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Opinion Editorials

6 surprising things startup investors don’t want

(Editorial) Startup investors are busy and they’re considering hundreds of companies at any given time, so be sure you know how NOT to waste their time or annoy them (if you want their money, of course).

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It’s time to deal with investors

It’s time to deal with investors
You’ve got your ducks in a row, you’re about to start pitching to investors and doing Demo Days, but do you really know what investors want? More importantly, do you know what they don’t want so you can avoid wasting their time (and frankly, avoid pissing them off)?

To learn what investors don’t care about, we’ve tapped into the wisdom of Launch Tennessee Chief Executive Officer, Charlie Brock who is hellbent on making his state the best place in his region to start and grow a company (and some say LaunchTN is succeeding at this mission).

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Brock acknowledges that early-stage companies should be over-prepared rather than under-prepared. “You should never waste time or money on things investors neither want nor need,” he adds. “Many investors consider 100 or more opportunities for every investment they make, so providing the exact information they need with a laser-like focus will help your startup stand out.”

When standing up against 100 others for a single opportunity, how can you stand out and avoid wasting anyone’s time?

In his own words, Brock outlines the 6 things you can skip, because investors care less – or in some cases don’t care at all – about them:

  1. A business plan. Investors are busy. They don’t have time to read a 15-page business plan that probably took you weeks to complete. Instead, prepare a two-page executive summary or a six- to 15-slide deck. Make sure your summary includes a description of your company, the problem it solves and your financial projections. This slide deck should not take more than 15 minutes to present.
  2. Burn rate (sometimes). As an entrepreneur starting a business, you need to know your burn rate. However, when it comes time to pitching for investment, it’s important to remember that depending on your location, investors in different parts of the country may have unique preferences. For example, Silicon Valley investors care far more about your market size than your burn rate, whereas in the South, investors want to know if you can “break even before breakfast.”
  3. A huge valuation. Presenting a huge valuation creates the perception that you are overestimating the potential of your concept. Instead of impressing investors, this will turn them off.
  4. Top-down forecasting. Investors definitely want you to be going after a large market, and they need to know your customer acquisition strategy. Put a lot of thought into the sales cycle and the customer adoption rate. When doing this, do not build your market from the top down. Meaning, do not tell an investor your company is in a $2 billion market, so you only need 1 percent of the market to generate $20 million in revenue.
  5. A non-disclosure agreement. For many investors, asking them to sign a non-disclosure agreement (NDA) is a non-starter. Keep in mind the number of business ideas investors see every day. It is likely that the investor has seen a company similar to yours and will see more in the future. Asking an investor to keep track of which ones have an NDA is asking too much. They won’t do it. Besides, the chance they will pass your ideas onto someone else to implement is pretty far-fetched.
  6. Your pride. Having a bad attitude and not accepting constructive feedback is a good way to prevent your company from raising money. Investors take a huge risk by investing in early-stage companies, and many have their own limited partners and investors to answer to. It’s great to be confident, but arrogance is a red flag that investors avoid. They want to be able to work with you in the long haul if they invest in your company.

“Every investor is different,” Brock concludes, “but the overall expectations of what they want to see to make their decision are the same. Know your market size and projections. Know your competition. Know how you will use the investment. Focus on those important details and leave the rest on your white board.”

The American Genius (AG) is news, insights, tools, and inspiration for business owners and professionals. AG condenses information on technology, business, social media, startups, economics and more, so you don’t have to.

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Opinion Editorials

DNA tests are cool, but are they worth it?

(OPINION EDITORIAL) DNA tests are all the rage currently but are they worth potentially having your genetic makeup sold and distributed?

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Over the last few years, DNA testing went mainstream. Companies like Ancestry.com and 23andMe have offered easy access to the insights of your genetics, including potential health risks and family heritage, through simple tests.

However, as a famously ageless actor once suggested in a dinosaur movie, don’t focus too much on if you can do this, without asking if you should do this.

When you look closely, you can find several reasons to wonder if sending your DNA to these companies is a wise choice.

These reasons mostly come down to privacy protection, and while most companies do have privacy policies in place, you will find some surprising loopholes in the fine print. For one, most of the big players don’t give you the option to not have your data sold.

These companies, like 23andMe and Ancestry.com, can always sell your data so long as your data is “anonymized,” thanks to the HIPPA Act of 1996. Anonymization involves separating key identifying features about a person from their medical or biological data.

These companies know that loophole well; Ancestry.com, for example, won’t even give customers an opt-out of having their DNA data sold.

Aside from how disconcerting it is that these companies will exploit this loophole for their gain at your expense, it’s also worth noting that standards for anonymizing data don’t work all that well.

In one incident, reportedly, “one MIT scientists was able to ID the people behind five supposedly anonymous genetic samples randomly selected from a public research database. It took him less than a day.”

There’s also the issue of the places where that data goes when it goes out. That report the MIT story comes from noted that 23andMe has sold data to at least 14 outside pharmaceutical firms.

Additionally, Ancestry.com has a formal data-sharing agreement with a biotech firm. That’s not good for you as the consumer, because you may not know how that firm will handle the data.

