Organizational Debt is like Technical debt – but worse

Startups focus on speed since they are burning cash every day as they search for product/market fit. But over time code/hardware written/built to validate hypotheses and find early customers can become unwieldy, difficult to maintain and incapable of scaling. These shortcuts add up and become what is called technical debt. And the size of the problem increases with the success of the company.organizational debt

You fix technical debt by refactoring, going into the existing code and “cleaning it up” by restructuring it. This work adds no features visible to a user but makes the code stable and understandable.

While technical debt is an understood problem, it turns out startups also accrue another kind of debt – one that can kill the company even quicker – organizational debt. Organizational debt is all the people/culture compromises made to “just get it done” in the early stages of a startup.

Just when things should be going great, organizational debt can turn a growing company into a chaotic nightmare.

Growing companies need to understand how to recognize and  “refactor” organizational debt.


I had lunch last week with Tom, the CEO of a startup that was quickly becoming a large company – last year’s revenue was $40M, this year likely to be $80M maybe even $100 million in ad revenue. They had reinvented a traditional print media category onto web and mobile devices for a new generation of users who were no longer buying magazines but reading online. Their content was topical, targeted and refreshed daily. Equally important their VP of Marketing had brilliantly executed a stream of social media campaigns (Facebook likes and partnerships, email campaigns, etc.) to drive traffic to their site, which they then turned into ad revenue.

Tom was excited about their next big round of funding that valued them at almost ½ a billion dollars. He talked about how they were trying to maintain their exponential growth and told me how many people they were adding, and the issues of scaling that rapidly. (They had doubled headcount from 100 to 200 in the last year and were planning to double again.) While he kept bringing the conversation back to their big valuation I tried to steer the conversation back to how they were going to deal with:

  • training the influx of new hires – in both culture and job specific tasks
  • retaining their existing hires who were working for intern-like salaries with little equity.

His answer centered on the great location of the new building, what great furniture they were getting, and the compensation plans for the key members of the executive staff.

This didn’t feel good.

They’ve Never Run A Company
Since the meeting had been a courtesy to Phillipe, one of their VC board members, I grabbed coffee and asked him what scaling challenges he saw for the company. I was taken aback when I got a reply that sounded like VC buzzword bingo – phrases like “They’re a platform not a product” and the ever popular “they’re a potential Unicorn.”

While the strategy sounded like a great long-term plan, I poked a bit and asked, “So what’s the training and onboarding plan for the new hires? What are you doing about the pay scales at the bottom of the organization? Aren’t you concerned about losing qualified people that the company spent the last few years training but never compensated adequately?” I got answers that sounded like the Tom’s – new stock grants for the executive staff, great new building, and oh, by the way, Tom and his co-founder got to sell some stock in the new round. And let me tell you about the vision and strategy again.

As Phillipe kept talking I listened but not really, because I started realizing that while he was a genius in finding and nurturing great early-stage deals, and had a vision that sounded great for the new investors, he didn’t have a clue about how to actually scale a company. He had never run one, and worse, had never been on a board of a startup making the transition from searching for a business model and product/market fit, to the next phase of “building” the infrastructure to support scale.

Unless they were planning to flip this company, organizational debt was going to hit faster than they could imagine. They needed a plan to “refactor” organizational debt. And Tom wasn’t going to get it from his board.

Focus on Bottoms Up as well as top Top Down
While the company had a great plan for keeping the top executives, and had all the startup perks like free food and dogs at work, they had spent little time thinking about the organization debt accruing with first 100 employees who had built the company underneath them. These were the employees that had the institutional knowledge and hard-earned skills. Originally they had been attracted by the lure of being part of a new media company that was disrupting the old, and were working for low salaries with minimal stock. And while that had been enough to keep their heads-down and focused on their jobs, the new funding round and onslaught of new employees at much higher salaries had them looking around and updating their resumes.

Surprisingly, given the tidal wave of new hires, formal training and job descriptions were still stuck in the early stage, “we’re too small to need that” mindset. The reality was that with hundreds of new employees coming on board the company desperately needed a formal onboarding process for new employees; first, to get them assimilated to the company culture and second, a formal process to train them in how to do their specific jobs. Unfortunately the people who could best train them were the underpaid employees who were now out looking for new jobs.

