Russell McGuire

From my experience, successful business launches require an affirmative answer to five questions:

1. Is there an unmet business need?
2. Does meeting that need align with our vision?
3. Do we have some unique ability to meet that need?
4. Is our advantage defensible against adjacent incumbents?
5. Is this new business worth pursuing?

It’s important to note that I have framed these questions so that they make sense whether we are talking about starting a new stand-alone business (a startup), or starting a new business within an existing business (a new division or line of business).

In the article linked below, I look at each of these questions, identify specific tools that can help answer the questions, and at the end recommend some helpful books.

Read the full article here.

The Venture Mindset by Ilya Strebulaev and Alex Dang teaches nine principles that define the “Venture Mindset” and how even large companies can adopt the principles to achieve disruptive innovation.

I have served as an executive in big companies, attempting to champion disruptive innovations. I have co-founded tech startups that have sought funding from various sources. I have advised venture-backed startups as they ride the roller-coaster highs and lows of market success and funding rounds and tranches. Over the decades I have seen (and at times lived) the truths presented in The Venture Mindset over and over again and yet it has never made as much sense to me as it does now, thanks to the authors of this book. 

In addition to being informative and helpful, Ilya and Alex have written a book that is a joy to read. It combines many of the attributes of my favorite books. It is full of real-world stories that bring the authors’ lessons to life; it is highly structured around nine specific and memorable principles; most of its conclusions are supported by scientific research; and it makes clear recommendations that the target audience could actually implement (although most won’t). 

While many books point out the challenges big companies face in implementing the kind of innovation fostered in venture-backed startups, The Venture Mindset is rare in doing so within the context of explaining how large business practices enable those companies to be very successful in incremental innovation, and how big companies actually offer incredible advantages that no startup could ever match (resources, customers, scale). The book also does a much better job than most of identifying very specific actions big companies could make if they wanted to embrace the venture mindset, and explaining why doing so will be so hard.

The book is structured as an introduction, nine chapters, each on one of the nine principles that make up the venture mindset, and a conclusion.

As many of the other chapters do, the Introduction starts with a story — how a couple of venture capitalists took a risk on an early stage startup called Saasbe. They went against conventional wisdom and even the counsel of the other partners in their firm. Saasbe went on to great success, changing its name to one that all of us have come to know. They put the first $500,000 into a company that, at its peak, was worth $150 billion (and today is worth about $20 billion). They use the story to introduce “nine distinct ways in which the Venture Mindset succeeds where most people fail — or don’t even try.” These nine principles are:

• Home Runs Matter, Strikeouts Don’t
• Get Outside the Four Walls
• Prepare Your Mind
• Say No 100 Times
• Bet on the Jockey
• Agree to Disagree
• Double Down or Quit
• Make the Pie Bigger
• Great Things Take Time

Each of the nine chapters in the book takes one of these principles and fleshes it out. Each chapter includes stories from VCs and the ventures they back, as well as from the authors’ teaching and consulting experiences. Most chapters reference detailed research performed by the authors or others. The authors often point out how the Venture Mindset differs so significantly from how big companies operate. Each chapter also includes a section with specific lessons for big companies and specific actions they could potentially take to embrace the principle covered in the chapter. Each chapter closes with a short list of critical questions leaders should ask to discern how far they are from the venture mindset.

Bottom line, The Venture Mindset is perhaps the best book I’ve read on how a big company can innovate like a tech startup. Readers are given a clear picture, a well-marked path, and realistic expectations if they choose to set out on the journey towards disruptive innovation.

Read my full review here.

Especially as they begin to consider their exit, business owners want to know what their business is worth. For many, the life they have planned for after their exit depends on the funds they can get from selling the business, so they really need to know. The short (but not very helpful) answer is that your business is worth whatever someone is willing to pay for it. The secret to getting a more useful answer to the question is to think like a buyer.

In the article linked below I explain the three broad approaches to valuing a business and how each is calculated:

– Asset Based Valuation

– Cash-flow Based Valuation

– Comparable Business Valuation

I also talk about the three areas business owners can focus to increase the value of their business:

– Business Performance

– Business Risks

– Potential Buyers

Read the full article here, or reach out if this is a topic you want to learn more about.

