3 Reasons Why Crowdfunding is like Trick-or-Treating

In case you haven’t been paying attention, the latest trend in raising capital for early stage businesses is Crowdfunding. Crowdfunding involves taking small contributions or investments from a large number of people to raise capital, usually enabled by the Internet. Done correctly, it may provide access to early stage capital for entrepreneurs; done incorrectly, it may just be illegal and a recipe for failure in subsequent financing efforts.

In honor of Halloween, I offer up three ways that Crowdfunding is like Trick-or-Treating:

1.      You need to dress up: If you’re like many companies, your business isn’t something with broad mainstream appeal that can be quickly digested and understood by the masses. The same way that my kids agonize over their costume choice for Halloween (my 8-year-old will be a pink leopard and my 5-year-old—wearing a paper bag; don’t ask—plans to be groceries), you need to find the right way to dress up your deal so that it can be understood by the masses in two to three sentences. You won’t likely get more than just a few words to set the hook on why people should want to help you, so choose them wisely.

2.      If you’re not careful, you might get burned: When trick-or-treating, keep your costume away from fire or the results can be catastrophic. When you engage in Crowdfunding, you also need to be careful. If you raise capital from investors who expect to receive a return on that investment (rather than just making donations), you are likely in violation of federal and state securities laws that require registration or an exemption from registration for offering of a security.

While there has been much written about Crowdfunding, and even proposed legislation to make Crowdfunding work for raising capital, it doesn’t work under currently applicable regulations. In part, this is because of: (a) the number of investors that likely would be involved in your Crowdfunded deal, (b) the way that they found your deal through what the SEC would call a general solicitation, and (c) the inadequate disclosure you may have provided to them before they made a decision to invest. If you, instead, narrowly tailor your Crowdfunding so that nobody who gives you money expects anything in return (or at least anything that is tied to the performance of your business), it won’t send your business up in flames.

3.      Standing out from the crowd is critical: Remember, in 1977, when you showed up in your really cool Darth Vader costume and you ended up in line behind a half dozen other kids with the same mask (and a few Princess Leias)? There are a lot of people residing in—and even more noise emanating out of—the Crowdfunding universe. You’ve got to find a way to stand out from the crowd.

Showing up at the neighbor’s door wearing a sweatshirt from your favorite team and claiming you’re dressed as a “couch potato” isn’t likely to get you a full-sized candy bar. Showing up with an amorphous “app” that works in “the Cloud” and involves social networking on a SAAS model (which may guaranty that VCs will be salivating over it once you’ve developed it and built some market acceptance) isn’t likely to cut it with your Crowdfunding audience. Telling them how you’re going to build something really cool and providing an example of how they can use it to change their daily lives will.

Here’s to hoping you don’t get too many rocks in your bag when you’re ringing doorbells…

Messing with the Brand

My dad loves newspapers. He pores over each page, carefully folding and refolding each section as he reads a story of interest, works on a crossword puzzle, or notes something that he wants to show to someone in the family. And then he piles them on one of the side tables next to his chair or on the floor around and even under his chair—but never in the perfectly-sized basket my mother carefully selected and placed next to his chair to hold these items while awaiting the weekly collection for recycling.

Last Sunday, I was circling my father’s chair, picking up several days’ worth of papers for the recycling basket, when I happened to note that his paper was open to an article in the Star Tribune business section entitled, “Agency Takes a Shot at Rebranding Jack Daniels.” My initial reaction? Oh, no! Another misguided MBA or overzealous marketing executive who is going to toss aside years of brand investment in the belief that it will change the company’s fortunes, or make the company attractive to a new or different market, or for no reason other than because the logo has been around for a long time and is due for a facelift. 

Does Brown-Forman (owner of Jack Daniels) remember Gap, which not that long ago introduced (and quickly withdrew) a new logo that moved their signature blue box surrounding the word “Gap” to a small box sitting on the “p”? Or Tropicana, which tried to exchange its “straw-in-the-orange” carton design with a boring orange color block. Or Seattle’s Best, which replaced its classic “cigar band” logo with a sleek circle and “drip design” best described by one Seattle journalist as suggesting something between Target and a Red Cross blood drive. (Seattle’s Best is owned by Starbucks, which itself “updated” its logo by dropping the classic “lifesaver” imprinted with “Starbucks Coffee,” leaving the mermaid design to stand alone…).

