Why do startups generally fail?

Startups Fail
Forbes reports that 90% or 9 out of 10 startups fail. That’s a very high chance of failure and yet millions of entrepreneurs all over the world take the risk daily, thinking they will be part of the 10% that succeeds. One way to increase your chances of being part of that 10% is to study reasons why other businesses failed in order to educate yourself on what to look out for when trying to get your company off the ground. One of the most recent “high profile” examples is that of Vine. The social media site that specialized in 6 second video clips took off and was eventually purchased by Twitter before ultimately failing. YouTube personality, DeStorm gives his reason on why Vine failed in the following video:

Although Vine may be a unique case, there are more fundamental reasons why businesses don’t succeed and several of the most common reasons may appear to be quite obvious.

No Market Need

Based on a study of 101 failed startups, no market need ranked at the top of the list with 42% of startups failing as a direct result. Perceived market need is not the same as actual market need and many times, despite adequate research and investigation, a product simply does not gain any interest. The difficult thing to understand here is that even if all the market research points to “yes” there is still a probability of it being a “no.” Sometimes products just lack that “x-factor” which is often times required to get things going.

Ran Out of Cash

Often believed to be the most common reason, running out of cash came in as the second most common reason startups failed with 29% of businesses listing it. Even with a strict budget and business plan, it almost always becomes impossible to factor in unexpected costs. The ironic thing about starting a business is you generally don’t have a good idea as to how much it’s going to cost until you actually start it and by that time it’s too late.

Not the Right Team

Not having the right team was the third most popular reason for business failure according to this survey. 23% of businesses felt they didn’t have the right team in place. The book Good to Great talks about this extensively. How no matter what type of business you have, that business can never be great unless you have the right people involved in running it.

Vine had some more specific reasons for its failure. The product failed to adapt quickly enough to a changing market. When Instagram and Snapchat arrived on the scene Vine was still only offering 6 second videos. Whereas these other platforms showed there was a definite appetite for slightly longer videos.

Management was also very unstable at Vine, which made it difficult to get the right team in place with a common goal. There were also users with massive followings who left Vine as a direct result of their dislike over its monetization setup. Instead of listening to these users and adapting/changing, they lost them to similar platforms along with their millions of followers.

Although Vine, or any business can essentially fail for a plethora of reasons, there are usually some core issues that are the onset of the problem. Once that problem becomes realized, 9 out of 10 times, it’s too late.

Apply For The FinTech Innovation Lab

Fintech Innovation Lab
FinTech is now accepting applications for their annual program for early and growth stage companies that work in the financial services technology sector. The program is now in its 7th year and hopes to have another successful showing of cutting edge technology companies aimed at disrupting the financial services market!

Who is FinTech?

The FinTech Innovation Lab is collaboration between the Partnership Fund of New York City and Accenture which allows technology startups with backgrounds in financial services to present their businesses/ideas to venture capitalists in order to get funding for their companies. The program has been held annually for 7 years and continues to be a great source for the development of partnerships between startups, large financial institutions and investors. There will be upwards of 30 representatives from some of the largest Wall Street companies in the world; such as American Express, Goldman Sachs and Bank of America. All will be present to offer mentorship and guidance to any technology company presenting at the conference.

Applications are due by December 1st, 2016.

Who can apply for the FinTech Innovation Lab?

If you are an entrepreneur involved with a technology company that works within the financial services sector, you can apply to be part of the FinTech Innovation Lab! Applications must have, at the bare minimum, a working beta version of their technology that is ready to be tested. The Lab starts in April 2017 where you will be paired up with top level executives from banks in conjunction with technology entrepreneurs who will help you hone and refine your product in preparation for a demo day that takes place in June 2017. During that demo day you will present your technology to venture capitalists and financial industry executives in an attempt to gain funding for your company.

How big is FinTech?

FinTech was founded in 2010 and since then has raised over 300 million in venture capital for participants in the program. The value of these investments has grown astronomically and nearly doubled last year from $12.6 billion to $22.3 billion. In New York alone FinTech deals tripled and surpassed Silicon Valley in the first quarter of 2016 for the first time.

How is FinTech Unique?

FinTech provides an amazing opportunity for technology start ups to learn from top level executives as much as it provides the opportunity to promote and sell their products to venture capitalists. Unlike other technology conferences where the goal is to simply get funding or close a deal, FinTech provides an amazing amount of value through the guidance and mentorship included in its program before the actual demo day. The insight received during this process can be invaluable regardless of venture capital interest.

