How Lack of Capital Can Drive Innovation

“You shouldn’t wait for change—you should pioneer it,” said Paul Block, CEO of Merisant, the company that makes the sugar substitute Equal, and his remark pretty well summed up the theme of last Thursday’s conference session, “Growth and Innovation: Leveraging the Momentum.” A standing-room-only audience attended the panel discussion, in which Block was joined by serial entrepreneur Howard Tullman, CEO of Tribeca Flashpoint Digital Media Arts Academy, and Lisa Price, CEO of Carol’s Daughter, a cosmetics company she launched 18 years ago while working as an assistant writer on “The Cosby Show.”

Perhaps the best illustration of Block’s precept came from Price. Four years ago, she said, she and her management team had detected early signs of a major change in the tastes and preferences of their customer base, principally African-American women. The company responded by developing a range of new products, including its first celebrity fragrance, My Life by Mary J. Blige. The problem was that Price didn’t have enough capital to launch the product in the traditional manner, through department stores, which was how every other cosmetics company did it. What she did have was a following on the Home Shopping Network. She decided to launch it there. It was a huge risk. If the gambit failed, the product might never recover. “I remember thinking about it a couple of weeks before, and asking myself, ‘Am I crazy?,” she said. But she went ahead—and wound up selling 60,000 units in a couple of hours.

Asked what had given her the confidence to believe she could succeed, Price said, “I didn’t have a choice. I didn’t have any money.”

It was, someone pointed out, a perfect example of the way that lack of capital can drive innovation, as well as its corollary: Having too much capital is often more dangerous to entrepreneurial businesses than having too little.

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charity:water CEO Lands Huge Commitment from Inc. 5000 CEOs

charity: water CEO, Scott Harrison, a nightclub promoter who transformed himself into one of the hottest not-for-profit entrepreneurs of our time, had Inc. 5000 Conference attendees on their feet this morning, pledging to “give up” their birthdays in support of his organization.

It was a morning filled with stories of personal transformation–from the likes of Russell Simmons, General Stanley McChrystal, and Ric Elias, who was on Flight 1549, the “Miracle on the Hudson” flight.  But Harrison’s tale was perhaps the most dramatic. 

A New York City nightclub promoter who lived to flaunt his Rolex, his super-model girlfriends, and his ability to get companies like Budweiser and Bacardi to pay him $2,000 a month to drink their brands in public, Harrison woke up one day and “realized I was the most morally, spiritually, and emotionally bankrupt person I knew.”

He signed on with a not-for profit that sent doctors to Liberia to do pro bono surgery on people with severe facial deformities. Harrison photographed the patients before and after surgery (the not-for-profit actually required him to pay $500 a month to work for them). While working in Africa, he became acutely aware of the devastating impact the lack of clean drinking water had on communities. “I learned that a billion people in the world didn’t have what I took for granted every day of my life,” he said.  “And it’s entirely solvable problem.”

Harrison decided he was the one to solve it and he went back to New York City with “my heart on fire. I wanted to solve the water problem but I also wanted to reinvent charity.”

He decided to take a three-pronged approach with charity: water.

 He pledged to find a way to put 100 percent of donations into water projects, such as digging wells in impoverished villages.

 He’d provide proof of where donations were going by sending donors pictures and showing them the projects using Google Earth.

 He’d create an “epic brand” to differentiate charity: water and to gain support from the media and high profile donors.

Harrison kicked off his campaign by throwing himself a birthday party, charging $20 at the door and donating all the proceeds--$15,000--to his new not-for-profit. Product sales, PSAs that ran for free on American Idol, and social media awareness put the charity on the map. And when Harrison could not make payroll because of his commitment to devote all donations to water projects, Bebo co-founder Michael Birch donated $1 million in 2009 to keep charity: water afloat.

Since then, high profile supporters like Saks, NASDAQ, and premium whisky maker Macallan have helped drive the not-for-profit’s success. But it’s Harrison’s grass roots campaign that has really taken off:  he asks individual donors to “give up” their birthdays by asking their friends and social media contacts to donate a dollar amount equivalent to the age to charity: water. 

So far, 9,500 people have done just that, including celebs like Seth Godin, Will and Jada Smith, and Justin Bieber. The charity has raised $43 million to finance 4,200 water projects, serving two million people in 19 countries. “We’ve been growing between 80 and 100 percent a year,” said Harrison.

