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I had the pleasure of co-leading a workshop at the recent AIGA Gain Conference in NYC along with the amazing Mateo Neri. As promised, here are some references related to the remarkably rich and dynamic discussion we had that day—special thanks to all in attendance for your great contributions!

3 Books:

  1. The Art of the Start by Guy Kawasaki
  2. The Design Entrepreneur by Steven Heller and Lita Talarico
  3. Making Ideas Happen by Scott Belsky

3 Blogs:

  1. AVC: Musings of a VC in NYC by Fred Wilson
  2. 30 Second MBA on FastCompany.com
  3. The New Entrepreneur on BusinessWeek.com

3 Twitter “Follows:”

  1. @VentureHacks
  2. @HelenWalters
  3. @ProjectM

3 Random Resources

  1. Startup Weekend
  2. Kickstarter.com
  3. BPC: Biz Plan Competitions

I’ve come across a couple interesting items recently about funding for small businesses or entrepreneurial projects. Ironically (but not surprisingly), both come from Bloomberg Businessweek.

The first relates to a resource that I’ve written about several times previously: Kickstarter.com, which helps people fund creative projects and off-beat business concepts. Users post their “pitch” online, set a funding goal, and ask for contributions. In less than two years, more than $1.5 million has been pledged to more than 5,000 projects. This BW feature profiles eight projects that have been “kick-started,” including some shocking funding totals like more than $200,000 to build an open-source alternative to Facebook. Click here for that full story.

Second is an article by Chris Burritt about Wal-Mart-owned Sam’s Club piloting an online loan program for small businesses that are Sam’s Club members. Wal-Mart appears to be responding to a statistic stating that only half of businesses that applied for a loan got all or most of what they needed. Click here for that full story.

I see both of these stories as encouraging news for creative entrepreneurs who are looking for seed money to launch a new idea. In a time when traditional forms of funding have dried up, this trend of funding coming from new and unexpected sources is something to be aware of.

The healthcare industry is a vast wasteland nearly void of design—a condition I’ve discussed many times here on Merge. This sector is ripe for innovative design thinking and remains one of the great areas of opportunity for the next generation of designers.

Two recent articles highlight some of the great work currently being done by designers in healthcare. First is Allison Arrief’s post on the NY Times online Opinionator section entitled “A Breath of Fresh Air for Health Care” in which she profiles the strategic shift being undertaken by health industry giant Kaiser Permanente to focus, as Arrief writes, “not how well Kaiser will care for you when you’re sick, but rather how Kaiser helps deliver wellness and can enhance the quality of your life.”

Kaiser Permanente’s rethinking of the patient room

This is a significant paradigm shift that I am seeing many of the prominent health industry leaders making (the Blue Cross Blue Shield “Do” campaign developed by Crispin Porter is one example). Allison Arrief goes on to explain how Kaiser is living into this strategy in a way that is impacting their entire organization and every point at which the patient is touched, “from

designing greener, healthier buildings to increasing the amount of time nurses spend at bedside.” The article includes an inspiring look of the Kaiser National Facilities Services group’s redesign of patient rooms.

The second article is by Helen Walters, the Business Week editor of Innovation and Design, who contributes a first-hand telling of her experience in the Mayo Clinic Rural Healthcare working group at the Aspen Design Summit last month entitled “Inside the Design Thinking Process.” Walters engages here in a thoughtful critique of the lofty goals and occasionally wandering methodology of the Summit. The Mayo working group had a brief “to design a new health-care system for Austin, Minn., a town of some 24,000 residents whose main claim to fame is being the home of Hormel Foods, the maker of Spam.” Walters rightfully questions how realistic it is to expect that 14 well-intentioned professionals in a Colorado resort are going to have the depth of insight to propose meaningful solutions to a problem with unique and deep parameters.

Walters goes on to tell how Maggie Breslin, senior designer and researcher at the Center for Innovation at Mayo Clinic, talked her off this hopeless edge by explaining “I don’t necessarily think what will move forward is the specific idea laid out for Austin in Aspen, but whether it ends up as a Web site with video is less important to me than the idea that people need a way to engage in multiple places within their community. You have to get to the detail to understand the larger principle—and then throw out the detail and keep that larger principle.” I agree with Maggie Breslin—and I’ve discussed this in my previous posts about the Aspen Summit—that the most significant outcome of this exercise may not be the specific ideas generated by the working groups, but the many interpretations of design thinking methodology we employed to get there.

The Center for Innovation at Mayo Clinic is an important side bar of this story. Like Kaiser Permanente, Mayo is an institution that is ahead of the curve on embedding design and design thinking in their strategic process. I had the pleasure of working with Nick LaRusso, Executive Director of the Center in my working group at Aspen, and I look forward to writing very soon about the great work they are doing.

For designers wondering where the next frontier will be for our skills, look no further than healthcare. Kaiser and Mayo are barely scratching the surface of the colossal mountain of work to be done.

Picture 41Here’s an assortment of items from my inbox.

When is the Right Time to Start a Business? Now.

