As our Lean LaunchPad for Life Sciences class winds down, a good number of the 26 teams are trying to figure out whether they should go forward to turn their class project into a business.
Given that we’ve been emphasizing Evidence-based entrepreneurship and the Investment Readiness Level, I guess I shouldn’t have been surprised when someone asked, “After we figure all this data out, should we pursue our idea based on the numbers?”
I pointed out that the “data” you gather in 10 weeks (talking to 100+ customers, partners, payers, etc.,) are not the first thing you should look at. There are three more important things you should worry about.
Now that you’ve gotten to know your potential channel and customers, regardless of how much money you’re going to make, will you enjoy working with these customers for the next 3 or 4 years?
One of the largest mistakes in my career was getting this wrong. I used to be in startups where I was dealing with engineers designing our microprocessors or selling supercomputers to research scientists solving really interesting technical problems. But in my next to last company, I got into the video game business.
My customers were 14-year old boys. (see 1:30 in the video) I hated them. It was a lifelong lesson that taught me to never start a business where you hate your customers. It never goes well. You don’t want to talk to them. You don’t want to do Customer Development with them. You just want them to go away. And in my case they did – they didn’t buy anything.
So you and your team need to feel comfortable being in this business with these customers.
2. Is this a scalable business? And if not, are you Ok with something small?
Is it a lifestyle business while you’re keeping your other job? Is it a small business that hits $4 million in revenue in four years and $8 million in ten years? Or is it something that can grow to a size that will result in an acquisition or some liquidity event?
You need to decide what your personal goal is and how it matches what you think this business can grow into. And you and your cofounders need to have that discussion to make sure that all the co-founders’ interests are aligned – before you make any decision to start the company. If one of you are happy making $500K/year and the other has visions of selling the company to Roche for a billion dollars, you have very different goals. Without clear alignment, one or both of you will be really unhappy later when you try to make decisions.
3. If I Didn’t Make Any Money After 4 Years, Did I Still Have A Great Time?
If your company fails, would you still say you had one hell of a ride? Founders don’t do startups because they’re searching for a huge financial windfall. They do it because it’s the greatest invention they can imagine. Most of the time you will fail. So if you’re not going to have a great time with your team and learn and build something you are truly excited about – don’t do it.
Asking, “Can I have coffee with you to pick your brain?” is probably the worst possible way to get a meeting with someone with a busy schedule. Here’s a better approach.
Jason, an entrepreneur I’ve known for over a decade, came out to the ranch today. He was celebrating selling his company and just beginning to think through his next moves. Since he wasn’t from Silicon Valley, he decided to use his time up here networking with other meetings with VC’s and company executives.
I get several hundred emails a day, and a good number of them are “I want to have coffee with you to bounce an idea off.” Or, “I just want to pick your brain.” I now have a filter for which emails get my attention, so I was curious in hearing what Jason, who I think of as pretty good at networking, was asking for when he was trying to set up meetings.
“Oh, I ask them if I can have coffee to bounce an idea off of them.”…Sigh.
I realized most entrepreneurs don’t know how to get meetings with people too busy to see you.
Perfect World Silicon Valley has a “pay-it-forward” culture where we try to help each other without asking for anything in return. It’s a culture that emerged in the 60’s semiconductor business when competitors would help each other solve bugs in their chip fabrication process. It continued in the 1970’s with the emergence of the Homebrew Computer Club, and it continues today. Since I teach, I tend to prioritize my list of meetings with first my current students, then ex-students, then referrals from VC firms I’ve invested in, and then others. But still with that list, and now with a thousand plus ex-students, I have more meeting requests than I possibly can handle. (One of the filters I thought would keep down the meetings is have meetings at the ranch; an hour from Stanford on the coast, but that hasn’t helped.)
So I’ve come up with is a method to sort out who I take meetings with.
What are you offering? I’m not an investor, and I’m really not looking for meetings with entrepreneurs for deal flow. I’m having these meetings because someone is asking for something from me – my time – and they think I can offer them advice.
If I’d had infinite time I’d take every one of these “can I have coffee” meetings. But I don’t. So I now prioritize meetings with a new filter: Who is offering me something in return.
No, not offering me money. Not for stock. But who is offering to teach me something I don’t know.
The meeting requests that now jump to the top of my list are the few, very smart entrepreneurs who say, “I’d like to have coffee to bounce an idea off of you and in exchange I’ll tell you all about what we learned about xx.”
This offer of teaching me something changes the agenda of the meeting from a one-way, you’re learning from me, to a two-way, we’re learning from each other.
It has another interesting consequence for those who are asking for the meeting – it forces them to think about what is it they know and what is it they have learned – and whether they can explain it to others in a way that’s both coherent and compelling.
Irony – it’s Customer Discovery While this might sound like a, “how to get a meeting with Steve” post, the irony is that this “ask for a two-way meeting” is how we teach entrepreneurs to get their first customer discovery meetings; don’t just ask for a potential customers time, instead offer to share what you’ve learned about a technology, market or industry.
It will increase your odds in any situation you’re asking for time from very busy people – whether they are VC’s, company executives or retired entrepreneurs.
Wanting to have coffee is an ask for a favor
Offering to share knowledge is a different game
Try it, your odds of getting a meeting will increase
There’s been a lot written about the individual characteristics of what makes a great founder, but a lot less about what makes a great foundingteam and how that’s different from a great foundingCEO
I think we’ve been imprecise in defining three different roles. In doing so we’ve failed to help founders understand what it takes to build a great founding team.
Here are my definitions.
Founders – the idea A Founder is the one with the original idea, scientific discovery, technical breakthrough, insight, problem description, passion, etc. A founder typically recruits co-founders and then becomes part of the founding team involved in day-to-day company operations. (However, in some industries such as life sciences, founders may be tenured professors who are not going to give up their faculty positions, so they often become the head of a startup’s scientific advisory board, but aren’t part of the founding team.)
A couple of caveats about founders with “ideas.” It’s important to differentiate between ideas that have been or can be patented and ideas thought up late night in a dorm-room. One of the hardest concepts for my students to grasp is that “an idea is not a company.” The reality is that in most cases, without the company to commercialize it, the idea is worthless (except to a patent troll.)
Even if they become part of the founding team, it’s not a given that the founder, having come up with the idea has a “guaranteed” leadership role (CEO or VP) in the new company. For some entrepreneurs this idea that the founder is not necessarily the CEO, is a surprise. When I hear, “What do you mean I’m not CEO? It’s my idea!” I get nervous that the founder is clueless about what makes the founding CEO special, and what else it actually takes to build a company. (Read on to see the difference in the roles.)
Founding Team – the rock on which to build the company The founding team includes the founder and a few other co-founders with complementary skills to the founder. This is the group who will build the company. Its goal is to take the original idea and search for a repeatable and scalable business model- first by finding product/market fit, then by testing all the parts of the business model (pricing, channel, acquisition/activation, partners, costs, etc.)
In web/mobile startups the canonical view is the founding team consists of a hacker, a hustler, and a designer. In other domains, the skill sets differ, but the key idea is that you want a team with complementary skills.
There’s no magic number about the “right” number of founders for a founding team, but two to four seems to be the sweet spot. One of the biggest mistakes in assembling a founding team is not thinking through the need for skills but instead settling for who’s around. The two tests of whether someone belongs on a founding team are: “Do we have a company without them?” and, “Can we find someone else just like them?” If both answers are no, you’ve identified a co-founder. If any of the answers are “Yes,” then hire them a bit later as an early employee.
Key attributes of an entrepreneur on a founding team are passion, determination, resilience, tenacity, agility and curiosity. It helps if the team has had a history of working together, but what is essential is mutual respect. And what is critical is trust. You need to be able to trust your co-founders to perform, to do what they say they will, and to have your back.
Most startups that fail over team issues fail because co-founders hadn’t dated first, (spent time together in a Startup Weekend, worked together in an incubator, etc.) but instead jumped into bed to start a company.