In conclusion, if you are working with a technology startup that has a presence in the financial services industry, you owe it to yourself to check out FinTech to see what it’s all about. You may even want to apply for the program and take a shot at gaining some investment interest!

Animated Explainer Videos for Startups

Explainer Video

A relatively new and effective way of marketing your startup is through the use of an animated explainer video. More and more companies are turning to these videos in order to offer a short and entertaining presentation that summarizes what their companies or products are all about. These videos have been shown to be highly effective in keeping businesses and consumers engaged while explaining in simple terms what the company does in 5 minutes or less.

When choosing an explainer video production company it is often a best practice to use one that specializes in animation. It keeps the video interesting and visually stimulating while increasing a potential customer’s attention span. It has been shown that videos can often increase visit time to 2 minutes! This is a huge increase considering the average attention span of a potential customer tends to be 8 seconds in length. That’s an increase of 1500%!

Conversions are extremely important for any business, especially startups, and any action that can increase conversions should be taken immediately. The good news is that videos have been shown to increase conversions as well; sometimes by as much as 30%! With an explainer video, the pitch has been perfected during the editing process and you know there is no variation in what’s being said or how it’s being said. This is great consistency to build on from a sales perspective and you don’t have to analyze each individual presentation differently. Once you’ve developed a presentation that works simply upload the video and BINGO, you’re in business!

Videos also help with your companies branding which is extremely important. Nowadays there are so many companies all competing for the same slice of pie, and building a brand that is recognizable will help give you an edge above the competition. Using video marketing allows you to use brand-centric colors, images, emblems, etcetera in order to get your point across. These images will have a more lasting impression on their audience and make your company more recognizable in the future when comparing it to other companies in similar segments.

Lastly, explainer videos can also improve your online presence from an SEO stand point. Youtube.com is widely recognized as the second largest search engine on the internet and uploading videos and acquiring visitors will undoubtedly help not only your videos ranking within YouTube, but also help your websites ranking on Google itself. The key to internet marketing is getting your site ranked high in Google’s search engine for relevant terms so you can take advantage of that increased traffic. Startup explainer videos will help you achieve this.

Remember, that even if you are a new company with a limited budget, you can still get a high quality video production done at a relatively low cost. You do not need to spend thousands on production like in the past. Take advantage of this and make a startup explainer video one of the first marketing items you tackle while building your business! The exposure and business it will bring you will pay out 10-fold!

How Napolean Hill’s “Think and Grow Rich” Can Help You Successfully Build Your Startup

think-and-grow-rich
Think and Grow Rich, by Napolean Hill, focuses on the importance of an individual’s mindset and how it directly relates to achieving success. Andrew Carnegie, who was the richest man in the world at the time (1908), commissioned the book with the goal of interviewing 500 successful people in order to discover the formula for success.

The information taught in the book can be directly applied to startups, sales, marketing and practically any business venture one can think. The significance of one’s thoughts in any of these scenarios will determine if success is achieved or if it is just another pipe dream.

Napolean Hill breaks down the power of thought into multiple chapters and explains his reasons for each.

  1. After the introduction, the second chapter deals with Desire. It all starts here. An individual must have an absolute burning desire to achieve success or whatever goal it is they want to achieve in their life.
  2. Napolean Hill talks about the importance of faith and believing you will attain your desire.
  3. Auto Suggestion. The importance of repetitive positive affirmation of your goals and desire.
  4. Specialized Knowledge. The pursuit for knowledge specific to your desire will aid in you and/or your company’s success.
  5. The importance of imagining ways to better your business. Imagine what hitting that sales target, or building a fortune 500 company will feel like.
  6. Organized Planning. Goals are extremely difficult to achieve without a plan. Planning helps you stay productive and focused on the task at hand.
  7. Have the ability to make a decision quickly and stick with it.
  8. Never quit, never give up. Look at every obstacle as an opportunity.
  9. A small group of people whom you come together with in order to brainstorm ideas about business and to problem solve.
  10. Sex Transmutation. Taking sexual thoughts and converting them into thoughts of another nature. Using them as fuel in order to help achieve your goals.
  11. Subconscious Mind. Visualizing your future and trusting your gut instinct.
  12. The Brain. Learning to maximize your brain power in order to aid your problem solving ability.
  13. The Sixth Sense. Once the first 12 principles are mastered, you can explore true wisdom by tapping into this ability.

Much of an individual’s or startup’s success is predicated on your thoughts and subconscious mind. If you are constantly thinking about success and building a great company or failure and losing everything, the outcome will manifest itself either way.