“When is it a good time to start a company? When you have a good idea!” Rob Hayes writes in this article for FastCompany.com, echoing much of the thinking I’m seeing around this question. Hayes, a veteran venture capitalist, observes that before the recession he was seeing a high rate of “FNACs” or Feature Not A Company business concepts, but he notes that the recession has had a positive effect by thinning the number of these pretenders. “While the venture capital spigot is not as open as it was last year, the investment dollars out there are flowing disproportionately to the obviously great companies.”

Thirty Conversations on Design
Little & Company is celebrating their thirtieth anniversary in business this year. The Minneapolis-based firm has steadily established itself as a force on the national design scene. In recognition of the anniversary, L&Co has produced Thirty Conversations on Design, a video compilation of short conversations with global design leaders. Massimo Vignelli, Erik Spiekermann, and Paula Scher are all featured.

Bruce Nussbaum Speaks with Tim Brown and Roger Martin in NYC
BusinessWeek contributor Bruce Nussbaum will serve as moderator for what looks like it will be a fascinating conversation on design and design thinking with two giants in the field—both of whom have new books out (I wrote about Brown’s book in this October 9th post). The event is November 11 at 4:00 at the Thomson Reuters Building on Times Square in New York. It’s sponsored by the Rotman School of Business in Toronto (where Roger Martin serves as dean). To register, click here.

3130I spend a lot of time here on Merge talking about how to enter the market with your start-up business idea, but what about the other end of the process—the exit strategy? Believe it or not, this is something you should be thinking about as part of your business planning process. In fact, planning your exit can be a big influence on your entire strategy.

When Lisa and I were building HealthSimple, the notion that the experience could culminate in an acquisition was the farthest thing from our minds—and it shouldn’t have been. Even if that was not our primary objective in building the business, we should have been more prepared than we were for this possibility. Had we taken some simple steps early in the process, we would have been in a much better position when the topic of acquisition became a reality.

Of course there are many options—acquisition being one—for how you can envision the “other end” of the business journey. Liquidation, IPO, and simply selling to a friendly buyer are other options.

The key to remember is that these things usually don’t happen by accident. I found this useful overview of exit strategy options on Entrepreneur.com by business consultant and blogger Stever Robbins . Robbins provides digestible pro-and-con lists for each of his strategies.

Succession planning is another aspect of the business building process that often gets overlooked. What happens when the goals of your business no longer match up with your skills as a leader? One of the options you have is to find new leaders who are better suited to carry the torch. Entrepreneur Michelle White faced this dilemma with her dietary supplement business, and her story is told in this BusinessWeek profile.

children-holdingkirans-mediumAs societal values continue to evolve, social entrepreneurship has become an increasingly growing business category. Defined as entrepreneurial ventures that have a goal of social change rather than strictly financial gain, I see social entrepreneurship as a close cousin of the emerging area of service design, which I’ve discussed at length on Merge (Continuing the Service Design Conversation, September 4, 2009). It’s easy to spot fundamental design principles in empathic concepts like solar powered trash compactors and needle-free injection devices.

But regardless of whether the primary goal of these businesses is financial gain or not, they still require money—and sometimes in significant amounts—in order to fulfill their vision. So, where does a social entrepreneur go for funding? Well, as the business category grows, and the success stories accumulate, the funding community is beginning to pay attention. Last spring, BusinessWeek.com ran a series of articles on social entrepreneurship which included this overview of angels, venture capitalists and foundations that specialize in this area. Included on the list are: Acumen Fund, Commons Capital, Investors’ Circle, and others.

Picture 13
Additionally, BW.com has an ongoing series of profiles of 28 of America’s Most Promising Social Entrepreneurs featured in this slideshow. More recently, the site ran an update on one of the stories from the original 28: D.Light Design which pledges to commercialize and sell solar-powered LED lamps to those living on less than $5 a day in Africa and Southwest Asia, a safer, cheaper option than the more common kerosene. D.Light Design recently secured $6 million in venture funding.

Picture 24I hate to sound like a broken record (or like I’m on the McGraw Hill payroll), but the BusinessWeek website continues to impress me with their depth and variety of content for entrepreneurs. The Small Biz section of the BW website—companion to the quarterly printed edition—is loaded with a range of useful pieces, from quick hit video clips and blog posts, to deeper dives on important topics like financing and operations.

In particular, I appreciated their recent two-part series in by John Tozzi in The New Entrepreneur column on the topic of risk (part one Entrepreneurs and Risk, and part two Two Risk Profiles of Entrepreneurs). I’ve written about this in the past, but I think it is one of the most critical principals for would-be entrepreneurs to understand. One of the most common reasons for not pursuing that start up dream is that it is “just too risky,” but these articles do an excellent job of illuminating the truth about risk. In fact, the first article sites a recent survey by Small Business Labs indicating that in today’s economy most entrepreneurs actually feel they are less at risk leading their own venture than they would be working for someone else.

The second article in the series analyzes two risk profiles: the first is of the business funded completely by the personal wealth of the entrepreneur; and the second of the investor-funded start-up. Tozzi points out that investor funding—while filled with potential downsides, can provide a freedom that can be critical to visionary entrepreneurs. “The VC model lets start-ups swing for the fences, with the understanding that a lot of times they’ll strike out, but that won’t leave the founder flat broke.”

