Category Archives: Entrepreneurship

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.

Tearing It All Down

In October of 1871, a fire swept over Chicago and killed hundreds and destroyed about 3.3 square miles. To give you an idea of the impact of how much of the city this affected, here is a map of the area affected.

Great_Chicago_Fire_map

It cost an estimated $3billion (in today’s dollars) to rebuild the city. We see disasters, either natural otherwise caused by humans, that can completely tear down systems, leaving people to rebuild them. Just look at cities such as Berlin and Warsaw that were rebuilt after large destructive forces tore them apart. One of the defining characteristics that I’ve noticed that separates a city like Chicago from a city like NYC (I’ve lived in both by the way) is that Chicago is cleaner, generally more efficiently mapped out, and more habitably than NYC. I believe this largely has to do with the fact that Chicago had the opportunity to be completely torn down and rebuilt because of the Great Fire.

I suspect, like all big cities, Chicago had a lot of problems previous to the great fire that lead to non-advancement of the city. Like most cases this is usually due to bureaucracy, politics, and corruption. But, it’s amazing the energy people will put into something when they’ve suffered a great loss.

Why am I talking about the Great Chicago Fire on a tech blog? It represents everything that is happening in today’s tech world. We are seeing a massive trend in creative destruction as being the norm to creating new business models, tearing down old ones, and generally as an advancement of our culture.

In 1998, an informal group called Mozilla set out to rebuild Netscape Navigator’s source code from scratch. Some people would argue that rewriting source code from scratch is the worst decision you can make, but judging by the success of Mozilla and the death Netscape, I think we can all agree that this has bee a good thing for us consumers.

I look back at my former employers and I see instances where destroying the company might actually be a good thing for the advancement of it’s mission, it’s employees, and ultimately it’s customers. But, as cognitively biased as we are, we are incapable of destroying our own selves, or doing nothing at all. Which often is the case in decision making, whereby doing nothing may actually more productive than trying to do too much. Our brains are wired to think that we always must do something, rather than nothing, and that creating a loss can never create a gain.

So looking at today’s system, both human and technical, we see the everlasting cycle with the following behaviors:

  1. New system gets built, people rejoice!
  2. Someone breaks system, so system adapts and get’s updated
  3. System get’s too clunky because it tries to do too much, losing the interest of its members
  4. People leave system and create new one

There are some exceptions to this, such as 37Signals. They deliberately let customers grow out of their system.

We’d rather our customers grow out of our products eventually than never be able to grow into them in the first place.

As I’ve decided recently with my life, I’ve tore all of what I had established down and am rebuilding. But it doesn’t mean I forgot the important lessons I’ve learned in building the professional I sought out to do 7 years ago.

Weekly Podcast – Week 03 – Advice on Startup Advice

Week 3 for my weekly podcast just uploaded and I’m talking this week about giving and taking startup advice. Some highlights:

  • Everyone is giving startup advice, sometimes in exchanges for money, equity, advice, etc
  • Often non-commercial exchanges of value happen with advice
  • Finding people’s incentives (control, equity, cash) will help you qualify whether the advice is quality or not

[soundcloud url="http://api.soundcloud.com/tracks/84407760" params="" width=" 100%" height="166" iframe="true" /]

Which is Scarier – That the Rest of the World isn’t like Silicon Valley or Vice Versa?

I’ve been a HN (HackerNews) junkie for almost 4 years now. I’ve been living and breathing topics like MVP, lean start-up, Node.js, git, etc and am a very active person in the community. I truly believe in the customer development process and keeping things agile. Sadly though, I’ve come to the realization that the rest of the world simply does not think this way. I don’t live in Silicon Valley, but I “study” it constantly; trying to find the pieces of the culture that make sense and those that don’t. My impression of the SV startup view on the world is:

  • Anyone who builds a startup must follow lean start-up rules
  • It has to disrupt some business that already exists
  • It has to have to some sort of social 
  • It has to be featured in TC at some point to be worth something
  • If there is no mobile component it’s probably not worth pursuing
  • Pivoting is inevitable, so just plan for that ahead of time
  • Design/UX/UI is everything
  • Business networking is all done socially
  • You have to blog (tweet, etc) in order to be seen
  • Your business model can be based on zero revenues but be based on an exit

The reality is that there are so many companies out there being built outside of SV that do not incorporate these principles. In fact, I’d argue that companies that are built with this mindset represent an extremely limited and small subset of the overal startup spectrum. (note – there’s obviously no way to quantify that) The reality is – there is no one single way to build a successful business. There is no handbook, cookbook, or formula. Are there ways to reduce your risk? Are there some techniques that work well? Sure, but nothing in business is purely anecdotal.