Organizational debt was coming due.

Organizational debt circled

“Refactoring” organizational debt
I had promised Tom the CEO we’d grab coffee again. When we did, I asked him about his head of HR, and heard all about what great medical and insurance benefits, stock vesting, automated expense account forms, movie night, company picnics, etc., the company had. I offered that those were great for an early-stage company, but it was time to move to a new phase (and perhaps a new head of HR.) Since Tom was an engineer I explained the “Organizational Debt” metaphor. He got it instantly and before I could even suggest it, he asked, “So how do I refactor organizational debt?”

I suggested that were seven things he could do – some quickly, some over time:

  1. Put together a simple plan for managing this next wave of hiring. Tell each hiring manager:
  • No new hires until you write/update your own job description.
  • Next write your new hire job description.
  • Next write how you will train new hire(s) in their functional job.
  • Next write how their job fits into each level upward and downward
  • And how it supports the mission of each level upward and downward
  1. Realize his expense plan is too low. I offered that it appeared he put together an expense budget using current employee salaries. If so, he was in danger of losing the people he most cared about keeping. He should stop thinking about 10% raises and start thinking about what he’d have to pay to replace employees who hold critical knowledge and train new ones. It felt to me more like 50% raises in quite a few cases.
    He needed to have his head of HR:
  • Do a salary survey of existing employees and industry comparables
  • Identify the employees they wanted to keep
  • Upgrade their salaries and equity ASAP

Some of the harder suggestions had to do with the organization as whole:

  1. He needed to consider refactoring some of the original hires and their roles. Some employees don’t scale from “Search” to this new phase of “Build”. Some because they are performance problems, or don’t fit a bigger organization, attitude etc. Some of these may be friends. Leaving them in the same role destroys a sense of what’s acceptable performance among new employees.  This is hard.
  2. In addition to refactoring the people, it’s time to relook at the company culture. Do the cultural values today take into account the new size and stage of the organization? What are the key elements that have “made it great” so far? Are they the same? different? how? why? It may be time to re-visit what the company stands for.
  3. Now that the company no longer fits in a conference room or even the cafeteria, it needs a way to disseminate information that grows with the organization. At times, this requires the same messages being repeated 4 or 5 times to make up for the fact the CEO isn’t always delivering them personally. Emphasize in the corporate messaging that while it is a period of rapid change, the company culture will be an anchor that we can rely upon for orientation and stability
  4. Does customer communication need to change? In the past any customer could talk to Tom or expected Tom to talk to them.  Is that feasible? Desirable?
  5. Finally, since this is new territory for Tom and board, create an advisory board of other CEOs who’ve been through the “build” stage from a startup to growing company.

Lessons Learned

  • Companies lucky enough to get to the “build” phase have a new set of challenges
    • They’re not just about strategy
    • It’s about fixing all the organizational debt that has collected
  • Onboarding, training, culture, and compensation for employees at the “build” phase all require a fresh look and new approaches
  • Failing to refactor organizational debt can kill a growing company

I’m on the Air – On Sirius XM Channel 111

Starting this Monday, March 9th 4-6pm Pacific Time I’ll be on the radio hosting the Bay Area Ventures program on Sirius XM radio Channel 111 – the Wharton Business Radio Channel.Untitled

Over this program I’ll be talking to entrepreneurs, financial experts and academic leaders in the tech and biotech industries. And if the past is prologue I guarantee you that this will be radio worth listening to.

On our first show, Monday March 9th 4-6pm Pacific Time join me, as I chat with Alexander Osterwalder – inventor of the Business Model Canvas, and Oren Jacob, ex-CTO of Pixar and now CEO of ToyTalk on Sirius XM Radio Channel 111.

Oren Jacob - CEO ToyTalk

Oren Jacob – CEO ToyTalk

Alex Osterwalder - Business Models

Alex Osterwalder – Business Models

On Monday’s show we’ll be talking about a range of entrepreneurship topics: what’s a Business Model Canvas, how to build startups efficiently, the 9 deadly sins of a startup, the life of a startup CEO, how large companies can innovate at startup speeds. But it won’t just be us talking; we’ll be taking your questions live and on the air by phone, email or Twitter.