When Christians face hard decisions, it’s right for us to step back and ask “what would God have me to do in this situation?” In Choose Better, T. David Gordon has compiled into one volume five Biblical models that have emerged over the centuries for answering that question. 

The book is relatively short (123 pages) and has a very simple structure. Chapter 1 introduces the five models. Chapters 2–6 each cover one of the models. The book closes with a brief conclusion. Click the link below to read my full review, but here’s a quick overview of the five models.

The first model (chapter 2) is the Imitation Model. When facing a decision, I should ask which option most allows me to emulate God or to cultivate human traits that reflect His image. 

The second model (chapter 3) is the Law Model. When facing a decision, I should ask of each option whether God, in the Bible, has commanded or prohibited that option.

The third model (chapter 4) is the Wisdom Model. This is perhaps the most nuanced of the models, requiring us to carefully consider the consequences of the decision being made. Does the Bible provide general guidance on this topic? Does how God has made the world align more with one option over others? Can wise human counselors help us with the decision? Can we learn from the past (from history) what would be a better decision? In short, we should apply the sources of Godly wisdom that the Lord has provided in making the decision. 

One of the key takeaways from the Wisdom Model is that often a given option won’t be the best one for everyone. While all of us Christians should be seeking to become more Christlike and increasingly obedient to the same revealed commandments, our differences in gifting, personality, and situation will often result in wisdom pointing us to decisions uniquely suited to each of us.

The fourth model (chapter 5) is the Communion Model. When facing a decision, I should ask of each option whether it enhances or inhibits my communion with God and His people. Will it lead me to spend more or less time in His Word, meditating on His Word, and in prayer? Will it allow me to be more or less actively involved with my church family?

The fifth model (chapter 6) is the Warfare Model. The Bible describes very real (but often invisible) battles between the forces of good and the forces of evil. When facing a decision, I should ask of each option whether it is likely to serve the forces of good or those of evil. I can think of the battle between the flesh and the spirit in my own life, Satan’s attempts to inflict damage in my family/business/church, and broader cultural spiritual battles.

Read the full review here.

One of the tools I most often use when faced with a hard or complex decision is the Strategy Sieve.

Those that worked with me at Williams might know it as the Sluice, and those that worked with me at TeleChoice might remember it as a TeleFilter.

It’s an especially powerful tool to use with a group of people to help drive clarity, consensus, and confidence in the decision being made.

Read my article here to learn more about the Strategy Sieve and a step-by-step guide to using it.

Last week I updated my LinkedIn profile and changed my title to Value Catalyst. What does that mean anyway and why would anyone need one?

You can read the full answer here.

Linked below is the fourth article in our series on tools to help leaders make tough decisions. This week, we dive into the power of decision trees and the critical question, “What would have to be true?”

At its core, every decision involves choosing between different options. However, understanding the conditions that make each option the right one is crucial. Decision trees are flowcharts that guide you through a series of conditions, creating a fork in the road at each one. By doing so, they represent the decision as a collection of conditions that lead to each possible outcome.

The simple question, “What would have to be true?” is also a valuable tool that complements decision trees. It helps you identify the conditions that must be met for a particular option to be the right one.

Check out the article linked below to learn more about these powerful decision-making tools and how to use them effectively.

Read the article here.

I really enjoyed reading Uptime by Laura Mae Martin. The book teaches a wide variety of practices for optimizing when, where, and how you do what you do to be as productive and stress-free as possible. I won’t be implementing all of them and don’t fully agree with all of them, but I think any reader could find practices in the book that would be helpful to them. Even better, the book was fun to read. The author makes a personal connection with her readers probably in a way similar to how she has been able to connect with and help thousands of workers at Google. I strongly recommend this book for anyone who wishes they could get more done with less stress and a happier life.

You can read my full review here.

Linked below is the third in my series of articles on tools helpful to leaders in making hard decisions. This week we are looking at Scenario Analysis.