Everyone has ideas. It’s the courage, passion and tenacity of the founding team that turn ideas into businesses.
Founding CEO – Reality Distortion Field and Comfort in Chaos
Idealistic founders trying to run a venture with collective leadership, without a single person in charge, find that’s the fastest way to go out of business. Speed, tempo and fearless decision-making are a startups strategic advantage. More often than not, conditions on the ground will change so rapidly that the need for immediate decisions overwhelms a collective decision process.
The founding team CEO is the first among equals in the founding team. Ironically they are almost never the most intelligent or technically astute person on the team. What sets them apart from the rest of the team is that they can project a fearless reality distortion field that they use to recruit, fund raise, pivot and position the company. They are the ultimate true believers in the company and have the vision, passion and skill to communicate why this seemingly crazy idea will work and change the world.
In addition, the founding CEO thrives operating in chaos and uncertainty. They deal with the daily crisis of product development and acquiring early customers. And as the reality of product development and customer input collide, the facts change so rapidly that the original well-thought-out product plan becomes irrelevant. While the rest of the team is focused on their specific jobs, the founding CEO is trying to solve a complicated equation where almost all the variables are unknown – unknown customers, unknown features that will make those customers buy, unknown pricing, unknown demand creation activities that will get them into your sales channel, etc.
They’re biased for action and they don’t wait around for someone else to tell them what to do. Great founding CEO’s live for these moments.
FIgure out who you are Many founding teams fail because they’ve never had the conversation about founder, founding team and founding CEO. Spend the time and take stock of who’s on the journey with you.
Founder, Founding team, Founding CEO all have word “founder” in them but have different roles
Founder has the initial idea. May or may not be on the founding team or have a leadership role
Founding team – complementary skills – builds the company
Founding CEO – reality distortion field and comfort in chaos – leads the company
I am honored to be with you as we gather to celebrate your graduation.
This school has a distinguished roster of graduates… Earl Bakken, the founder of Medtronic, was an Electrical Engineering grad, and Bob Gore of Gortex, and your current president are both alums of your Chemical Engineering program.
In fact, I feel very connected to another one your grads. I’m sure you’ve heard of Seymour Cray, he built a supercomputer company in Chippewa Falls that made the fastest computers in the world. These were very expensive supercomputers. They cost 10’s of millions of dollars and filled two tractor-trailers worth of space.
Back in Silicon Valley I co-founded a company that built desktop workstations powerful enough to compete against Cray. We bid against them in a sale to the Pittsburgh Supercomputer Center… and lost. I never forgot that loss because instead of buying hundreds of our small computers they spent $35 Million on that Cray. My startup never recovered and soon after went out of business.
Fast-forward 15 years, Now retired I noticed that the Pittsburg Supercomputer Center had put their Cray for sale on Ebay. Yep – the $35 Million machine was now for sale for $35,000 dollars.
I bought that Cray, … Honest… you can Google “Cray on eBay” and there I am… I had it shipped to my ranch and kept it in the barn next to the cows and manure.
But the story about Cray is also a story about success and failure. If I can keep you awake, I’m going to tell you why – while you may have thought today was the end of your education – it’s really only the beginning. And while you might be moaning about that thought, pay attention because what I’m about to share could make a few of you very, very successful.
First day of your life For most of you, college was the first day of your own life – the morning you stepped onto campus you were no longer just a child of your parents – college was the first place you could taste the freedom of making your own decisions – and in some of those mornings-after – learn the price of indulgence and the value of moderation.
Here at school you had your first years of taking responsibility for yourself. While it may not be obvious to you yet, your college years were a transition from having your parents make decisions for you to making decisions for yourself. But now you face a new chapter that -– if you’re not careful – could result in having companies make decisions for you.
Career Choices It might turn out that graduating from college and getting a job may be just anillusionof independence. If you’re not careful you’ll simply end up having others tell you what to work on, how to spend your time, when to show up and when to go home. In fact, working in a company could be the adult version of listening to your parents tell you what to do… Only the pay is usually a whole lot better than your allowance.
For some of you, that may be exactly what you are looking for. Many of you are going to take what you learned here, get a good job, get married, buy a house, have a family, be a great parent, serve your community and country, hang with friends and live a good life. And that’s great. Minnesota is a wonderful place to hunt, fish, canoe, raise kids, and pursue lots of interests other than just your job.
All of you will ultimately make a choice… a choice about whether you “work to live” or you “live to work.” This should be a conscious choice. Don’t get trapped into the daily routine of showing up and just getting by.
Diverging Interests While you’re excited about your first “real” job, recognize that your interests and those of your employer are probably not the same. Having your employer tell you what a great job you’re doing and rewarding you for it is not the same as discovering your passion, and figuring out who you are, and what’s rewarding for you.
What I am saying is, “Don’t let a career just happen to you.” And as much you love, respect and honor your parents, don’t live their lives. Your obligations to meet their expectations ended the day you became an adult.
At the end of the day, you can decide whether you want to be an employee with a great attendance record, getting promoted to ever better titles and working on interesting projects – or whether you want to attempt to do something spectacular – this be or do should be a question you never stop asking yourself — for the next 20 years, and beyond. Be? or Do?
Let me share with you the day I faced the Be or Do question.
Big Company versus Startup Out of the military, my first job in Silicon Valley was with one of the most exciting companies you never heard of. By the time I joined it was a decade old, and no longer a startup. Our customers were the CIA, NSA, and National Reconnaissance Office. Our CEO, Bill Perry eventually became the Secretary of Defense.
In the 1970’s and ‘80’s the U.S. military realized that our advantage over the Soviet Union was in silicon, software and systems. These technologies allowed the U.S. to build weapons previously thought impossible or impractical. The technology was amazing, and somehow in my 20’s I found myself in the middle of all of it.
Building these systems required resources way beyond the scope of a single company. A complete system had spacecraft and rockets and the resources of ten’s of thousands of people from multiple companies.
If you love technology, these projects are hard to walk away from. It was geek heaven.
While I worked on these incredibly interesting intelligence systems, my friends in startups worked on new things called microprocessors. They’d run around saying, “Hey look, I can program this chip to make this speaker go beep.” I’d roll my eyes, comparing the toy-like microprocessors to what I was working on – which was so advanced you would have thought we acquired it from aliens.
But before long I realized that at my company, I was just a cog in a very big wheel. A small team had already figured out how to solve the problem and ten’s of thousands of us worked to build the solution. Given where I was in the hierarchy, I calculated that the odds of me being in on those decisions didn’t look so hot.
In contrast, my friends at startups were living in their garages fueled with an energy and passion to use their talents to pursue their own ideas, however unexpected or crazy they sounded. “Really, you’re building a computer I can have in my house?”
Engineers Run the World Engineers used to be the people who made other peoples ideas work. Today, they change the world. We live in a time where scientists and engineers are synonymous with continuous innovation. We don’t think twice as our phones shrink, our computers fit in our pockets, our cars run on batteries, and our lives are extended as new medical devices are implanted in our bodies. Scientists and engineers no longer work anonymously in backrooms. Today we celebrate them for improving the quality of peoples’ lives.
George Bernard Shaw once said, “Some men see things as they are and ask why. Others dream things that never were and ask why not.” Engineers like you have the capacity to move the world forward by continually asking “why not?” It’s your special “doing” gene that empowers us to do better.
You invent. You imagine. You see things that others don’t. Where others see blank canvases, you’ll see finished paintings. You hear the music that’s not written, you see the bridges that have yet to be built. You envision the products and companies that don’t exist yet.
Only In America University of Minnesota Science and Engineering alumni have founded more than 4,000 active companies, employing over ½ million people and generating annual revenues of $90 billion. These alums chose not to take the safe road but instead to push beyond their boundaries and DO.
At some time you might decide that you want to become the master of your own destiny – that you want to take an idea – and start your own company. And all of you sitting here just earned a degree that gives you choices that very few other professions have.