Now, Harrison is starting a new, even more ambitious campaign with the goal of providing clean drinking water to 100 million people within the next decade. “We need to raise two billion,” he says.  He’ll start by helping to finance the purchase of drilling rigs for a water project in Northern Ethiopia. And it looks like the vast majority of conference attendees will help him out. At end of his talk, Harrison asked all who were willing to “give up” their next birthday for charity: water to stand. Suffice to say that most seats were empty!

For more information about how you can donate, check out the charity:water website.

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Is War a Good Analogy for Business?

Michael Robbins, the editor of Military History, took the stage this afternoon at the Inc. 500|5000 Conference to discuss Sun Tzu's 2nd century classic, The Art of War.

"There is a metaphorical connection between warfare and other human endeavors," Robbins said. "There are serious lessons to be learned."

Robbins is hardly the first to make the connection between war and business. Mark McNeilly's book Sun Tzu and the Art of Business, famously outlined six management principles from the text, including: "Capture your market without destroying it;" "Avoid your competitor's strength, and attack their weakness;" and "Use speed and preparation to swiftly overcome the competition."

At the same time, Robbins cautioned against making the leap from war as a metaphor for business, and war as a reality for business.

"There is a distinction," he said. "Subjugating and killing one's enemies is not proper conduct when applying it to one's customers."

"Although I don't know your businesses," he joked.

What do you think? Is war an appropriate analogy for business, or does it make you uncomfortable to think about business in terms of violence? Let us know in the comments section below.

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Scott Harrison: Why Charity Shouldn't Be About Guilt

Several years ago, Scott Harrison had the sudden realization that his life up to that point had been a sham.

This is where Harrison began his story, as he took the stage at the Inc. 500|5000 Conference. Both his personal story and the story of what his non-profit organization charity:water does (bring clean water to the developing world) was one of the most moving talks of the conference so far and had many entrepreneurs in the audience tearful.

That feeling he described, he told the room, was the result of spending years working in the New York City club scene as a promoter.

"Budweiser paid me $2,000 a month to drink Bud," he said. "Bacardi, the same. I was paid to drink. I did drugs and gambled. I realized on that beach that I was the most emotionally, spiritually, and morally bankrupt person I knew."

What'd he do about it?

"While I was hungover during the day, I started reading the Bible. That was an interesting push and pull," he said, laughing.

It was through this spiritual awaking that Harrison decided to clean up his act. He signed up to volunteer with doctors going to Africa to provide free surgeries to underprivileged people with deformities . A year into this volunteering journey, he found the one underlying issue for so many of these deformities that he could do something about: dirty water. This was the birth of charity:water.

Harrison's visual presentation showed graphic, moving images of the devastation caused by dirty, disease-filled water. Children drinking muddy water from bottles. Mothers struggling to carry huge jugs of water. And even though the message was serious, Harrison had a knack for lightening his serious message with a joke here and there.

From an entrepreneurial standpoint, he had an early guiding principle.

"I knew from the beginning that this couldn't be about guilt. You can't guilt people to give," he said. "It had to be about opportunity. I had to find a way to get real people, selfish people like me, to invest in this cause."

Harrison revealed to the crowd the three things he set out to do with this charity--all of which, he says, most charities lack. 

1. Find a way to give 100 percent of the profits to the actual cause. 

2. Proof: Make it completely transparent where the money goes.

3. Build a brand.

Today, having met those three objectives, the organization has funded 4,200 water projects with over $40 million in donations. He's convinced not only everyday people to donate money, but huge brands like Saks Fifth Avenue to help out in some way. For more information about how you can donate (which Harrison encouraged the crowd to do), check out their website.

 

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Ric Elias: How Facing Death Changed My Life (And My Business)

Ric Elias was sitting in seat 1D of U.S. Airways Flight 1549 on January 15, 2009 headed to Charlotte, North Carolina, when a flock of Canadian geese collided with the jet, sending the engine into a ball of flames.

"When the pilot said, 'Brace for impact,' I knew my life was over," said Elias, the CEO and co-founder of Red Ventures, a marketing firm in Charlotte, North Carolina. "But I was given a chance."