What prompted these decisions? What is the intended outcome of the change? What marketing research suggests that a change would be good for business? Did anyone do any market research? I can’t speak for the above situations, but in many cases, there is no clear reason for a change.

Instead, there is a failure to question change, a lack of understanding of the difference between a brand and a marketing campaign. While even the truly awful trademark changes are not being credited with any direct long-term negative financial effect, these changes can be very costly to implement (and even more so to unwind), and if poorly received, may create some hard-to-repair trust issues with loyal customers.    

Not all brand changes are bad. I’ll bet most readers will not remember the original Apple logo, which consisted of a detailed drawing of Isaac Newton sitting under an apple tree. At a glance, it looked like a Gothic-style engraved book plate. Switching to the sleek bitten apple design was a smart move—both as a recognition-based branding strategy, as well as one of sheer practicality. Imagine trying to stamp that original design on an iPhone. I’m not sure that there was a great deal of thought put into such a substantial change, but the company was young and hadn’t developed much brand recognition in its early design. There wasn’t much risk in that change, and certainly no long-term negative impact.

But Jack Daniels? It’s been around forever. You don’t need to have perfect vision to recognize a bottle in a restaurant or on a liquor store shelf, even from across the room. Why would anyone mess with that?

When I finally located the now-read Sunday business section tucked into the cushion of my dad’s chair (a new place no doubt selected to annoy me), I learned that my fears and anxiety for Jack were misplaced. The old and new bottles, displayed in a side-by-side comparison, were, at first glance, indistinguishable. But upon further examination, there was no question as to which was the new design. The shoulders of the bottle were more boldly squared and the label was significantly cleaned up—unnecessary and excess elements were removed while preserving core items most identifiable to the consumer.

To me, this was a perfect job. Subtle but important changes were made to truly improve the packaging without destroying the historic brand elements. My congratulations to Cue, the Minneapolis-based brand design agency that managed the project.

Build it… and they will come

I admit that I am a sucker for magazines that showcase other people’s success (and so are you…). For me, publications like Inc., Forbes, and Entrepreneur are a guilty pleasure because, like most people, I enjoy a happy ending. These publications, and now even more so, blogs, put color on the more finite details of how those success stories became magazine covers. Oftentimes the war stories, the failures, provenance, or even luck that occurs on the journey are more interesting than the result (remarkable exit, billion dollar company, etc.). With very limited exception, collaboration is the common thread that holds innovation together and can be traced all the way to some of the success stories that we read about on the newsstand shelf (okay, on your iPad/Notebook, etc...).

I am always curious about where the collaboration comes from, or where they “go” to find what they need. Universities have taken a step into providing those resources by creating centers for entrepreneurship. In our area, the University of North Dakota has a great track record of generating serial entrepreneurs and has the Centers for Innovation, one of the first of its kind in the U.S. 

This article about the “Top 50 Entrepreneurship Programs” lists what the qualifications are to be considered for a ranking (the University of North Dakota does not make the top 25 list, further proving my theory of a national conspiracy of anti-North Dakota bias and “North Dakota envy”…). Without exception, the centers consider externships, internships, non-curriculum based activities and contests (usually outside the university setting), and guess what… collaboration or some type of partnering.

So, outside of the university setting, what kinds of collaboration resources are there? The ‘90s gave us the advent of the incubator, where many dot.coms and e-based businesses got their start. The 2000s gave us accelerators where carefully reviewed concepts and even established businesses would be put in a collaborative environment to rapidly push products/services into the market, often backed by venture funds or industry partners. So what about this decade? How about an "Innovation House?"

Innovation based on collaboration in a centralized location isn’t new. There is no shortage of studies that support the conclusion that getting innovators, even from diverse industries, to work on ideas, develop accountability, and share expertise in strategic areas leads to greater innovation. However, what about creating clusters based on national origin? Having had a front row seat to international innovation entering the U.S. market, we don’t often see a national flag “flying” over a center of innovation, but yet our European counterparts have been doing this for years, with great success.

Often a collaboration among government, industry, and trade resources, many European (and specifically Nordic) countries rank at the top of countries that innovate, and much of that is largely the result of collaboration. Also, because of the relatively small populations of those countries, it shouldn’t be a surprise that they often support foreign trade offices and centers where their domestic businesses can find support and connectivity even in the most remote locations globally. 

As an example, Norway already has a diplomatic consulate and a highly regarded Innovation Norway office in San Francisco, and now an Innovation House in Palo Alto. One thing is certain—they must be serious about supporting innovation.

