Blog: Doug Neal


Doug Neal is the director of the Center for Entrepreneurship at the University of Michigan College of Engineering. He is a serial entrepreneur and experienced senior technology and operations executive who has spent the last 20 years working in leadership positions at various technology companies in California and Michigan.

In 2005, Doug and his family returned to his home state of Michigan, where he has spent the last five years pursuing his own entrepreneurial activities in addition to mentoring multiple technology startups in the Ann Arbor area, working with SPARK, the Central Michigan Smart Zone, and regional investment organizations.

Prior to returning to Michigan, Doug was Vice President – Endpoint Policy Management at iPass Inc. and the former president and CEO of Mobile Automation. He co-founded Mobile Automation in 1997, believing that customers were missing an easy-to-use mobile system management solution. As president and CEO, Doug played an active role in strategic decisions, technical vision, and operational management of the company. Mobile Automation was acquired by iPass Inc. in fall 2004. At iPass he led a team to provide iPass connectivity customers with a secure management platform solution uniquely integrated with the broader iPass wireless product line.

Doug began his career in network management software during college at Central Michigan University as a network administrator and software programmer. He then went on to Hewlett Packard, where he led a team to develop a network version of some of the company's products. He also served as lead architect and director of development for a system management product line at Symantec's Peter Norton division.

Doug is passionate about entrepreneurship in Michigan and believes in the tremendous potential that exists in the University of Michigan entrepreneurial program. He feels the future of Michigan begins with our students.

Doug Neal - Most Recent Posts:

Post 2: Entrepreneurial Distractions

As I was sitting down to write about popular distractions that entrepreneurs run into on a regular basis, I remembered a presentation that I saw by a Microsoft manager in the early 90s.  This guy is a very successful author and manager and did a great job in his presentation, but it was the comment he made about how he goes about writing a book that stuck with me all these years.

He explained that when he starts to write a book he always uses a yellow pad of paper and a pencil… he never uses a word processor to write the initial draft.  Only after that draft is written will he then use a computer to create the final version.

The reason for this, he explained, was that when he sits down and opens Microsoft Word to start writing he'll spend most of the time adjusting the fonts, aligning the paragraphs, changing the layout, etc. instead of actually writing.  There are just too many distractions that keep him from doing the hard work of creating a compelling book!

For entrepreneurs I think there is a very similar story to be told.  There are far too many distractions that many entrepreneurs engage in when starting a company that waste valuable time and money and most importantly distract us from the important tasks of trying to identify a compelling business model that you can build a company around.

So, based on my own experience and talking to dozens and dozens of entrepreneurs I'd like to present the top 10 entrepreneurial distractions:

#10 - Building a website

Many people believe that before they can go out and talk to potential customers they must build the ultimate website.  What's more, they believe they must do it in a custom way so that it can meet all potential future possibilities for online sales, support, and product updates.

This is crazy.  If you absolutely must have a website today, spend 5 minutes setting up a turnkey one through a domain aggregator or popular search engine.  You most likely don't need a custom website on day 1.  You can always revisit this later.

#9 - Polishing your business plan
For some, their company exists only on paper and they believe the more they keep polishing their business plan the better the company will be. 

The reality is that a business plan is rarely an accurate representation of what will happen in your business.  As Steve Blank says – "no (business) plan survives first contact with customer".

#8 - Ordering business cards

Ordering business cards for some people is a sign of success.  It's a way of telling the world – "look at me, I've lost my mind and started a business".  Rarely are business cards essential in the first few months of company inception.  I recommend you avoid all print until you have validated your messaging with customers, which won't happen until you have built some traction in your business.

At most, just spend 10 minutes ordering some generic card that has your name, email, and cell phone on it.  Any more time spent on this is not worth it.

#7 - Delegating Sales
Delegating sales comes in many forms (hiring a VP of sales, hiring sales reps, signing a contract with a reseller, etc.).  In the first few months of a company's life you (the founder) are the chief sales rep!  Delegating this responsibility because you are too busy or don't like talking to customers (yes, that is a common complaint) is suicide for your business.  How else can you find out if you are delivering the right value?  This is too important to delegate – find the time, make the time and get out there!

It doesn't matter if you don't have experience in sales, btw, just get out there and talk to potential customers about your product and most importantly… listen to them!  If you really listen carefully they will tell you their problems and you will see your opportunity.

After you figure out how to sell your product, then revisit this issue and figure out how to build your sales resources.

#6 - Pitching VCs
It's amazing how often I hear this… "I've decided to start a company so I need to go out and raise some money".  Uh-uh.  It doesn't work that way.  You can't just expect people to throw money at you unless you have proven some aspects of your business model.  Reducing risk is what VCs want to see you do and an "idea" usually doesn't cut it.

On top of that, pitching VCs and raising money is very time intensive.  Not many will actually say "no" (which lets you move on) – many of them will give you words of encouragement and ask you to keep in touch, etc.

