Entrepreneurial Basics

"The single most important criteria for a good early-stage deal is the quality of the CEO and the team. Investing in technologies or "market opportunities" without a good CEO is a key to disaster. Having said that, you need core skills/assets, uniqueness, a real market opportunity and a business plan that makes sense. Finally, the valuation has to make sense."

This quote is from Joi Ito, one of the many bright and incisive voices on and off the Internet. He has seen the entrepreneurial process from both sides, as business developer and as funder. What he says above is the very basic blueprint needed to create successful start-up businesses:

---High-quality CEO and team: Many entrepreneurs believe that VC firms and investors invest in ideas and markets. If you don't believe The Jenius, believe Joi: it's the people that matter most. And although experience matters, the willingness to align the idea to the needed experience is just as valuable. Nobody expects you to know everything, so you have to be savvy enough to locate the resources you need to bolster your weak points.

---Core skills and assets: This is basically an offshoot of having a good team, for a good team will include all the core skills and many of the assets you need to be a success. In essence, if you have been working in daddy's garment company all your life, don't expect investors to give you big checks for launching an Internet business in another industry. Play to your strengths, identify the basics, get them on board with your idea and secure as many assets as possible.

---Uniqueness: Every entrepreneur believes his/her idea is unique. "Unique" is very hard to do if all you're doing is a "me too" idea. It's easier to find uniqueness in the angle of attack than in the concept itself, to focus on your specific improvement rather than on the general category. Don't pitch an eBay clone as "Like eBay, but better!" Nobody will believe you. Instead, pitch it with your improvement squarely in the spotlight. Uniqueness doesn't come from wild creativity: it comes from focused strategy.

---A real market opportunity: This criteria often requires you to drag a horse to water and make it drink. The biggest market opportunities are beyond the vision and imagination of most people; that's why they are real opportunities. Many entrepreneurs slack off in this criteria, believing that "the market's obvious" or "everyone will want it." Here's a tip: words mean less than numbers and numbers mean less than experience. If you can't get numbers--and you often can't--create experiences, ways to show investors how powerful your idea really is. Prototypes, samples, run-throughs, simulations, whatever it takes to give the investor the feeling of how big the business opportunity really is. Is this hard work? That's why you're an entrepreneur...or aren't.

---A business plan that makes sense: My friend Roberto Filomeno and I reviewed over 400 business plans for investors. We used different styles: he started from the back, with the numbers; The Jenius started from the front, with the Executive Summary. Usually We'd look at each other and either nod or shake Our heads at the same time. We only disagreed once (and he was right, not Me.) From words to numbers, a business plan has to answer every question clearly, thoughtfully and honestly. It has to tell the story of your idea and how it will grow. It has to fire the imagination and be as realistic as an earthquake. It has to inspire and create trust. From concept to team to operations to marketing to exit strategy, a business plan reflects the entrepreneur and his/her team only to the extent they choose. A fund-worthy image requires a fund-worthy effort.

Now having said all that, is there anything on that list that We--Puerto Ricans of the dawn of the 21st century--cannot do?

The world offers opportunities every second. There's money galore for ideas that take advantage of global opportunities. What are We waiting for?

The Jenius Has Spoken.