Don’t fear the fire: Why entrepreneurs need all the criticism they can get

Don’t fear the fire: Why entrepreneurs need all the criticism they can get

Rick Spence | 13/04/29 8:54 AM ET
Last week, I took part in a business event in Peterborough, Ont., called Bears’ Lair. As you might guess, it’s a Dragons’ Den type format where entrepreneurs compete to win prizes for making the most compelling pitch for their business.

Sponsored by the local Workforce Development Board and organized by three dynamic women entrepreneurs, Bears’ Lair was done right. The competition started in January with 25 entrepreneurs entering on Facebook, and ended in April with four finalists facing off in front of a panel of four judges and 150 boisterous fans. The winner received $5,000 in cash and $20,000 in products and services from various sponsors, which included office equipment, advertising credits, Web development, Internet marketing coaching, accounting services and even fashion consultation. That the runners-up also won a number of free services showed the generosity of Peterborough’s business community.

But this event got me thinking: Why bears? Why dragons? Why do we associate entrepreneur pitch-offs with such violent concepts? “If you don’t win, you’ll be eaten by bears. Or consumed in dragon fire.” This doesn’t happen to aspiring singers (they become “Idols”) or apprentices (after being fired by Donald, they go home in a limo).

Still, I think there’s good reason for adopting this carnivorous imagery. Entrepreneurs deserve it.The names of these programs imply consequences. And facing the consequences has become a rare concept these days. Society today too often protects us from consequences — even mild criticism. (Look at the mealy-mouthed report cards that eschew the word “Fail.” Or consider the word “non-judgmental, which is now generally perceived to be a good thing.) Everyone must be encouraged; no interest, direction or pursuit can be judged “wrong.”

But business doesn’t work this way. When you run a company, and your products or services don’t meet the market’s needs, the consequences are severe: You don’t get paid. If you don’t fix it fast, your children don’t eat. It’s epically Darwinian.

Which is why entrepreneurs should embrace these dragons and bears. Most startups get overly friendly feedback from friends, family and business acquaintances, when what they need is tooth and claw. “Great cookies,” say your friends. Knowing nothing of the expense of starting a business, they suggest, “You should sell these.” “I love this prototype,” others say. “You should manufacture these and sell them.” Yes, entrepreneurs need positivity, but not mindless encouragement. If they’re going to invest their life savings into a venture, they deserve caring criticism and provocative probing.

This is why dragons and bears are your best friends. They ask the tough questions no one else will. Kevin O’Leary, of CBC’s Dragons’ Den, has become the poster boy of abusing entrepreneurs, for the excessive delight he takes in ripping apart their business plans. But in the end, he’s usually right.

The judges in last week’s Bears’ Lair event weren’t as critical as the dragons tend to be; in a city the size of Peterborough, you may meet that entrepreneur tomorrow in the checkout line at Costco. Even so, they asked strong, challenging questions of the four finalist pitchers:

Asked of an entrepreneur planning a video-production company aimed at seniors: How did you come up with your price point? Do you have additional services you can sell? Where will you find more professional expertise when you get too busy to do all the work yourself?

To the creators of a new consumer product: How are you protecting your product idea? Does the uniqueness of this product really justify the expense of getting a patent? Would you consider licensing your product rather than taking on the burden of manufacturing it yourself?

To an artist launching a creative product geared to seniors suffering from dementia: How do you plan to acquire customers? How will you encourage repeat sales? How will you keep users from simply photocopying your product rather than buying more?

To an aesthetician starting a spa: Have you really looked at your business plan? You’re not making enough money! How could you get that profit higher?

The entrepreneurs had good answers to only some of these questions. More often, they were taken aback, and took notes for future reference. While it’s no fun to be called out on stage for your mistakes, it’s far better to get this feedback now than to be socked by these problems down the road, when the stakes are higher and other problems are coming at you fast and thick. Feedback, says management guru Ken Blanchard, is the breakfast of champions.

Most entrepreneurs will never be lucky enough to be exposed to the withering cross-examination of bears and dragons. So you must proactively seek that out. Share your business plan widely. Build a network of business experts and ask for their objective comments and probing questions. Don’t fear the fire.

Congratulations to Janet Howse of Work of Art, who won first prize in the Bears’ Lair. If you’re lucky, the tough questions are just beginning.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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