Of course, as we know now, 57-year-old Capt. Chesley B. "Sully" Sullenberger heroically took the plane down into the Hudson River in what would later be termed the "Miracle on the Hudson."

As Elias recovered from his near-death experience, he knew some things in his life must change. 

"I thought, why do I waste so much energy on the things that do not matter, with the people that mattered the most?" he said.

Now, Elias lives life by these three simple credos:

• Things can change very fast. Live in the present. 
• Choose happiness over righteousness. 
• Above all, find what matters the most.

Elias also knew that things had to change within his company, namely, his fear of failure in trying to scale the company. Since the plane crash, he's more than doubled his staff.

"I needed to let go of the fear of failure," he said. "In every employee meeting, I try to create a global consciousness of how lucky we are. We've become a very happy company."

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5 Keys to Business Happiness

At yesterday’s morning session at the Inc. 500|5000 Ted Leonsis discussed the difference between success and happiness. As a young entrepreneur he sold his magazine to a larger company and “declared victory.” But that didn’t translate into happiness for him. “I sold my company and I didn’t feel happy – I felt like I sold out. Is this the process? Is this what it’s supposed to feel like?”

The next thing that happened was worse - on a terrible plane ride where the flight was forced to make an emergency landing, Leonsis negotiated with the Almighty. “If I get through this, I promise I’ll leave more than I take. I made it off the plane, and I was changed, but I didn’t know how.” He then described how he tried to bring more happiness into the world of business.

His five key points for happiness:

1.    Be an active participant in multiple communities of interest. “Being comfortable in many communities and being a connector is vital. The most successful product I worked on at AOL was AIM (AOL Instant Messenger.) It really invented social media and viral marketing. We never spent any money marketing it.” The product helped customers connect to their communities of interest.

2.    Have high levels of personal expression. Leonsis blogs daily at Ted’s Take. “Companies that allow employees to have high levels of personal expression, and which allow their fans to do that as well are successful. We have the biggest blogosphere around our team. One of our fans comes to every game in a space suit. The more self expression, the more sales – the Capitals had sell outs their last 4 seasons.”

3.    Have a high level of personal empathy. Leonsis promised fans the Verizon Center would be the cleanest, most high tech facility around. But he hadn’t consulted with the cleaning crew. So, after President Obama visited a Mystics game, Leonsis stayed and cleaned the stadium. Eighteen months after cleaning the ladies room and mopping the stairs, no one talks about the President’s visit, but they do talk about the night the boss cleaned up.

4.     Be grateful and give back. “The act of giving back really moves you up in happiness,” said Leonsis.

5.    Articulate and believe there is a higher calling. “Not many people know their own higher calling is," states Leonsis. "The Dalai Lama came to the Verizon Center last year, and told people “Your journey is to find happiness.” We enjoyed our conversation, because it was the first time he had heard how business can make people happy, and that companies that generate happiness can increase value.”

Many of these ideas are covered more fully in The Business of Happiness: 6 Secrets to Extraordinary Success in Life and Work which Leonsis authored in 2010.

As a final thought, Leonsis said “We’ll all have reckonings. From that reckoning, you pivot and do something positive. I was programmed to be successful, but I went to the Library of Congress and read the Declaration of Independence, and they have all the draft versions as well. Every red line version had the same line about Life, Liberty and the pursuit of Happiness. So, our country is based on happiness. The second part of my career has been about making businesses happy.”

How do you incorporate happiness into your business for customers or employees? Let us know in the comments.

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Conference Life: Cocktail Party Impacts Early Morning Yoga Attendance

The last day of the Inc. 500|5000 conference in Washington D.C. kicked off with a little yoga. 

But after a lively circus-themed cocktail party last night, only 16 of the 40 or so CEO's and entrepreneurs who registered actually showed up at 6:30 a.m. for the session. (It seems, the turn out for yesterday's outdoor run was much higher.)

Among the sweaty, mostly-female crowd, was Mary Lorenz, who works with CareerBuilder.com.

"I think people had fun last night," she said. "Which means less people here. But that's okay. I feel really great right now--awake."

Other early bird activities at the Gaylord Hotel in Washington, D.C.? The Inc. Marketplace, a mall of company booths including Google and Dell, was buzzing with people setting up for the last day.

And whereas yesterday morning, the marketplace was packed by 8 a.m. with entrepreneurs and CEO's networking and chatting, today, the vibe is much like the yoga class: Easy does it. 

