Archive for August, 2008

Quotes for Entrepreneurs – August 2008

Written by Sean Murphy. Posted in Quotes, skmurphy

Continuing my twitter experiment from April, May, June, and July I have continued to select a quote every couple of days that I believe is applicable to the challenges of entrepreneurship. I collect these quotes for entrepreneurs into a blog post at the end of the month. Enter your E-mail if you would like Feedburner to deliver new blog posts to your inbox.

Here are my choices for August:

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“Be wary of the man who urges an action in which he himself incurs no risk.”
Joaquin Setanti

A lot of VC advice pre-investment falls into this category. Like the primitive tribe that didn’t have a word for “no” VC’s rely on “why don’t you try this shiny new business area instead of your current plan.” Potential partners and prospects can also ask you to make additional investments in a potential relationship without putting any of their own intellectual, social or financial capital at risk. At a minimum you should get agreement on an “acceptance test” in advance that allows you to determine what result will impel them to go forward.  It can appear more encouraging when you hear “I’ll have to get back to you on that,” since it allows you to live in hope–for a while–but tends to encourage inaction as founders savor the illusion of traction.

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“There is in the worst of fortune the best of chances for a happy change.”

Cultivating calmness in a crisis enables an entrepreneur to see opportunities inherent in the “creative destruction” of capitalism.

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“We notice the ripple and take the lake for granted”
John Seely Brown & Paul Duguid in “The Social Life of Information

This reminded me of

“We don’t know who discovered water, but we know it wasn’t the fish.”
Marshall Mcluhan

One challenge for entrepreneurs seeking a disruptive business model is to invert their focus from trends to constants. It’s easy to focus on what’s new, it’s hard to see how something permanent might be catalyzed or transformed.

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“My future starts when I wake up every morning. Every day I find something creative to do with my life.”
Miles Davis

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“Don’t judge each day by the harvest you reap, but by the seeds you plant.”
Robert Louis Stevenson

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“To be able to look back upon one’s past life with satisfaction is to live twice.”

Three Tests For Negotiating A Software Deal

Written by Sean Murphy. Posted in 3 Early Customer Stage, Rules of Thumb, skmurphy

Negotiating a software deal, from either side of the table, can be different from many other negotiations that you enter into. I have been surprised over the years at how folks who are successful in other domains can fail one or more of the following tests as they negotiate a software deal.

  1. Have You Created the Basis for an Ongoing Relationship?
    Software is the Promise of a Relationship: software typically involves getting your custom information into a new format (or creating information you would later like to translate into other formats) and almost always involves process and habit changes. The expectation on the vendor side is that the customer will contribute not only bug reports and enhancement requests but also additional maintenance and/or license fees over time. The customer expects the vendor to continue to maintain and enhance the product in response both to general changes in the environment and to specific requests from customers. If the negotiation leaves such ill feeling on one or both sides that a mutually beneficial relationship is out of the question, it’s not a good deal.
  2. Have You Assessed Both Yours and the Other Party’s BATNA?
    In their 1981 book “Getting to Yes” Roger Fisher and William Ury coined the term “Best Alternative To a Negotiated Agreement”  which they abbreviated BATNA. Both sides have a BATNA. It describes the status quo ante or likely result for a side if an agreement cannot be negotiated. You must continually assess not only the other side’s BATNA but your own as well.

    • Explore the other side’s perception of their BATNA from the beginning. Their perception of their options will shape their negotiating position.
    • Be careful in multi-way negotiations as a smaller firm, you may have been brought in just to give the appearance of adding a key feature or a lower price to the other side’s BATNA. For example, your offer may be used to induce another bidder to cut price.
  3. Are You Considering Something That Must Be Kept Secret After The Deal is Signed?
    Assume everyone finds everything out! It’s rare that a negotiating ploy can be kept secret over the long run. Active misrepresentation in particular can be destructive to any ongoing relationship. However, you are not testifying during a negotiation: while I believe that you should tell the truth and nothing but the truth, you don’t have to tell everything that you know.