Some companies give data away to the public databases for free, but as we saw from the earlier example, those can be easy targets if you wanted to reverse engineer the data back to the person.

It would appear the only safe course of action is to have this data destroyed once your results are in. However, according to US federal regulation for laboratory compliance stipulates that US labs hold raw information for a minimum of 10 years before destruction.

Now, consider all that privacy concern in the context of what happens when your DNA data is compromised. For one, this kind of privacy breach is irreversible.

It’s not as simple as resetting all your passwords or freezing your credit.

If hackers don’t get it, the government certainly can; there’s even an instance of authorities successfully obtaining a warrant for DNA evidence from Ancestry.com in a murder trial.

Even if you’re not the criminal type who would worry about such a thing, the precedent is concerning.

Finally, if these companies are already selling data to entities in the biomedical field, how long until medical and life insurance providers get their hands on it?

I’ll be the first to admit that the slippery slope fallacy is strong here, but there are a few troubling patterns of behavior and incorrect assumptions already in play regarding the handling of your DNA evidence.

The best course of action is to take extra precaution.

Read the fine print carefully, especially what’s in between the lines. As less scrupulous companies look to cash in on the trend, be aware of entities who skimp on privacy details; DNA Explained chronicles a lot of questionable experiences with other testing companies.

Above all, really think about what you’re comfortable with before you send in those cheek swabs or tubes of spit. While the commercials make this look fun, it is a serious choice and should be treated like one.

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Opinion Editorials

How to deal with an abusive boss and keep your job, too

(OPINION EDITORIAL) Sometimes bosses can be the absolute worst, but also, you depend on them. Here’s how to deal with an abusive boss and, hopefully, not get fired.

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Nothing can ruin your work life like an abusive boss or supervisor. But when you’re dependent on your boss for assignments, promotions – heck, your paycheck – how can you respond to supervisor abuse in a way that doesn’t jeopardize your job or invite retaliation?

A new study to be published in the next Academy of Management Journal suggests an intriguing approach to responding to an abusive boss. As you might expect, their study shows that avoiding the abuser does little to change the dynamic.

But the study also found that confronting the abuser was equally ineffective.

Instead, the study suggests that workers in an abusive situation “flip the script” on their bosses, “shifting the balance of power.” But how?

The researchers tracked the relationship between “leader-follower dyads” at a real estate agency and a commercial bank. They found that, without any intervention, abuse tended to persist over time.

However, they also discovered two worker-initiated strategies that “can strategically influence supervisors to stop abuse and even motivate them to mend strained relationships.”

The first strategy is to make your boss more dependent on you. For example, one worker in the study found out that his boss wanted to develop a new analytic procedure.

The worker became an expert on the subject and also educated his fellow co-workers. When the boss realized how important the worker was to the new project, the abuse subsided.

In other words, find out what your boss’s goals are, and then make yourself indispensable.

In the second strategy, workers who were being abused formed coalitions with one another, or with other workers that had better relationships with the boss. The study found that “abusive behavior against isolated targets tends to stop once the supervisor realizes it can trigger opposition from an entire coalition.”

Workplace abuse is not cool, and it shouldn’t really be up to the worker to correct it. At times, the company will need to intervene to curb bad supervisor behavior. However, this study does suggest a few strategies that abused workers can use to try to the tip the balance in their favor.

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Opinion Editorials

Avoid the stack, conquer busy work as it comes

(PRODUCTIVITY) It’s easy overwhelmed with emails and a stack of real mail. But tackling as it comes may help to enhance organization and productivity.

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A few weeks ago, I was walking through my office (also known as my bedroom after 5 p.m.) and I noticed a stack of mail that I had tossed aside over the course of the last few months. While they were non-urgent, this collection of paperwork had been opened, read, and left unattended.

Now, this was a classic move of mine – leave a mess for Future Taylor to clean up. So, imagine my surprise when Present Taylor woke up and decided to put an end to “the stack.”

I sat down, went through everything, and took care of what needed to be done. Even though my wallet took a few hits, it felt great to have this cleared up and off my desk.

Right then and there, I made it a rule to let things only cross my desk once (unless there’s some extenuating circumstance in which it requires me to come back to it; i.e. my favorite sentence on this paperwork “This is not a final bill.”) There’s no point in drawing out the stress that “the stack” induce.

This led me to finally attacking something that’s been on my to-do list since I created my Gmail account in 2009 – create an organizational system.

I set aside some time to create folders (for individual projects, people I communicate with frequently, etc.)

While this is all stuff that you may have already implemented, my point is that this increase my productivity and lifted a weight off of my shoulders I didn’t acknowledge was there.

So, I encourage you to find one of those menial tasks that has been on your to-do list forever and tackle it.

This can include, organizing all of your electronic files into folders, updating your phone and email contacts, or going through all of your desk drawers to get rid of unneeded items. Organizing and freshening up your workspace can help increase your focus.

Once you’re organized and in gear, try the “let it cross your desk once” method. When an email comes in, respond to it or file it. When a bill comes in, pay it. You may be surprised at your rise in productivity.

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