Also spotted: Serial entrepreneur and the day's most anticipated speaker Russell Simmons, strolling the hall, preparing for his time on stage.

 

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Are You Living the American Nightmare?

Jessica Herrin, founder and CEO of social selling website Stella & Dot, kicked off the last session of the Inc. 500|5000 conference Friday with a high-octane talk on finding balance. Her company hosts independent makers and sellers of boutique-style jewelry and accessories, or as Herrin put it: "I created a platform for balance for other entrepreneurs."

Is it odd for a self-proclaimed frantic, over-worked entrepreneur to create balance for her peers? Not to Herrin. As the co-founder of her earlier venture WeddingChannel.com, she had been on the frontlines of a tech start-up and knew what entrepreneurs needed.

"I was 24-years-old, worked all the time, and I didn't care," she said. "Other people would come to me and say 'I want to be you.' I was like 'No! This is not the American dream; it's the American nightmare!"

She decided to start Stella & Dot, which now sees $100 million in revenue since its founding in 2007.  Herrin had some quick takeaways for entrepreneurs looking for more balance in their start-up.

The highlights:

- Stay curious and nimble. Herrin said change is inevitable, so surround yourself with people that respond well to change. 

- People are everything. She said networking and building a strong support system will lead to a more balanced company. 

- Hire people with mental fortitude. "Mental stability is underrated," she added. 

- Love your life. "You have to show strength and conviction in your company," she said. "If you wouldn't do your job for free, entrepreneurship isn't for you."

 

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If You Don't Go All In on Social Media, You're Dead

Gary Vaynerchuk got his entrepreneurial start selling baseball cards and lemonade on the streets of Edison, New Jersey. Times have changed. Vaynerchuk, who has over 900,000 Twitter followers, says marketers have been too slow to adapt to the reality of marketing today; That is, no one cares about a lot of the media you put in front of them.

"The business world in 2011 is acting like 2007," he said. "And that is our opportunity."

For instance:

Outdoor media: "People are not looking at billboards. They're not even looking at the f!@$-ing road!"

Direct mail: "Who's pumped to get mail? No one!"

TV Commercials: "How many of you have fast-forwarded through every single commercial? Exactly. People aren't watching them!"

Vaynerchuk believes that marketing will inevitably revert back to a one-on-one relationship with business and customer. And companies that don't implement large-scale social media campaigns built into the fabric of their businesses, he says, will fail.  

"Word of mouth is the currency," he said. "Now we have the infrastructure to put it on steroids…I believe that companies have an opportunity to take themselves from non-human to human, [using social media]. When we engage on Twitter and Facebook, it's not just a press release. It's personal."

What about you, readers? Has your company completely forsaken traditional marketing for social campaigns? How do you interact with customers? Let us know in the comments section below. 

 

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Do Entrepreneurs Need to Be Crazy?

If you've ever started a company, you might have a disorder.

That's the thesis of the Inc. 500|5000 debate between Jay Goltz, CEO of the Goltz Group and author of The Street Smart Entrepreneur, and Phil Patrick, founder of PharmaStrat, a boutique strategy consulting and market research services firm.

The panel's title, Are Entrepreneurs Too Crazy to Make Good CEOs, is really a question in two parts. One: Are entrepreneurs crazy? The second part (because, well, let's face it, everyone who's extraordinarily passionate is at least a little insane): Are they too crazy to be highly effective leaders?

A panel of judges pondered three rounds of questioning structured around three potential disorders allegedly plaguing entrepreneurs everywhere:

1. HypoMania
Literally "below mania," it is a persistent elevated mood characterized by a decreased need for sleep, and extremely outgoing personality, competitiveness, and a great deal of energy. However, unlike full "mania," hypomaniacs are fully functioning and are actually more productive than others.
—Adapted from Websters

2. Delusions of Grandeur
A delusion in which one believes oneself possessed of great importance, power, wealth, intellect, or ability.
—American Heritage Medical Dictionary

3. Narcissism
A consuming self-absorption or self-love; a type of egotism. Narcissists constantly assess their appearance, desires, feelings, and abilities.
—American Heritage Culture Dictionary

While Goltz and Patrick duke this one out, let's let our readers—amongst whom are a lot of successful entrepreneurs and CEOs—have a say: Are you a little crazy?

