http://blog.inc.com/nolan-bushnell/ en-us 2010-01-14T10:46:38-05:00 hourly 1 2000-01-01T12:00+00:00 http://blog.inc.com/nolan-bushnell/2010/01/getting_perspective.html A recent news item on Inc.com asked the question, "Are your employees afraid to take a vacation?" You should pose that same question to yourself. It is easy to work all the time because the tasks of an entrepreneur seems to never be finished. But not taking a vacation is a huge mistake. Tasks are the noise in the system of innovation, and they almost always try to muffle what is more important, which is to take the right strategic actions you need to build your business. Getting away from the office allows you to reconstitute a view of the company without all the daily noise created by tasks, people, and customers. Of course, it isn't easy to get away. In the early days of Atari, I could not imagine taking a week off and being out of touch. I am sure that the first three years could have been much easier if I had just taken time to view the big picture without all the distractions. Today, it is even harder to get that distance because of e-mail and cell phones. Can you really get perspective on your business when your BlackBerry hums constantly and pulls you back into the minutia? Still, you must build the discipline to do it. There will be a payoff, I promise. I remember distinctly a September afternoon in a Paris café when one of the big ideas of my life was born. The vacation was nice also. 7687@http://blog.inc.com/nolan-bushnell/ 2010-01-14T10:46:38-05:00 http://blog.inc.com/nolan-bushnell/2010/01/new_years_resolutions_for_your.html This is the time of year to look back on a year gone and a fresh one just starting. Every company has the ability to take hard steps to improve performance. What can we learn from last year? What mistakes were made that lead to problems? What were the triumphs? Is it time to move offices, to junk that old machine, to let go the marginal employee? Company resolutions are often easier to follow than the every-year personal ones that we make. Take the next few days to look back, to look forward, and to make a list. Get your employees to thinking also and have a shared list. Then put some skin in the game by offering a party a bonus if “X” is completed by a specific date. Objectives can be fun and very helpful if they are thought out and implemented. 7656@http://blog.inc.com/nolan-bushnell/ 2010-01-04T10:07:44-05:00 http://blog.inc.com/nolan-bushnell/2009/12/how_to_avoid_horrible_presenta.html In making a pitch for funding, communicating with co-workers, making a sales presentation, or just giving a speech, a good PowerPoint deck or a set of keynote slides have become a must. Over the years, styles have changed with the advent of new technology features, but there are some basic rules that have endured. “Less is more” is the most important rule—and the most frequently violated. For example, I just sat through a presentation in which there was so much information contained on each slide that I quickly lost what the group was doing. Slide after slide of more and more and more. The slides were unreadable and the concept was muddled. So I finally did something that I never do which is stop the presentation and simply ask: What are the three things you want me to understand? The presenter couldn’t answer me directly, so then I tried the old elevator pitch gimmick—What would you tell a potential customer on an elevator? The CEO started to answer my question and, after about 30 floors of explanation, I asked the members of the team to leave and to e-mail me once they get their business figured out. Here's a tip: Complexity does not sell. There may be thousands of cool features to your new product or technology, but listing them just puts people to sleep. Find out what the key elements of your pitch are, and then boil down the presentation accordingly. Add graphics, pictures, tables—anything to break up big concepts and communicate them simply. I think it was Mark Twain that said, “If I would have had more time, I would have written you a shorter letter.” Keep it simple. 7626@http://blog.inc.com/nolan-bushnell/ 2009-12-18T12:42:49-05:00 http://blog.inc.com/nolan-bushnell/2009/12/is_your_idea_a_product_or_a_co.html I see hundreds of business plans each year, and more than half of them fail what I call the “Company Test.” That is, many of them describe clever products or services, but the idea itself is simply not sufficient to support a whole company. So how do you know if your idea is simply a great product or in fact the basis for a larger organization? First, ask yourself, is there any way this idea could produce at least $100 million in sales? I pick that number because, to get funding, a company needs to grow large enough to accommodate several viable exit strategies. Few products or services on their own will have enough drawing power to hit those numbers, of course. What is needed for a viable business is a line of new products that draw are able to draw on a continual flow of innovation, or a line of ancillary services that produce recurring revenue and high margins. Web companies have similar problems if they are advertising-supported, because advertisers require a certain scale that few will be able to achieve. There are ways that small sites can generate ad revenue but they will always have to give much of that back to all the middlemen—ad agencies, ad networks, etc.