100 Insider Rules for Beating the Startup Odds

startup secrets

Lessons for Entrepreneurs

Over the course of their careers, veteran venture capitalist Randy Komisar and finance executive Jantoon Reigersman continue to see startups crash and burn because they forget the timeless lessons of entrepreneurship. But, as Komisar and Reigersman show in their new book, Straight Talk for Startups: 100 Insider Rules for Beating the Odds, you can beat the odds if you quickly learn what insiders know about what it takes to build a healthy foundation for a thriving venture.

 

“Apprentices work furiously to learn the rules; journeymen proudly perfect the rules; but masters forget the rules.” -Randy Komisar

 

Randy Komisar recently shared his perspective:

 

How did this book come about? Have you been compiling these rules for years?

We wrote this book because we were distressed by the growing frequency of missteps by entrepreneurs, many of whom are notoriously splashed across business pages and websites. Jantoon Reigersman brought fresh eyes to the situation as the CFO of a Silicon Valley rocket ship gone awry. We had been having a dialogue for years about what was really going on in the Kabuki Theaters of startup boardrooms and venture capital firms. And we felt that entrepreneurs and investors, professors and students, and frankly anyone curious about the startup game could all benefit from our conversations regarding the time-proven best practices for building successful companies. I have been part of the scene since the mid-1980s, and Tom Perkins, founder of Kleiner Perkins, was one of the original Silicon Valley venture cowboys. I had been compiling and sharing these insights with entrepreneurs since I co-founded my first company. These are the insider rules that the random hero stories heralded by the press conveniently leave out. In Straight Talk for Startups we address the nuts and bolts of choosing investors, raising money, building boards, achieving liquidity, and mastering the fundamentals by distilling decades of frequently forgotten wisdom about how to beat the odds.

 

“Venture Capitalists have one of the greatest jobs in the world. They get to sit across the table from passionate strangers who hallucinate the future for them.” -Randy Komisar

 

Rule 1: Starting a venture has never been easier; succeeding has never been harder. You’ve had an extraordinary vantage point in your career, and I’d like your perspective on the why behind Rule 1. 

It’s all about capital. Privileged places like Silicon Valley are awash is excess capital. The recovery from the Great Recession has left interest rates at record lows. Investors have been looking for ways to juice their returns, and venture capital’s black swans are a siren song. Forget the low odds of winning; the size of the pot is mesmerizing. So investors have been ignoring risk and plowing money into long-shot bets.

This may seem great for entrepreneurs. And on its face it is. But there is a downside. Too much capital means that too many companies are being funded in any single market. With easy capital comes reckless spending on scaling—often times resulting in highly uneconomic growth, that is the acquisition of customers who pay less than the cost of providing the product or service and who have little loyalty to the business. This “all or nothing” mentality leads to wasted dollars, talent and effort. And when one competitor makes the leap to noneconomic growth, the rest are left with little choice but to follow.

The cornucopia of money and startups also affects the job market. Salaries are inflated. People are quick to move from perceived losers to winners. In the Bay Area, for instance, the price of housing, the suffering infrastructure and the breakdown of communities makes building businesses much harder, even if starting them is easier than ever.

 

Startup Rule: Starting a venture has never been easier; succeeding has never been harder.

How to Fuel Purpose and Profit by Doing Good

do good

More than Profit

Customers are increasingly expecting more from brands. Many consumers expect far more from companies than for them to increase profits. They expect organizations to “do good” in society.

A former executive director of strategy and planning and head of consulting at Interbrand, Anne Bahr Thompson, founded Onesixtyfourth, a strategic and creative consultancy, to help leaders integrate social responsibility into their brands, business strategy, and corporate culture. Her passion for challenging organizations to a more collaborative way of thinking grabbed my attention. And her new book, Do Good: Embracing Brand Citizenship to Fuel Both Purpose and Profit, is not only a call to action but a blueprint to help leaders move from a Me-to-We mentality of service.

I recently spoke with Anne about her work. 

 

“When a brand clearly communicates what it delivers, it provides customers with a benchmark from which to measure all their interactions with that brand.” -Anne Bahr Thompson

 

What explains this incredible shift from a profits-only focus to one where we expect brands to “Do Good”?

There are a number of things underlying this shift. Overall, profound changes in technology, politics, the global economy, and the rise of social media have reshaped the landscape for business. The wired, digital world in which brands now operate has impacted the traditional pact between companies and their customers, employees, and stakeholders. As people’s expectations for their relationships with brands have shifted, businesses are finding that their success is tied to their ability to demonstrate that they are committed to doing good, helping to solve people’s bigger social and environmental concerns.