SV start-up culture has an engineering mindset based on the belief that new business can be engineered, which I simply don’t believe to be true. More importantly I believe SV startup culture has actually created a larger culture (that includes myself) of people who hate to plan. For good reason, plans are usually thrown out in the first 5 minutes after reading them. But it doesn’t mean that plans aren’t important. My theory is that since the dot-com era, we are following a tolerance of failure curve inversely proportional to our adherence to plans. So, we’re do for a planning era when this 2.0 bubble bursts.

tolerancecurve

The problem I see is that the very few companies who do follow this pattern, only picked the pattern because they saw their idols successful at doing it. But just because these very few companies do become successful it doesn’t mean that everyone can build companies based on the same principles. For example: Twitter CEO, Evan Williams, is quoted for having said

“User experience is everything. It always has been, but it’s still undervalued and under-invested in.”

Point is – just because it worked for one company (and probably a handful of other ones) doesn’t mean it will work for every startup. So, while this advice is certainly good, it’s up to you to determine if it’s applicable to your business (web based or not).

Let’s take for example a company I used to work for: SAP. Most young people have never heard of SAP. Yet it does roughly $20bil in revenue and is probably used by at least one company that you interact with on a daily basis (including Apple!). It also has offices in Palo Alto, so it’s technically in SV. But you’re talking about an ecosystem of people who believe that a whole IT project has to be blueprinted several months (if not years) ahead of the actual build. SV startup culture says “screw it, let’s just build it”.

At the end of the day the important thing to remember is that companies like IBM, SAP, Twitter, SalesForce, AirBnB, Google, etc – all internet related businesses – have built successful business based on different priorities and principles. Just because IBM built and continue to grow their company in one way and Apple did it another way, the reality is that they all have proved one thing – they can create businesses and grow them.

Here’s my prediction for the future – we’ll continue to pretend like we can engineer successful businesses and continue failing at doing that. But it’s worth a shot right?

You Have One Job – Eliminate my Fear

If there is one thing I’ve learned about business, it’s this. Getting someone to do something for you is all about eliminating their fears. Naturally we are risk averse animals. Which means we are constantly analyzing our situation to make sure we do not fail.

The reality is, a majority of the world is based on the crystal ball business – meaning you pay me in order to expect something to happen in the future. In some cases this is 1 hour, in others this is 10 years. The longer the time frame, the more fear is associated with it. 

fearcurve

Currently with my new startup – Compete Hub – I have the following stakeholders and associated fears:

My team – The three of us (myself, Philip, and Alexei) are all not being paid for our work. There is a lot of uncertainty around paying bills, eating, etc. So I’m constantly reminding them (and myself!) that the idea is good and the money will come eventually. More importantly I asked constantly what things are important to everyone in order to ensure that they are comfortable. It’s also why we launched www.ignitelab.net in the interim and I’m spending countless hours trying win our team some business. (ps – guys if you’re reading this and I’m not doing a good job, let me know!)

My potential investors – I’m currently pitching the business to angel investors to get seed money to keep the team happy for the first year so they can focus on what’s best for the business. Investors are very fearful people, and they have a right to be. For angel investors, their fears can be a multitude of various things. For example, what will my wife think if I put $10k into a friend’s startup?  How will I pay for my mortgage? What if the startup fails in the first year?

My customers and users – The people who will use Compete Hub are also very fearful people. The biggest question when dealing with startups is knowing: Will you exist n years from now? Many startups will reduce these fears by putting up a page (like this) that explains that they do have funding to keep them alive for years. Which means if I’m going to invest my time to use your service as a client, I want to know you won’t disappear tomorrow. Also, it’s the reason the ideal landing page is set to reduce fears by showing what problem your solving and more importantly how it solved someone else’s problem (the testimonial!).

Fear is above and beyond the most motivating factor in business. So if you’re trying to move and motivate someone else – be it, an investor, a business partner, or a potential client – focus and understand what they value first and then eliminate the fears associated, second.