On April 27th, on my next program, my guest will be Eric Ries the author of the Lean Startup. Future guests include Marc Pincus, founder of Zynga, and other interesting founders and investors.

Is there anyone you’d like to hear on the air on future shows? Any specific topics you’d like discussed? Leave me a comment.

Mark your calendar for 4-6pm Pacific Time on Sirius XM Radio Channel 111:

  • March 9th
  • April 27th
  • May 11th
  • June 29th
  • July 13th
  • Aug 24th in NY

What Do I Do Now? The Startup Lifecycle

search build growLast week I got a call from Patrick an ex-student I hadn’t heard from for 8 years. He was now the CEO of a company and wanted to talk about what he admitted was a “first world” problem. Over breakfast he got me up to date on his life since school (two non-CEO roles in startups,) but he wanted to talk about his third startup – the one he and two co-founders had started.

“We’re at 70 people, and we’ll do $40 million in revenue this year and should get to cash flow breakeven this quarter. ” It sounded like he was living the dream. I was trying to figure out why we were meeting. But then he told me all about the tough decisions, pivots and firing his best friend he had to do to get to where he was. He had been through heck and back.

“I made it this far,” he said, ”and my board agreed they’d bet on me to take it to scale. I’m going to double my headcount in the next 3 quarters. The problem is where’s the playbook? There were plenty of books for what to do as a startup, and lots of advice of what to do if I was running a large public company, but there’s nothing that describes how to deal with the issues of growing a company. I feel like I’ve just driving without a roadmap. What should I be reading/doing?”

I explained to Patrick that startups go through a series of steps before they become a large company.

Search
In this first step, the goal of a startup is to search for a repeatable and scalable business model. It typically takes multiple iterations and pivots to find product/market fit – the match between what you’re building and who will buy it.

searchYou’ll realize you’re ready to exit the Search step when you have customer validation:

  • You’ve found a sales channel that matches how the customer wants to buy and the costs of using that channel are understood
  • Sales (and/or customer acquisition in a multi-sided market) becomes achievable by a sales force (or network effect or virality) without heroic efforts from the founders
  • Customer acquisition and activation are understood and Customer Acquisition Cost (CAC) and Life Time Value (LTV) can be estimated for the next 18 months

Startups in Search mode have little process and lots of “do what it takes.” Company size is typically less than 40 people and may have been funded with a seed round and/or Series A.

Most startups die here.

Build
At about north of 40 people a company needs to change into one that can scale by growing customers/users/payers at a rate that allows the company to:

  • achieve positive cash flow (make more money than it spends) and/or
  • generate users at a rate that can be monetized…

buildUnfortunately as you hire more people, the casual, informal “do what it takes” culture, which worked so well at less than 40 people, becomes chaotic and less effective. Now the organization needs to put in place culture, training, product management, processes and procedures, (i.e. writing the HR manual, sales comp plan, expense reports, branding guidelines, etc.)

This Build phase typically begin with around 40 employees and will last to at least 175 and in some cases up to 700 employees. Venture-backed startups will often have a Series C or D or later rounds during this phase.

Grow
In the Grow phase the company has achieved liquidity (an IPO, or has been bought or merged into a larger company event) and is growing by repeatable processes. The full suite of Key Performance Indicators (KPI’s) processes and procedures are in place.

Lucky you’re not the ex-CEO
I pointed out to Patrick that he was in the middle of the transition from Search to Build. And I suggested that he was lucky to be encountering this problem as a 21st century startup rather than one a decade or two ago. In the past, when venture-funded startups told their investors they’d found a profitable business model, the first thing VC’s would do is to start looking for an “operating exec” – usually an MBA who would act as the designated “adult” and take over the transition from Search to Build. The belief then was that most founders couldn’t acquire the skills rapidly enough to steer the company through this phase. The good news is that VC firms are beginning to appreciate the value of keeping the founder in place.

I reminded Patrick that the reality is startups are inherently chaotic. As a founder he got the company to the Build phase because he was able to think creatively and independently since conditions on the ground changed so rapidly that the original well-thought-out business plan became irrelevant.

He managed chaos and uncertainty, and took action rather than waiting around for someone on his board to tell him what to do, and his decisions kept his company from dying.