Scenario Analysis is a planning approach that involves envisioning multiple future scenarios and understanding how each of those scenarios would impact your near term decisions and long term strategies. Even though it’s unlikely that any of the scenarios developed will develop exactly as envisioned, if the scenarios are selected well, the process will help you prepare for almost any outcome.

Scenario Analysis is most valuable in times of high uncertainty. 

In the normal course of business planning, we can be relatively safe assuming that the business environment will continue to develop within reasonable bounds. Competitors will introduce new products, customer’s desires will shift somewhat, and external factors like the economy and politics will go through regular cycles, but in general we can expect that our industry and our business will continue to be manageable using our traditional planning methods.

However, there are times when aspects of the future become highly uncertain. New technologies or concepts are emerging and it’s not at all clear how broadly they will be accepted. New competitors are emerging and we can’t predict how disruptive their innovations will become. Dramatic shifts are occurring in the political, global, health, or economic landscape and we don’t know how significant they will become or how long they will last. If ignoring these uncertainties and simply planning for business as usual could dramatically damage or even destroy our business, then we need to take a different approach.

That’s when it makes sense to consider Scenario Analysis.

Read the full article here, including how to develop scenarios, how to apply them to make specific decisions, how to use them in developing strategies, and links to other articles I’ve written on the topic, including video tutorials

Walking to Destiny by Christopher Snider is written for business owners and the advisors that help them. It teaches the Value Acceleration methodology at the core of the Exit Planning Institute’s CEPA certification program and provides a common approach and language for financial advisors, accountants, lawyers, and consultants to all work in concert in helping owners improve the performance of their business, build intangible capital, and prepare the business and themselves for their exit, whenever that might happen.

Although the book is about “exit planning”, having the best possible exit from your business (financially and personally) requires years of planning. The Value Acceleration methodology is designed to assess an owner’s present readiness to exit and then iteratively and systematically take actions that increase the near term performance of their business while increasing its value when they do exit, and as importantly, preparing the owner for life after the exit. Optimally, a business owner would read Walking to Destiny years before they plan to exit.

For the past couple of years I’ve been helping a client prepare to successfully exit his business. One of the client’s other advisors recommended that I pursue CEPA certification. Once I understood that “exit planning” was really what I would call “strategic planning with the end in mind”, it made perfect sense and I am now pursuing my CEPA.

Unlike large corporations or venture backed startups, most small businesses are privately owned by the people who run them. There are 32 million privately held businesses in the U.S. with a total of $37 trillion in annual sales. At some point in time, these owners plan to exit their businesses (and, with our aging population, 63% plan on exiting in the next 10 years). Most of them have been so busy running the business, they haven’t taken the time to plan for that exit and so, only 20-30% of them that try to sell their businesses succeed. Even those that decide to keep the business in the family are unprepared, with only 30% having success in the 2nd generation (and far fewer beyond). The owners also typically haven’t done much planning for their own lives beyond retirement, with three out of four profoundly regretting their decision 12 months after selling their business.

In addition to being busy, although business owners have multiple advisors (their CPA, their lawyer, their personal financial advisor), each of those advisors is focused on just one aspect of the puzzle, sometimes giving conflicting advice, and often overlooking critical gaps. I’m thankful that my client brought me in as a consultant to focus on the overall picture and help him identify and fill some of those gaps, but even so, working with the business owner’s other advisors hasn’t been tightly coordinated. The Exit Planning Institute provides the training and certification to get all of these people working together to prepare the business and the owner for that eventual future date when the owner leaves the business.

I love tools and methodologies, so at first I was frustrated that the author didn’t jump right in to teaching me this new approach. In hindsight, I understand the wisdom of his approach. Part One of the book makes the case for advanced planning for your eventual exit from your business. Part Two of the book covers the five fundamental principles that an owner needs to understand for the Value Acceleration methodology to make sense. Part Three finally gets to the details of the methodology itself. Part Four provides practical guidance for owners and advisors on how to most effectively implement the Value Acceleration methodology.

Bottom line, Walking to Destiny is a great introduction for business owners of the work they need to do to prepare their business and themselves to transition the business to new ownership. I strongly recommend this book for business owners and those that advise them, whether or not they plan on using the methodology.

Read my full review here.