—that stand between them and the advertiser. The bottom line is this: If you come up with an idea for a cool product or service, don't stop there. Keep your creative juices flowing and try to imagine a family of products or services. Perhaps then one day you will grow the business big enough to buy the castle on the hill. 6656@http://blog.inc.com/nolan-bushnell/ 2009-12-14T13:40:21-05:00 http://blog.inc.com/nolan-bushnell/2009/11/how_to_create_a_million_jobs.html If members of Congress wanted to create a million jobs, all they would have to do is repeal in its entirety the legislation that is known as Sarbanes Oxley. It is the most destructive legislation that has ever been written, causing hundreds of millions if not billions of dollars in waste and problems. It has virtually destroyed the IPO market for midsize companies and caused thousands of public companies to de-list. I know personally of at least 10 companies that have chosen, because of Sarbanes Oxley, to go public on foreign stock exchanges rather than listing in the U.S. The problem with the legislation is the massive cost of compliance and the stilted way that companies need to operate in order to comply with it. All this is waste. The law was put in place in response to the accounting and financial fraud that came to light in the early part of the decade at several companies, most notably Enron. What is little understood today is that people at Enron and elsewhere were successfully prosecuted under the then-current security laws were. The rules in place dealt with the problems effectively. Piling on a huge regulatory burden was totally unnecessary. We live in a global economy and having companies in the U.S. carrying the added burden of high compliance costs and the inefficiency that entails only makes U.S. businesses less competitive. Companies backed by venture capital have created massive numbers of jobs in the U.S. but because the law has made it harder for them to go public (or to stay public), the amount of VC money has dried up. Newly-formed companies have been denied the IPO exit that all investors want, and the math is quite simple: No exit equals no more investment. If you want to start a company and some day take it public, contact your Congressional representatives and ask them to repeal Sarbanes Oxley. It was and is a horrible burden on everyone. 6535@http://blog.inc.com/nolan-bushnell/ 2009-11-02T16:32:07-05:00 http://blog.inc.com/nolan-bushnell/2009/10/an_easy_way_to_learn_entrepren.html Today there is no reason for any kid to be out of work. That's because online markets such as eBay, Craigslist, and Amazon.com provide some of the best hands-on training in the world for anyone who really wants to learn how to grow a business. My 15-year-old son has discovered eBay and he is now up to 6-to-10 transactions per day. He is starting to seriously reduce the accumulations of stuff in our garage--so much so that he is planning to turn to other sources of merchandise as well. The great thing, particularly for young people, is that the results are very immediate. They can play online markets almost like they would play a video game: Add a well-crafted appeal or product description to your auction page, and you can take a tepid sales volume and turn it into a torrent. It has been fun talking to him and coaching him not just when it comes to creating ad copy, but also in sales and in pricing strategy. I think that every high school should consider creating an eBay course to teach students the basics of online marketing. Who knows from which tiny acorns mighty oak trees will grow? A tiny online business today could grow to a major enterprise over time. The secret to success is gaining the ability to get into your customer's head and solve their problems. That is the skill that my son and other young people like him are learning when they sell things online. 6523@http://blog.inc.com/nolan-bushnell/ 2009-10-29T08:47:00-05:00 http://blog.inc.com/nolan-bushnell/2009/10/why_i_love_trade_shows.html Trade shows are somewhat out of favor these days, and I think that's a shame. The more you know about business, the better you will be at solving new problems. And trade shows are a great way to get an instant education in one particular industry--a look at the competition among the larger and smaller players, the new trends, the new technologies, and the problems that are being solved. And I find that I can learn a lot from trade shows representing industries other than my own. A trip to Las Vegas is great for this. There are typically several trade shows being held simultaneously, and I enjoy ducking in and out of each of them. By delving into a business that is very different from my own, I find that I can absorb new ideas about marketing and other core processes. Often, there are