Entrepreneurship is not something foreign – it’s built into the DNA of this country. America was built by those who left the old behind. Not too many generations ago your family packed up what they had, got on boat and came to America. They struck out across the country and ended up here in Minnesota.
And what’s great about the United States… No other country embraces innovation and entrepreneurship quite like we do. You don’t have to stay in one job, and it’s really, really hard to starve to death.
Passion I predict that 78% of all commencement speeches this year will have advice about “pursuing your passion and doing stuff you love.” But they don’t tell you why. Well here’s the secret – if you’re going to spend your career in a company, doing stuff you enjoy will help you keep showing up..
But if you want to do something, something entrepreneurial, just loving what you do is isn’t enough. You’re pursuing ideas you can’t get out of your head. Ideas that you obsess about. That you work on in your spare time.
Because that fearless vision and relentless passion are what it takes to sustain an entrepreneur through the inevitable bad times - the times your co-founder quits, or when no one buys, or the product doesn’t work. The time when everyone you know thinks that what your doing is wrong and a waste of time. The time when people tell you that you ought to get a “real” job.
You don’t get grades for resiliency, curiosity, agility, resourcefulness, pattern recognition and tenacity.
You just get successful.
Failure The downside of starting something new is that’s it’s tough, because unlike the movies – you fail a lot. For every Facebook and Google, thousands never make it.
Like Rocket Science Games, which was my biggest failure. 90 days after showing up on the cover of Wired Magazine I knew the game company where I raised 35 million dollars was headed for disaster.
We’d believed our own press, inhaled our own fumes and built lousy games. Customers voted with their wallets and didn’t buy our products. The company went out of business. Given the press we had garnered, it was a very public failure.
We let our customers, our investors, and our employees down. I thought my career and my life were over. But I learned that in Silicon Valley, honest failure is a badge of experience.
All of you will fail at some time in your career…or in love, or in life.
No one ever sets out to fail.
But being afraid to fail means you’ll be afraid to try. Playing it safe will get you nowhere.
As it turned out, rather than run me out of town, the two venture capital firms that had lost $12 million in my failed startup actually asked me to work with them again.
During the next couple years…and much humbler… I raised more money and started another company that we were ultimately able to take public, and those patient investors more than made up for their earlier loss – many times over.
Hypothesis Testing As scientists and engineers, you know about failure. You know that virtually no experiment works the first time. And in a new company all you have is a series of untested hypotheses. You learned something vital in school — to test your hypotheses by designing experiments, getting accurate data, analyzing the results, and then modifying your initial hypotheses based on those results. This is the scientific method, and surprisingly we found the exact same method works for startups.
Becausefailure is a part of the startup process. In Silicon Valley, we have a special word for a failed entrepreneur – it’s calledexperienced. Our country and our entrepreneurial culture is one of second and third chances. It’s what makes us great. You don’t have to change your name or leave town. Entrepreneurs in America know that they get multiple shots at the goal.
Be or Do Someday several of you in this graduating class will be worth a $100 million dollars. And a few of you might change the way the world works.
I want you to look around you. …Go ahead. Take a few seconds and give it a look…
While most of you were looking around wondering who this was going to be, I hope a few of you were feeling sorry for the rest of your classmates, knowing that the most successful person in the audience is going to be you.
These days I write a blog about entrepreneurship. At the end of each post, I conclude with “lessons learned”—a kind of Cliff Notes of my key takeaways. So that’s how I’ll finish up today.
Here are the two lessons that I’d like to pass on to you
Your science or engineering degree gives you tremendous choices – you, and no one else gets to decide two things:
whether you choose to be or you choose to do
whether you “work to live” or whether you “live to work”
Remember… live your life with no regrets. There’s no undo button.
“What’s gone and what’s past help
Should be past grief.”
William Shakespeare - The Winter’s Tale
We give abundant advice to founders about how to make startups succeed yet we offer few models about dealing with failure.
So here’s mine.
In my experience, living through failure has 6 stages:
Stage 1: Shock and Surprise
Stage 2: Denial
Stage 3: Anger and Blame
Stage 4: Depression
Stage 5: Acceptance
Stage 6: Insight and Change
While I had been part of a few failed startups, none of them had fallen squarely on my shoulders until Rocket Science Games where my business card said CEO. It was there that I lived through all 6 stages and came out the other side a changed man.
Stage 1: Shock and Surprise We raised $35 million and after 18 months made the cover of Wired magazine. The press called Rocket Science one of the hottest companies in Silicon Valley and predicted that our games would be great because the storyboards and trailers were spectacular. 90 days later, I found out our games are terrible, no one is buying them, our best engineers started leaving, and with 120 people and a huge burn rate, we’re running out of money and about to crash. This can’t be happening to me.
Stage 2: Deny any of it was your fault In my mind, I had done everything the investors asked me to do. I raised a ton of money and got a ton of press. We hired everyone according to our plan. It was everyone else who screwed up. I did everything right.
Stage 3: Get angry and blame everyone else This was the fault of my cofounder since he was in charge of game development, it was the engineers who bailed on me, it was the sales and marketing people who didn’t tell me how bad the games were, it was the VC’s who refused to put any more money in the company, it was Sega’s fault for making a bad gaming platform…
State 4: Get depressed When the inevitability and magnitude of the failure sunk in, I slept in a lot. There were days I’d get up late and go to bed again at 5 pm. I lost interest in anything associated with my past industry. (To this day I still can’t play a video game.)
Step 5: Gradually accept your role in the failure A few weeks after leaving, I began to think about what I should have done, could have done and pondered why I didn’t do it. (I didn’t listen, I didn’t act, I didn’t own my role as CEO, I wasn’t prepared to do what was right or leave.) This was hard and didn’t happen overnight. My wife was a great partner here. I often reverted to Stages 2 and 3, but over time I took ownership of my primary role in the debacle.
Stage 6: Gain insight and change your behavior This was the hardest part. While I stopped blaming others, understanding what I could change in my behavior took long months. It would have been much easier to just move on, but I was looking for the lessons that would make my next startup successful. I looked at the patterns of behavior, not just at my last company but also across my entire career. I learned how to dial back the hubris, get other smart people to work with me – rather than just for me, listen better, and act and do what was right – regardless of what others thought I should do.
Epilogue For my next startup I parked the behaviors that drove Rocket Science off the cliff. We established a team of founders who worked collaboratively. When my co-founders and I got the company scalable and repeatable, we hired an operating executive as the CEO and returned a billion dollars to each of our two lead investors.
Now when I listen to entrepreneurs who’ve cratered a company, I listen for their stories of failure and redemption.
Six stages of failure and redemption
Don’t get stuck in Stages 2, 3 or 4 - move forward
Don’t skip acceptance of your role
Get to insight so you can change your behavior—then commit to the challenge of doing it differently the next time
This July I thought I had set the record for tenacity in my age group. Go ahead and take a moment to read the post, it’s short. I reminded my Startup Owners Manual co-author Bob Dorf this is how entrepreneurs played the game, blah, blah, blah.
As usual Bob did one better. Here’s a guest post on what happened to him in the Ukraine.
Usually when you teach entrepreneurship, one of the key things you teach is tenacity, a vital characteristic of great entrepreneurs. Only rarely does the teaching itself require tenacity, as it did late last month in Kiev, Ukraine.
Following two days with a dozen startups at a brand-new incubator in Kiev called “Happy Farm,” it was time to head to my next stop: Skolkovo, the private Moscow business school formed to bring Silicon Valley-quality training to young Russian entrepreneurs. I was headed to my second Lean LaunchPad launch, excited that the first one in June had led to four funded startups raising some $2-million from Russian VC’s.
Ukraine was magnificent. Kiev is a beautiful city and Happy Farm Training Director Elena Kalibaba led me on a walking tour. Then it was on to a series of workshops and one-on-one coaching sessions with ten terrific startup teams, plus a press conference with Forbes Ukraine and others. When it was over, Happy Farm CEO and founder (and serial entrepreneur) Anna Degtereva drove me to the airport and–for some strange reason–escorted me to the gate.