Now Patrick would have to pivot himself and the company. In this Build phase he was going to have to focus on how to thoughtfully start instituting things he took for granted in the Search phase. He was going to have build into his organization training, hiring standards, sales processes and compensation programs, all the while engineering a culture that still emphasized the value of its people.

Patrick took a bunch of notes, and said, “You know when I figuring out how to search for a business model, I read the Startup Owners Manual and Business Model Generation, but where are the books for this phase? And come to think of it, in the Search phase, there are Incubators and Accelerators and even your Lean LaunchPad/I-Corps class, to give us practice. What resources are there for me to learn how to guide my company through the Build phase?”

Time to Make New Friends
I realized Patrick just hit the nail on the head. As chaotic as the Search phase was in a startup, you were never alone. There was tons of advice and resources. But in the past, the Build phase was treated like a smaller version of a large company. Operating execs hired by investors used the tools they learned in business school or larger corporations.

I suggested it was time for Patrick to consider four things:

  1. Read the sparse but available literature that did exist about this phase. For example, The Four Steps to Epiphany Chapter 6, Company Building, Ben Horowitz’s The Hard Thing About Hard Things (a series of essays) or Geoff Moore’s classic Crossing the Chasm
  2. If he already had an advisory board (formal and/or informal), add CEO’s who have been through this phase. If not, start one
  3. Get a one-one CEO coach or join a CEO peer group
  4. And potentially the most difficult, think about upgrading his board by transitioning out board members whose expertise was solely rooted in the Search

As we finished our coffees, Patrick said, “Thanks for the advice, though I wish someone had a methodology as simple as the Lean Startup for how to scale my company.”

Lessons Learned

  • Startups go from Search to Build to Scale
  • The Search to Build phase happens ~40 people
  • Very different management tools and techniques are needed to guide your company through this new phase
  • You need to reset your board and your peer advisers to people who know how to manage building a company versus starting one

The Best Job in Stamford Connecticut

K&S Ranch Publishing has an exciting opening for a Book Traffic Coordinator living near Stamford, Connecticut. We need someone who can help get our library of entrepreneurship books into the hands of the startup founders and students who rely on them.

The job involves figuring out where to best sell our books (The Startup Owner’s Manual, The Four Steps to the Epiphany, and Holding a Cat by the Tail), and the logistics of managing inventory, sales and shipments of them.

Maybe it’s a position for you or someone you know?

It’s a great opportunity for someone detailed-oriented, and interested in startups and entrepreneurship.

We want you if you are:

  • Interested in making the numbers go up and not just writing them down
  • Adept with Excel, QuickBooks and Word (finance, accounting and bookkeeping experience a plus)
    • And can suggest how to use that data to make a difference in our business
  • Professional and terrific on the phone with clients and vendors
  • Web savvy
  • Able to do your job without standing around waiting for direction
  • Independently able understand and solve problems

The  work environment is casual and fun, hours could be flexible, and you’ll earn your pay every day.

If this sounds like a job for you — or a friend or relative living in or near Stamford, Connecticut — send your resume to Terri S. Vanech at terri@kandsranch.com

It’s About Women Running Startups

Just before the holidays I had coffee with Anne, an ex MBA student running a fairly large product group at a search engine company, now out trying to raise money for her own startup. She had an interesting insight: existing content/media companies were having the same problem as hardware companies that rarely made the leap to new platforms. And she had a model for a new media company for mobile and wearables.women innovation I thought we were going to talk about her product progress, so I was a bit taken aback by her most pressing question, “Why is it so hard for a woman to still get taken seriously by a venture capitalist?”

I had lots of answers, but none of them good enough for either of us.

I had a better one when I came back from New York.

——
Entrepreneurship at Columbia
I was in New York last week teaching my annual 5-day version of the Lean LaunchPad class at the Columbia Business School. We had 130 students in 30 teams who got out of the classroom and did 2154 customer interviews in 5 days – a remarkable effort for 120 hours. Their amazing Lessons Learned presentations can be seen here.

In the last year entrepreneurship at Columbia has taken a pretty remarkable leap across the entire university. The Columbia Startup Lab is a visible symbol of how the university is making entrepreneurship an integral part of all colleges at the university.