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Tips for Running Daily and Local Deals

Inc. has covered the Daily Deal and Local Deal space quite extensively over the last year or so. In fact my colleague Eric Markowitz has reported on the death of daily deals (and their resurrection) in the last few weeks. As a business owner, what are some practical questions to ask yourself before creating a daily deal offer, signing up for a location based deal service, or making your own go at it?

 At today’s Inc. 500|5000 panel called “Deal or No Deal,” I interviewed Tristan Walker, Director of Business Development for Foursquare, Digital Consultant Marci Weisler and Daniel Kim, CEO of RedMango Frozen Yogurt to get their best tips for businesses on using daily deals and location based services.

First, it’s important to know who you’re trying to reach with a deal. Kim and Weisler both talk about using deals to generate new customers. “The purpose of these deals is to generate trial,” said Kim. “It is also and more important to obtain repeat customers. Make sure that the offers get into your target demographics so that it helps filter out consumers who may only redeem your offer because the price is too good. Daily deals is a marketing strategy, so make sure you're executing that strategy to the right group of people.” Weisler added “Structure your deal to attract new customers, and when they get there, give them reason to come back again. If you decide to do a deal, be sure that the demographic of the deal site you use matches your target audience.”

Walker asked if new customers or customer loyalty was the better goal. “Each leads to two unique and very different paths to execution and also investment profiles,” said Walker. “Traditionally (by rule of thumb) it costs 7 times more to acquire new customers than retain loyal customers. Fortunately, services like Foursquare allow our merchants to experiment and find the right strategies which suit their needs over time, free of charge. Invest time in these services; learn what's best for you as a business owner and most importantly commit to seeing it through via execution (training, marketing etc).”

Continuing to think about loyalty, Walker described a loyalty exercise done by AJ Bombers bar and restaurant in Milwaukee. The owner used Foursquare's badge feature to encourage customers to visit. Reaching out to his customers via social media, he invited them to the bar to obtain the "swarm" badge which is only given out when more than 50 people check into a venue during a short period of time. Over 140 people showed up, they all earned the badge, and the restaurant got 140 paying customers in the door. Use of this Foursquare feature was free.

Back to daily deals, think through how much doing this will cost you, all in. There are many different kinds of costs. Kim noted you must “include your labor and cost of goods sold, and compare this cost to other advertising options you have. Ensure that the option you choose will yield not only the highest revenue, but also the highest guest satisfaction.” You need staffing to ensure you can handle a flood of new business, according to Weisler. Then you have to make sure the staff is ready, which may require time and effort. Kim adds “Train all of your managers and staff on how to talk about and redeem daily deals, and ensure that they accept them openly and willingly. Daily deal groups market your services very well, so consumers will arrive with the highest expectations. Make sure you don't disappoint them.”

For a practical example, I spoke with Founder and VP of Sales Mike Connolly at StinkyCakes.com. Their site is a fun and practical way to give diapers and other baby gifts. “We say that we provide the cake and baby provides the Stinky!” Connolly did a Groupon deal in December 2010 and January 2011, reaching 5 suburban and small metro areas like Springfield, MA, Daton, OH and Westchester County, NY, with a potential reach of 750,000 subscribers. “We offered $40 worth of product for $20, for any items customers wanted. If I were to do it again, I would offer this only on certain items. Most people used exactly what they bought credit for; we didn’t have many upgrades. However, we priced it properly to cover shipping and cost of goods.” Connolly said he used this offer as a marketing, and not a sales tool, as Kim suggested above.

Stinky Cakes created segmented email lists of both the purchasers from their Groupon deals and the gift recipients. He was able to increase his marketing lists at a low cost per acquisition of customers. “We were also able to find targeted demographics and areas where people like our products, and we’ve since used targeted Facebook ads in those areas to obtain new, full price business.” Connolly hasn’t used Groupon again, due to their policy of requiring 50% of the deal price as their payment. His online shopping cart software now allows him to create his own deals, and he’s planning a $20 off any purchase offer to all his previous deal customers. “We almost consider these deal customers like our wholesale customers, and we have enough margin to cover their purchases.” Connolly is negotiating with other deal providers to find a better potential deal structure that would allow him not only new customers, but also a profit.

What are your top tips for using location-based services like Foursquare or daily deal sites? Please share in the comments below.

