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.

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

How Great Leaders Bring Out the Best in Others

influence

Bring Out the Best

As leaders, we are often wondering what the best way is to bring out the best in our organizations. We want to help people exceed all expectations and accomplish more than they thought possible.

Yet, the current feedback mechanisms and performance appraisal processes in our organizations often don’t work toward that goal. In fact, Tim Irwin, author of Extraordinary Influence: How Great Leaders Bring Out the Best in Others, argues that they do just the opposite. Tim Irwin, PhD is an author, speaker, and leading authority on leadership.

I recently asked Tim to share his perspective on negativity and criticism at work.

 

“Leadership is influence-nothing more, nothing less.” -John Maxwell

 

What are a few things we often get wrong with criticism in the workplace?

Our brains are hardwired to detect anything that threatens our physical or emotional safety. When a person senses criticism, it engages a “negativity bias” in our brains and generally shuts down the parts of our brains responsible for creativity and problem solving. This is just one reason the often-used term “constructive criticism” is such an oxymoron.

 

Research: Science has revealed that affirmation sets in motion huge positive changes in the brain.

 

Avoid Words of Death

What are Words of Death?

The workplace, and society in general, are filled with critical words and phrases. For example, in some organizations, the phrase “One Throat to Choke” is used to describe the need for accountability on a project or other initiative. While maybe colorful and entertaining at some level, the use of these words and many others diminish us, at least at an unconscious level. Leaders routinely use statements such as, “I’m going to hold your feet to the fire,” (a torture method in the middle ages) to motivate employees and presumably to get them to work harder. Our brains thrive on affirmation not threats.

 

Research: Affirmation activates areas of the brain associated with calmness and openness to new ideas.

 

If we are on the receiving end of them, what can we do to limit their impact on us?

If it’s our present boss, we may learn some valuable lessons about how not to lead and motivate others. If a “Words of Death” culture prevails in our organization, we may need to consider, “Do I want to spend 40 to 60 hours a week or more in such a toxic environment?”

 

Share an example of “alliance feedback” that works to bring out someone’s highest potential.influence

Recently I met with a senior officer of a company who had some significant deficits in “Emotional Intelligence.” I could have said, “You have the empathy of a fence post, and no one trusts you.” Those were actually true statements. Would he have heard my feedback and acted on it in a conscientious manner? Doubtful. Instead, I said, “I know you aspire to a larger role in your company, and I think that is a worthwhile and achievable goal. In order to realize that aspiration, I recommend you work on collaborating with your peers more effectively by appreciating the challenges they face in reaching important goals.” What ensued was a very productive conversation about specific actions he could take to collaborate more effectively. He was eager to learn and not defensive in the slightest. The research is compelling that connecting feedback to personal hopes and aspirations bypasses the part of our brain that stays in hyper defense mode.

 

3 Faces of a Leader

How Mirror Moments Can Improve Your Leadership Effectiveness

mirror moment

Lead Your Career

Mike Rognlien is the founder of Multiple Hats Management, a leadership consultancy. Prior to founding his company, Mike spent fifteen years learning while working at Facebook, as a consultant to Microsoft, and at numerous other companies. In fact, he was one of the founding members of the L&D team at Facebook. After reading his new book, This Is Now Your Company, I reached out to him to continue the conversation.

 

“Culture is the sum total of all the things that every person in the organization says or does in the process of getting things done.” -Mike Rognlien

 

Your book about the Facebook culture was released right after Facebook was in the news for its questionable privacy practices. The question many may ask now: Is Facebook really a culture to emulate? Why?

It’s a fair question, but I’d start by saying it’s about much more than any one company’s culture – it’s about the individual’s role in their organization’s culture and how they can really own it. That said, I think that every company makes mistakes, and every company is going to face challenges based on real or perceived issues. Being on the outside of the company now I can say that I was really proud of how Mark and other senior leaders from Facebook handled themselves and continue to handle themselves. They apologized, accepted responsibility for mistakes, directly confronted misunderstandings or incorrect assumptions and have already made some pretty sweeping changes to how the platform operates. I’ve done leadership development work for a long time and think that this is what we want leaders and their companies to do when they mess up.

 

“You use a glass mirror to see your face; you use works of art to see your soul.” -George Bernard Shaw

 

Improve Performance with Mirror Moments

What’s a mirror moment and how can they be used to improve our performance?

One of the things that is consistent in the learning field is the push to reflect – and rightfully so. It’s a powerful development tool that we all have available to us at all times. In a 24/7 news cycle / instant meme-ification culture, I think it’s become even MORE important to do this because we are constantly getting so much outward signal (likes, comments, engagements, etc.) on how others see us that we can forget that it’s really important to know how we see ourselves. In so many programs I’ve developed or led over the years – on hard conversations, on bias, on leadership – much of my time and energy has been getting people to stop looking outside of themselves for approval and validation (or blame when things go wrong) and to instead constantly look inward to understand how what they’re saying and doing is impacting the results they’re generating. We need feedback from other people, absolutely, but we can make that process so much easier if we’re willing to have that first hard or reflective moment with ourselves.

 

How prevalent is Organizational Stockholm Syndrome? What can be done to reverse it?

How the Best Companies Stay Relevant

shift

How to Stay Relevant

The number one reason for organizational success or failure is the ability to stay relevant. Staying ahead of the continual marketplace changes may seem an impossible task. How do you continually evolve at a pace that keeps you ahead of the curve?

In SHIFT AHEAD: How the Best Companies Stay Relevant in a Fast-Changing World, authors Allen Adamson and Joel Steckel explore why some organizations can continually evolve to meet the times and the marketplace, and why others struggle to keep up. Allen is co-founder and managing partner of Metaforce and brings over thirty years of experience in building iconic brands. Joel is an expert on marketing research and branding. He is currently Vice Dean for Doctoral Education at NYU’s Stern School of Business.

I spoke with Allen about the book and their research.

 

“Focusing too much on the competition can lead to inappropriate shifts. It’s the customer that really counts.” -Adamson and Steckel

 

The Case of Blackberry

You share many examples and case studies about companies that just plain missed some key changes. Some ended up obsolete and others struggled for years. Would you share an example and what went wrong?

One of my favorite examples of “what went wrong” is the story of the rise and fall of Blackberry. For those who may not remember, Blackberry was once the indispensable mobile communication device of choice for heads of corporations, heads of state, and the Hollywood elite. It was an easy, secure and effective device that allowed workers to send and receive emails and phone calls while away from the office. The functionality of its tactile keyboard made typing easy, and it built its initial reputation on the concept of security. This was all before Apple and Android smartphones had taken hold.

The quick answer about why it fell so precipitously is that Blackberry’s inability to shift and move forward was caused by its own sense of invincibility, inward group-think, and general arrogance. With the rise of in popularity of iPhones and Androids, those at the helm saw only what they wanted to see. They considered these new devices not as significant competition, but as toys, a passing trend. They arrogantly laughed off the threat that was materializing in front of them instead of figuring out how to defend against it.  As we all know, not only were these smartphones built for ease of communication on multiple platforms, they were beautiful to look at. They became just too much to resist for even the most security-centric audience of users.

Too-little-too-late is what Blackberry eventually did in response, which was exactly what it shouldn’t have done. It began to chase the market with subpar versions of the competitors’ brilliant models, wrongly assuming that its core customers would follow with them. That did not happen. The producers of Blackberry should have doubled down on what made the product so vital to its initial loyal audience. It should have kept its focus on its point of relevant differentiation in the marketplace – security – and capitalized on it. No brand, product, or organization is invincible, especially when it dismisses the needs of its most loyal audience.

 

Shift Ahead