Entrepreneurial Myth Busters—Golf Clubs and Gender

In my humble opinion, entrepreneurs tend to be people who think outside the box. In the world of golf, my favorite entrepreneurs are those that challenge generally held perceptions, especially when the perception is a myth. Myth busting: That’s one of the many reasons those of us in our Entrepreneurial Services Group like to work with entrepreneurs.    

A common golf myth is that “…women’s clubs are designed for women and men’s clubs are designed for men.” Obviously, men and women come in different sizes and with different athletic abilities. Some are the same size with similar athletic abilities. Of course, some women are taller and stronger than men (take a look at the women on the LPGA).

So, how can it be that club designers are able to design clubs that are gender specific? Based on some of the clubs on the market today, perhaps some shorter, weaker men should use “women’s clubs” and some taller and stronger women should use “men’s clubs.”   

Well, it has taken some smart, common-sense entrepreneurs, such as Tom Wishon, to bring the golf world to its senses, bust some myths, and state the obvious: “Properly fit golf clubs know no gender restrictions. They only know that they are matched to exactly how their owner swings.”  [See Tom Wishon with Tom Grundner, Twelve Myths That Could Wreck Your Golf Game (Cortero Publishing, 2009), p. 21]  Imagine that!

More importantly, because of the leadership of entrepreneurial club makers, some of the larger manufacturers and big box retailers are catching on and fitting clubs to your needs. Clubs that don’t fit are like shoes that don’t fit; they can make your day very painful!

Just because a manufacturer paints their clubs pink, don’t assume that they fit you as a woman. The next time you are in the market for clubs, find a local custom fitter or a retailer who will take the time to properly fit your clubs. Golf should be fun, not a pain.

Thanks to Tom Wishon and the many entrepreneurs who think outside the box and are “myth busters.”

Facebook, Disney World, and the Golden Rule—When Businesses Have “Customers” Who Don’t Pay

Yes, yet another post occasioned by the upcoming Facebook changes. For a couple of others, see here and here. 

No, not my opinion on whether the changes are amazing or awful, useful or confusing, or smart or misguided. Rather, in my quest to understand what annoyances I’ll face over the next few weeks navigating the new layout, some observations about Facebook as a business—and its users as its customers. Or are we?

An interesting comment in “yet another post about the upcoming Facebook changes” caught my eye the other day—“Remember that as long as you do not pay for Facebook, you are the product, not the customer. That's why when you complain, Mark Zuckerberg often ignores you.” This got me thinking. The first image that came to mind was of the vast world of Facebook users swimming around in a big fishbowl, with Facebook’s paying customers, businesses who want data, ominously staring in. An eerie picture, to say the least. But then I started realizing that this two-tiered-consumer business model doesn’t belong to Facebook alone. Rather, it applies to any business that separates consumers who want to use from consumers who are willing to pay.

Great example: Disney World. Last I checked, most normal 10-year-olds aren’t making a six-figure salary (that’s what you need for a trip to Disney World these days, isn’t it?). However, most normal 30-somethings also aren’t clamoring to meet someone dressed up as “Jasmine” and to ride “It’s a Small World After All” (okay, maybe some*). Somehow, though, Disney World rakes in billions of dollars a year. The kids want it, and the parents pay for it. 

This is really how Facebook works, isn’t it? Users want to be able to share their lives, and to share in the lives of their friends, via the Internet. But since they won’t (or at least don’t) pay for this capability, businesses step in, because Facebook has something they want. Of course, parents empty their wallets at Disney World out of a true desire for their children’s happiness and enjoyment (or a weakness for good advertising). Businesses pay for Facebook’s operating expenses because they want to exploit the information its users freely share. In either case, you can bet that everyone involved remembers the Golden Rule: whoever has the gold, rules.

Ultimately, though, these types of businesses can’t afford to ignore their “user” customers—despite the fact that these customers aren’t keeping the lights on, at least not directly. If kids aren’t excited to go to Disney World, most parents surely wouldn’t fork over the money for the trip (and if the kids come home unhappy, I’d be willing to bet there are some parents on the phone demanding a refund of the money they took out of retirement savings to make the excursion). The same holds true of Facebook. If its users are unhappy with their experience, and either begin sharing less, or—God forbid—leave the site all together, businesses won’t pay for the website’s continued existence.