I Spent A Year One Night in Kiev As I approached the check-in desk, a very gruff Ukrainian customs official looked at my visa to Russia and said, “You cannot travel. Your visa to Russia has already been used. No exceptions.” He said nothing else in English, and waved me out of the line.
A mad scramble uncovered the problem: when I had changed planes for Kiev back in Moscow they stamped my visa as “entered” so that counted as “visiting” Russia. As far as Ukrainian customs was concerned I didn’t have a valid visa to enter Russia therefore I couldn’t get on my plane. No charm or magic worked at all with airport customs, and we were told in no uncertain terms that Bob Dorf would be living in Kiev for two weeks, absent miracles that seldom happen in government bureaucracies, at home or in Ukraine, for sure.
The problem was that I had 25 founders from all over the Russian republics expecting me to teach a Lean LaunchPad class 12 hours later in Moscow. And then I was heading to Paris and Bogota to teach as well. Oops. Not if I had to spend two weeks in the Ukraine applying for a new Russian visa!
We dashed off from the Kiev airport to the Russian consulate in hopes of sorting it out in two hours rather than two weeks. While on the way, we called the embassy at 12:55 and found out that the Embassy closes at 13:00 on Fridays, and we were 30 minutes away. And I don’t even like borscht, a prime Ukrainian delicacy, nor did I know how the “Bob Dorf world tour” would continue.
Four entrepreneurs in a car Was this time to give up? Of course not. Four entrepreneurs in a car in Kiev means three cell phones buzzing in different directions in Russian and me as the non Russian-speaker on my iPad looking at travel sites for the next flight, just in case I could get a visa. We went to the consulate anyway, where two armed guards right out of your favorite spy movie (fat, grumpy, unshaven and did I say grumpy?) barred the door. After rapid-fire begging in Russian, a phone finally call got a functionary out to basically shoo us away. “Visa processing takes two weeks, and that would start Monday, since the visa office is now closed. The Professor can go home to America, but can not go from here to Russia.” Visions of stealth border crossings or—perhaps even worse—a ten-hour Skype talk with my Moscow students—played over and over again.
While the thoughts of going back to the U.S. for a weekend at home with my long-lost wife Fran were lovely, the thought of disappointing 25 students the next day and 50 more two days later in Bogota weren’t fun. I immensely enjoyed my last lectures at Skolkovo and was eager to do it again.
So we started an international incident of sorts First, the truly entrepreneurial and unstoppable Happy Farmer, Anna, somehow in five phone calls got through to the Foreign Minister of Ukraine, told him the story, begged for his help. She did this through a friend (how everything happens in Ukraine, of course) who served as one of his deputies. “I will talk to him at four pm and he will call the Russians,” she said, which offered only nominal relief: the last flight out was at 7 pm, and there was no firm commitment that anything good would happen.
At the same time, on the Russian side of the border, Skolkovo’s equally tenacious Startups Project Director, Lawrence Wright, went to work, calling the Russian foreign office and imploring them to call the Ukrainian embassy and tell them “let Dorf out.” When they agreed to consider breaking every rule in the 40-pound Russian rulebook, the fun began.
The Ukrainian solution to all this, while we paced for two hours to see if anybody heard our cries: “lets go to lunch and have a drink.” In perhaps one of four times in my entire life, I was actually unable to eat. The thought of jumping barbed wire fences, pursued by Cossacks, was quickly looming as my only choice for an on-time performance launching the LaunchPad. Meanwhile, something clicked. Somebody got to somebody, and suddenly the Russian Consul himself, boss of the entire place, headed back to—or was sent back to–the office himself to personally produce a visa for Bob Dorf in one hour, not two weeks.
We were given less than an hour to find wifi and download the 20-page visa application in the backseat of an SUV. Needed to have the original, not a copy, of the new Skolkovo “invitation letter” physically in my hand. Scrambled to get a passport photo and a printer to print out the application. Done, back to the Consulate at Indy 500 speed!
Somehow it worked. If Anna and her team are as good at running over hot coals and through brick walls with their startups as they were with my visa, watch for lots of great companies emerging from the Happy Farm. As for me, I was sure I was headed to the funny farm. By nine I was heading to Moscow. Six hours of fun aggravation, five and a half of which had me absolutely sure we were opening a branch of K&S Ranch in Kiev.
But the best part of the adventure is that I now had a better tenacity story than Steve. Beat this one!
Listen to the post here:
Listening to my the family talk about dividing up the cooking chores for this Thanksgiving dinner, including who would peel the potatoes, reminded me that most careers start by peeling potatoes.
KP – Kitchen Patrol One of the iconic punishments in basic training in the military was being threatened by our drill instructors of being assigned to KP – Kitchen Patrol – as a penalty for breaking some rule. If you got assigned to KP you were sent to the base kitchen and had to peel potatoes all day for all the soldiers on the base. It was tedious work but to my surprise I found that it wasn’t the dreadful experience our drill instructors made it out to be. But working in the mess hall, the real eye-opener was the inside look at the workings of something I took for granted – how do you cook three meals a day for 10,000 people at a time. Peeling potatoes was a small bit in the thousands of things that had to go right every day to keep 10,000 of us fed.
One my first career lessons: stop taking for granted finished goods and appreciate the complexity of the system that delivered them.
Solutions From Hands On When I got to my first airbase my job was lugging electronics boxes on and off fighter planes under the broiling hot Thailand sun, to bring them into the technicians inside the air-conditioned shop, to troubleshoot and fix. The thing we dreaded hearing from the techs was, “this box checks out fine, it must be a wiring problem.” Which meant going back to the aircraft trying to find a bent pin in a connector or short in a cable or a bad antenna. It meant crawling over, under and inside an airplane fuselage the temperature of an oven. Depending on the type of aircraft (F-4’s, F-105’s or A-7’s – the worst) it could take hours or days to figure out where the problem was.
A few months later, I was now the guy in the air-conditioned shop telling my friends on the flight-line, “the box was fine, must be a cable.” Having just been on the other side I understood the amount of work that phrase meant. It took a few weeks of these interactions, but it dawned on me there was a gap between the repair manuals describing how to fix the electronics and the aircraft manuals telling you the pin-outs of the cables – there were no tools to simplify finding broken cables on the flightline. Now with a bit more understanding of the system problem, it didn’t take much thinking to look at the aircraft wiring diagrams and make up a series of dummy connectors with test points to simplify the troubleshooting process. I gave them to my friends, and while the job of finding busted aircraft cabling was still unpleasant it was measurably shorter.
My next career lesson: unless I had been doing the miserable, hot and frustrating job on the flightline, I would never have known this was a valuable problem to solve.
Up From the Bottom My startup career started on the bottom, installing process control equipment inside auto assembly plants and steel mills (in awe of the complexity of the systems that delivered finished products.) Wrote technical manuals and taught microprocessor design (to customers who knew more than I did.) Worked weeks non-stop responding to customer Requests For Proposals (RFP’s.) Designed tradeshow booths, spent long nights at shows setting them up, and long days inside them during the shows.
Over ten long years I wrote corporate brochures (making legal, finance and sales happy), and sales presentations (treading the line between sales, marketing, truth, and competition), and data sheets, web sites and competitive analyses, press releases (getting a degree in creative writing without being an English major,) and flew to hundreds of customer meetings on red-eyes at a drop of a hat (making sales guys rich and gaining a huge appreciation for their skills.)
Partnered with engineering trying to understand what customers really wanted, needed and would pay for, versus what we could actually build and deliver (and learning the difference between a simply good engineer and working in the presence of sheer genius.) In the sprint to first customer ship, slept under the desk in my office the same nights my engineering team was doing the same.
Each of those crummy, tedious, exhausting jobs made me understand how hard they were. Each made me appreciate the complexity of the systems (with people being the most valuable) that make up successful companies. It made me understand that they were doable, solvable and winnable.