New York Startups
The Columbia Startup Lab is in a building completely taken over by WeWork – a company that provides co-working spaces in 12 cities worldwide. I wandered through four full floors of SohoWest WeWork sticking my head into the random startups’ offices.

Looking at office after office of startups a few things stood out.

  • This was just one of the 14 WeWork co-working spaces in New York City— there are over 100 co-working spaces in New York
  • Michael Bloomberg has yet to get his due for engineering the New York entrepreneurial ecosystem
  • I was struck by something that had been slowly percolating through my head during my entire week – there are a higher percentage of women on the founding teams of New York City startups than in Silicon Valley

Women in New York Startups
This last point is definitely not a data-driven survey. However after spending a week teaching 130 entrepreneurship students, ~35% of them women, and then walking through ~100+ WeWork and TechSpace offices in New York, I get the impression that the number of women leading startups in New York is much higher than in the San Francisco Bay area.

When I mentioned this to my friends running the NYU and Columbia entrepreneurship programs, they looked at me like I just discovered that it gets dark at night. Their answer seemed to make sense: a higher percentage of startups in New York are focused on media, fashion, communications, real estate, financial tools – all the products of industries centered in NYC – and all are attempting to disrupt them with products that run on and are delivered by 21st century platforms. (Think of what Refinery29 is doing to Conde Nast.)

These are industries where women have had a history of leadership positions and more importantly, where young women entrepreneurs can find role models and mentors as their male counterparts do in Silicon Valley’s tech-centered, pay-it-forward culture.

This raises an interesting question: is the credibility of female entrepreneurs in the eyes of New York VC’s something about the venture firms, or is it about the industries they are funding?

One can make the case that New York venture capital industry is rooted in the 21st century not the 20th. While some venture firms have been around for awhile, perhaps the newer partners have a different model of what a successful founder looks like than their west coast peers.

Or perhaps it’s as simple as New York VC’s are funding startups that play on the disruption of New York’s key strengths in Media, Fashion, Finance and Real Estate, and the women founding New York startups have an existing track record in those industries, and pass a gender neutral “VC credibility” bar.

Correlation does not imply causation
Those bemoaning the dearth of women founders in Silicon Valley might want to see if there is a real disparity between the coasts or if it is just my selection bias?

If it’s real why?

  • Women founders already had leadership roles in the industries they’re about to disrupt?
  • Women can find existing role models?
  • Women have built a network of women mentors?

What role does the type of startup play?

  • Companies that get started and built in New York City tend to be applied technology
  • Companies that get started and built in Silicon Valley have historically focused on core technology

What role does venture capital play?

  • Is there any difference in funding women for old-line firms versus 21st century firms?
  • What role does industry segment play? (i.e. lots more women founders in media companies than you find in enterprise software companies.)
  • On the West Coast the history of successful startups is technology first, and perhaps VC’s weigh that more in what they want to see in founders.
  • Is it as simple as having credibility in the industry you want to startup in?

—–

I sent Anne, my student, an email when I returned, “You may want to take a trip to NY and pitch some of their VCs.”

Lessons Learned

  • Lots of entrepreneurial activity in NY
  • Different industry focus than in Silicon Valley – more media, finance, real estate
  • Women seem to be more represented as founders
  • If a NY bias toward women as founders is true, why? And what are the lessons for Silicon Valley?

The Path of Our Lives

Some men see things as they are and say, why;
I dream things that never were and say, why not
?”
Robert Kennedy/George Bernard Shaw

I got a call that reminded me that most people live their life as if it’s predestined – but some live theirs fighting to change it.

At 19 I joined the Air Force during the Vietnam War. Out of electronics school my first assignment was to a fighter base in Florida. My roommate, Glen, would become my best friend in Florida and Thailand as we were sent to different air bases in Southeast Asia.