whole ways of doing business in one industry that have not taken hold in another. On a recent trip, for example, I spent time at a materials-handling show. The companies in this particular industry are experimenting with some of the most inventive automation that I had ever seen. I actually think that some of the technology they were using could be adapted for my industry, to make some very new kinds of video games. On another trip, I went to a retail-fixtures convention. There, I came up with an idea for a new market for some of our software. It never hurts to learn and to get out of the usual a rut. 6446@http://blog.inc.com/nolan-bushnell/ 2009-10-09T08:55:00-05:00 http://blog.inc.com/nolan-bushnell/2009/10/the_fullyoutsourced_startup.html An entrepreneur is fundamentally an organizer of labor and capital for an enterprise. But that doesn't need one must build an organization in the traditional sense. There are many businesses that do millions of dollars in revenue with no capital in place, no employees, and no facility. In the era of outsourcing, starting a so-called hollow company is a fairly low-risk way of becoming an entrepreneur. So how to begin? I blogged earlier about the importance of the one pager. Once you have crafted that marketing document, your sole priority should be to go get a sale. You have to be convincing, of course, but I have seen many entrepreneurs make their first sale without so much as a prototype. By making a sale, you have done the most important part of a business by showing that at least one company wants your product. Once you have a sale, you can move on to the next step and find a manufacturer that will do all the work. There are thousands of these small-batch manufacturers out there that are constantly looking for new products that they can make and sell. With a manufacturer signed on, your next step should be to establish a sales organization. Rather than hiring, I would advise you to stay hollow and look to the outside. There are many independent sales organizations employing thousands of reps, and they are always looking for a new product or service to represent. Rep firms work on a commission basis, so they only get paid when you do. This is the way Atari grew so quickly. We simply put on a rep force and we had instant worldwide coverage. As your organization makes more and more sales, there are accounting groups that will take care of billing and cash flow and bonded warehouses if you want to start to hold inventory. You can work with all of these companies on a contract basis. The truly hollow company need never hire anyone. Employees only complicate things. And since you now have nothing to do yourself and no one to manage, you can then turn to the really interesting work, like thinking about expanding your product line to grow even bigger. 6444@http://blog.inc.com/nolan-bushnell/ 2009-10-08T10:40:17-05:00 http://blog.inc.com/nolan-bushnell/2009/09/funded_companies_are_fragile_c.html There are basically two theories about funding a start-up. One is to bootstrap the company; the other is to pour on the cash. Bootstrapping is always attractive because if the company becomes viable, there is no dilution for the founder and he or she will enjoy a great deal of freedom. Atari started that way. We launched the company with $250 and didn’t raise a dime until the business was generating about $40 million in sales. Yes, I went without a paycheck for long periods of time, and I almost lost the company one summer. But we survived and prospered and found out ways to save money on everything. This created a very robust business, because we were simply more efficient than any of our competitors. For us, bootstrapping worked like a charm. The other common start-up approach is to raise money early and often. This allows a company to rise quickly up a very steep ramp, achieving large market share much sooner than is typical. Founders often end with very small percentage of ownership. As long as the company grows quite large, of course, this is not so bad. In this scenario, however, the entrepreneur must be prepared to run a much more fragile company. Start-ups are by their nature messy. Management will make mistakes, markets will be slower to take shape than you anticipated, and the technology will be buggy. In a bootstrapped company, you can survive because your expenses are low and you are accountable to no one but yourself. But in a funded company, you must demonstrate to your investors that you are making progress even as cash flow continues to be negative for a much longer time, requiring added rounds of investment. If you go for the fast-growth model, be sure to raise more money than you think you need. The good news is that, in general, it is actually easier to raise more money than less. You can always argue to investors that a stronger cash position will only improve your company's likelihood of success. 