Napolean Hill explains the importance of using one’s mind in order to achieve success and when you combine that thought process with an amazing work ethic, your goals will be achieved much more rapidly. These principles can be applied to any aspect of one’s life, whether personal or professional. If you are trying to hit a new sales goal you need to believe and visualize yourself hitting it before you can achieve it. The same holds true for building a startup; you need to see it in your mind first, and then do it second.

Tools to make animated explainer videos

Expaliner Video Tools
It’s no secret that explainer videos can have a dramatic affect on your websites engagement with visitors and conversion ratios. Some companies have seen unbelievable results from the use of a simple explainer video on their homepage. If you are interested in creating an explainer video yourself there are some tools you can use in order to help. Below is a list of six of those tools for your review.

1. Rawshorts.com – Raw Shorts incorporates custom video templates that can be chosen for your business. The software uses a “drag and drop” interface and is extremely user friendly. They offer a free version and various pay per export versions at different price points ranging from $8 to $20.

2. Biteable.com – Biteable.com claims to be the “world’s simplest video maker.” You can use their software to make animation videos with their provided templates. They offer a free package and a $99 dollar a year package that offers more functionality.

3. Goanimate.com – Go Animate offers a free 14 day trial and various monthly packages ranging in price from $39 to $159 per month. The free trial is of their “Go Premium” package which typically boasts a price of $79 per month.

4. Animaker.com – Animaker offers drag and drop functionality for ease of use, similar to that of Raw Shorts. They offer a free package and upgraded packages ranging in price from $9 per month to $39 per month.

5. Animatron.com – Animatron offers a nice selection of tutorials for anyone interested in using their software. There are a fair amount of training videos designed to make the use of their software as easy as possible. They offer a free package and two
upgradable packages costing $15 per month and $30 per month respectively.

6. Powtoon.com – Powtoon claims that premium members see a 300% increase in engagement. They offer a free package and monthly packages that range from $89 to $197 per month.

If you are not the most tech savvy individual you can always hire a company to create an explainer video for you. Just be warned that prices are obviously going to be more expensive for professional video development, however some of the monthly packages of the aforementioned sites were fairly expensive so justifying the cost of hiring a professional may be reasonable.

If you intend to pay someone else to design a video for you also take into consideration the fact that you may want to test multiple videos with varying images, verbiage and durations to see which one yields the best results. In this scenario, it may be best to play around with the free software options provided above during your testing period before forking over the money on professional production.

At the end of the day, getting your explanation video up as quickly as possible should be the most important thing and your end goal. How you go about achieving that goal is up to you. Just make sure that you A/B test everything so your video yields success for your business!

What makes a startup investable or fundable?

There are many factors that make a startup investable. Some are tangible while some are not. Investors do like to see proof both in the form of past sales and experience in conjunction with the right economics and market conditions in order to maximize scalability. Growth potential is a huge motivating factor when deciding if one should invest in a startup and a proven track record is extremely beneficial as well.

Regardless, there are many factors that play into an investor’s decision as to what makes a particular company good for investment. Many are relatively obvious while others may be surprising.

First off, is the company poised for growth? Meaning, are market conditions favorable for that specific business and does it have a history of sales with incremental increases in gross revenue? If so, it will definitely catch the eye of potential investors with the goal of helping expand that growth; thus generating more revenue.

Do the company’s founders have experience? Is this a first time entrepreneur or someone whom comes from a background of multiple successful startups in the past? Investors will very much take this into consideration when deciding to fund a startup. This is very common in industries such as Silicon Valley, where many CEO’s and founders of technologies companies are often involved in several startups or recruited to aid in the successful launch of a new company. A good founding team is worth its weight in gold.
Does the company offer a unique selling proposition? What do they offer that’s different than the competition? Investors will be looking for something new, fresh, and different from the “norm.” Creating that niche market for a product that only 1 startup develops will definitely stimulate interest in that company due to a lack of competition within that space.

What about timing? Does the timing for this company just “feel” right? There have been countless business ideas that were all great in their own right that failed miserably due to poor timing. There have also been seemingly simple or moronic business ideas that went viral because of their perfect timing. Launching a business at the proper time cannot be ignored and is extremely important.
Does the company have a solid and proven marketing plan? Having previous sales is one thing, but continuing to grow can sometimes be difficult if existing marketing avenues are tapped out. A startup needs to be aware that they will need to divulge into different marketing techniques as they grow and should have this already outlined before approaching an investor for funds.

Lastly, does the investor simply like the business idea and the people involved in founding it? As simple of a concept as this is, it’s an extremely powerful one. People in general gravitate towards people they like and get along with. If parties are constantly clashing heads, the business relationship will most likely fall apart. Investors want to provide capital to people whom they genuinely respect and can see themselves working alongside. If that fundamental human trait is not there it’s safe to say that no investor will give a dime.