It took me a decade to work my way up to VP of Marketing and then CEO. By that time I knew what each job in my department meant because I had done every one of them. I knew what it took to get these jobs done (and screw them up) and I now pushed the people who worked for me as hard as I had worked.
Career Lessons Learned:
Winning at entrepreneurship is for practitioners not theorists.
Building a company in all its complexity is computationally unsolvable.
There’s no shortcut for getting your hands dirty. Reading stories about the success of Facebook or blogs about the secrets of SEO might make you feel smarter, but it’s not going to make you more skilled.
Unless you’ve had a ton of experience (which includes failing) in a broad range of areas you’re only guessing.
Here’s to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes. The ones who see things differently. They’re not fond of rules. And they have no respect for the status quo. You can quote them, disagree with them, glorify or vilify them. About the only thing you can’t do is ignore them. Because they change things. They push the human race forward. While some may see them as the crazy ones, we see genius. Because the people who are crazy enough to think they can change the world, are the ones who do.
Countries that put their artists and protesters in jail will never succeed in building a successful culture of entrepreneurship. They will be relegated to creating better mousetraps or cloning other countries’ business models.
But in hindsight, the ad captured something much more profound.
The crazy ones? The misfits? The rebels? The troublemakers? To celebrate those people as heroes requires a country and culture that tolerates and encourages dissent.
Because without dissent there is no creativity.
Countries that stifle dissent while attempting to encourage entrepreneurship will end up at a competitive disadvantage.
Pushing the boundaries Most startups solve problems in existing markets – making something better than what existed before. Some startups choose to resegment a market – finding an underserved niche in an existing market or providing a good-enough low cost solution. These are all good businesses, and there’s nothing wrong with founding one of these.
But some small segment of founders are truly artists – they see something no one else does. These entrepreneurs are the ones who want to change “what is” and turn it into “what can be.“ These founders create new ideas and new markets by pushing the boundaries. This concept of creating something that few others see – and the reality distortion field necessary to recruit the team to build it – is at the heart of what these founders do.
The founders that make a dent in the universe are dissidents. They are not afraid to tell their bosses they are idiots or tell their schools they been teaching the wrong thing or to tell an entire industry to think different. And more importantly they are not afraid to tell their country it’s mistaken.
Freedom of Speech, Expression and Thought Entrepreneurs in the United States take for granted our freedom of speech, freedom of expression and freedom of thought. It’s enshrined in our constitution as the first amendment.
In the last few years I’ve traveled to lots of countries that understand that the rise of entrepreneurship will be an economic engine for the 21st century. In several of these countries, the government is pouring enormous sums into building entrepreneurship programs, faculties and even cities. Yet time and again when I ask the local entrepreneurs themselves what questions they have, most often the first question is, “How do I get a visa to the United States?’
For years I thought the reason hands were raised was simply an economic one. The same countries that repress dissent tend to have institutionalized corruption, meaning the quality of your idea isn’t sufficient enough to succeed by itself, you now need new “friends in the right places.” But I now see that these are all part of the same package. It’s hard to focus on being creative when a good part of your creative energies are spent trying to figure out how to work within a system that doesn’t tolerate dissent.
Entrepreneurs require the same creative freedom as artists and dissidents
Without that freedom, countries will be relegated to cloning others’ business models or creating better versions of existing products
History has shown that the most creative people leave repressive regimes and create elsewhere
I often get asked about finding cofounders and I usually give the standard list of characteristics of what I look for in a founder. And I emphasize the value of a founding team with complementary skills sets – i.e. the hacker/hustler/designer cofounder archetype for web/mobile apps. But Jessica Alter, Cofounder & CEO of FounderDating, pointed out that cofounders did not mean two founders in the same room. She suggested that I was missing one of the key attributes of what makes successful startup teams powerful. She suggested that how cofounders fight was a key metric in predicting the success of a founding team. So I asked her to write a guest post.
I think about [cofounding] teams a lot – an insane amount. And, not surprisingly, I frequently get asked what to look for or what to think about when starting the process of finding a cofounder – a true partner to start your next company with.
Like second nature, I start to recite a list of important attributes: complimentary skill sets, common visions, the notion of not trying to make someone fall in love with your idea (because the idea will likely change and then where are you?). There are plenty more and they are important. But a few weeks ago after I sat on a panel about cofounders at Startup2Startup there was a small group dinner conversation to dig deeper on the topic. Garry Tan (Posterous, YC), in recounting his personal experience said, “success can cover up a lot.”
And it clicked in my head – one of the key things to pay attention to in a search for a cofounder is how you fight.
Taking Time How you fight with your potential cofounder(s) matters for a lot of reasons, the simplest of which is that you have time to fight – meaning you’ve worked together long enough to hit disagreements or bumps. It’s one of the most common mistakes we see. I literally just received an email from someone (that I don’t know) asking to me to meet with them so that they can circumvent our regular process because, “I don’t feel like I have time for the regular FounderDating process.“ Quick advice to people that think finding a cofounder is a box to check and “don’t have time” – you won’t find someone and if you do the relationship is unlikely to last. You’re looking for an employee, not a partner.
We tell all our FounderDating members that we’re a great starting point to connect with amazing people all with high intent to start something. But in order to figure out if you can work together you have to (wait for it…) actually work together. That could be starting a side-project, heading over to a Startup Weekend or other hackathon, working full-time for a few months or some combination of those options. However you do it, you need to build something together. It doesn’t ultimately matter it if ends up being the right product, you will still have areas you disagree on throughout the process. Ask yourself: Have we had disagreements? If you haven’t, maybe you should consider a longer courtship period.
Simulating Real-Life Consider what real startup life is going to be like. For a long-time (longer than you plan) things are not going to work and you’ll have to figure out what to do – together. If you do eventually reach a point where the company is making real progress, you’re still going hit crazy challenges on a regular basis that you’ll have to navigate together. This pressure – which is compounded by the sound of the ticking clock if you took money – will up the stress levels and hence the propensity to disagree.
If you don’t have at least a taste of what that’s going to be like, not only have you not done your homework, but also could be in for a rude awakening. So, let’s agree you’re going to fight. That, in and of itself, doesn’t mean anything. In fact, it’s quite healthy. What matters in real life is what are the fights like? Do they escalate rapidly or become knock down, drag outs? Can you recover quickly and keep moving? Entrepreneurship and early stage companies are about moving fast; if you’re caught in a disagreement for days at a time it means decisions are not being made and/or people are walking around feeling resentful. Either one will eventually lead to failure. Ask yourself: When we fight do we get over it quickly and respectfully?
What Are You Fighting About? Finally, and this is insanely important, it matters what the fights are about. Are you fighting about whether a button should be green or blue or are you fighting about whether or not you want to raise money?
A lot of people approach finding cofounders as just a skill set need and believe once that box is checked, everything will be smooth sailing. Complimentary skill sets are important and if you’re fighting about one functional area (e.g. design, product) it might be a sign you have too much skill set overlap. But if it were just about complimentary skill set matching it wouldn’t be very hard.
What’s difficult is making sure you’re aligned on the softer side: Why do you want to build a company? What kind of company you want to build? What are your working styles? What are your values? What are your other priorities (family, etc.)? We don’t care if entrepreneurs want to build lifestyle businesses or go for IPOs, if they are tethered to their email or check out at 7pm – that’s a personal decision. But you better make sure you’re on the same page as your potential cofounder about those topics. These are the issues that break up relationships, not button colors.
Ask yourself: What are we fighting about and why?
Make no mistake; I’m not suggesting you should manufacture a fight. But every relationship has ups and downs, the ones that last are able to bounce back from the downs quickly and respectfully and be better for it. So give yourselves permission and time to fight and reflect on how you do it before you take the leap together.
Listen to the post here:
We Sleep Peaceably In Our Beds At Night Only Because Rough Men Stand Ready To Do Violence On Our Behalf
Everyone has events that shape the rest of their lives. This was one of mine.