Bonus: Related Features

How to Break Into the Daily Deals Space -

10 Pros and Cons of Using Groupon 

Foursquare Teams Up With Daily Deal Sites

How to Find New Customers by Offering Daily Deals 

Trying to Make Sense of the Daily Deal Craze?

 

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John Vechey on How to Cope With Success

John Vechey, co-founder of Seattle-based games maker PopCap Games, just sold his company to Electronic Arts for just under a billion dollars, so you might think he doesn't have to fret about success any longer. But according to Vechey, it's not success that CEOs need to be concerned about, but how they will deal with that success once it comes their way. Vechey, always humble, shared with our Inc. 500|5000 conference audience the seven ramifications of success that he's struggled with over the years:

1 . "You won't be the smartest person in the room." When your company grows, it will ultimately outgrow you and you'll need to hire people who can take it to the next level. Vechey hired a CEO--Dave Roberts--several years ago but, he cautions, "if you do a great job hiring, you will also have to do a great job of listening" to the people who are smarter than you.

2. "It won't be your company anymore." As you become more successful, your company becomes bigger than you.  That means you'll ultimately lose control. "An example is that Dave Roberts hired a vice president that I didn't necessarily see eye to eye with and I had troubles with that," says Vechey. The CEO of a smaller company might have shown the VP the door, but Vechey knew that wasn't in the company's best interests.

3. "Only you can control self indulgence." The more successful you become, "people won't necessarily call you out on your shit," says Vechey. "So I hired a professional coach because then your hiring someone to tell you you're an idiot." The lesson: the more successful you are, the more you need to step back and examine how you're behaving.

4. "You will have to fire your best friends." As your company grows, you will inevitably be faced with making "soul crushing" decisions about the friends you hired at the start-up stage and their ability to help you scale. It's painful, says Vechey, but "if you haven't done it, you need to look around and ask yourself if you're missing something."

5."Right decisions will make people unhappy."  CEOs like being liked, but growth means making tough decisions that won't always be popular with employees. "Adapting is hard and people don't like change," says Vechey. "But if you try to make people happy in the short term, it probably will not work out for the company in the long term."

6. "You won't always have a place in your company."  The best thing he ever did, says Vechey, is to say "my place is not as CEO." But since then, it's been a struggle to find his place at PopCap. "You need to find the perfect interaction between what the company needs, your skills, and your passions."

7. "People can't relate." Being a CEO can be lonely and it's often impossible for friends and colleagues to understand your experience. "Friends assume that because I have a games company, I can do whatever I want or that I spend all day playing games. Sometimes I do but don't tell my boss."

What do you think of Vechey's observations about the ramifications of success? How do you cope with your own success?

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Barbara Corcoran's Grand Revenge

Hell hath no fury like a Corcoran scorned.

"You know, Barbara, you'll never succeed in business without me," a young Barbara Corcoran's ex-boyfriend said as they split up the real-estate business they had built together.

As Corcoran, the New York real-estate entrepreneur, author, and investor who appears on Shark Tank, explained at the Inc. 500 | 5000 conference, the boyfriend had left her for her secretary, and she decided it was time for her to end their business relationship as well. In no more than 10 minutes, the pair divided the business in half, splitting receivables and picking salespeople like it was a football drawing.

Those harsh words couldn't have been better for Corcoran. "He game me an insurance policy for success for the rest of my career," she said.

Sure enough, Corcoran sold her business in 2001 for $66 million cash.

"You know what? I credit him for half of that success. You know some people are motivated by revenge," she said. "And I'm one of those people."

Corcoran offered five strategies for succeeding in business, complete with stories from her own life.

1. Perception creates reality. "I got very good at looking the part long before I was the part," Corcoran said, noting that one of her early secrets to succes was simply mastering the art of, well, bullshitting. "I got there because I just bullshitted. I got bullshit in my bones."

2. Use the news media to build your brands. "How can you pull the rug out from under your competitors? Steal the limelight." Corcoran says she began putting out a regular report on Manhattan real estate to the news media, complete with headline-ready statistics—and before long she was treated as an expert. "The press actually fell for the fact that my people were the power brokers. We weren't!" she says. "Soon I had a new business partner, and his or her name was The New York Times."

