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The Most Important Personality Trait All Business Leaders Should Have Posted: 09 Oct 2019 08:15 AM PDT When most people think of what makes a great business leader, they often say words like "bold," "strong personality," "charismatic," "self-confident," and "visionary genius." Business leaders are often in the spotlight, driving their company’s agenda in a very public and visible way. You might assume that to be a great business leader you have to be aggressive and attention-seeking, to the point of being a bully or egomaniac who will step over other people who get in the way. But what if the truth about what makes a great business leader is more mundane? According to research cited by the Wall Street Journal, one of the most important leadership qualities of effective managers is humility. If you want to inspire good teamwork and high individual performance among your employees, it's best to be a humble leader. What does humble leadership mean, and how can you bring a spirit of humility to your business? Consider these bits of "humble advice." Pay attention to your own weaknessesHumble leaders tend to have a high level of self-awareness of their own weaknesses and vulnerabilities. They don't beat themselves up, but they know they're not always going to be the smartest person in the room, and they don't expect to be the best at everything. When leaders understand their weaknesses, they are better at delegating, bringing in outside expertise, exploring different perspectives, and avoiding impulsive decisions. Ask for advice (and listen)Humble leaders aren't afraid to ask for advice, and more importantly, they will listen to the advice. They are eager to hear from diverse stakeholders and voices from all levels of the organization. And they don't assume that good ideas and smart solutions only come from the executive ranks. Delegate to othersHumble leaders don't micromanage and they don't take on more than they can handle. They trust their team to do their jobs, and they are eager to delegate tasks and create new opportunities for others. The most humble leaders tend to exude a sense of calm. Instead of being overwhelmed, they quietly and capably are captaining their ship, even when there are lots of moving parts. But because they're able to delegate, they can proceed calmly during storms. They have the time and mental space to evaluate high-level strategic options and guard against risks and threats. Other Articles From AllBusiness.com:
Share the credit, hoard the blameHumble leaders are eager to share the credit. They are constantly praising their team and deflecting praise off of themselves and onto their people. Humble leaders are happy to see their employees get promoted or even recruited by other organizations; they consider it a compliment of their own leadership skills when good people rise through the ranks and are happy to create a successful culture that nurtures and develops top talent. On the flip side, humble leaders are also eager to take more than their share of the blame when things go wrong or when well-meaning plans don't work out. They take responsibility for their team, good and bad. Put the team firstIn all that they do, humble leaders elevate the interests of the team above their own self-interest and ego. They're more concerned with building a great culture than winning an award or seeing their name in news headlines. They are happy when their employees are happy. They feel proud when their employees win accolades. They see the team and the culture that they are building as more important than their own individual success. They believe if you hire, develop, and retain the right people, and surround them with the right support and encouragement, that winning culture will deliver more value for the company than any individual achievement. Become a humble leaderHumble leaders succeed because talented people want to keep working for them. There's an old saying: "People don't quit jobs, they quit bosses." If you're worried about losing talented employees, if you want to know how to have better teamwork and higher productivity, if you want to know what it takes to truly be a great boss…it might be time to take a closer look at your own attitudes and behaviors. How can you be more humble? If you can learn to make some adjustments in your temperament and management style, and run your business as a quieter, calmer, more supportive place to work, you will likely find that the long-term rewards outweigh the short-term efforts. RELATED: 4 Leadership Lessons I Learned From Climbing Mount Kilimanjaro The post The Most Important Personality Trait All Business Leaders Should Have appeared first on AllBusiness.com The post The Most Important Personality Trait All Business Leaders Should Have appeared first on AllBusiness.com. Click for more information about Gregg Schwartz. |
10 Key Issues for Fintech Startup Companies Posted: 09 Oct 2019 07:38 AM PDT By Richard D. Harroch and Melissa Guzy Investment in financial technology ("Fintech") companies is growing dramatically. Global Fintech funding has risen to over $100 billion, fueled by large M&A deals and large rounds of financing. Investment in Fintech companies is expected to continue to grow significantly in the next few years, as such companies offer outsized growth opportunities. Fintech companies encompass a broad landscape of businesses, generally around financial-oriented services and products. Examples of Fintech related companies or products include:
See a thorough analysis of companies in the Fintech space in Fintech Insights by FT Partners. Fintech companies fall into either a business-to-consumer sales model (B2C) or business-to-business model (B2B). Each model has its own challenges, although the B2C sales cycle tends to be much shorter than the B2B sales cycle, as businesses are slower to adopt new technology. A number of Fintech startups show great promise and are quickly earning rising market valuations. Some of these companies have grown, or will grow, to become valued at billions of dollars. For example, Stripe is valued at over $35 billion and Square is valued at $25 billion. Startups in the Fintech space face a number of issues and challenges, from regulatory to fundraising and competitive issues. In this article, we will outline 10 of those key issues and challenges. 1. Raising Venture Capital or Strategic FinancingRaising venture capital financing is never easy for Fintech companies. Venture investors will raise a number of key questions in their due diligence process, including:
See 15 Key Questions Venture Capitalists Will Ask Before Investing in Your Startup and A Guide to Venture Capital Financings for Startups. Ideally, Fintech companies will attract the right venture capital investors with Fintech experience and the right strategic investors. Here are some examples of how experienced Fintech investors can assist Fintech companies:
Strategic Fintech investors can be:
However, Fintech companies need to avoid granting too many rights (such as rights of first refusal on sale of the company), as this will chill or kill future fund raisings or M&A opportunities. Additionally, tailoring product development to the needs of a strategic investor can turn a startup into a captive development team. 2. Having a Great Investor Pitch DeckBoth venture investors and strategic investors expect to see a concise and interesting summary of the business before they will even consider taking a meeting. Therefore, it's crucial that a Fintech startup creates a great investor pitch deck that tells a compelling story and shows scalability. You want your investor pitch deck to cover the following topics, roughly in the order set forth here, and with these titles:
Here are some helpful pitch deck tips:
For additional guidance, as well as sample pitch decks, see How to Create a Great Investor Pitch Deck for Startups Seeking Financing and The 17 Biggest Mistakes Startups Make With Their Investor Pitch Deck. 3. Regulatory Issues for Fintech CompaniesIf you are in the Fintech space, you should anticipate that dealing with regulation will become a daily norm. There is increasing pressure on Fintech startups, globally, to address and deal with existing or potential regulatory hurdles. It is important to work with regulators and make sure that you hire a capable team member who is dedicated to understanding the trends, can interface with the appropriate regulatory bodies, and who has a solid understanding of any regulatory impact on your product or the way you market the product. Many countries have "Regulatory Sandboxes," such as Singapore, Australia and the UK, that can assist and guide Fintech companies. Unfortunately, in the United States, Fintech companies must comply with both federal laws and a patchwork of state laws. Although certain federal agencies and state regulators have voiced support for promoting Fintech innovation by simplifying the applicable regulatory regime, in the near term, Fintech companies should expect to engage specialized legal counsel experienced in navigating the morass of laws, regulations, and court decisions that could apply. As a startup, it's important to be aware of the regulatory framework. A few key issues to consider include:
If the company is dealing with securities, deposits, and/or lending, then legal counsel should be consulted on an appropriate approach before marketing to consumers. Privacy and protection of personal information is a huge issue right now, with new laws coming out all over the world. Even large financial institutions are struggling to keep up with new requirements. The following consumer privacy, data security, and financial services-related laws or regulatory schemes are important for Fintech companies:
4. Competing With Huge Financial BrandsToday, Fintech companies don't only compete with the large existing financial powerhouses, such as Goldman Sachs, Citi, or PayPal, but they soon will have to contend with Amazon and other technology companies expanding into financial services. A Fintech startup cannot underestimate the spending power of the incumbents and their willingness to spend when it comes to direct consumer marketing. A Fintech company needs to differentiate its product and services and ensure defensibility. The target market might be poorly understood or underserved, or consumers are simply dissatisfied with the current offerings. In the infrastructure space, it might be that a new trend is emerging and a new solution bridges a product gap or reduces friction. As "open banking" expands globally, along with PSD2 (the European Payment Services Directive applicable to the payments industry) and GDPR, new opportunities are emerging for Fintech companies. The introduction of new regulations is leveling the playing field and creating new opportunities for products and services in both the B2C and B2B spaces. Although large incumbents have been working to address these changes, they are generally slower than the average Fintech company; speed to market is an important competitive advantage, but might not be sustainable over the long term. A Fintech B2C company should be able to answer the following:
For a B2B company, the questions are centered around product differentiation and the problem you can solve for the enterprise. Remember that the product needs to solve a significant problem in order for a large company to bet on a startup versus a larger more established company. The following list highlights the most critical points:
5. Cost Effective Marketing to Acquire CustomersCustomer acquisition is a significant issue for Fintech startups. To be honest, entire books are written on the topic of customer acquisition, and the methods will vary depending on whether the company has B2C or B2B offerings. But, in brief, key ways Fintech companies can market themselves are:
Although venture capital financing has been flooding into Fintech startups, marketing is an easy place to waste money. We have been in a period of "growth at all cost," but this will not be sustainable. We recommend carefully constructing a marketing strategy before you launch and making sure your tech can support analyzing cohort data on a granular level. Creating a budget for different tests on short cycles will help you to eliminate any strategies that are not working and fine tune marketing programs that are showing success. Keep fine tuning and experimenting, and making sure the data collected shows the right metrics to determine whether the business will thrive at scale. For B2C companies, there needs to be a virality effect that emerges to reduce the overall acquisition costs and drive scalability. For B2B2C companies, the marketing is more complex. Initially you need to market to another business and convince them that you will increase their revenue, but ultimately sales are driven by the B2C component. Venture investors will often ask B2C Fintech companies the following questions during due diligence:
The questions from investors for B2B companies is quite different. Many of the questions are around the initial customers. B2B companies need to think about marketing very differently; acquiring the right initial customers is more important than branding. Being invited to speak at the relevant conferences and reaching the right people at a prospective customer are both important. 6. Getting Early Adopters and Avoiding Slow Sales CyclesGetting early revenue traction is critical to determining initial product market fit. Early adopters are important for this reason. In B2B, the sales cycle is long, especially for behemoths—sometimes 24 to 36 months to reach a steady state of recurring revenue. For smaller enterprise customers, the sales cycle can be shortened to six months. We recommend a pipeline that is a mixture so that the product marketing and engineering teams can receive feedback on the product sooner and are able to iterate on product design to meet market requirements. Getting early adopters in B2C is much easier, especially if a company uses incentives. Companies need to understand their market segments, the sales cycle for the "proof of concept" phase, and the sales cycle for broader commercial rollout. In a company's early days, it is fine to be opportunistic. but at some point, usually when the company reaches $5 million to $10 million in revenues, an organized sales process needs to be implemented. At this point, an opportunistic approach can become problematic when addressing issues associated with competing sales, engineering, and customer requests. Too many companies don't mature organizationally and remain sales opportunistic Taking the time to prepare a detailed market segmentation and to build a sales process and pipeline will pay off long term. Many Fintech CEOs are trying to please their venture capitalists, but implementing a process will lead to more sustainable growth. This is the time to really understand product market fit and to determine what other features and functionality should be added to meet specific client requirements. The following is a list of questions a Fintech company may be asked by a venture capitalist. Many startups underestimate their sales cycle in both the budgeting and due diligence processes. However, a realistic sales plan can be developed from the answers to these questions:
7. Cybersecurity and Data Privacy IssuesData privacy, cybersecurity, and data breach issues are especially important in the Fintech space. Fintech companies often have access to highly confidential information on individuals: Social Security numbers, credit card information, net worth, income, and much more. Hackers have become increasingly sophisticated at illegally accessing a Fintech company's data. Their latest stealth methods have made it more difficult for companies to detect and defend themselves from such attacks. Advanced covert surveillance techniques allow attackers to monitor and steal data—often sensitive proprietary information or strategies—over a long period of time without detection. A delay by a company to discover and report a data breach can result in significant negative publicity, as well as legal exposure, including the risk of substantial fines and potential liabilities due to class action lawsuits and shareholder derivative actions. The FTC and state attorneys general have taken action against companies that failed to immediately report data breaches. A few high-profile companies that have had actions brought against them due to delays in reporting a data breach include Equifax, Uber and Google+. Investors in Fintech companies may want to review a company's procedures to protect the data of employees, customers, and business partners, as well as the company's networks and systems. Questions they may ask include:
Investors will also review whether the company is in compliance with applicable laws, as noted in items #3 and #10 in this article. For a comprehensive discussion of data privacy and cybersecurity issues, see Data Privacy and Cybersecurity Issues in Mergers and Acquisitions: A Due Diligence Checklist to Assess Risk. 8. Intellectual Property and Technology Issues for Fintech CompaniesFintech investors are particularly interested in a company's software, technology, and underlying intellectual property. The questions the investors will pursue include:
See 10 Intellectual Property Strategies for Technology Startups. 9. Business, Revenue, and Expense Model IssuesInvestors are particularly sensitive to a number of key business, revenue, and expense model issues inherent in Fintech companies, including:
When building a company's financial model, it is important to keep expenses as lean as possible until a revenue trajectory can be established. We suggest building the model from the ground level. On the expense side, start with the core engineering team, add a business development person, and one good "athlete" who can be a multitasker. Don't go crazy on fixed expenses. Startups are usually very accurate at projecting their expenses, but it's far more difficult to project revenues. It can be difficult to judge when to ramp up expenses. For a B2B business, even if you were to execute perfectly, there is a natural revenue ramp that occurs and it is difficult to alter the trajectory. Fintech companies, therefore, should avoid overspending on sales and marketing too early. Once the burn rate gets too high and revenue does not materialize, it is usually difficult for a company to recover. Early-stage companies should avoid the following expenses:
Key early expenditures for Fintech companies should include:
10. Legal Issues for Fintech StartupsInvestors will look at several questions to ensure a Fintech company's house is in order from a legal perspective:
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____________________________ Copyright © by Richard D. Harroch. All Rights Reserved. About the Authors Richard D. Harroch is a Managing Director and Global Head of M&A at VantagePoint Capital Partners, a large venture capital fund in the San Francisco area. His focus is on internet, digital media, and software companies, and he was the founder of several internet companies. His articles have appeared online in Forbes, Fortune, MSN, Yahoo, FoxBusiness, and AllBusiness.com. Richard is the author of several books on startups and entrepreneurship as well as the co-author of Poker for Dummies and a Wall Street Journal-bestselling book on small business. He is the co-author of the recently published 1,500-page book by Bloomberg, Mergers and Acquisitions of Privately Held Companies: Analysis, Forms and Agreements. He was also a corporate and M&A partner at the law firm of Orrick, Herrington & Sutcliffe, with experience in startups, mergers and acquisitions, and venture capital. He has been involved in over 200 M&A transactions and 250 startup financings. He can be reached through LinkedIn. Melissa Guzy is the Co-founder and Managing Partner of Arbor Ventures. Prior to founding Arbor Ventures, Melissa was Managing Director and Head of VantagePoint Asia, a $4.5 billion venture capital firm based in Silicon Valley with offices in Beijing, Shanghai and Hong Kong. As a thought leader in the global technology community, with experience across Asia and Silicon Valley, Melissa has been recognized as one of the Top 200 Fintech Influencers in Asia in 2018. Melissa brings with her a unique combination of global experience and perspectives, with deep technological and innovative prowess anchored in an extensive international network. Melissa is a regular speaker on Venture Capital markets, key Fintech trends and the changing global landscape. Melissa serves on the Board of Directors of the HKVCA and the SVCA, and is Co-Chair of the HKVCA Venture Committee. She also served on the Board of Innovation for the Hong Kong Securities and Commodities Commission. Melissa has been recognized as one of the Top 100 Influencers in FinTech, NxtBnk (2016), Always On FinTech Power Player (2015 & 2016), and One of the Most Influential Women in Tech in Asia. She is a Hopkins Fellow and participated in the Women's Leadership Program at Harvard University. She has been a speaker at Financial Times Top 50 Women in Asia, Money2020, Asian Financial Forum, RISE, and a guest lecturer on the Venture Capital industry at the University of Florida, Hong Kong University, the Chinese University of Hong Kong, and the Hong Kong University of Science and Technology, in addition to being a Contributing Expert at CFTE, the Centre for Finance, Technology and Entrepreneurship. The post 10 Key Issues for Fintech Startup Companies appeared first on AllBusiness.com The post 10 Key Issues for Fintech Startup Companies appeared first on AllBusiness.com. Click for more information about Richard Harroch. |
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