An Enemy Attack May Make Your Stay Here Unpleasant

An Enemy Attack May Make Your Stay Here Unpleasant

On the surface, Glen and I couldn’t have been more different. He grew up in Nebraska, had a bucolic childhood that sounded like he was raised by parents from Leave it to Beaver. I didn’t, growing up in a New York City apartment that seemed more like an outpatient clinic. Yet somehow we connected on a level that only 19-year-olds can.  I introduced him to Richard Brautigan and together we puzzled through R.D. Laing’s The Politics of Experience. We explored the Everglades (and discovered first-hand that the then-new national park didn’t have any protective barriers on their new boardwalks into the swamps and that alligators sunning themselves on a boardwalk look exactly like stuffed ones – until you reach out to touch them.) In Thailand I even figured out how to sneak off base for a few days, cross Thailand via train, visit him in his airbase and convince everyone I had been assigned to do so (not that easy with a war on.) The chaos, the war, our age and our interests bonded us in a way that was deep and heartfelt.

steve in Thailand 2 ARL-46Yet when the Vietnam War wound down, we were both sent to bases in different parts of the U.S. And as these things happen, as we grew older, more people and places came between us, and we went on with our lives and lost touch.

Four Decades Later
Last week I got an email with a subject line that only someone who knew me in the Air Force could have sent. While that caught my attention, the brief note underneath stopped me in my tracks. It read, “You have crossed my thoughts through the years. The other night you appeared in my dreams. I actually remembered it in the morning and googled your name. By God, there you were. A bit overwhelming…”

You bet it was overwhelming, it’s been 40 years since I last heard from Glen.

On the phone together, I spent an hour with an ear-to-ear grin as both of us recounted, “when we were young, crazy and stupid” stories, stories I still won’t tell my children (which makes me grateful it was life before social media documented every youthful indiscretion.) Glen even reminded me of my nickname (which still makes me cringe.)  The feel of long forgotten camaraderie let me wallow in nostalgia for a while. But as Glen began to catch me up with the four decades of his life, it was clear that while we both had the same type of advanced electronics training, both had been on the same airbases, and essentially both had been given the same opportunities, our careers and lives had taken much different paths. As he talked, I puzzled over why our lives ended up so different. Listening to him, I realized I was hearing a word I would never use to describe my life. Glen used the word “predestined” multiple times to describe his choices in life. His job choices were “predestined,” where he lived was “predestined,” who he married and divorced had been “predestined.”  I realized that our world views and how we lived our lives differed on that one single word.

“Predestined.”

The path of our lives
While the call brought me back to when we were foolish and fearless, thinking about how Glen lived his life troubled me. It took me awhile to figure out why. I wasn’t bothered about anything that Glen did or didn’t accomplish. It was his life and he seemed happy with it. Hearing his voice brought back those days of enthusiasm, exploration, adventure and unlimited horizons. But listening to forty years of a life lived summed up as “preordained” felt like a sharp reminder of how most people live their lives.

Glen’s worldview wasn’t unique. Most people appear to live an unexamined life, cruising through the years without much reflection about what it means, and/or taking what life hands them and believing it’s all predestined.

As I’ve gotten older I’ve come to grips that the unexamined life is what works for most people. Most take what they learned in school, get a job, marry, buy a house, have a family, become a great parent, serve their god, community and country, hang with friends and live a good life. And for them that’s great.stages of awareness

Some do want more out of life, but blame their circumstances on others – their parents or government or spouse or lack of opportunities, but almost never on their own lack of initiative. Initiative means change and change is hard for most. (Clearly there are still pockets in the world where opportunities and choice are limited but they are shrinking daily.)

Perhaps the most painful to watch are those who wake up later in life thinking, “I could have or I should have.”

Pushing the Human Race Forward
Whether we have free will or whether our lives are predestined has been argued since humans first pondered their purpose in life. The truth is we won’t know until the second coming or the solution to the many-worlds theory.

But what we know with certainty is that there is a small set of humans who don’t act like their lives are predestined. For better or worse, regardless of circumstances, country or culture they struggle their entire lives wanting to change the outcome. And a small percentage of these translate the “wanting to change” into acting on it. This small group is dissatisfied with waiting for life to hand them their path. They act, they do, they move, they change things.

Those born into poverty actively strive to change their own lives and that of their children. Those who want to start a company or join one quit their job and do it, while others try to change their political system or fight for social or environmental justice.

And the irony is while the individual stories are inspiring they are trying to tell a much bigger story. These misfits, rebels and troublemakers have been popping up in stories for thousands of years. Every culture has myths about larger than life heroes who rose from nothing. This archetype is a recessive gene common to all cultures. They are the ones that make things happen, they’re the ones that push the human race forward.