A Couple of Explainer Video Case Studies

Explainer videos have been shown to increase viewer interest significantly! User engagement increases, conversion ratios increase, and overall web interaction becomes more enjoyable. Serious thought should be put into the implementation of explainer videos on any website. The benefits it can yield are far too great to ignore!

Below are two case studies of how large of an impact an explainer video can have on a company’s well-being. In some instances, it was literally the sole marketing tactic responsible for putting that company on the map.

Dropbox

Dropbox went from 0 to 100 million users from the use of a simple explainer video. This was done in a time span of about 5 years. Amazing isn’t it? What’s even more fascinating is the simplicity in which Dropbox chooses to market their website. Their website contains a simple explainer video and download link, that’s it. It forces users who go to their website to watch the video because there are simply no other options. Their product was described in a 120 second video and was able to stimulate enough interest that millions of users then download their software. Sounds like a pretty powerful video!

Utilizing this method resulted in a 10 percent increase in sign-ups which equated to an additional 10 million users for Dropbox. It’s obvious an explainer video increases conversions, but by how much?

Based on a study by Internet Retailer an explainer video can increase the chance of a product purchase by as much as 85 percent. With metrics like this, it’s amazing more companies don’t take advantage of this marketing technique.

Zencash

Zencash incorporated a 90 second explainer video on their homepage and saw dramatic results as well. 74% of their websites visitors were clicking play versus the previous norm of 17%. That’s an amazing jump in user activity and engagement.

Zencash learned several things by incorporating an explainer video onto their website. The importance of keeping the video no longer than 2 minutes was deemed the goal to hit. After testing they realized that 30-90 seconds appeared to be the sweet spot. They also learned the importance of putting the most relevant information in the beginning of the video. Remember, people have short attention spans and you need to get that key information to them as quickly as possible before they lose interest.

Zencash also did a good job of knowing their audience and developing a video that spoke to that specific audience. For example, if your business is predominantly dealing with C-level executives, it would be in your best interests to develop a video geared towards that market versus teenagers. This seems obvious but it’s somewhat surprising how many companies chose not to follow this rule.

Placement and testing are also important in any explainer video development. Be sure to make the play button big and visible and don’t be afraid to test different durations, messages, and animations. A/B testing is your friend and can help you work out the kinks in your video before deciding on your final product. You never know, the next viral explanation video could be yours!

Why these Shark Tank pitches succeeded

Shark Tank
ABC’s hit TV show “Shark Tank” explores the interaction between hungry investors and startup businesses searching for capital to help their companies grow to the next level. Entrepreneurs present their existing businesses and ideas to the investors (sharks) with the hopes of convincing them that their company is a worthwhile investment. More often than not, these businesses are shot down due to a number of reasons ranging from inadequate sales, lack of preparation, or even blatant incompetence, however there are many examples of successful Shark Tank pitches and understanding why that is can be extremely beneficial to any entrepreneur who hopes to gain venture capital at some point in their career.

Lumio

Lumio is a foldable lamp company founded by Max Gunawan. His pitch was so well received by the “sharks” that he had all 5 of them fighting for a deal with his company. Max was able to gain interest from the sharks by showing his commitment to the product and by backing it up with actual sales numbers. Max showed his commitment level by spending four months living in a Chinese factory to make sure his product was being designed in accordance with his vision. He was also able to grow his company to $1 million in annual sales within two years.

Scrub Daddy

Scrub Daddy is a scratch-free, tough hygienic sponge product designed and developed by Aaron Krause. Aaron had several interested sharks in his product due to his perfect sales pitch. Aaron had spent months refining and practicing his pitch while trying to sell his product in local grocery stores and that practice paid off! By the time he presented his product to the Sharks, he had his pitch so finely tuned and was brimming with confidence that the Sharks went for it.

Beatbox Beverages

Beatbox beverages is a boxed fruit wine company founded by Brad Schultz, Aimy Steadman, and Justin Fenchel. Beatbox beverages already had sales in their native state of Texas and Mark Cuban saw potential in the product for expansion. Mark was interested in purchasing a third of the company which the founders of Beatbox were not prepared to give up, however a quick counter offer from Beatbox for nearly double Mark’s offer ended up closing the deal. Beatbox had the confidence and didn’t hesitate with their counter offer which is ultimately what got the deal done. Any hesitation during a price negotiation shows a lack of belief in your company’s true valuation and could effectively kill the deal.

