Hartford Business Journal

www.HartfordBusiness.com April 20, 2015 • Hartford Business Journal 25 BIZ BOOKS Key questions all startups should ask before launching "T he Ultralight Startup — Launching a Business with- out Clout or Capital" by Jason Baptiste (Portfolio/Penguin, $25.95). It all starts with an idea built around "what service or product you wish existed." In Bap- tiste's case, he and fellow blogger, Andres Barreto found that their Website didn't look good on an iPad. Their idea, to make small Website content look good on an iPad, filled a void. It solved their problem and it had a built-in market of blog- gers and small businesses faced with the same issue. Baptiste and Barreto co- founded Onswipe — a plat- form for tablet publishing and advertising that made Time's 10 Best Startups in 2011. While it was a tech product, it was utilitarian and simple, not sexy. Before open- ing their doors, they answered a number of questions that all entrepreneurs need to address: "When will you make your first dollar?" The longer it takes to generate revenue required to sustain operations, the greater the likelihood you'll go out of business before making a dime. Onswipe, partnering with WordPress, created a $50 plug-in. The partnership with an estab- lished publishing organization provided instant credibility and a litmus test for the product's value to others. Baptiste and Barreto were able to build Onswipe into a standalone because they found a way to create market acceptance. App developers for smart- phones found a way to get their products visibility and make money quickly. Products like Dropbox, Evernote and Angry Birds used that path. "Do you have the expertise?" You'll waste valuable time and money if you have a steep "how to build and sell your product" learning curve. Find others who fill in your knowledge gaps. Look to friends, those who have been there and done that, and potential investors. And don't forget about the reach of social media and the cloud. All those friends and con- tacts represent a knowledge base. "Are you really passionate about this idea?" No business is an overnight success. Starting a business requires pas- sion that breeds commitment. That passion carries you through the bumps in the road all entrepreneurs encounter. "How big is the market?" You can have a great idea, but if it doesn't play in a large market, you'll have difficulty attracting inves- tors and making a living. Many people are satisfied with a business that's really a hobby. I know a newscaster who can create cakes that look like works of art and taste divine. She recognizes that she'll never make enough dough baking cakes to sustain her lifestyle. A corollary: There are small markets that offer the opportunity to become the big fish in the small pond. "How crowded is the market?" Estab- lished markets beg for innovation. Onswipe was an innovative product in a market crowd- ed with Web-publishing software and apps. The iPhone made the Blackberry a dinosaur because its apps made it more useful. Baptiste advises against entering hot markets where a number of innovators are trying to get a piece of the pie. "In these mar- kets, clear leaders emerge fast, leaving every- one else to settle for scraps." A serial-entre- preneur friend of mine got on the bandwagon for medical records software that allows doctors, clinics, hospitals and pharmacies to share information that will improve patient care. He's struggling because he's too small to gain traction in such a broad market and has refocused on physicians' groups. "How simple will it be to ship your first product?" If you don't have the capi- tal to support a long ramp-up, keep your idea simple. Facebook started at one school and allowed only one photo posting. Key takeaway: "Don't get caught up in the grand vision. Instead think of yourself working on a project, not a company." Doing so focuses you on now — which creates the road to later. n Jim Pawlak is a nationally syndicated book reviewer. Jim Pawlak OTHER VOICES McDonald's, Walmart didn't wreck the state By Chris Powell F or more evidence that Connecticut's economy has passed the tipping point and is locked into reverse, consider the legislation recently reported favorably by two General Assembly committees to penalize large employers $1 for every hour worked by every employee who isn't paid at least $15 per hour. As with recent proposals to raise minimum wages throughout the coun- try, the premise of this legislation is that every full-time job should pay a "living wage," a wage large enough to support a family — that people should not be paid more or less in relation to the value produced by their labor, the method traditionally used in a market economy, but paid according to their need, as determined by government. But the legislation doesn't define neces- sary terms. How big a family exactly and at what stage of life? Exactly what living condi- tions — what sort of dwelling, cars, amenities? And who is to decide these variables to make a master assessment of need? What state gov- ernment agency is equipped for that, or will one have to be created some place? Advocates of the legislation claim that big companies that don't pay their employ- ees at least $15 per hour are being subsidized by the various income supports and welfare stipends given by the government to the working poor. The advocates say the dollar- per-hour tax on such companies will recover some of government's expense. But the level of welfare benefits is a mat- ter of the discretion of government itself, not employers. That government now considers even cellphone service to be a necessity and has begun providing it as a welfare benefit suggests that such benefits are highly argu- able. That people merely want rather than need cellphones hardly establishes that a large employer is bad or underpaying them. Further, there does not seem to be any mechanism in the legislation to prevent com- panies from recovering the new tax by reduc- ing wages, transferring the tax from compa- nies to their employees and actually worsening the circumstances of the working poor. But then the legislation may be meant mainly to improve the financial circumstances of state government itself so that it may blithely con- tinue to pay salary and benefit increases to its own employees and those of local government even as the state budget deficit grows. Judging from the examples cited by the wage legislation's advocates, the essential problem here seems to be that tens of thou- sands of unmarried, uneducated, and largely unskilled women with several children, often by different fathers who are not contributing to the support of their offspring, cannot survive in Connecticut without government subsidies in the only sort of work available to them, low- skilled jobs in food service and retailing. The governor and legislators refuse to note this social disintegration and its facilitation by welfare policy. They also refuse to note that, because of the state's comprehensive policy of social promotion in education, two-thirds of Con- necticut's high school seniors and public col- lege freshmen have not mastered high school math and half have not mastered high school English but have been given high school diplomas anyway and sent into the workforce grossly unprepared for anything but similar low-skilled employment. So instead state government will blame McDonald's and Walmart. Connecticut's policies lately have given it the reputation as the most pro-labor and anti-business state even as the state's eco- nomic and population declines have contin- ued into a third decade. Connecticut now excels at giving things away but it is hard to find any business willing to locate or expand here to produce something without a direct cash subsidy from state government. Of course correlation is not causation but a little curiosity might be in order, if only as an academic exercise for warning other states about what not to do. n Chris Powell is managing editor of the Journal Inquirer in Manchester. Chris Powell ▶ ▶ The longer it takes to generate revenue required to sustain operations, the greater the likelihood you'll go out of business before making a dime. ▶ ▶ Connecticut's policies lately have given it the reputation as the most pro-labor and anti-business state. Send Us Your Letters The Hartford Business Journal welcomes letters to the editor and guest commentaries for our opinion pages. Electronic submissions are preferred and welcome at: editor@ HartfordBusiness.com. Or you may fax submissions to Editor, Hartford Business Journal, at (860) 570-2493.

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