    • Don’t assume that the other side is telling the whole truth: trust but verify.
    • In “Negotiations and Resolving Conflicts: an Overview” Prof. Edward G. Wertheim of Northeastern University includes this guideline from a British Foreign Service Manual on diplomatic negotiation: “Nothing may be said which is not true, but it is as unnecessary as it is sometimes undesirable to say everything relevant which is true; and the facts given may be arranged in any convenient order. The perfect reply to an embarrassing question is one that is brief, appears to answer the question completely (if challenged it can be proved to be accurate in every word), gives no opening for awkward follow-up questions, and discloses really nothing.”

Strategic Planning for Non-Profits

Written by Sean Murphy. Posted in Consulting Business, skmurphy

I spent the morning helping to facilitate a strategic planning meeting for PATCA. I was asked by Walt Maclay, the current PATCA president, to assist him and the board of directors (and any PATCA members how wanted to take part) in charting a course for 2009.

PATCA is a Silicon Valley institution, a non-profit founded in 1975 specifically to help connect businesses with independent consultants. It’s older, for example, than the Software Development Forum (SDForum started out as the Software Entrepreneur Forum in 1983) and the Silicon Valley Association of Software Entrepreneurs (SVASE) which was founded in 1995. An unlike either of those organizations it’s entirely member supported, it doesn’t rely on corporate sponsorships to fund any of its programs or activities.

A number of experienced and articulate consultants attended and contributed.

Strategic planning covers a multitude of sins, my contribution was to suggest the group review a couple of key questions:

  • Analyzing the budget for the organization, do the priorities implied by where you are spending your money match the priorities of the organization and it’s mission.
  • Is the organization encouraging, fully utilizing, and recognizing the volunteer energy that makes any non-profit successful.
  • What are the key metrics for assessing how well the organization is fulfilling its mission? If this were a business, they would be what Jack Stack might call “the critical numbers.”

I came away impressed with everyone who contributed and in particular how well the finances were managed. Having some exposure to non-profit finances over the years, it’s one area where hard choices can often be postponed to the detriment of an organization’s long term viability.

Not a bad way to spend a Saturday morning.

Entrepreneurial Ideas

Written by Sean Murphy. Posted in 1 Idea Stage, skmurphy

Robert May concludes his post on “Entrepreneurship: Don’t Drink the Kool-Aid” with the following

If you want to be an entrepreneur, stop believing that ideas matter. That isn’t what entrepreneurship is about. Entrepreneurs aren’t idea people, everybody and their brother has ideas. Entrepreneurs are people that exploit ideas by matching them to market needs, executing them despite scarce resources and designing a business model that makes the idea profitable.

If you want to be an entrepreneur, stop waiting. Start doing something. That is how you learn. Make entrepreneurship your hobby, until you can make it your career.

This is a very common situation for folks with an inventive or entrepreneurial frame of mind (note that the two are different). A couple of suggestions if you are a “geyser of ideas” (as Adrian Monk says “it’s a blessing…and a curse”):

  1. Write them down and flesh them out to at least a paragraph or two.
  2. Focus on who the customer is and the pain that you are alleviating.
  3. Keep them sorted by your desire to work on them.
  4. Share the top 10-20% in face to face and small conversations, see if you get any interest.
  5. Give the rest of the ideas away (e.g. blog about them, post them) in such a way that people can contact you if they are interested. Don’t worry, next month you will have more ideas. And next year even more.

Networking and Referrals

Written by Sean Murphy. Posted in 4 Finding your Niche, 5 Scaling Up Stage, Lead Generation, Sales

This is a guest post on networking and referrals by Steve Moore of SPMSolutions.

Networking and ReferralsNetworking and Referrals

Networking and referrals continue to be the primary marketing strategy for many community-based small businesses (especially those with limited budgets). In contrast, many technology-oriented small businesses rely more upon on-line forums, social networking sites, user groups, etc. to reach potential customers. I sometimes wonder if more old-fashioned ‘schmoozing’ skills can help these companies get more customers–especially here in Silicon Valley?

Two Different Things

First, we need to remember that networking and referrals are really two different things:

  • Networking is the act of putting yourself in an environment to meet and interact with others.
  • Referrals happen when someone introduces you to a third party who might benefit from what you have to offer.

I guess it’s a little like dating. You go to a dance to socialize with others (i.e. networking) and hope to get introduced to someone with similar interests (i.e. a referral).Getting a referral from someone is very special. They are sharing their credibility by referring you to someone you may not even know. They are essentially validating that you are real, credible and can do what you say you can do. This short-circuits the sales cycle considerably. While some referrals are nothing more than warm leads others can be considerably hotter!