Ultimately there can be an infinite amount of reasons why a deal may or may not close on a show like Shark Tank, but when looking at the deals that were successful, commonalities can be seen amongst them. Most of the deals that closed had existing sales already, confident founders and clean well-rehearsed sales pitches. These traits repeat themselves time and time again within the closed deals on Shark Tank and serve as a good foundation for anyone looking to pitch their business to investors for capital.

How to self-finance your startup or business

Every business needs money at some point in its life time. The notion that you can start a business without money is somewhat of a fallacy. Sure, you can start a business without any of your money, and use someone else’s, but at the end of the day you are still using money to get your business going. If you are just getting started with your business, you most likely don’t have any sales yet, and asking friends or family members to invest may not be an option. The business is too early in its lifecycle to acquire professional funding from investors which leaves it all on you. The conclusion that you are now going to draw is that you will have to self-fund this business; now you need to figure out how to do it.

So what are your options? Let’s discuss a few.

If you’re a home owner and have equity you can see about taking out a home equity line of credit. This will provide you with a lump sum of cash that you can use to launch your business and hopefully there is enough there to float you until you start to generate your own sales. Please take into consideration what that debt will cost you and be sure to factor those increased payments into your overall financial picture. When acquiring any loan, affordability is going to be key. Banks have already shown that they will give loans even to those who are unable to afford it, so it will be your own responsibility to recognize what falls within your income range.

If you have a retirement (401k or IRA) you can look into cashing those out as well. Just be sure you are willing to accept the penalties imposed on early withdrawals from these accounts. Sometimes it’s simply not worth it to take that hit, however if you’ve done your homework and believe strongly enough on your business idea, it may be worth it to you.

If you have good credit, you can float yourself using credit cards until sales pickup. Be sure to shop for the best interest rate possible and make sure you can afford more than your minimum payments on those cards when you utilize them otherwise you will never get them paid off.

If these aren’t viable options you can get a second job to help fund your business venture, although this won’t leave much available time for you to work on it, or downgrade your current living expenses in order to free up income for you to use on your business. Even if it’s an additional $200-$500 per month, it may make all the difference in the world during your beginning stages while you try to get things going. Sometimes that’s all it takes to build something great and if you believe in yourself and the business idea it will be well worth the sacrifice. It’s better to try and fail, then to live your life with regret for not ever truly knowing if your business idea could have been a huge success.

Why using a video to market your startup is a good idea!

Gaining exposure when launching a start-up or trying to explain your business product/idea to individuals can be difficult. Often times people are still left confused or not entirely convinced that your vision for success is a good one. Using a video to describe your new business venture can help break through this plateau and offer both a visual and audio explanation of what you are trying to achieve.
The good news is that in the age of the internet, you can have a video created for a relatively low cost! No longer do you have to spend thousands on production, scripts, and acting. This can all be done digitally from the comfort of a video editor’s home charging a nominal fee and delivered within a matter of days.
It also can help with conversions! According to certain studies, 68% of people will remember your video over a simple text article or press release about your company. That’s a dramatic difference and one that can yield excellent results. It’s no secret that people typically have short attention spans, and creating a video can help keep an individual interested and engaged in your product.
You will want to keep your video clear and concise while making sure the duration is adequate. For example, the average www.youtube.com video is generally 4 minutes and 20 seconds in length per Google. Taking that into consideration, you will most likely want to keep your startup video under 5 minutes in order to maximize your viewers interest.
Be sure to use short sentences and ideas when filming your explainer video and try to avoid complicated concepts. If your business is inherently complicated, you should spend some time before you film your video developing a script that really simplifies everything.
For example, the founder of Tesla and Spacex, Elon Musk, has an amazing ability to take extremely complicated ideas and simplify them so the masses can understand what he is trying to do. When you are making your videos, you should try to emulate this behavior.
Be sure to get your main point across very quickly within the video, this will help “hook” the watcher into staying longer to learn more about your company and what you’re all about.
Lastly, try to have some animation in your video. It helps keep your prospect visually interested more so then just individuals talking to one another, or a voiceover on still pictures. You will want to combine some good animation with your audio for maximum effectiveness.
A good example of an explainer video can be seen here:

You’ll notice the video is short, clear and concise. It offers animation in conjunction with audio and explains the company/product in under 2 minutes. Don’t try to say everything in one video, focus on some major core points designed to peak interest and if done correctly, your viewer will take it upon themselves to investigate things further on their own.
Keep the duration manageable, use animation, and script out a simple explanation and you should see some amazing results from your startup explanation video!