doing it and you’re not -yet. It’s better to over estimate the capability of those you aspire to compete with and to plan accordingly.
9. I have an MBA, my partner has a Ph.D so we know what we’re doing. While it is not always true, it is often true that having preconceived ideas dramatically increases your costs simply through inappropriate priorities.
Guy says this one best: “If the entrepreneur were that proven, that he (a) probably wouldn’t have to ask for money; (b) wouldn’t be claiming that he’s proven. (Do you think Wayne Gretzky went around saying, “I am a good hockey player”?)” Point here is that most of the people who have to tell others about their greatness usually aren’t so great (except for Muhammad Ali, of course). The way to demonstrate greatness is to prove it today, not to point to the past.
10. I’m getting a patent. Before you ever say this to anyone, please read pp 22-23 of my book and all the entries under the category of Intellectual Property. Otherwise it’s possible that people will not take you seriously, particularly if the design doesn’t even begin to approach technical novelty. I usually won’t work with someone who’s saying they’re getting a patent. If you had something of sufficient technical novelty to warrant a patent, in most cases you’d have to have the skills to bring it to bear yourself so you wouldn’t need me anyway. I see very very few things that are worth the bother and expense of a patent.
I am trademarking the expression, “I’m getting a patent,” so fear it no longer. Or let me know if someone is still using it without a licensing agreement with me. I will automatically license at no cost to anyone who has actually applied for a patent. Everyone else has to pay $500/use.
And Donald, You’re fired!
This post is worth its weight in gold. It should have its place on the discussion forum not so much as there’s a great deal to add to it, but so that people new to the site can stumble easily upon it.
I thought self-deception was a necessary element in being a successful interpreneur. How else to survive constant rejection?
I thought self-deception was a necessary element in being a successful interpreneur. How else to survive constant rejection?
Is this a joke? I’m seriously asking, I’m not good at picking up jokes.
I do think self deception is necessary to be an entrepreneur with a bad idea. The point is, if you want your business to last, get a GOOD idea. Sometimes that means abandoning all your grand ideas and starting from scratch, sometimes it just means digging a little deeper to find the kernel of truth that’ll grow into a great business. Self deception inhibits both of those actions.
I’m speaking personally here. I myself know that I’m ready to go ahead with something when I stop fearing (and start craving) criticism, because that means my idea has enough kernel of truth to weather it, and in fact criticism helps tear away all the irrelevant chaff to help me find that kernel.
So thanks for all this honesty (yet again), Kathleen, I love it!
Sure, the kernel of truth has to be there. But how many times have we heard business owners – including successful ones – say “If I’d known then what I know now, I never would have started.”
Meaning that you need to be able to focus on the needs of your business and rise to the challenge of meeting them consistently… even when the rewards aren’t what you had dreamed or the work is exponentially more than you had ever imagined and disaster is stalking you more persistently than you can possibly think is reasonable.
One of the ways people manage this is by telling themselves lies about how awful it is or about the rewards that are just around the corner. They get to sleep at night by spinning fairy tales about how great everything is going to be once they get over this little hump.
Being able to distinguish between stupid lies about the worth of your vision and necessary lies about the difficulties in bringing it to reality is one of the key characteristics of the successful entrepreneur. But just because a startup entrepreneur might need a little bit of fantasy to keep them going doesn’t mean that their suppliers need to buy in to the same fantasy.
Hallelujia!!! I love topic. I think that the majority of designers I have known that are still in business have gotten beyond this thinking. It’s really difficult NOT to go there because as we start a “celebrity”-style business, you are trained almost to use those buzzwords and hype…yes, that’s pretty much it. Instead of slow serious consideration to the process, many designers are led astray at the outset of their idea…or are going about things based on an unrealistic business model practiced only by people who have the money to be that silly (and who consequently aren’t seeking money). I have a friend in the industry in LA and he has told me about approximately 5 companies he’s consulted with that wanted to do their business that way…needless to say, they aren’t around anymore. I really think that designers who are serious about their business surpass that little bit of idiocy eventually and start using a different lexicon to describe their line, their needs, and look for help in more appropriate places…
I made my “self deception” comment only partly as a joke.
Even if you have a “good idea” there will be folks who say bad things about you. That’s just the way it is. Self deception is perhaps too strong a term. Maybe I ust should have said, “you really need a thick skin when you are pursuing your dream.”
In regards to number 10 you might find this debacle amusing regarding several companies fighting over the term stitch and bitch
http://www.girlfromauntie.com/journal/index.php/2005/shades-of-you-know-who/
Of course the debacle over “stitch and bitch” is a trademark issue, not a patent issue.
Kathleen’s point was about designers claiming patents–although they’re issued from the same office, they’re NOT the same: Trademarks are easier to get than patents, and rightly so. trademarks are about marketing, patents are about inventions. (and copyrights are about art.)
Fashion isn’t art in the U.S. (argue all you want, it’s a legal distinction), and usually isn’t invention, so trademarks are pretty much the only way to protect intellectual property in the fashion world. Like I said, trademarks only protect your marketing assets which are, in general, limited to your brand name, logo, & sometimes (ala Tommy Hilfiger) your oft-used color combinations (He trademarks his color combos in his striped shirts, not in his logo.)
BTW, I got a little more info from the person I sorta know who DOES have a patent on one of her clothing innovations. It’s for the functional aspects (something to do with childproofing the garment.) The intellectual property lawyer who gave the seminar where I learned the most about intellectual property in the fashion world seemed to think that even gaining patents for the functional aspects of a garment would be very rare. Is the patent office getting more lenient???
This is about the same woman Jinjer mentioned. I’ve been reading her posts (different site) on her patent application process for some years.
Her patent lawyer seems sincere.
Although she doesn’t view it this way, it sure seems like a colossal waste of her time and money for a piece of paper. She’s extremely knowledgable and has been a canny businessperson, but she clearly believes that having a patent is going to bring her business, and it doesn’t seem to be working out that way.
regarding Wayne Gretzky… the best advice he said he ever got was (I think)from Gordi Howe, “you have two ears and one mouth for a reason” if only everyone followed that life would be soooo much nicer!
Heh. Fascinating article, which I’ve read before but is newly relevant since I am actually writing up one of those formal business plans. We’re supposed to project sales, determine desired market share, etc. Since my demographic is a niche and not particularly easy to get information on, it’s not like market share numbers are easy pickings! Plus, as stated, I have no samples and no contractors and no anyone but me yet, so it’s a leetle tough to price all those things. :) The exercise can be good, but just ’cause I “project” a number by pulling it out of a hat doesn’t mean that it’s anywhere near reality.
Thanks for quoting Guy. It’s nice to see an outsider’s (meaning fashion outsider) perspective…
I love this post – I remember reading the article by Guy Kawaski and laughing at it – he is so dead on. Kathleen your take on it for a clothing designer is great – it pertains to small business owners also. Great information!
If I had ten dollars for every DE that approached me with an idea for a T shirt that “no one has ever done before” or has a “unique fit” I could retire :)
Thanks Kathleen.