It’s a weird, triangular relationship, but each party is indispensable. Ultimately, while I’m sure I’ll suck it up and get used to the new “Timeline” profile page Facebook is introducing, I hope Facebook—and any similarly-structured business—keeps in mind that if it wants to keep the parents happy, it’d better keep the kids happy, too. 

*Co-editor Dan Tenenbaum, though he has moved beyond the 30-something cohort, is a perfect example—Ed.


A Post by Karen Wenzel, Guest Blogger

It Is Not Paranoia If Someone Really Is Following You

I find it amazing how many times companies start as incredibly innovative and competitive juggernauts and how often they become sad shells of themselves.  Some say it is because they become too big or too complacent or too conservative or because the best people don’t want to work at big companies.  I believe it is a little bit of all of these things.

Andy Grove wrote a book in 1999 called Only the Paranoid Survive, in which he speaks about “Inflection Points” in companies.  I think the title could be a mantra for all businesses all the time.

Part of the reason entrepreneurs are successful is because they decide to do something different; they are willing to take risks and able to move quickly.  They are Davids fighting the mighty Goliaths of industry.   But over the last thirty years (and I am sure it was true before I began working), I have noticed that growth companies have huge difficulties maintaining the edge that got them where they are.

As they grow bigger, companies often don’t look realistically at themselves.  My first boss once told me "never believe your own press releases." By this he meant everyone markets themselves and tells people they are better than they are, but don't believe it yourself.  Many great companies start to believe their own press releases and fail to understand that they are only as great as their most recent product.

History is littered with great companies that felt they could never fail and basked in past glories—think of Control Data, Digital Equipment and Polaroid, or more recently look at what is happening at Kodak and Motorola.    All are amazing companies that failed to recognize that technology was passing them by. 

At the end of the day, what are the greatest causes of this failure?  I believe the most common are fear of failure, complacency and inability to remain nimble.

When a company is small and does not have money and salaries are low, it is easy to risk everything to unseat the big guy on the block.  The halls of startups are full of people in jeans and t-shirts working fourteen-hour days for little pay while the halls of large companies are full of well-dressed MBAs focused on advancing their careers.

When you are the big guy, all your time is spent trying to protect what you have.  Andy Grove and others argue this is why you must continue to challenge and innovate because there will always be someone trying to unseat you, but most of us are too afraid of failure or losing what we have to keep taking the type of risks necessary to stay on top.

You might think you are just a little guy so you don’t have to worry about this.  You are wrong.  If you don’t start building an attitude of paranoia driving innovation and excellence, then when you do get to be the Goliath it will be too late and the only thing you have to look forward to is a long downward spiral to the bottom.

A Post by Frank Vargas, Guest Blogger

Steve Jobs: An Incredible Life

Last week brought the sad news of the passing of Steve Jobs, one of the world’s greatest inventors, marketers, leaders, and entrepreneurs. By now, you probably are familiar with his legendary story and accomplishments, which are virtually unrivaled. 

In 1976, at the mature age of 21, he co-founded Apple with his high school friend (Steve Wozniak) in his parents’ garage. Between 1977 (when Apple introduced the Apple II) and 1981 (when Apple went public), Apple’s sales grew from $2 million to $600 million. He wasn’t the technical developer of Apple’s computer technology, but he was the leader who saw the potential in taking computers out of research laboratories and big businesses and bringing them into the homes of everyday people. Our lives have been forever and remarkably changed by his vision. 

During some time away from Apple in the mid-‘80s to mid-‘90s, he bought a struggling computer animated graphics company named Pixar from George Lucas. Few others—if any—saw the potential of computer animated graphics, but that changed in 1995 when Pixar released Toy Story. Since then, Pixar has gone on to release such other favorites as Finding Nemo, The Incredibles, Cars, Up, and Monsters, Inc., and along the way has changed the way in which we watch animated movies. Pixar eventually went public and then was sold to the Walt Disney Company in 2007 for $7.4 billion. As a result of the sale, Mr. Jobs became the largest shareholder in the Walt Disney Company at that time. 

Mr. Jobs returned to Apple in 1997 as a consultant, and assumed the CEO position again in 2000. After his return to Apple, he led the teams that developed iTunes, the iPod, iPhone, and iPad. It’s hard to imagine our lives without some or all of these inventions. He was the visionary leader behind all these successes, and he personally changed the way that we listen to music, access information (through our phones and tablets), communicate with others, and watch movies. It’s an incredible legacy.