Don't get me wrong, venture capitalists and angels are very valuable to early stage companies… just don't start pitching them on day 1.

#5 - Getting a merchant account

The logic goes something like this… I'm going to sell a lot of this product, I better get ready to handle a lot of credit card transactions, etc.  Worry about this the day you can't keep up with the sales volume.

#4 - Naming the company
Amazingly, this consumes a lot of time.  I once saw this bring an entire company (3 founders plus the first 5 employees) to stop working for an entire week to debate what should be the company name.

The fear is that if you choose the wrong name you will send the wrong message and the brand will be wrong and the sky will fall and… relax.  Pick some random name, get going with figuring out the business… you can always change the name once you get traction.

#3 - Getting a domain name
Same as naming the company and can consume countless hours.  Pick something simple, even ridiculous, and move on.   You can change this once you start getting traction. Yes, you will lose any SEO (search engine optimization) value if you switch domain names but come on, you don't have any customers yet, you just started… the time spent on this right now doesn't equal the lost SEO value.

#2 - Designing a logo

People seem to be fascinated by logos as if the logo will drive the entire customer experience… as if the logo is the brand of the company.  Get over it, the logo is not your brand.  The value you deliver and the experience the customer has with all aspects of the engagement of your company and product IS your brand… the logo is art.  It can change later too.

#1 - Renting an office
Yes, in my opinion renting a physical office is the #1 distraction that I see with startups.  There is a fixation on having a physical place to call home.  A place to engage customers and work all night in and have pizza delivered to.   

Reality check: you don't need an office for your business, you need a business model.  You need to figure out what you are going to deliver and how customers will value that and is there enough profit in the process to sustain your business.  The good news is that there are a lot of business incubators and accelerators popping up all over the world, and you should just grab some space at one of them and get going.

So, that is my top 10 list of entrepreneurial distractions.  I hope they help you avoid some costly delays and keep driving forward.  

In fact, when I'm trying to focus on creating a new business I find that the yellow pad and pencil work very well for that as well!

Post 1: Simulate This

When I graduated college and went to work as a software programmer at a large company in Silicon Valley, I remember how excited I was to be working with some of the best engineers in the industry.  The creativity, intensity, and precision that everyone brought to their work was inspiring and I was amazed at all the work going on around me.

I remember one day specifically as my team was approaching the launch date of a new product I was working on, an engineer from a different team (team makes it seem small – in reality, his team was a group of about 100 software engineers) and I were having lunch and he turned to me and said "Wow, you sure are lucky.  I've been designing and building products for years but none of them have ever shipped… they are always canceled but you are working on a product that actually is shipping!  That must feel great."

I was dumbstruck.  How can it be that we would be spending all that time and money building products that would never ship?  After I made a few inquiries the word I got back from management was that when they had demonstrated the early product release with some key customers, they found it didn't meet their needs so the project was canceled and the team was reassigned to the next one.

The problem this company was having is very similar to what happens to engineering entrepreneurs who dive head first into designing and building a product without first validating that their solution will ultimately deliver strong customer value.  For large companies, this can be a costly mistake… for startups, it usually means death.

Over the last decade the pace of innovation has increased significantly and with it the need for a more efficient model for innovation has emerged.  This process which is followed by some of the best entrepreneurs is also one that can be used within large organizations – we call it using the entrepreneurial mindset.

The key is to take your idea as quickly as possible to potential customers in a way that will either validate or trash your concept so that you can make adjustments and try again.  Entering a lengthy design or build process without any real customer validation is simply not acceptable whether you are a startup or a Fortune 1000 company.  Note that real customer validation does not mean market analysis, customer segmentation or focus groups – it means getting in front of potential customers with a simulation of your business model to validate you are creating value for a customer.

Note that I specifically choose the word simulate instead of prototype.  The problem with the word prototype is that it implies the only way to get to a customer validation phase is to build some amount of technology and create a scaled down functioning version of the final product.  In my experience, this overemphasizes the technology and you can lose site of the goal.

Instead of prototyping your product you should be thinking about simulating your business.   Simulate the approximate customer solution and even pricing if possible with any means possible including drawings, human actions, even subcontracting out the work – do anything you can to simulate your business without actually investing in the technological development.  The reason for this is to maximize the speed at which you can get in front of customers, and, secondly, to minimize cost.

Jeff Hawkins, co-creator of the Palm Pilot, carried a block of wood around for a week while trying to validate the various aspects of a new handheld device. David Filo and Jerry Yang started Yahoo! as a simple web page of bookmarked websites that they had to edit manually before they ever considered building a dynamic and powerful web indexing site. These entrepreneurs were engaging potential customers with low-tech solutions very early on in the process and gaining tremendous knowledge of what was needed to build a successful solution.

The process of Simulating and then Validating your business before moving on to designing and building the product is the way we work with our student entrepreneurs here at the University of Michigan.  At TechArb (our student company business accelerator) we encourage our students to get out of the lab and into the customer environments as quickly as possible and to engage the customers.