Be sure to read the comments on each of these posts for some excellent anecdotal reporting.

Picture 21As I was researching last week’s post about Bruce Nussbaum of Business Week, I came across this slideshow on the Small Business section of the BW website featuring 20 Entrepreneurs to follow on Twitter.

I’ve found Twitter to be an invaluable new tool for connecting with people who have the same business interests as I do. In fact, many of my Merge topic ideas come from Tweets I receive. But Twitter can also be a massive waste of time if you don’t maintain your “follows” carefully. Of course, there are countless search engines that can aid in this process, but lists like this one are a great starting point. Business Week has added a short description and sample Tweet from each of their recommendations to help you determine if they are going to be worth your valuable time. If you’ve got an interest in entrepreneurship and you’ve been meaning to get into Twitter, this list is a great starting point. If you’ve already got a robust Twitter network, there might be some additions here that will add to the experience. Some of the recommendations are a bit obvious, like @richardbranson who is more fluff than insight. But others, like @chrisgillebeau or @fredwilson (two of my personal faves), and @BusinessDotGov (from the Federal Government site) offer some serious content tips on a daily basis.

One Tweet I just received:
Check out this Fast Company diagram of the “5 Second MBA” which was just Tweeted to me. Clever, and not too far from the truth!

Picture 17Bruce Nussbaum, contributing editor for Business Week and formerly the publication’s editor of Innovation and Design, is everywhere these days. I am continually getting directed to his blog, Nussbaum on Design on the Business Week site, and I also came across a very good video of Nussbaum at the recent ITT Institute of Design Strategy Conference (a preview of which is embedded below). Nussbaum is one of those freakish “Tom Friedman-esque” characters who has the ability to clearly recognize big trends without the benefit of years or decades of hindsight. He’s particularly tuned in to design thinking and how it is evolving as an area of practice.

In this blog post, he discusses the trend of design thinking and validates that this—rather than the creation of designed artifacts—is where the real activity and movement is happening for designers. And he’s quite bullish about it, pointing to several examples in the public and private sectors—domestically and internationally—where designers are playing increasingly central roles.

One area Nussbaum calls out as not keeping up with the pace is design education. I’ve discussed the immense challenges facing design educators many times on Merge, and Nussbaum’s critique is further evidence of the complex puzzle educators must solve to integrate this new strategic component into a very crowded curricula. Nussbaum cites the example of where businesses are turning to find help bringing design thinking into their organization—they’re turning to the leading design firms, not the leading design schools for guidance.

From the entrepreneurial perspective, there is an intriguing nugget of Nussbaum’s post in which he eludes to a new venture capital model being driven by designers. He highlights Fuseproject, Yves Behar’s amazing firm, as one to whom venture capitalists are turning to help identify new trends and product ideas. This puts the designer in a very influential position.

“A new VCD (Venture Capital Design) model is emerging. Yves Behar’s fuseprojects and others are funding new brands either directly or with partners. Designers are using their talent for spotting new trends and their ability to translate insights into new products and services to directly create new brands, instead of doing it for large companies.Venture Capital firms are turning to Behar and other Designers to bring them brands and concepts. This is a new role for Designers.”

Check out the site for the ITT Institute of Design Strategy Conference for more great videos, including a conversation with outgoing P&G CEO, A.G. Lafley.

kiva_logoOne of my first posts on Merge was about microfinancing or “peer-to-peer” lending and Kiva Microlending, one of the highest profile players in this industry (Microfinancing. A Model That Can Work for Designers? March 28, 2009). Surprisingly, that post is one of the most highly searched topics on the blog—so when I came across an article about Kiva in Business Week’s SmallBiz bimonthly, it seemed like a good time for a follow up.

Kiva, a non-profit which is known for their innovative approach to facilitating loans to entrepreneurs in the developing world, is making news again because they have now created an operation here in the U.S. for domestic entrepreneurs. U.S. loans will not exceed $10,000 and the total value of U.S. loans will be capped at $800,000. Despite loaning to the smallest of businesses in the remotest of locales (a cobbler in Mongolia was featured on their homepage as I was writing this), Kiva has had remarkable success with their international lending operation, with more than $80 million loaned and a stunning repayment rate of 98.5%.

Of course, there are many other players in this growing field. Prosper is the largest U.S. peer-to-peer lender and Accion and Opportunity Fund are also prominent operations. Ironically, in the same issue of SmallBiz, there are a couple articles about the gloomy state of the traditional small business loaning process which has completely dried up in the last year. Despite efforts by the Small Business Administration to stimulate activity at this level, the recovery has been slow and sluggish. Hence, I see peer-to-peer lending as an encouraging trend for designers who are exploring ways to launch a new venture. If your new business vision has stalled out because ytou don’t have the cash for an initial run of products or prototypes, this could be an opportunity worth exploring.


Merge Workshop at Kane Mini-Camp

I will be presenting a workshop on Entrepreneurship for Creative Professionals at the Kane Consulting Summer Camps this Tuesday, August 18, 6:00PM at Aloft in downtown Minneapolis. Spots are still available.

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