So how can we all do a better job of getting referrals?

  1. The first step is to get out there and show up where everyone else in your industry goes. Sure there are a lot of referrals made using emails and over-the-phone but many more are made during face-to-face meetings.
  2. The second step is to give more referrals! The old adage that ‘givers gain’ is so appropriate. Go out of your way to refer your customers, partners and associates to others who could benefit from their services. After awhile you’ll notice them reciprocating and everyone wins.
  3. The third step is to simply ask for them. It is amazing how many business owners shy away from ever reminding their satisfied customers that their referrals would be much appreciated. I would also take things further and make referrals a strategic goal instead of a casual thing that either happens or it doesn’t.

Certainly referrals should not be your only marketing strategy to get more clients but it sure seems like every other strategy takes more time, costs more money and rarely gets the results that a dedicated networking/referrals strategy does.

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Why Did You Start Your Business?

Written by Theresa Shafer. Posted in Events

Last week I attended Marketing Strategies in a Down Economy by Steve Moore. Steve stressed the importance of why you are different than your competition. One key differential can just be the reason why you started your business: what is the passion you bring to this business?

Following that meeting, I updated our website home page. Here are the questions I hope our home page answers:

  • Who we are?
  • What we do?
  • What type of clients we work with?
  • What type of projects we take on?
  • Why we started this business?
  • Why existing clients use us?

This should be a good list for most businesses.

5 Mistakes CEOs Make In Demos

Written by Theresa Shafer. Posted in Events

I am always surprised by how many basic mistakes CEOs make when giving demos. Learn to avoid them at Cohan’s Great Demo workshop.

  1. Starting the demo with your company history … who cares?
  2. Too many bullets on one slide. See Guy Kawasaki’s 10/20/30 Rule of Powerpoint
  3. “Why I should care about your product” is left to the end of the presentation (long after the high level execs have left the room).
  4. Live demo that does not work.
  5. Detailed explanation of every product feature. Regardless if the audience want to see them or not. Gear it to your audience, ask them if you don’t know.

This is an interactive workshop with Peter Cohan geared especially for startup entrepreneur. If you bring a copy of your demo, we will review it in the workshop and provide you feedback on how to improve it.

“SKMurphy’s partnership with the Second Derivative has allowed entrepreneurs at smaller firms access to the same world class sales training normally only available to Fortune 1000 companies. In the class my team developed a presentation that allowed us to explain our offering much more clearly to our prospective customers.” said Miles Kehoe, President at New Idea Engineering. “We have also reshaped how we help our clients present results to their end users. The temptation so often is to start at the beginning of the story and tell them here’s what we did first…then we did this…and really the only thing the they care about is the results, the improvements they will see.”

Postscript Aug 18: I struck a chord with Chris Edwards, who saw parallels between poor demos and poor press briefings, causing him to ask the question “Does Anybody Enjoy Presentations?” Some excerpts follow:

Basically, all these presentations are done backwards. Point three in the SKMurphy list is the most important one for me: “‘Why I should care about your product’ is left to the end of the presentation.”

Many briefings are like some ghastly cross between company brochure and time-share sales. Most presentations make you feel like you’re being set up for a con. There is slide after slide of selective evidence, all meant to make you think that the thing to be unveiled at the end is the answer.


People really need to think about the thought processes that their intended audience are likely to use. A journalist is, in the case of a briefing, looking for a story. They may well not take away the story you presented but if you start off with what you think the story is, things might at least unfold in the right order.

So, make the claim early. And then provide the background for why this claim might be true. And then you can move onto the background. Why this way round? Because it’s a structure that fits the inverted pyramid of news; it fits the thought processes that journalists are most likely to use: what’s happened; how it happened; evidence to back it all up.

This is the reality of most demos as well, you have to convince the prospect in no more than a few minutes that you can help them in a meaningful way. And the first part runs more reliably on PowerPoint as a platform than Linux, so hold off on the interactive portion until you have established very clearly what the value for your audience is.

