Category Archives: Business

Common Themes in the Despair of Entrepreneurial Success

I hated reading growing up. I read the cliff notes on everything just get to through class assignments, and don’t think I can safely say I ever enjoyed a single book for pleasure. When I started my first company (a digital design creative agency called SureFive), had literally no idea what I was doing. I barely read an economics book in college, and no one ever told me there was a handbook for starting a company (hint: there isn’t). I just did it. Me and my business partner went on to start FlyrOnline, which despite it’s moderate success in the aviation industry, wasn’t enough. I starting thinking to myself “why don’t I get this?”

So then I started reading – for pleasure.

I started reading something I genuinely have become very passionate about – entrepreneurism, business building, ya know…what’s considered “cool” now. Books like The Lean Startup, Personal MBA, Nudge, and Thinking, Fast and Slow.

As I read more and more about people who have “made it”, I realized I wasn’t alone on my journey. Several themes started matriculating, and here’s a short breakdown of the one’s that have stuck in my head.

The Crash – At some point everyone crashes. People burn out. For a growing organization, this is often called the pit of despair. Steve Jobs got fired from Apple at one point. Think about that for a second.

Engineering – There is no handbook, guidebook, or cookbook to starting a company. You can get all of the advice you want. You can read this post and get inspired. You can get an MBA. But none of this matters, because there is no single anecdotal, formulaic way to build a business. There’s a common theme in the startup world and it goes something like this: “I have no idea what I’m doing” 

Overnight success – These don’t exist. Literally. Do. Not. Exist. Did I mention they don’t exist?

Almost nothing scales except Facebook – There is a word in the english language called “exception”. Every company that reaches scale, eventually hits exceptions. CRM app doesn’t allow contacts to be imported via Outlook? That’s an exception. As soon as exceptions hit your business, things tend to get really complicated. A company that can continue to smoothly grow in spite of increasing exceptions is the only one that can truly scale.

Spam – At some point every company will resort to spam. Why? It works. Spam isn’t evil. It just sucks to be on the receiving end of it.

Customer acquisition trumps everything – Peter Drucker is quoted with saying “There is only one valid definition of business purpose: to create a customer.” What a brilliant way to express something so inherently complex in such so few words.

Fear – Fear is everywhere. Fear and risk are the two greatest combatants to success. Seth Godin calls this the “lizard brain”.

Blind ambition – Ever heard of Hamdi Ulukaya? He’s a Turkish Kurd who moved to the US with $3,000 and started Chobani. It’s now America’s largest yogurt company. This is blind ambition, and I wish I had more of it.

People matter, we don’t know how to rate people – Hiring sucks. Finding a co-founder sucks. There is only one solution to find out if someone is right for your business – just start working with them.

Embarrassment – I’m horribly embarrassed of some of the projects I’ve launched in my life. Every business that became big was at some point an embarrassingly simple project. The only thing that matters is launching. Everyone was a noob at some point.

Love what you do – I’ve struggled with this. Everyone does. I often dream that I could wake up one day and become the son of a rich oil tycoon, reaping the benefits of a quasi-feudalistic world, and then spend my money to create whatever I want. $10,00 triathlon bike, you say? YES PLEASE. You’d soon realize this wouldn’t be any fun. Building something from nothing is the most rewarding thing in the world.

Lastly – us entrepreneurs need a support network. That’s why I’m moving back to the US. I need the support network. It doesn’t exist like it does outside of the US.

Dealing with the Startup Emotional Roller Coaster

I went on my first roller coaster when I was probably about 10 years old. Growing up in the north suburbs of Chicago, it was every kid’s dream to go to Six Flags: Great America. About every year or so there was a new attraction that outdid the year previous. And as a child there was a sort of right of passage to each passing year as you became taller, meant you were allowed on the bigger and badder roller coasters.

When you get older, the appeal of the roller coaster wears off. You start to realize that “Batman: The Ride” no longer is exhilarating. What seemed, at the time, like an eternity of a ride, eventually just became 90 seconds of an adrenaline induced haze.