6313@http://blog.inc.com/nolan-bushnell/ 2009-09-02T15:15:08-05:00 http://blog.inc.com/nolan-bushnell/2009/08/the_case_against_government_sp.html Every morning, a CEO or a product manager in the private sector will ask his or her staff if there are ways for the company to save money. Managers know that their survival and bonuses depend of not wasting money. Sure, they also look at the revenue side and try to increase sales. But the two go hand in hand. The legislator and seldom a governor get up and ask what kind of legislation can make our current government systems more effective and deliver more value for less money. The bureaucrat actually is always looking for ways to increase their budgets, not to drop them. In that lies the problem with government services and why they always fail in comparison to the free market. As we contemplate expanded government, we should ask why. Is there any government program in any country that is more efficient than private providers? I have asked this question at parties for the past year, with not one example offered. The only examples proffered were using the police power of the state to enact triage or rationing on some scale. Little government wins. Stop the bloat. 6290@http://blog.inc.com/nolan-bushnell/ 2009-08-28T10:41:11-05:00 http://blog.inc.com/nolan-bushnell/2009/07/the_power_of_a_onepage_marketi.html When launching a new product or a new line of business, many companies make the mistake of starting with either engineering or design. This is wrong. Start with marketing. The best way to start a marketing process--no matter what the product or service--is to create a one-page brochure, an 8x11 sheet of paper, printed on both sides, that fully describes the offering. On the front page, write up the big sell, the uniqueness of your value proposition, and the price. The information should be printed in big type and less is more. Shoot for three prime features easily outlined in short, declarative sentence--anything more, and you have a problem. The idea of the front page is to encapsulate the essence of the product so well that a customer who glances at it will be instantly hooked. The front is all about getting a customer to pick up the page and turn it over. The back page is about specifics, details, and more information. A customer should be able to learn everything there is to know about your new product, find answers to all their questions, and decide if it is something they want to buy. By addressing in detail the purchaser's wants and needs, the product brochure now becomes an important design document for the rest of the company. A list of features for engineering to build, a synopsis of the necessary market research, an outline of costs for production--you'll find it all right there. Often a well-produced brochure can save million of dollars in wasted time and money. 6188@http://blog.inc.com/nolan-bushnell/ 2009-07-31T17:24:05-05:00 http://blog.inc.com/nolan-bushnell/2009/07/raising_money_is_like_kissing.html Even in this market, there are new companies getting funded, but the process of raising money can seem at first to be quite unpleasant. You have to kiss a lot of frogs before you find your prince--and you will sometimes despair at the companies that you see getting funded while you're still in the hunt. Over the course of my career, I have seen hundreds of entrepreneurs that are on the money trail. Many business plans that I thought were marginal wound up raising huge amounts of money. I have also seen great plans that never got off the ground for lack of funding. In most cases, success at raising money had to do more with persistence than it did with any other quality. The entrepreneur that would simply not give up always got funded in the end. He or she would often modify a plan, and the ultimate business may have been very different from the original concept--but, nevertheless, they got the money and they got their start. Even though raising money is like kissing frogs, it's not all bad. Like that search for your true love, the prep work can actually be rather enjoyable. Venture capitalists and angel investors can provide an entrepreneur with a great deal of insight and experience. Look at the process of pitching investors as an education and, even if a group doesn’t invest try, to learn something valuable from each of them. 6115@http://blog.inc.com/nolan-bushnell/ 2009-07-22T18:26:37-05:00 http://blog.inc.com/nolan-bushnell/2009/07/4_trends_in_the_gaming_industr.html I am shown new things in the video game business all the time, and love the portal into the future of fun that these demonstrations provide. While some innovations that I see are covered under non-disclosure agreements, I can talk about many that are not. Here are four trends that I find intriguing: 1. Gesture technology is one development that I particularly like. Several camera technologies sample where a gamer's arms, hands, head, body, and legs are in space, and render movements and actions accordingly. This gives a player the ability to “be in the game.” The same technology could also be used to create systems that allow for the elimination of a game console or a TV remote control. A viewer might just hold out his hand and, with a few gestures, change the channel or raise the volume. 