Welcome Your Feedback on New Startup Stages Section

Written by Theresa Shafer. Posted in skmurphy

We’ve recently expanded the website to add a Startup Stages area that organizes the content based five distinct stages of evolution for a startup. It’s designed to offer you a perspective on content that’s directly relevant to your needs based on the logical next steps to build on what you have achieved. It’s an effort on our part to stand in our customer’s shoes and present what’s immediately relevant to their needs. Like anything else on this site it’s still under construction but far enough along we welcome your feedback by e-mail, comment, contact form, or phone; whatever is easiest for you.

90-day Plan for Blogging from “Getting More Customers” Workshop

Written by Theresa Shafer. Posted in Blogging, Customer Development

One of the strategies we cover in our Getting More Customers workshops is blogging.

Below is a 90-plan developed by a workshop attendee last year, anonymized and presented with permission. Actual implementation took more than 90 days but he has been blogging for a little less than a year and has 60 blog posts that have been gathering readers. He also uses the blog to answer questions that keep coming up, treating it like a FAQ in progress.

Any good action plan builds on your existing strengths and successes. If you are comfortable with writing, a blog is a good way to gently remind your prospects that you are out there and are available to help them when they have a problem.

Here is the blank worksheet he filled out, answers in italic

One Page Customer Development Plan

Chose the techniques you are going to implement and have a plan! Figure out how you are going to measure it and track the outcome.


  • Who are the NEW customers you want to attract?
    want to target customers in financial space
  • How will you develop NEW business?
    use blog as a way to reach and influence prospects
  • How will you grow EXISTING business?

90-day Plan

2 weeks: Identify blogs where I can guest blog or comment on

4 weeks:

  • Select blog software and domain name
  • Check out at TypePad, WordPress, Blogger
  • Does my hosting service have one?
  • Comment on other blogs – 3 times/week (Can I keep this up?)

8 weeks:

  • Develop a plan for one/week blogging topics
  • Start writing one blog per week

13 weeks:

  • Start my blog
  • Write one blog a week on my blog
  • once a week comment on someone else blog (linking to my)

We checked in with him briefly at each of the milestone dates (basic follow-up is included in the workshop fee) and recently spoke with him now that he has been blogging for about 10 months to get his assessment of the results achieved.

I got busy so it took about 5 or 6 months to do. It takes a lot more planning, reading and thought than I anticipated that it would and readership is smaller than I would like (at least compared to our newsletter). I need to get better at commenting on other blogs. When I am busy this is the first thing to fall off, yet it is critical to building my readers. I have seen it boost my website traffic but I have not seen it generate sales leads directly yet. It was been useful to answer inquiries we get by writing a blog post, and doing this has made them easier to re-use. It’s also been helpful when we wanted to respond quickly to an event (e.g. an acquisition) that our customers and prospects are looking for a quick take on. But it’s a different writing style from a forum post or a newsletter article that requires practice to master.

“The Check is NOT in the Mail” this Friday at Bootstrappers Breakfast

Written by Sean Murphy. Posted in 2 Open for Business Stage, 3 Early Customer Stage, Events, skmurphy

Compare notes with entrepreneurs who eat problems for breakfast.At a Bootstrappers Breakfast you can:

  • Take part in a serious roundtable conversation among bootstrapping entrepreneurs
  • Compare notes and exchange ideas
  • Learn from others’ mistakes
  • Find potential business partners and co-founders

The Check Is Not In The Mail


Len Sklar joins us in Milpitas this Friday, he will make a short presentation on why “The Check is Not in the Mail” and answer questions on effective approaches to getting paid in full, on time, at less cost and without losing valued customers.

Len came to our March 7 breakfast and facilitated some very well received interactive exercises: several bootstrappers in turn took the role of a delinquent customer and Len demonstrated a variety of low key techniques to move beyond a current deadlock.

One of the key points he made was that you have to prevent payment issues before they start by being clear in writing about your credit terms and polite but no-nonsense once a slow payment situation starts to occur.  To many entrepreneurs are afraid to pick up the phone and see if it’s a quality problem or a slow payment problem, letting the situation fester until they become angry and less effective or staying ignorant of real defect in their offering that need to be addressed.

Here are some comments from Amazon reviews:

“Author Leonard Sklar knows his stuff. As well as ‘what to do’, Sklar is right on in covering the areas ‘you shouldn’t go’, or more particularly, waste your time.”

“Definitely a great read/reference for the beginning entrepreneur. I’ve learned quite a bit from it.”