This is startup life.

I can comfortably say I’m desensitized to all of my failures, and successes for that matter. It doesn’t mean I’m not emotional about them – I’m human – but just means I deal much better with handling spikes in emotions.

realize with every passing day, that there are so many individuals out there who are still dreaming of hitting 42″ in height so they too can enjoy “Spiderman: The Ride”. And once they do, they’ll continue to ride that until they too will understand what it means to go through the lows and highs of being an entrepreneur. 

There is one thing generally very consistent and common among every startup I’ve ever read about, studied, listened to -

Every Single One Of Them Hit A Low

Facebook, Microsoft, Xerox, Nestle, Coca-Cola, Ford…you name it. The best part of going through so many phases of this up and down, is that is now easy for me to hit that low and know that there is always an up. The story is always the same. And I never rarely ever use the word always.

And you know what…this is why it’s so much damn fun.

Your Logo Doesn’t Matter

There’s often discussion about logos. I’m not sure why, but people seem to be obsessed with them. More often than not, designers especially, people will point to poorly designed logos as a reflection of a poor brand. I would argue that this is simply isn’t true. Your logo is simply a easy way for our brains to associate a product experience with a visual representation.

In the past few years a couple of big tech companies have redesigned their logos and another big one is on the verge to do the same. Last year for example, Twitter redesigned their logo with a statement that included this little nugget of creative joy:

This bird is crafted purely from three sets of overlapping circles — similar to how your networks, interests and ideas connect and intersect with peers and friends. Whether soaring high above the earth to take in a broad view, or flocking with other birds to achieve a common purpose, a bird in flight is the ultimate representation of freedom, hope and limitless possibility.

Microsoft also unveiled their new logo after nearly 25 years. From their blog they wrote:

The symbol is important in a world of digital motion (as demonstrated in the video above.) The symbol’s squares of color are intended to express the company’s diverse portfolio of products.

Yahoo is now in the process of unveiling their new logo on the 5th of September by showing 30 days of different logos.

So why do companies change their logo? Most people will say “their logo was outdated!” or “that logo was so ugly, no wonder they couldn’t sell smartphones!”. If you read the aformentioned quotes, you may think “Well of course the logo didn’t represent those things before, so they had to change it.” The reality is that none of this matters. If your brand is strong, there is absolutely no reason to change your logo. It will only confuse. In fact, I still wonder why Twitter changed their logo. Nothing prompted them to do so. It’s too bad, because they probably spent a lot of money redesigning it.

So, if you think a brand’s logo is the problem, think again. You can have the ugliest logo in the world (i.e. Google) and people will still use your product. The only reason to change your logo is when your logo (and therefore your brand) become associated with something negative. This happened with Microsoft, is happening to Yahoo, and will continue to happen in technology as brand perceptions change on the fortnight.

I hope Yahoo does decide to change it’s logo. It has a bad perception problem right now and they need a new logo to represent the new positioning they are trying to take. It’s extremely difficult to climb yourself out of a branding ditch, so the idea with creating new logo is to start on new ground.

If you ever seen The Wire, Stringer Bell tells this story even better than I do:

Shifting the Burden of Responsibility

The business world has always been critical of middle management. They don’t actually do anything. They aren’t good at what they do. They don’t make any decisions. Regardless of the level at which management positions exist, the primary responsibility is to make decisions. With decision making comes susceptibility to loss, and therefore risk. One of the greatest tricks of the trade for business people in management is what I like to call “shifting the burden of responsibility”.

Growing up, especially in America, most people were taught the lessons of responsibility at an early age. Responsibility is seen as a cornerstone of a set of good personal values. For example, I was allowed by my parents to buy a pet (in this case some fish) that I was responsible for taking care of. I was taught how to clean the tank, feed them and dealt with the repercussions of fish-death when I didn’t fulfill my responsibilities. As I grew older and learned why these values were important, I was given more and more responsibilities. Not everyone has the fortunate support of good parents to properly aid them in understanding the value of responsibility, however there is at least a general consensus that responsibility is a good value to have.