And yet, his story is not just about unbridled success. It is also about persevering through failures. It doesn’t seem possible now, but in its earliest days, not everything Apple touched turned to gold. In the early ‘80s, for example, Apple tried to introduce an office workstation named Lisa. It was not a commercial success, and that, together with some other commercial failures, led to Mr. Jobs’ ouster from Apple in 1985. 

Mr. Jobs’ response to his ouster, and his remarkable success thereafter, reminded me of a blog post about failure authored by my colleague Frank Vargas several months ago. In his post, Frank suggested that entrepreneurs (and any one else for that matter) can use failure as a learning experience upon which to build the foundation for future success.  

After leaving Apple, in addition to acquiring Pixar, Mr. Jobs started a new company, called NeXT, the initial purpose of which was to create a workstation computer for the higher-education market to enable teachers and students to access digital books, music, art, and other intellectual content. While NeXT never enjoyed great commercial success, it established a business model that ultimately was the basis for the iTunes pricing scheme with which almost everyone is familiar today. And, it was on a NeXT computer that the first version of the World Wide Web was developed by a young programmer named Tim Berners-Lee. NeXT was acquired by Apple in 1996 for $430 million, leading to Mr. Jobs rejoining the company he co-founded. The rest, as they say, is history.

There are myriad lessons one can glean from Mr. Jobs’ incredible life. I don’t think that his legendary charisma or visionary leadership are traits that we can all adapt and use in our own companies and businesses. Some of those qualities you either have or you don’t. But we can gain lessons from the way in which he dealt with the very few failures he encountered. He was not deterred by those experiences, but rather learned from them and developed greater products as a result.

Tax Saving Opportunity for Minnesota Qualified Small Businesses

An unexpected outcome to the 2011 Minnesota budget crisis is the portion of the Minnesota Legislative Special Session budget bill that will help small business owners and farm families transition their businesses to the next generation with less estate tax.

Until recently, the amount any decedent could pass through their estate without incurring Minnesota estate tax was $1 million. This new Minnesota law exempts estate taxes up to an additional $4 million for estates that include a “qualified small business property” or “qualified farm property.” This new exemption amount is in addition to the $1 million exemption that still applies to all Minnesota estates.

This change brings Minnesota in line with the federal estate tax rules exempting estates of $5 million or less from federal tax. This new exemption only applies to estates where the decedent died after June 30, 2011, and the estate includes a small business or farm property that meets the following specific criteria.

A Qualified Small Business Property is a business property which:

• The decedent or decedent’s spouse materially participated in the business in the year before the decedent’s death;
• The business has annual gross sales of less than or equal to $10 million during the taxable year immediately preceding the decedent’s death;
• The decedent owned the business property continuously for three years immediately prior to the decedent’s death;
• The property will be continuously operated by a family member for three years following the decedent’s death, or pay a recapture tax; and 
• The estate or qualified heir must agree to pay the recapture tax at a flat 16% rate if the family operation of the property does not continue for three years following the decedent’s death.

A Qualified Farm Property is farm property which:

• Qualifies under Minnesota law as a family farm actively engaging in farming;
• Is classified as the homestead of the decedent or decedent’s spouse;
• Is classified as agricultural land and buildings;
• Was continuously owned by the decedent for the three-year period ending with the decedent’s death;
• A family member continuously uses in trade or business for three years following the decedent’s death, or pay a recapture tax; and
• The heir must agree to pay any recapture tax, if applicable, for the three-year period following the decedent’s death at a flat 16% rate.

Individuals who may have a qualified small business property or qualified farm property that is estimated to be worth more than the previous $1 million exemption amount should review their business succession and personal estate plans to confirm their plan takes full advantage of this new deduction.

This is a tremendous tax savings opportunity for those who qualify.

The Go-Go Years: The Drama and Crashing Finale of Wall Street’s Bullish 60s

The Book: The Go-Go Years: The Drama and Crashing Finale of Wall Street’s Bullish 60s, by John Brooks (John Wiley & Sons, Inc., 1999).

Why you should care: A very readable collection of vignettes of investors, entrepreneurs, business, and markets during a period of incredible economic growth.

Although time is starting to take its toll in some ways, my memories of the 1960s remain bright and fresh, subject to almost instantaneous recall. Between the bookends of John Glenn’s orbit in 1962 and the dark depths of the Vietnam War in 1969, I can easily bring to mind memories of TV programs (Batman twice a week—BAM! POW!), popular music (Sporcle has not yet published a quiz on the music of the 1960s and 1970s that I cannot dominate), cool stuff (thank you, Wham-O), baseball (that heart-breaking seventh game in the 1965 World Series), and—yes, it’s true—the stock market.

