There is a rule as an entrepreneur, “Don’t run out of money.” As long as you still have cash in the bank, you can adjust and change your plans enough so that you still can be in the game. Part of not running out of cash at your business is to be a personally frugal person. If you are wise with your personal money, you probably will be wise with company expenditures.

A great story about frugality comes from Josh Childress. Josh is a professional basketball player that shocked the world by signing a $10MM per year deal to play in Greece and by-passed the NBA. Besides understanding the fundamentals of a pick-and-roll, Mr. Childress also understands the power of watching every dollar, as demonstrated by this quote:

The next time you have to spend money for your business, maybe you can remember the monetary efficency of Josh Childress.

Many times, companies that are in the software business lose sight of how to maximize their chances for success. This is especially true of companies that serve multiple market segments. Sometimes it is easier to solve the problems of one segment that is not profitable than it is to solve the issues of a more profitable market segment.

This was the subject of an email that I sent to the management team of one of our portfolio companies that is on the verge of growing exponentially in the next few months. As they begin the path of growth, they will be looking to solve problems of businesses, which is where the core of their future revenues will come. With this on my mind I sent this email:

“It isn’t the people you fire who make your life miserable, it’s the people you don’t.” Harvey Mackay

A couple weeks ago, we wrote about the importance of finding help when building your company. But sometimes when you find help, you find the wrong people. Cutting ties with a wrong-fit employee is one of the hardest things to do for any manager, but not doing it can destroy your start-up and make you miserable as Harvey Mackay mentions.

There are a few facts about hiring in a start-up:

• Some people are made for start-ups
• Some people aren’t made for start-ups
• And some people think they are made for start-ups, but they aren’t

Start-up life is hard work and has its own culture when compared to any other type of employment. A successful hire is often forced to work in strained environments without a lot of support. Some people strive in this environment, and others crash-and-burn.

As the manager/owner, your job is to determine if they are keepers or deadweight. At a start-up, you can’t be in the business of grooming talent. There are too many things to do and too many roles to fill. Cut your deadweight quickly and save yourself the headaches.

Most smart entrepreneurs are customer focused. They want to make the customer happy and get more of them. But are there times when you shouldn’t listen to customers?

This question was the topic at one of our portfolio companies, PBwiki , last week. One of the senior developers had put together a list of articles that he had read about development philosophies. The one article that caused the most interaction by the team was an excerpt from The Inmates are Running the Asylum by Alan Cooper. Most people came down on the side that you have to listen to customers to make sure you are building things that the marketplace wants. But I actually took a different twist when I sent this email:

The key message here is that you have to know who your target is and listen to those customers. Don’t think that every customer fits your target audience.

So many times when you are at a technology start-up you get caught up in the day-to-day drudgery of trying to make incremental progress. While it is essential to make the tactical decisions and efforts, you have to understand that you are doing something great. Only in making the world a better place (no matter how small a part of the world you are affecting), will you really create value. This thought was on my mind in an email I sent to one of our portfolio companies, PBwiki, this week:

On a visit to one of our portfolio companies I was struck by the amount of progress that was being made. Every front — sales, engineering, finance, customer service, and marketing — were making daily strides. And when I left I sent the team this email:

I spent a few weeks in the HQ, and I was left with a thought of great progress. Every functional area is making great progress on building a world-class, second-to-none SaaS delivered collaborative solution. This made me think of a Latin phrase that I have used in the past: nulli secundus. This means “second-to-none” and is really the goal we have set as a company.

Often companies put their emphasis and focus on monetary goals, e.g. profitability or sales numbers. And while these are great and important, the striving to greatness is really the key. If everyone in an organization is focused on building an amazing company/product, the monetary results will follow.

“Nullis Secundus” should be the catch phrase for any start-up.

If you want to be an entrepreneur, one of the skills you must learn is how to deal with authority.

On the one hand, if you listen to advice from authority figures, you’ll never become an entrepreneur.  Too risky.  Too much of a long shot.