This is what makes and drives entrepreneurs. Our heads are just wired differently.

You Are Master of Your Own Fate
The world is much different then when Glen and I were young and foolish. In the past, even if you did feel this spirit of adventure, you had no idea how and where to apply it. Barriers of race, gender or location threw up roadblocks that seemed insurmountable.

The world is much smaller now. The obstacles aren’t gone but are greatly diminished. Everyone within reach of a smartphone, tablet or computer knows more about entrepreneurship and opportunity and where to get it then all of Silicon Valley did 40 years ago. There’s no longer an excuse not to grab it with both hands.

As far as we know, this life isn’t practice for the next one. For entrepreneurs the key to living this one to the fullest is the understanding that you can choose – that you do have a choice to effect the journey and change the rules, that you can decide to give it your best shot to do something, something extraordinary.

If your passion is startups and innovation, and your community, region or country doesn’t have an entrepreneurial culture and community – help start one. If there’s no funding for startups in your community – get up and move to where it is. If you’re in a company frustrated with the lack of opportunity – change jobs.

You are master of your own fate. Act like it.

Lessons Learned           

  • The same destiny overtakes us all
  • It’s what you choose to do with your life in between that makes the difference

Three Things I Learned on Commencement Day

In the last five years I’ve been at Commencement Day at universities around the world – a few times to receive awards and three times as the commencement speaker. But attending both my daughters’ college graduations this year helped me to see how things look from the other side of the podium.

——-

CommencementFirst, college graduations fall in the category of “life cycle” events. At some major events– your birth and death for example, while you may be the center of attention, the events are managed by others and are more important to the people around you. Other events, like coming of age celebrations, getting your driver’s license, getting married, the birth of your children – are more important to you, and those attending are the celebrants at your event.

While our daughters’ graduations felt important to us, on top of mind was that this day was about honoring their accomplishments not ours. We were there to celebrate with and for them. And we were incredibly proud of what they achieved – through their years as college students, they grew smarter, wiser and more prepared for the world in front of them.

Second, for most students, our kids included, college was a halfway house to independence. The morning they stepped onto campus as freshman it was the first day of their own life –they were no longer just a child of their parents. College was the first place they could taste the freedom of making their own independent decisions – and in some of those “mornings-after” – learn the price of indulgence and the value of moderation.

At school they had their first years of taking responsibility for themselves. While it may not be obvious to them yet, their college years were a transition from having their parents make decisions for them to making decisions for themselves. Through those years, we lived through a few crises, tried hard not to be helicopter parents and helped when we were needed.

But as independent as our kids and their classmates felt, going to college is still a known path for 21 million U.S. college students. Commencement Day has a sobering finality in that it’s the end of the prescribed path. From that day forward each of these 21 million students now has to search for his or her own path through life

That brings up my third and final observation. At the commencements I attended, graduates were classified by their academic rankings. Outstanding academic performance was noted in the programs and awarded with special honors. Schools reward their students for a combination of intelligence, perseverance and hard work, in the classroom and on the playing fields. But these metrics don’t help kids understand that great grades are not a pass for a great life.

How many of those “A” students will find that after their first job, few employers care about grades and customers don’t ask for your transcript? In fact, in a decade or two, a good number of those “A” students may well be working for those supposed losers who barely graduated.

It’s at the back of the hall where there were a few who see things differently. Who have no fondness for rules or respect for the status quo—these are the kids who are more likely to grow up to create new companies and new industries and push the envelope in directions not visible to those who follow a more conventional path. Successful founders and technology entrepreneurs have at best a zero correlation with great grades.

Colleges may not reward resiliency, curiosity, agility, resourcefulness, pattern recognition and tenacity. But as an entrepreneur, they matter a whole lot more than following directions, playing by the rules and getting top grades.

Congratulations to those in both the front and back of the room. Your lives are going to be interesting – through very different paths.

Lessons Learned

  • Graduation was their day. We were there to help them celebrate
  • Commencement Day is the end of the prescribed path. Now they have to find their own
  • Great grades are not a pass for a great life
  • After their first job, few employers care about grades and customers don’t ask for your transcript
  • Successful founders and technology entrepreneurs have at best a zero correlation with great grades


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