OK, I’ll admit it; I was something of a precocious child. My lawyer father, perhaps a bit relieved that I was taking some interest in something that could actually lead to a remunerative occupation, from time to time would bring home investment guides and stock analysis books written by giants of the financial world. If I recall correctly, my studies led me to choose American Motors as a good bet, and I received the gift of five shares for my eleventh birthday.  Don’t ask how that turned out. After all, I ended up going into law, not investments.

Looking back, I think my interest arose naturally from what was going on around me. I can’t point to any particular incident, but I do remember that at the time everyone seemed to take at least a passing interest in the stock market. There’s a certain duality to my recollections, like the evening news reports that would turn from the daily casualty reports (“15 Americans and 590 Viet Cong guerillas were killed today in intermittent fighting in the Mekong Delta”) to the financial reports (“today, the Dow Jones Industrial Average set another high, climbing 15 points”).

So it was with some interest—and much nostalgia—that I cracked open John Brooks’ The Go-Go Years: The Drama and Crashing Finale of Wall Street’s Bullish 60s. Through a series of brief vignettes, Brooks captures the morphing of Wall Street from a playground for the idle rich and the Old Establishment to its emergence “as a kind of American Mount Olympus where the gods walked, bluffed and blustered, gossiped, made mistakes, and sometimes touched aspiring mortals with financial godhood.”

There is much here of interest to an entrepreneur—how some people went from just a good idea and no capital to owning controlling blocks of huge publicly traded conglomerates, some exiting at the top, others crashing and burning. H. Ross Perot, who as an independent presidential candidate in 1992 coined the phrase “a giant sucking sound” to describe the loss of American jobs that would be caused by NAFTA, is only one of the many players on the 1960s stage described here who managed to build and keep incredible wealth. Their stories are entertaining, and sometimes still very instructive.

Could Spongebob Squarepants Also Be Bad for Business?

In case you missed it, much has been written about a study, published a couple of weeks ago in the journal Pediatrics, which detailed how a group of four-year-olds watching a short clip of an episode of "Spongebob Squarepants" performed worse on mental function tests than those who watched the more sedate PBS show “Caillou” or just drew pictures. If you’ve ever seen a Spongebob cartoon (and, unless you’ve been living in a cave, you probably have), you can attest to the frenetic pace of the content. In fact, the show is reported to switch scenes every 11 seconds (verses twice a minute for the tamer Caillou).

While I certainly wouldn’t suggest that my early-stage entrepreneurial clients are like four-year-olds, I’ve seen the frenetic pace at which they are often asked to operate. As founder, CEO, CFO, CMO, CTO (and whatever other two letters you want to put in front of the “O”), not to mention chief cook and bottle-washer, the job often demands constant reaction to and decision making about what’s good for business. I’m sure the barrage of incoming emails, phone calls, posts, and other inquiries can at times be completely overwhelming.

Just last year, I was working on an acquisition transaction with a client who was negotiating a letter of intent (LOI) to sell his business. I met with him to explain that the LOI didn’t really cover any of the key issues (like structure, escrow, earn-out details, and, every lawyer’s favorite, indemnification) and that, once he signed it, his leverage would decrease significantly. He spent much of the meeting reading and responding to emails on his iPhone (along with the two calls he took along the way). Basically, his conclusion was that he had made up his mind to sign the LOI “today,” and he was prepared to deal with the fallout.

I would have felt fine about that decision (heck, it’s his business after all) if I believed he had been paying attention and had stepped back to consider the ramifications. I knew he had not. After more than three months of subsequent due diligence and negotiation, he abandoned the transaction because he didn’t really have a deal.

I’m not sure that the Spongebob study translates into the real life of the adult entrepreneurs I work with daily. It may not even translate into a meaningful analysis as it relates to the behavior and cognitive function of four-year-olds. Some (including, not surprisingly, the folks at Nickelodeon) have questioned the small sample size and the methodology of the study.

That said, the findings seem sort of obvious if you think about it. It seems like the better we become at multitasking, the more difficult it becomes for us to focus on a single important decision. I’ve sometimes wished that a client would take a step back (and a deep breath) before making a decision that could have important business ramifications. In the sometimes ADHD world of entrepreneurship, it often doesn’t happen.