“Any small business owner has faced reluctant-to-pay-in-full clients. Author Leonard Sklar has some great tips about asking for money firmly without pissing people off–which often is enough to get them to pay in full.”

Bootstrappers Breakfast Friday Aug 8

RSVP and bring your questions Friday August 8 to the Bootstrappers Breakfast.

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Crossing the Chasm Using Cartoon Physics

Written by Sean Murphy. Posted in 1 Idea Stage, skmurphy

My younger son and I were walking across the field to soccer practice over the weekend when he told me “Papa, I know why cartoon characters are able to walk across the chasm without falling.”

Entire books have been devoted to Crossing the Chasm, but I wanted to make sure we were both talking about the same thing.

“You mean walk off a cliff, walk on air without falling, and get to the other side?” I asked.

“Yes! Do you know how they do it?” he said, barely able to avoid giving me the truth before I gave my answer.

“How?” You have to be the straight man.

“They don’t look down!”

And because I spend most of my time in an entrepreneurial frame of reference I thought, what a great metaphor for most start-ups. If they knew how hard it would actually be and what the odds were, fewer would attempt it. Many succeed by focusing on the goal, not the risks.

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Entrepreneurs Need Gumption To Succeed

Written by Sean Murphy. Posted in 1 Idea Stage, skmurphy

Gumption is the ability to continue to try new things with confidence, in spite of past failures. Entrepreneurs need this to debug problems and build things that don’t exist–yet.

Entrepreneurs Have Confidence, Inspire Teamwork, Plan for Iteration, and Focus on Impact

We’ve recently gone through a mid-year re-planning exercise and one of the questions we asked ourselves was what were some key characteristics of the successful teams that we have had the good fortune to work with over the last five years. We came up with a short list as it related to how they approached bootstrapping.

  • They believe that they can create something of value. They proceed with a quiet confidence.
  • They are part of a team because they value effective collaboration and believe that they can accomplish more in the team they are in than on their own.
  • They don’t assume that a new initiative or product will succeed on the first try, so they plan for iterations. This means spending a small amount of time planning, keeping careful notes and/or developing a checklist or two, and updating them in response to new failures.
  • They don’t keep trying the same thing if it didn’t work, they make small changes and see if they have an impact.

This is not a horoscope, here are some examples of the opposites:

  • Most people that want to make a lot of money in a hurry, don’t.
  • If you are committed to succeeding entirely on your own you probably won’t. As one of our clients remarked “it takes a village to raise a start-up, I am calling in favors and asking so many folks for help and advice that I would never have anticipated reaching out to.”
  • Most entrepreneurs who stake everything on a new business idea working perfectly, keeping no funds or mental energy in reserve, don’t have the ability to maneuver around obstacles or recover from errors.
  • If you take the same product/idea/demo to two or three dozen people and nobody gets it, there may not be smarter prospects. It’s probably your product, your presentation, or your idea of who should be interested that need adjustment.

Obviously there are many other factors, but as I reflected on our list, I realized that the successful entrepreneurs had gumption, which is a mix of initiative, resourcefulness, and common sense.

Zen and The Art of Motorcycle Maintenance on the Value of Gumption

Robert Pirsig devotes chapter 26 of “Zen and the Art of Motorcycle Maintenance” to a discussion of gumption. I re-read this chapter over the weekend and found some excerpts that are particularly on point (links added):

I like the word “gumption” because it’s so homely and so forlorn and so out of style it looks as if it needs a friend and isn’t likely to reject anyone who comes along. It’s an old Scottish word, once used a lot by pioneers, but which, like “kin,” seems to have all but dropped out of use. I like it also because it describes exactly what happens to someone who connects with Quality. He gets filled with gumption.The Greeks called it enthousiasmos, the root of “enthusiasm.” which means literally “filled with theos,” or God, or Quality. See how that fits?

A person filled with gumption doesn’t sit around dissipating and stewing about things. He’s at the front of the train of his own awareness, watching to see what’s up the track and meeting it when it comes. That’s gumption.


The gumption-filling process occurs when one is quiet long enough to see and hear and feel the real universe, not just one’s own stale opinions about it. But it’s nothing exotic. That’s why I like the word.

You see it often in people who return from long, quiet fishing trips. Often they’re a little defensive about having put so much time to “no account” because there’s no intellectual justification for what they’ve been doing. But the returned fisherman usually has a peculiar abundance of gumption, usually for the very same things he was sick to death of a few weeks before. He hasn’t been wasting time. It’s only our limited cultural viewpoint that makes it seem so.