I’ve never been shot at. Much braver men I once worked with faced that every day. But for a year and a half I saw weapons of war take off every day with bombs hanging under the wings. It never really hit home until the day I realized some of the planes didn’t come back.
Life in a War Zone In the early 1970’s the U.S. was fully engaged in the war in Vietnam. Most of the fighter planes used to support the war were based in Thailand, or from aircraft carriers (or for some B-52 bombers, in Guam.) I was 19, in the middle of a hot war learning how to repair electronics as fast as I could. It was everything life could throw at you at one time with minimum direction and almost no rules.
It would be decades before I would realize I had an unfair advantage. I had grown up in home where I learned how to live in chaos and bring some order to my small corner of it. For me a war zone was the first time all those skills of shutting out everything except what was important for survival came in handy. But the temptations in Thailand for a teenager were overwhelming: cheap sex, cheap drugs (a pound of Thai marijuana for twenty dollars, heroin from the Golden Triangle that was so pure it was smoked, alcohol cheaper than soda.) I saw friends partying with substances in quantities that left some of them pretty badly damaged. At a relatively young age I learned the price of indulgence and the value of moderation.
What a great job But I was really happy. What a great job – you work hard, party hard, get more responsibility and every once in awhile get to climb into fighter plane cockpits and turn them on. What could be better?
Near the beginning of the year when I was at an airbase called Korat, a new type of attack aircraft showed up – the A-7D Corsair. It was a single seat plane with modern electronics (I used to love to play with the Head Up Display.) And it was painted with a shark’s mouth. This plane joined the F-4’s and F-105 Wild Weasels (who went head-to-head with surface-to-air missiles,) and EB-66’s reconnaissance aircraft all on a very crowded fighter base. While the electronics shop I worked in repaired electronic warfare equipment for all the fighter planes, I had just been assigned to 354th Fighter Wing so I took an interest in these relatively small A-7D Corsair’s (which had originally been designed for the Navy.)
He’s Not Coming Back One fine May day, on one of my infrequent trips to the flight line (I usually had to be dragged since it was really hot outside the air-conditioned shop), I noticed a few crew chiefs huddled around an empty aircraft spot next to the plane I was working on. Typically there would have been another of the A-7’s parked there. I didn’t think much of it as I was crawling over our plane trying to help troubleshoot some busted wiring. But I started noticing more and more vans stop by with other pilots and other technicians– some to talk to the crew chief, others just to stop and stare at the empty spot where a plane should have been parked. I hung back until one of my fellow techs said, “Lets go find out what the party is about.”
We walked over and quickly found out it wasn’t a party – it was more like a funeral. The A-7 had been shot down over Cambodia. And as we found out later, the pilot wasn’t ever coming home.
An empty place on the flight line While we were living the good life in Thailand, the Army and Marines were pounding the jungle every day in Vietnam. Some of them saw death up close. 58,000 didn’t come back – their average age was 22.
Everyone shook their heads about how sad. I heard later from “old-timers” who had come back for multiple tours “Oh, this is nothing you should have been here in…” and they’d insert whatever year they had been around when some days multiple planes failed to return. During the Vietnam War ~9,000 aircraft and helicopters were destroyed. Thousands of pilots and crews were killed.
It’s Not a Game I still remember that exact moment – standing in the bright sun where a plane should be, with the ever present smell of jet fuel, hearing the engines of various planes taxing and taking off with the roar and then distant rumble of full afterburners – when all of a sudden all the noise and smells seemed to stop – like someone had suddenly turned off a switch. And there I had a flash of realization and woke up to where I was. I suddenly and clearly understood this wasn’t a game. This wasn’t just a big party. We were engaged in killing other people and they were equally intent on killing us. I turned and looked at the pilots with a growing sense of awe and fear and realized what their job – and ours – was.
Less then ninety days later the air war over Southeast Asia ended.
For the rest of my career when things got tough in a startup (being yelled at, working until I dropped, running out of money, being on both ends of stupid decisions, pushing people to their limits, etc.), I would vividly remember seeing that empty spot on the flightline. It put everything in perspective.
Entrepreneurship is hard but you can’t die.
Listen to the post here:
It was at my second startup in Silicon Valley that my life and career took an interesting turn. A recruiter found me, now in product marketing and wanted to introduce me to a hot startup making something called a workstation. “This is a technology-driven company and your background sounds great. Why don’t you send me a resume and I’ll pass it on.” A few days later I got a call back from the recruiter. “Steve, you left off your education. Where did you go to school?”
“I never finished college,” I said.
There was a long silence on the other end of the phone. “Steve, the VP of Sales and Marketing previously ran their engineering department. He was a professor of computer science at Harvard and his last job was running the Advanced Systems Division at Xerox PARC. Most of the sales force were previously design engineers. I can’t present a candidate without a college degree. Why don’t you make something up.”
I still remember the exact instant of the conversation. In that moment I realized I had a choice. But I had no idea how profound, important and lasting it would be. It would have been really easy to lie, and what the heck the recruiter was telling me to do so. And he was telling me that, “no one checks education anyway.” (This is long before the days of the net.)
My Updated Resume I told him I’d think about it. And I did for a long while. After a few days I sent him my updated resume and he passed it on to Convergent Technologies. Soon after I was called into an interview with the company. I can barely recall the other people I met, (my potential boss the VP of Marketing, interviews with various engineers, etc.) but I’ll never forget the interview with Ben Wegbreit, the VP of Sales and Marketing.
Ben held up my resume and said, “You know you’re here interviewing because I’ve never seen a resume like this. You don’t have any college listed and there’s no education section. You put “Mensa” here,” – pointing to the part where education normally goes. “Why?” I looked back at him and said, “I thought Mensa might get your attention.”
Ben just stared at me for an uncomfortable amount of time. Then he abruptly said, “Tell me what you did in your previous companies.” I thought this was going to be a story-telling interview like the others. But instead the minute I said, “my first startup used CATV coax to implement a local-area network for process control systems (which 35 years ago pre-Ethernet and TCP/IP was pretty cutting edge.) Ben said, “why don’t you go to the whiteboard and draw the system diagram for me.” Do what? Draw it?? I dug deep and spent 30 minutes diagramming trying remember headend’s, upstream and downstream frequencies, amplifiers, etc. With Ben peppering me with questions I could barely keep up. And there was a bunch of empty spaces where I couldn’t remember some of the detail. When I was done explaining it I headed for the chair, but Ben stopped me.
“As long as you’re a the whiteboard, why don’t we go through the other two companies you were at.” I couldn’t believe it, I was already mentally exhausted but we spent another half hour with me drawing diagrams and Ben asking questions. First talking about what I had taught at ESL – (as carefully as I could.) Finally, we talked about Zilog microprocessors, making me draw the architecture (easy because I had taught it) and some sample system designs (harder.)
Finally I got to sit down. Ben looked at me for a long while not saying a word. Then he stood up and opened the door signaling me to leave, shook my hand and said, “Thanks for coming in.” WTF? That’s it?? Did I get the job or not?
That evening I got a call from the recruiter. “Ben loved you. In fact he had to convince the VP of Marketing who didn’t want to hire you. Congratulations.”
Epilogue Three and a half years later Convergent was now a public company and I was a Vice President of Marketing working for Ben. Ben ended up as my mentor at Convergent (and for the rest of my career), my peer at Ardent and my partner and co-founder at Epiphany. I would never use Mensa again on my resume and my education section would always be empty.
But every time I read about an executive who got caught in a resume scandal I remember the moment I had to choose.
You will be faced with ethical dilemmas your entire career
Taking the wrong path is most often the easiest choice
These choices will seem like trivial and inconsequential shortcuts – at the time
Some of them will have lasting consequences
It’s not the lie that will catch up with you, it’s the coverup
Not readily letting go of, giving up, or separated from an object that one holds, a position, or a principle: “a tenacious grip”.
Not easily dispelled or discouraged; persisting in existence or in a course of action.