More specifically, five factors have been at play:

  1. On the most basic level, greater consciousness of people across the globe and social media demand that we pay attention to inequities we’ve previously been able to ignore. And, most people now acknowledge the planet does not have unlimited resources.
  2. Further, technology has reshaped our cultural narrative. The ability to cut and paste things together has trained us that we no longer need to choose between opposites. What follows is that the notions of making a profit while simultaneously doing good no longer seem at odds with one another.
  3. As many people have discussed, the power of social media and the impact of stories and images going viral have forced businesses to lis­ten and respond in ways that are unprecedented for many of them.
  4. People are frustrated with partisan politics. Beginning in 2011, participants in my research were saying that business was better suited than government to step in and fix big problems.
  5. The economic downturn in 2008 accelerated a nascent trend that began with the digital revolution at the turn of the millennium, which emphasized a shift from shareholder to stakeholder value. Since then, big name investors such as Larry Fink of BlackRock and Jamie Dimon of JPMC have visibly promoted a shift in orientation from short-term returns to long-termism. Add in the rise of various movements beginning with Occupy Wall Street and extending to #BlackLivesMatter, #MeToo and #GunControlNow, and it’s hard to ignore that the call for more equity and fairness in business decision making has grown stronger.

 

What is “Brand Citizenship”?

Brand Citizenship is an ethos that aligns purpose and profit. It’s a five-step model that emerged from the grassroots up, over three years of qualitative and quantitative research, deconstructing brand leadership from good corporate citizenship and favorite brands, which is a proxy for brand loyalty. Beginning with a meaningful purpose, Brand Citizenship simultaneously delivers benefits to individual customers and employees and betters the world. The five steps of the model – trust, enrichment, responsibility, community, and contribution – span across something I’ve labelled the ME-to-WE continuum. My research demonstrated that people look to the brands they buy and businesses they support to help solve their personal ME problems as well as their wider WE concerns about the environment, the economy and social issues.

 

5 Steps of Brand Citizenship

Who Are You Serving?

serve to lead

Who Are You Serving?

That’s the question on the back cover of James Strock’s new book Serve to Lead: 21st Century Leaders Manual. It’s the first of four questions posed by the author. Serve to Lead is filled with principles that inspire us to the highest level of leadership. It’s an essential leadership guide for anyone aspiring to take their game to a higher-level. As someone who writes and speaks about servant leadership, I found it a compelling read.

James Strock is an author and leadership speaker, an entrepreneur, and a reformer. I recently asked him to share his perspective on the changing nature of leadership.

 

“Life’s most persistent and urgent question is, What are you doing for others?” -Martin Luther King, Jr.

 

21st Century Leadership

What has changed in the field of leadership for the 21st Century? 

Our lives and work are undergoing extensive, high-velocity change. It’s inevitable that leadership—which is about relationships and relates to all parts of our world—would be transformed.

Among the most significant changes is the breakdown of longstanding barriers that defined leadership. For example, individuals holding high positions of power traditionally tended to be distant from the those they served. Today, anyone can find a way to communicate with almost anyone else through new technologies. Such individuals no longer have the zones of privacy that separated their personal and professional lives. Elective politicians have been experiencing this new world for some time. Corporate and NGO officials are now liable to be held to account in the same way.

The new trends are part of a transformational change wrought by digital technology. In the 20th Century interactions were generally transactional. Now, by contrast, we’re in a web of relationships. Those relationships can be established or defined by individuals rather than by large public and private institutions.

The ongoing empowerment of individuals and previously isolated or marginalized groups through new technology has accelerated the longstanding trend toward leadership exerted through influence rather than domination or dictation. That doesn’t mean that the world has magically become a utopian paradise or democracy. It does mean that leadership roles are subject to greater accountability, and the tools of workaday management and service are in transition.

 

“Organizations exist to serve. Period. Leaders live to serve. Period.” -Tom Peters

 

What are the unique challenges of our day that impact leadership? 

A unique, unprecedented challenge of 21st-Century leadership is involuntary transparency. Traditional notions of separate work and personal lives are being upended. Presidential candidates are pursued 24/7 by stalkers with video cameras. They lay in wait for a moment of anger, a moment of exhaustion, or a moment of pique. Then they pounce! Skilled propagandists will utilize such human moments to convey a negative narrative that appears more credible through a captured moment that may have no actual relevance.

Those who would lead are being curtailed in their capacity to craft a narrative. One can see advantages when this exposes relevant hypocrisy. Yet there are also costs. It can surely inflame the mistrust and cynicism that is afflicting the populace. It can also prompt people to turn away from positional leadership roles.

How involuntary transparency will be negotiated with expectations of privacy is one of the great questions of evolving 21st-Century leadership.

 

“First, always ask for the order, and second, when the customer says yes, stop talking.” -Michael Bloomberg

 

Everyone Can Lead