3. Everybody wants what everybody wants. Creating buzz around just about anything—be it a basket of puppies or a building with 88 vacant apartments—begets popularity.

4. Expand early. Can you afford extra office space? Buy it, Corcoran says.

5. Shoot the dogs early. "I fire the lowerst-performing 25 percent of my sales staff every six months," Corcoran says.

Is that sensible, or just too harsh? Let us know in the comments, or on Twitter with #Inc500.

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Success Isn't All It's Cracked Up to Be

The second half of the morning at Inc. 500|5000 conference, which featured hugely successful PopCap founder John Vechey and serial entrepreneur Ted Leonsis, took a different tone from the energetic coffee-fueled morning sessions. 

The theme: Success isn't all it's cracked up to be.

Or at least, it can be hard to deal with. Both speakers talked about the little-talked-about struggles that come with a fast-growing company. 

Vechey, who recently saw his gaming company PopCap sell for over $700 million, talked to the audience of a couple hundred entrepreneurs about the "ramifications of success."

"I sat down to write some standard bullet points of success for this speech, and I just realized this isn't what I want to talk about. I'm struggling with where I am right now," he said, adding with a laugh: "This is sort of therapeutic, so thanks."

So what could he possibly be struggling with after such success? One point he discussed was finding he no longer had a place within the company.

"It's good to step down, let better people run the company," he said. "It's necessary for growth, but personally, emotionally, it's very hard."

He also talked about realizing, as a founder, you eventually are not the smartest person in the room, because you hire the best people around.

Leonsis, CEO of Monumental Sports & Entertainment, also talked about the harder parts of success.

After building and selling a tech company in the 1980's for over $60 million, he said he had a moment of emotional reckoning when a plane he was on nearly crashed.

"It shook me. I, of course, then began to negotiate with God," he said. "I was supposed to be happy at this point in my life, but I wasn't. So I decided to continue on. I said to God, 'Get me through this and I'll leave more than I take. That was the elevator pitch."

Since, Leonsis has had even more success, making rounds as a senior level manager at companies including AOL, and sat on the boards of and invested in tech start-ups like Groupon and Google. But he, like Vechey, says to not think success comes with money. It's about personal fullfilment.

So how'd the crowd take the news? No one ran for the doors, just saw a few raised-eyebrows.

 

 

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You Need More Conflict in Your Business

After a few rounds of coffee and morning chatter, hundreds of Inc. 500|5000 attendees piled into an auditorium at the Gaylord Conference Center to see author Patrick Lencioni talk about building healthy teams. And a key ingredient for health is, you guessed it, conflict.  

 

"First, here's what healthy means," he told a packed house of alert and note-taking entrepreneurs and business owners. "Minimal politics, minimal confusion, high morale, and low turn-over. That's it. But most CEO's spend 95 percent of their time on the smart part, because it's easier."

The fast-talking Lencioni, a bestselling author of several books including The Five Dysfunctions of a Team, launched into a talk about how a smart and healthy organization is the only way to grow a successful business. His theory focuses primarily on the stuff not learned in business school: the healthy conflict part. 

"Conflict builds good teams," he said. "Companies that don't discuss, that don't fight--the bad stuff gets pushed under the rug, out into the hall. It creates trouble later on."

He added: "Conflict with trust is the pursuit of truth. Conflict without trust is politics. If your team fights about something, they are engaged no matter what final decision is made."

How do you foster healthy conflict? Build trust.

An attendee stood up and asked him to explain further how exactly to build trust.

"Vulnerability," he said immediately. "I'm looking for people who can say 'I suck at something.' Someone who can be relatable to the people who work for them."

"But don't go back home and have a vulnerability event," he added, laughing. "It has to be natural. People will know if it's engineered. It's not found on stage or in a press release. It's in a meeting when you've been wrong and your employee was right, and you admit it."

 

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Gilt CEO: Interviewing is a Waste of Time

What's the best way to find talent?

Kevin Ryan, the founder and CEO of Gilt Groupe, a flash sales site that has grown to 850 employees and $500 million in gross sales since it was founded in 2007, offered his perspective on hiring and managing this morning at the Inc. 500|5000 Conference. His advice to CEOs? Don't waste your time on interviews. 

"I don't want to be thrown off by someone who presents well," he said. "When I think of why people succeed, it's because of intangibles that don't come through in an interview."