2. The musician wannabe market continues to attract innovators eager to develop the next Rockband, Guitar Hero, or Dance Dance Revolution. Consumers are ready to devour more intense experiences and new artists now see the value of incorporating their original music into these gaming platforms. 3. Virtual worlds. I am happy to see that there is some game play that does not rely on the slash, slash, level-up metric, which I find boring. I find that virtual worlds are getting richer and more interesting all the time. 4. Micropayment systems. The ability to spend a few pennies or nickels on virtual goods or “passage to the island” is helping to create a new economic model for games. I am on the board of a Seattle-based company called Reality Gap that has developed a cool new technology called MetaTix, which has created a payment system for online games that calls to mind the tokens that gamers use at Chuck E. Cheese. Over time, a new micropayment system like Reality Gap could replace credit cards as the currency of choice for online gaming; credit cards, in my opinion, are great for purchases of $10 to $20, but they are horrible for things costing a nickel. These are a few interesting developments in my field. I will keep you posted on other new stuff as it comes up. 6099@http://blog.inc.com/nolan-bushnell/ 2009-07-17T08:09:00-05:00 http://blog.inc.com/nolan-bushnell/2009/07/what_to_do_when_you_cant_pay_a.html During tough times in any business, it becomes difficult if not impossible to pay all your bills on time, and this can become a source of sleepless nights and worry for an entrepreneur. One summer at Atari, we had an extremely dry sales season and got behind on our payments. Some of our suppliers agreed to work with us. Others sued, and we would up with more than a dozen judgments against us on behalf of them. It was an unhappy period. If you find yourself facing this situation today, it is important to know that you have many more friends than you may believe. Your key suppliers--the good ones to whom you owe probably the most money--generally want you to survive and to prosper. They really want to supply your company for many years to come. If you go out of business next month, they not only lose the revenue you owe them, they also lose you as a recurring customer. So you have more leverage with them than you may think. The secret to surviving this situation is to communicate. It can be exhausting, but open a dialogue with your creditors and make sure that you are honest. Present them with a plan, and ask for their patience. Here's what you want to find out from them: 1. Think about which creditors you absolutely need in order to stay in business, and vice versa. Make sure that you have a way to secure future shipments or services from them in order to keep your business running. 2. Determine which of the rest of your creditors are rational and want to work with you, which ones are also in financial difficulty, and which creditors are jerks who will tolerate no give-and-take. 3. Work out a payment schedule for each creditor and try to be as faithful to that schedule as possible. 4. In general, in these difficult times, don’t sweat any payment turned over to a collections agency and don't allow threats of legal action to worry you. It can take years for a creditor to get a judgment and then to collect from you. They know that and now so do you. 5. The most important thing is to keep your business operating and to reduce costs. Business cycles come to an end and make sure that you are there to see that new dawn. When Atari ran into trouble, none of the competitors who sued us were able to collect a dime until we were ready to pay. That moment didn't come until about 6 months later and, by that time, the market had come back and our cash position had improved. The creditors that helped us through the tough period won our loyalty going forward, while we permanently black-balled all the firms that sued us. And they were very sorry. We survived and made our helpers millions as we grew and expanded. 6081@http://blog.inc.com/nolan-bushnell/ 2009-07-13T18:18:04-05:00 http://blog.inc.com/nolan-bushnell/2009/06/look_to_the_rich_for_market_re.html If you want to know what will be popular a few decades from now, you don't have to engage in expensive or time-consuming market research. Just look at what rich people have, and think about a way to make something similar, although at a much lower cost, for the average consumer. For example, in the next 20 years I believe there will be automobiles that can operate on auto-pilot. This will give the middle class the benefit of having a chauffeur, but at a fraction of the cost. Think of how great it will be to always be dropped off and picked up where you are going, instead of having to trek to and from some parking lot. Businesses that provide middle-class people with access to items that previously only the rich could afford are almost always successful. When I look at business plans I ask, does this make people's lives “richer”? If it does, the business has a much higher likelihood of success. 6022@http://blog.inc.com/nolan-bushnell/ 2009-06-29T18:57:30-05:00