If you’re going to repair a motorcycle, an adequate supply of gumption is the first and most important tool. If you haven’t got that you might as well gather up all the other tools and put them away, because they won’t do you any good.

Gumption is the psychic gasoline that keeps the whole thing going. If you haven’t got it there’s no way the motorcycle can possibly be fixed. But if you have got it and know how to keep it there’s absolutely no way in this whole world that motorcycle can keep from getting fixed. It’s bound to happen. Therefore the thing that must be monitored at all times and preserved before anything else is the gumption.

Robert Pirsig outlines several techniques for maintaining gumption in the balance of the chapter. I took away three key habits appropriate for entrepreneurs:

  1. Keep a careful log of decisions.
  2. Avoid premature diagnosis: continue to correlate all of the facts against whatever hypothesis you are relying on.
  3. Re-evaluate priorities based on events and new information

He gives a memorable description of the “South Indian Monkey Trap” that’s worth adding to your “perhaps I have mis-assessed” checklist:

[T]he most striking example of value rigidity I can think of is the old South Indian Monkey Trap, which depends on value rigidity for its effectiveness. The trap consists of a hollowed-out coconut chained to a stake. The coconut has some rice inside which can be grabbed through a small hole. The hole is big enough so that the monkey’s hand can go in, but too small for his fist with rice in it to come out. The monkey reaches in and is suddenly trapped…by nothing more than his own value rigidity. He can’t revalue the rice. He cannot see that freedom without rice is more valuable than capture with it. The villagers are coming to get him and take him away. They’re coming closer—closer! — now!

Can you let go of what you have to allow yourself the freedom to become what you want to be?

That takes gumption as well I suppose.

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Sleep is a Necessary Part of the Workday

Written by Sean Murphy. Posted in Rules of Thumb, skmurphy

In an article in Scientific American Mind called “Sleep on it, How Snoozing Makes You Smarter,” Robert Stickgold and Jeffrey Ellenbogen conclude that at least six hours of sleep per night is essential to cognitive function (hat tip to Hacker News)

…while we sleep, our brain is anything but inactive. It is now clear that sleep can consolidate memories by enhancing and stabilizing them and by finding patterns within studied material even when we do not know that patterns might be there. It is also obvious that skimping on sleep stymies these crucial cognitive processes: some aspects of memory consolidation only happen with more than six hours of sleep. Miss a night, and the day’s memories might be compromised—an unsettling thought in our fast-paced, sleep-deprived society.

I read Sleep by Gay Gaer Luce and Julius Segal in high school have long been fascinated by concepts such as REM sleep and the circadian rhythm. Even before I started drinking coffee when I was 15, I have looked for ways to minimize the amount of sleep I needed (or thought I needed). I started meditating when I was 17 and continue irregularly to today. It’s only recently that I quit “pulling all-nighters.” OK, I take that last one back, at least once every two or three months I will be bothered by the sun coming up while I am working at my desk.

One of the risks of a start-up is the loss of structure compared to the regular workday world:  many teams take this as an opportunity to work more hours, or at least spend more time in front of the computer. The scientific evidence that cutting back on sleep is counter-productive is now overwhelming: if only this data allowed me to develop the self-discipline to work a regular schedule. It’s harder than it looks–after all wasn’t one of the reasons for becoming your own boss was that you could set your own hours?

There is something strangely difficult for me about surrendering to the need for sleep. I don’t know whether it’s a lack of recognition of limits and budgets, or an inability to work too far in advance of deadline (WARNING – dates on calendar may be closer than they appear!) and the need to prioritize and make trade-offs.

I like to think of myself as a little smarter than when I was in kindergarten, but the objective evidence may not support it.

I notice that when I get enough sleep I will sometimes spend the last dream of the morning solving (or at least advancing on a solution) to a problem I have been wrestling with. I keep a notepad and pen next to my bed that I use at least once or twice a week, sometimes in the middle of the night (or early morning) and often just as I awake. So perhaps I should re-frame and consider sleep to be a necessary part of the workday where memories get processed and summarized into more useful patterns. Easier said than done but probably a very necessary habit for long term success as an entrepreneur.

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