Instead, Ryan relies on aggressive reference checks and retains recruiters to be constantly monitoring for fresh talent.

"If your HR director reports to the CFO, I know [your recruiting strategy] is not important enough," he said. "I don't want them to be a nice person who's just friends with the employees."

Ryan concedes that hiring is an imprecise science that needs constant tweaking. But finding good people is the most important thing a CEO must do, he says.

"It's not just about having a visionary idea...It's about having the employees bring passion and flawless execution," Ryan says. 

What do you think? What's the most important part of your on-boarding process? Let us know in the comments section below. 

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Get Funding or Go Lean?

Tonight was movie night at the Inc. 500|5000 conference. The film? Something Ventured, a documentary that explores the roots of what is now a trillion-dollar industry: Venture capitalism. 

As attendees took their seats, Carl Schramm, president and chief executive officer of the Kauffman Foundation, introduced the film by noting the recent decline of the venture capital industry. 

"The model is broken," said Carl Schramm, president and chief executive officer of the Kauffman Foundations. "VC, while important, is not the be-all and end-all." In five years, he added, venture capital firms have not seen a positive return. 

Still, young CEOs and entrepreneurs spend a lot of time jockeying to get face-time with venture capitalists. Demo Days, which are held almost weekly now in cities across America, let start-ups pitch investors in three to five minute demonstrations. But does getting venture funding guarantee a fast-growing company? Absolutely not. In fact, only 14 percent of Inc. 500 companies are venture-backed. 

On a table 20 feet from the movie screen, copies of Eric Ries' The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses were being handed out. Which I found ironic. Not that Ries doesn't believe in start-ups taking venture funding, but the concept of staying 'lean' indicates a bootstrapped approach to taking on capital. "Many lean start-ups are ambitious and are able to deploy large amounts of capital," Ries has written. "What differentiates them is their disciplined approach to determining when to spend money: after the fundamental elements of the business model have been empirically validated."

So what do you think? When should you take on funding, and when should you try to bootstrap without giving up a piece of your company? Let us know in the comments section below. 

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Business is Just Another Form of Combat

Dawn Halfaker, founder of Halfaker and Associates, took the stage at the Inc. 500|5000 Joining Forces Military Entrepreneurs Mentoring Fair at the Reagan Center in Washington, D.C. to talk about military culture and entrepreneurship.

"Business is just another form of combat," she told the crowd of about a hundred CEO's and military entrepreneurs. "Military culture does prepare you for the business world. But it isn't an easy road."

Halfacker revealed her inspiring story of starting her own business, a consulting firm for that specializes in services for the federal government. As a police officer in the army, she spent years working with Iraqi police officers at a police station in a city north of a Baghdad.

She said it was just another day riding through the city streets when her truck was ambushed by enemy insurgents. She sustained massive injuries that left her in a coma, and forced the amputation of her right arm.

"I woke up from my coma in the same moment I went into it," she said, as the audience became tearful. "I had no idea what was happening. And when they told me I lost my arm and that I probably wouldn't have a dream career in the military, I thought I had lost everything." 

But a trip to Walter Read Medical Center for physical training changed her outlook she said.

"I got perspective. The vets there were positive, living their life. I decided to focus on what I had and not what I lost," she added.

Today, her Arlington Virginia-based company has seen quadruple revenue growth over the last few years.

After telling her story, Halfacker gave five points of advice specifically for the military entrepreneur, that were inspiring to everyone in the room.

1. Have a well-thought out, strategic plan. She suggests reading Jim Collins' Good to Great.

"No bank will give you a loan unless you can articulate your plan. Trust me I know," she added.

2. Leverage social media. Halfacker pointed out that many returning vets who plan to start companies might not live in the most condusive environments for networking.

"We do all our recruiting through Linkedin and Tweet out all our job openings," she said.

3. Focus on revenue producing activities.

"Seems obvious but in the military, you're used to taking orders. With a business you're in charge so make sure you aren't just doing what is easy or comfortable," Halfacker said.

4. Have a talent strategy. Halfacker said: "In the Army, you play the cards your dealt. Your team is your team. But in business, you need to seek talent for your team."

5. Relationships! Halfacker ended her talk pushing the importance of relationships in business.

"Definitely look to the military community for your first relationships," she said. "We're built for support.

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