On the other hand, if you decide that none of the old rules apply, you’re likely to end up like the dot-bomb entrepreneurs who thought that they were immune to old-fashioned economics.

Entrepreneurs have to walk the middle path of respecting, but not obeying authority.

Respect authority for its implied wisdom and experience, but recognize that it is far from infallible.  Authority thought Wilbur and Orville Wright were insane for thinking that man could fly–even after they had done it!

Listen carefully to what authority has to say, and if you have good reasons for disagreeing, ignore it and do what you think is right.

In the end, even if you’re working within a larger company, disobeying authority can put you on the fast track to success.

Authority makes rules for a purpose–to get results.  If you get results, you can rewrite the rules.

Have you been following the saga of the 14,000 taco trucks in Los Angeles? Let’s give you a synopsis:

The County of Los Angeles has 14,000 mobile trucks that sell food in neighborhoods. They offer mostly Mexican-American dishes (e.g. tacos) that are inexpensive and simple. Well, recently, in its infinite wisdom, the county board of supervisors voted to make it a crime if a truck stayed in one place for more than an hour. This measure was supported by the local chamber of commerce, and it was passed unanimously by the 5 supervisors.

The logic was that the trucks, with their inexpensive menu and low overhead, were forcing brick and mortar restaurants to close. So, they imposed a fine of $1,000 and/or 6 months in jail if they didn’t move every hour. Armed robbery or drunk driving probably gets you 30 days, but sitting your truck in a place for an hour gets you 6 months!

The part of the story on which we want to concentrate is the economics of the situation. If government passes laws that make it harder for licensed, regulated, inspected food vendors to deliver their wares, the only loser is the consumer. Food the consumer wants would become more expensive artificially.

If a mobile vendor has determined a better and less expensive way to deliver his or her food, then let the market factors determine that. If traditional restaurants can’t adopt and adapt to market conditions, then they should go out of business. Let markets determine what consumers want, and the natural fluid conditions will make the correct adjustments.

Have you been watching any of the NBA playoffs? Although the games have been great and competitive, what is even more interesting is the fallout from the first round exits in the West. Avery Johnson and Mike D’Antoni were both fired when their 50+ win teams exited the playoffs stage left. These firings showed a great correlation to what life in sales management at start-up is like.

The parallels:

• You get paid pretty well (i.e. NBA coaches are all 7 figure men, and sales people usually make the most money at a company)
• When things are going well (i.e. playoff wins or lots of closed deals), you are a hero. You are almost like a god. Everyone thinks you are a genius, and you probably have the ego to prove it.
• Even when things go well, if you don’t reach expectations (i.e. not winning big games or making an inflated sales projection), you are probably in trouble.
• Expect to get fired or minimized sooner or later

Currently, I am filling the role of VP of sales at a start-up. The start-up has shown great strides the last 6 months of my involvement. Although April was the second best month ever, it really didn’t hit the expectations that I made public. Needless to say, I feel like an NBA coach today!

Crocs, the company and product name for those brightly colored rubber clogs that Mario Batali and others wear, recently made a decision to close their manufacturing facility in Quebec, Canada. The factory there employed 669

people, and the company cited high labor costs and a slowdown in sales for their plant closure.

While I am sure the fashion world is rejoicing in the slowdown in sales of the mostly hideous footwear, what caught our eye was the quote from Raymond Bachand, the Quebecois minister of economic development, innovations and

exports: “This is a pure case of savage capitalism. They decided to flush away Quebec.”

Now I have no idea what savage capitalism is, but if our dear French-Canadian friend defines it as moving production to a lower labor cost venue, then I am all for it. The key to capitalism is three-fold:

• Easy entry and exit from a market
• Free flow of information
• Asset holders make independent economic decisions

Quebec may not be happy about losing the 669 jobs, but it should be more unhappy about creating a business environment where quality work can be done cheaper elsewhere.