As I’ve gotten older, I’ve started to realize the people who are structurally more suited to having more responsibilities are the ones who are actually better at shifting them off to someone. To these people having responsibilities is a risk-laden burden and the ability to reduce and mitigate risk is often a value that supersedes responsibility.

Take for example the HR manager from a global telecomm who decides to outsource her IT project to a big five firm. She has a responsibility by her manager to deliver a project because she’s given a budget and therefore the responsibility. Like all IT projects, there is a serious risk of failure. So why make the decision to use the big five firm? If it’s her responsibility to deliver the project to her stakeholders, she can effectively shift this responsibility on to the outsourcing partner when the project fails and conversely decide to reap all of the personal benefits of responsibility when the project succeeds. It’s a win-win scenario that reduces her own risk, while still providing the capability for her to move up the corporate ladder.

I’ve seen this time and time again in business – especially big business. Generally speaking, the larger the business, the easier it is to shift responsibility.

This is what I believe to be the fundamental difference between large and small businesses. If your fish dies in a big business you can shift the responsibility to the tank operator, the water re-filler, or the feeder and life for you goes on. In a small business, if your fish dies, it’s your fault and can have serious implications on whether your business continues to float.

Personally I like to work with people who accept responsibility on their own account, even if means that they have more failures on their track record. In the long run, these people are more akin to the characteristics of successfully growing firms, and I believe is the defining characteristic of employees that can grow at scale as opposed to those that cannot. If we had more people accepting real responsibilities rather than shifting them elsewhere, we’d have more productive people and better businesses.

Breaking Down the Online Publishing and Advertising Industry

One thing I pride myself on is my ability to break down business models. I tend to use the business model canvas as it’s a very simple, effective and concise way of articulating your business model. Quite possibly the most misunderstood business model in today’s web businesses is the advertising and publishing industry. The reason it’s so misunderstood is that because so many people consume it every day, they’re often mislead to believe they are the customer. However, as we all know, if you’re not paying for it, you’re not the customer. As I’ve written before, I’ve always been challenged to decrease my time consuming and increase my time producing.

It’s first important to understand the cross section of the publishing and advertising industry. The cross-over is called distribution. The term distribution might be an awkward term for many people in the online word because it’s probably more commonly known as sales, but distribution is a little bit more than sales. It’s the whole process of how you’re going to get your product to your eventual users. Sales is just a function of that. The goal of both the advertiser and the publisher is the same – costumer acquisition. Customer acquisition for them is being able to go to another business and sell them user attention. In order to gain attention, they must offer an exchange. Usually there is an exchange between your time and theirs, through a medium called content. Once this exchange takes place – you read an article on their website – then they have now procured their product to be able to sell.

Most people assume that because you use Google’s search engine it means you are a customer. This is simply not true. You’re attention is a product that is being procured. Google’s procurement process is to give you something of value (discovery) in exchange for something you have time (attention). It then sells that attention to someone else.

To make this easier to understand, let’s compare it to a manufacturer’s business model, which is very easy for pretty much everyone to understand.  So, just as a semi-conductor gives something of value to it’s suppliers (money) in exchange for something they have (sand), so to is a publisher giving away something of value (their content and therefore time) in exchange for your time (and therefore attention). It then refines the sand and creates semi-conductors.

adprocess

 

Seth Godin has once said:

Attention is a bit like real estate, in that they’re not making any more of it. Unlike real estate, though, it keeps going up in value.

I love this quote. It speaks volume to how large the advertising industry is and can be. It also speaks to how much is at stake – your attention. I believe procuring our attention is the single most important aspect of today’s internet businesses. It’s also quite possibly the most difficult and potentially the most costly. Everything we do is based on a limited supply of it and therefore there will always be a constant battle to procure as much of it as possible.

Next time you are annoyed at an organization for the content they used to procure your attention, remember, it’s your attention. You get to choose what you do with it.