When I was a entrepreneur I’d pursue a goal relentlessly. Everything in between me and my goal was simply an obstacle that needed to be removed.
This week I had another reminder of what it was like.
Plenty of Time I was speaking at the National Governors Conference in Williamsburg Virginia and my talk ended Sunday at noon. I knew I had to be in Chicago at 9:30Am Monday for a Congressional hearing (I was the lead witness) so I made sure I was on the next to last plane out of Richmond (just in case the last one got cancelled.)
My wife and I got to the airport for our 4:45pm plane and found it was delayed to 6pm. Ok, no problem. Oops now it’s delayed until 7:30pm. Hmm, the last plane out looks like it’s leaving on-time at 8pm – can I get on that? No, sold out. So we sit around and watch our plane get delayed to 8pm, then 9pm then 10pm, then cancelled. Oh, oh this is looking a bit tight, but there’s a 6am from Richmond to Chicago. No problem. If we can get on that I can still make the hearing. The nice smiling United agent says “oh that’s sold out as well. Now I’m getting a bit concerned, “Well how about the American Airlines 6am?” “Sold out” she replied. The next flight is at 8am.” Ok put me on that one. ”Oh that’s sold out as well.”
We Have a Problem I need to be in downtown Chicago by 9:30am. Period.
So I ask, “where’s the nearest airport that has a 6am flight to Chicago?” Oh, that’s Dulles airport in Washington.”Ok, how far is that?” 120 miles.
We head back to the car rental booth, rent our second car of the day and head to Washington in pouring rain and drive in bumper to bumper traffic, crawling to our next airport. Three hours later we check into the airport hotel at 1:30am assured that all we needed to do is get 3 hours sleep and United would whisk us on the way to Chicago.
Waking up at 4:15am I glance at my email and couldn’t believe it – United canceled our 6am from Dulles. The next flight they had would get us into Chicago at 10am – too late to testify in front of Congress. It looked like there was simply no way to get where we needed to go.
My first instinct was to give up. Screw it. I tried hard, failed due to circumstances beyond my control. Why don’t we just go back to bed and get a good nights sleep.
That thought lasted all of 30 seconds.
We quickly realized that Washington has two airports – the other one, National was 30 miles away. I looked up the flight schedule and realized that there was a 6am and 7am leaving from National. I booked the 7am online not believing we could make the earlier 6am flight.
The only problem is that there weren’t any taxi’s to be found at 4:30 in the morning – in front of the hotel or on Uber. So I hiked over to the main road and flagged one down and had him drive me back to the hotel, pick up my wife and luggage and continued our adventure.
We got to Washington National Airport at 5am and walked directly into the longest security line I’ve seen in 10 years. Well, at least we can make the 7am plane (the one we’re ticketed on) and barely make the congressional hearing.
Getting through security the first gate we pass is the 6am for Chicago and they’re in the process of closing the door. ”Any chance you have any seats left?” Oh, we have two seats in the back of the plane but we don’t have time to re-ticket you.
Trying to remember my reality distortion field skills from my entrepreneurial days I convinced her to let us on.
We made it to Chicago. I actually got to sleep in our hotel for 45 minutes before the Congressional Field hearing.
Individuals play the game, but teams beat the odds
SEAL Team saying
Over the last 40 years Technology investors have learned that the success of startups are not just about the technology but “it’s about the team.”
We spent a year screwing it up in our Lean LaunchPad classes until we figured out it was about having the right team.
Startup Team Lessons Learned During the last 12 months we’ve taught 42 entrepreneurial teams with 147 students at Stanford, Berkeley, Columbia and the National Science Foundation. (As many teams as most startup incubators.)
Get into the Class When I first started teaching hands-on, project/team entrepreneurship classes we’d take anyone who would apply. After awhile it became clear that by not providing an interview process we were doing these students a disservice. A good number of them just wanted an overview of what a startup was like – an entrepreneurial appreciation class (and we offer some great ones.) But some of our students hadn’t yet developed a passion for entrepreneurship and had no burning idea that they wanted to bring to market. Yet in class they’d be thrown into a “made-up in the first week” startup team and got dragged along as a spear-carrier for someone else’s vision.
Step One – Set a Bar So as a first step we made students formally apply and interview for the Lean LaunchPad class. We were looking for entrepreneurs who had great ideas and interest in making those ideas really happen. We’d hold mixers before the first class and the students would form their teams during week one of the class.
But we found we were wasting a week or more as the teams formed and their ideas gelled.
Step Two – Apply As A Team So next time we taught, we had the students apply to the class as a team. We hold information sessions a month or more before the classes. Here students with preformed teams could come and have an interview with the teaching team and get admitted. Or those looking to find other students to join their team could mix and market their ideas or join others and then interview for a spot. This process moved the team logistics out of class time and provided us with more time for teaching.
But we had been selecting teams for admission on the basis of whether they had the best ideas. We should have known better. In the classroom, as in startups, the best ideas in the hands of a B team is worse than a B idea in the hands of a world class team.
Step Three – Hacker/Hardware, Hustler, Designer, Visionary As we taught our Lean LaunchPad classes we painfully relearned the lesson that team composition mattersas much or more than the product idea. And that teams matter as much in entrepreneurial classes as they do in startups.
In a perfect world you build your vision and your customers would run to buy your first product exactly as you spec’d and built it. We now know that this ‘build it and they will come” is a prayer rather than a business strategy. In reality, a startup is a temporary organization designed to search for a repeatable and scalable business model. This means the brilliant idea you started with will change as you iterate and pivot your business model until you find product/market fit.
The above paragraph is worth reading a few times.
It basically says that a startup team needs to be capable of making sudden and rapid shifts – because it will be wrong a lot. Startups are inherently chaos. Conditions on the ground will change so rapidly that the original well-thought-out business plan becomes irrelevant.
And finding product/market fit in that chaos requires a team with a combination of skills.
What skills? Well it depends on the industry you’re in, but generallygreat technology skills (hacking/hardware/science) great hustling skills (to search for the business model, customers and market,) great user facing design (if you’re a web/mobile app,) and by having long term vision and product sense. Most people are good at one or maybe two of these, but it’s extremely rare to find someone who can wear all the hats.
It’s this combination of skills is why most startups are founded by a team, not just one person.
University Silos While building these teams are hard in the real world, imagine how hard it is in a university with classes organized as silos. Business School classes were only open to business school students, Engineering School classes were only open to engineering school students, etc. No classes could be cross-listed. This meant that you couldn’t offer students an accurate simulation of what a startup team would look like. (In our business school classes we had students with great ideas but lacking the technical skills to implement it. And some of our engineering teams could have benefited from a role-model to follow as a hustler.)
So the next time we taught, we managed to ensure that the class was cross-listed and that the student teams had to have a mix of both business and engineering backgrounds.
I think we’ve finally got the team composition right – relearning all the lessons investors already knew.
But now on to the next goal – getting our mentor program correct.
Finding product/market fit in startup chaos requires a team with a combination of skills
Hacker/Hardware, Hustler, Designer, Visionary
At times an A+ market (huge demand, unmet need) may trump all
Remembering that I’ll be dead soon is the most important tool I’ve ever encountered to help me make the big choices in life. Because almost everything – all external expectations, all pride, all fear of embarrassment or failure – these things just fall away in the face of death, leaving only what is truly important.
Watching an entrepreneur fail is sad, but watching them fail from a lack of nerve is tragic.
Excitement At the beginning of this year Bob, one of my ex-students was in entrepreneurial heaven. He had an idea for a new class of enterprise software insight-as-a-service based on big data web analytics as a Cloud/SaaS (Software As a Service) application.
I had made one of the introductions to a Fortune 100 CIO’s so I got to hear his progress from both him and the CIO.
Takeoff After 90 days, things seemed to be moving at startup speed. Bob had a backlog of users wanting to try his application, and the corporate IT people who were trying his early prototype said, “It’s crude, we hate the user interface, it’s missing lots of features – but we’ll kill you if you try to take it away from us.”
I pointed a VC who followed the space to the CIO who was testing the prototype. The VC told me the CIO wouldn’t get off the phone. He kept telling him he couldn’t remember when he had seen an enterprise software product with so much promise. The VC checked with other IT users and heard the same reaction. It was a “gotta use it, don’t take it away, we’ll have to buy it” product. After a demo and lunch, the VC (who normally did later stage deals) wrote my ex student a check for a seed round.
Life couldn’t be better.
I followed Bob progress in bits and pieces from updates from the CIO, the VC and his emails and blogs. He seemed to be on the fast track to startup success. But pretty soon a few worrying warning signs appeared.
The first thing that I noticed was that Bob couldn’t seem to find a co-founder. I wasn’t close enough to know if he wasn’t really looking for one, but given the early success he was having, it seemed a bit odd. But the next thing really got me concerned. Bob started hiring second rate developers. At best they were B- players.
Stall A month went by, and the product stopped getting better. The U/I still sucked, and new features had stopped appearing. The next month, the same thing. I got a call from my CIO friend asking, “what was going on?” He said, “It was a great prototype, we would have loved to deploy it company-wide, and I hate to let it go, but it looks like Bob company just lost interest in developing it. I’m going to dump it and look for a substitute.” So I called Bob and suggested we grab a coffee.
I asked him how things were going and got the update on how the earlyvangelists were using the product. As I had heard, they were ecstatic. But Bob said he was worried he hadn’t found the right customer segment yet. “I’m not sure I can get all of these guys to pay me big bucks,” he said. “That’s why I stopped coding, and I’m spending all my time out in the field still talking to more customers.” “What does your VC’s say you ought to be doing?” I asked. “Oh, he hasn’t had much time for me, his firm almost never does seed deals. It turns out I was an exception.” Oh, oh.
The conversation was starting to make the hair on the back of my neck stand up. Bob had gotten to a place most founders never do – his product was a “gotta have it for people with big budgets.” He should have been back rapidly coding, iterating and finding out what feature set would get him to paying customers.
Instead he had produced barely 3 weeks of progress in the last 5 months. His prototype was rapidly wearing out its welcome.
A Lack of Nerve When I pressed Bob on this he admitted, “No I guess my engineers aren’t very good. But I hired guys who were cheap because I wasn’t sure if my hypotheses were right. Didn’t you tell us to test our hypotheses first?” Now it was my time to be surprised. “Bob, you’ve validated your hypotheses better than any startup I’ve ever seen. You found that out in the first month. You got customers begging you to finish the product so they could buy it. You should have been hiring world-class talent and building something these CIO’s will pay for. It’s not too late. It’s time to grab them by the throat and go for it.”
I wasn’t ready for the answer, “Steve, I’ve been reading all about premature scaling and making sure everything is right before I go for it. I want to be sure I get all of this right. I’m afraid I’ll run out of money.”
I thought I’d make one more run at it. “Bob,” I said, “few entrepreneurs get the first time response you have from an early product. At your rate you’re going to burn through your cash trying to get it perfect. It’s a startup. You’ll never have perfect information. You’re sitting on a gold mine. Grab the opportunity!”
I got a blank stare.
We made some more small talk and shook hands as he left.
Bob was in the wrong business, not the wrong market. He wanted certainty, comfort and security.
I stared at my coffee for a long time.
Carpe Diem – make your lives extraordinary.
Yes, premature scaling is a cause of startup death
Yes, you need to get out of the building and test your hypotheses
But, when an opportunity smacks you in the head for gosh sake grab it with both hands and don’t let go
Foreign visitors to Silicon Valley continually mention how willing we are to help, network and connect strangers. We take it so for granted we never even to bother to talk about it. It’s the “Pay-It-Forward” culture.
We’re all in this together – The Chips are Down in 1962 Walker’s Wagon Wheel Bar/Restaurant in Mountain View became the lunch hangout for employees at Fairchild Semiconductor.
When the first spinouts began to leave Fairchild, they discovered that fabricating semiconductors reliably was a black art. At times you’d have the recipe and turn out chips, and the next week something would go wrong, and your fab couldn’t make anything that would work. Engineers in the very small world of silicon and semiconductors would meet at the Wagon Wheel and swap technical problems and solutions with co-workers and competitors.
We’re all in this together – A Computer in every Home In 1975 a local set of hobbyists with the then crazy idea of a computer in every home formed the Homebrew Computer Club and met in Menlo Park at the Peninsula School then later at the Stanford AI Lab. The goal of the club was: “Give to help others.” Each meeting would begin with people sharing information, getting advice and discussing the latest innovation (one of which was the first computer from Apple.) The club became the center of the emerging personal computer industry.
We’re all in this together – Helping Our Own Until the 1980’s Chinese and Indian engineers ran into a glass ceiling in large technology companies held back by the belief that “they make great engineers but can’t be the CEO.” Looking for a chance to run their own show, many of them left and founded startups. They also set up ethnic-centric networks like TIE (The Indus Entrepreneur) and the Chinese Software Professionals Association where they shared information about how the valley worked as well as job and investment opportunities. Over the next two decades, other groups — Russian, Israeli, etc. — followed with their own networks. (Anna Lee Saxenian has written extensively about this.)
We’re all in this together – Mentoring The Next Generation While the idea of groups (chips, computers, ethnics) helping each other grew, something else happened. The first generation of executives who grew up getting help from others began to offer their advice to younger entrepreneurs. These experienced valley CEOs would take time out of their hectic schedule to have coffee or dinner with young entrepreneurs and asking for nothing in return.
They were the beginning of the Pay-It-Forward culture, the unspoken Valley culture that believes “I was helped when I started out and now it’s my turn to help others.”
By the early 1970’s, even the CEOs of the largest valley companies would take phone calls and meetings with interesting and passionate entrepreneurs. In 1967, when he was 12 years old Steve Jobs called up Bill Hewlett the co-founder of HP.
In 1975, when Jobs was a young unknown, wannabe entrepreneur called the Founder/CEO of Intel, Bob Noyce and asked for advice. Noyce liked the kid, and for the next few years, Noyce met with him and coached him as he founded his first company and went through the highs and lows of a startup that caught fire.
Steve Jobs and Robert Noyce
“Bob Noyce took me under his wing, I was young, in my twenties. He was in his early fifties. He tried to give me the lay of the land, give me a perspective that I could only partially understand,” Jobs said, “You can’t really understand what is going on now unless you understand what came before.”
What Are You Waiting For? Last week in Helsinki Finland at a dinner with a roomful of large company CEO’s, one of them asked, ”What can we do to help build an ecosystem that will foster entrepreneurship?” My guess is they were expecting me talk about investing in startups or corporate partnerships. Instead, I told the Noyce/Jobs story and noted that, as a group, they had a body of knowledge that entrepreneurs and business angels would pay anything to learn. The best investment they could make to help a startup culture in Finland would be to share what they know with the next generation. Even more, this culture could be created by a handful of CEO’s and board members who led by example. I suggested they ought to be the ones to do it.
We’ll see if they do.
Over the last half a century in Silicon Valley, the short life cycle of startups reinforced the idea that - the long term relationships that lasted was with a network of people - much larger than those in your current company. Today, in spite of the fact that the valley is crawling with IP lawyers, the tradition of helping and sharing continues. The restaurants and locations may have changed, moving from Rickey’s Garden Cafe, Chez Yvonne, Lion and Compass and Hsi-Nan to Bucks, Coupa Café and Café Borrone, but the notion of competitors getting together and helping each other and experienced business execs offering contacts and advice has continued for the last 50 years.
It’s the “Pay-It-Forward” culture.
Entrepreneurs in successful clusters build support networks outside of existing companies
These networks can be around any area of interest (technology, ethnic groups, etc.)
These were mutually beneficial – you learned and contributed to help others
Over time experienced executives “pay-back” the help they got by mentoring others
The Pay-It-Forward culture makes the ecosystem smarter