Our stories are very different, and yet there are some striking common themes: Both of us started in restaurants as dishwashers and became CEOs. Both of us mapped out our goals early in life. Both of us believe in people as the way to transform company culture.
Perhaps that is why I was immediately drawn into the pages of Cameron Mitchell’s compelling book.
More likely the answer to my intrigue is the fact that I find myself in one of his restaurants every week. You can always count on superb service, delicious food, and an inviting atmosphere.
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
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.
If you’re an artist or creative with a burning desire to launch something, Anna has been there. She built her business from scratch, one customer at a time, and has valuable lessons for anyone who wants to build something enduring.
“Living unconventionally comes at a cost.” – Anna Sabino
In the opening of your book, you talk about all that’s now available but then you say that “there are still things that can crush our creativity if we let them.” As you built your businesses, how did you overcome those things?
It’s up to us to decide what to pay attention to. Unfortunately, very often we tend to be attracted to dissatisfaction, so we notice people and things that make us feel inadequate. There are always going to be those who started earlier, have more resources and have achieved more, but we have our own creative path to follow – limiting distractions and staying on it is something that we should all strive for.
So, yes, we can crush our own creativity and flow if we choose to focus on dissatisfaction. Being aware that we’re doing it is a step closer to taking advantage of our full potential and starting to step into our greatness.
“Get comfortable with the process, it’s not important how long the process will take if the result is sustainable.” – Anna Sabino
I appreciate your take on discomfort and its importance to achievement and success. Would you share your philosophy with those who haven’t read your book?
Our entrepreneurial path is far from being straight. It has curves and roadblocks. Sometimes we have to stay in the discomfort for a very long time not knowing when or if the breakthrough will ever come. Most are scared of this insecurity and quit, sometimes right before succeeding.
When we put our heart into any project or career design, at first we are at zero with zero followers, readers and zero customers. Then our hard work makes us advance. However, the progress happens inch by inch. Those who want the miles and are disappointed by “the work input versus the result unfairness” get out of the game. They join a different game where all the pieces have been laid out for them, and they can securely step in and ride the wave of that success. It’s not their own, but to them success may be the security that they now have.
Definitions of success are very personal, but every success comes with its own territory. You’ll never like all the colors that it presents, but it’s crucial to realize what truly matters most to us and know that we’ll have to make some sacrifice to achieve our success and maintain it.
“We’ve always put talent on a pedestal but it’s actually its application that matters.” – Anna Sabino
You never know where he’ll turn up around the globe as he speaks about empowering entrepreneurs. I interviewed him in Madrid, Spain where he shared with me 6 Entrepreneurial Lessons that all of us can use.
How do you find your One Word? What if you think of a few? How do you narrow it down?
That’s a loaded first question J The process starts by understanding that you—and everyone else—has a deep, core value that represents who you are, and the more you live your life in alignment with it, the more happiness, success, and impact you’ll have. Understand that Your One Word has always been a part of you and always will. It’s not a New Year’s resolution. It’s a lifelong resolution. People can often be prisoners of their current situation, which prevents real self-analysis. When thinking of your One Word, put it in the perspective of, “This is a forever commitment and who you always have been – knowingly or unknowingly.” To continue the process of finding your One Word, think about all the things, people, habits, and activities that have made you come alive in the past. Who was your favorite teacher? What is your favorite song? What did you love about your parents? Fill a page with happiness. Then next to each item, write down what specifically you loved about it. Mrs. Jenkins, your 9th grade science teacher, is your favorite teacher of all time for a reason. And it wasn’t just because of the material she taught in class. When you make the list of all the things that have made you happy and the reasons why, you’ll start to find a consistent theme among them. That consistent theme is your One Word. And once you find it, I’d challenge you to start designing your life around it so you can, with purpose, bring more of those happy moments in as opposed to randomly waiting for them to happen.
“If you think you’re too small to have an impact, try going to bed with a mosquito.” -Anita Roddick
Recent studies show that personality changes dramatically from when we are young to when we are old. Does your One Word change over the course of your lifetime?
Your personality can change with time. You might get more conscientious as you get older or more agreeable once you’re raising a family. Some of what you value might also change. Early in life, you might be more concerned with promotions and career advancement. Later on, it could shift to health and relationships. But your core value, your One Word, doesn’t change. Your One Word is the lens through which you see the world. The way you approach and execute may change over time, but the foundation remains the same. For instance, one of the examples in my book is Mark Drager, a 30-something-year-old father, husband, and entrepreneur. His One Word is #Extraordinary. He’s currently focused on being an #Extraordinary father, husband, and entrepreneur. What he values most is being #Extraordinary. He doesn’t want to be ordinary. He wants to be more than that, in whatever he does. If he grows tired of business and puts a higher priority on travel or restoring old cars, or any number of things, his core value of #Extraordinary comes with him. It’s forever. It’s who he is at the deepest level. That’s why it’s so important to figure out and potentially the most important exercise you can do in your life. If you’re going through the process of finding your One Word and you fast forward your life to age 90 and you see yourself not believing in the same thing anymore, then you haven’t found your One Word.
“Stay committed to your decisions, but stay flexible in your approach.” -Tony Robbins
Many of us love to read stories of the beginnings of Apple or Facebook. We imagine what those early days were like and what it would be like to be a part of a small startup that skyrockets to success.
But, of course, statistically most startups fail. Studies show 90% fail in the first two years.
Why do so many startups fail?
What can the successful ones teach us?
Is there a blueprint for startup success?
Tom Hogan and Carol Broadbent founded Crowded Ocean, Silicon Valley’s top marketing firm for startups. They have years of experience working with some of the Valley’s most successful firms. Their new book, The Ultimate Start-Up Guide: Marketing Lessons, War Stories, and Hard-Won Advice from Leading Venture Capitalists and Angel Investors, is packed with the wisdom of their experience working with numerous startups. I recently spoke with them about what makes a successful venture.
“Start-ups fail because of lack of execution.” -Charles Beeler
Everyone reads about how many startups fail. What are a few of the reasons?
Dog design. According to a recent study of 101 failed startups, 42% cited ‘no market need’ as the reason they failed. In other words, they created their product ‘because they could,’ not because of any perceived market need.
Running out of money. Obvious but it happens more often than you’d think. Because of parsimony (giving away as little of the company as possible) or optimism (I’ve never missed a deadline in my life), first-time CEOs work from budgets and schedules that assume that everything will go right. It usually doesn’t—and so the founders fold shop.
‘Camel Design.’ If a camel is a horse designed by a committee, a camel product is one where the founders listened to too many people, didn’t trust their initial instincts, and built a product that is a little of everything and compelling to no one.
A single, dictatorial founder. It’s one thing to have a strong vision. It’s another to refuse to tolerate questions or input about that vision, especially when that input comes not just from employees but from the market. One way to track how much of a martinet you’re being is by tracking employee retention: this may be your first rodeo as CEO, but most startup employees are on their third or fourth.
Underestimating the competition. Sometimes it’s hubris; other times it’s just not enough time. Either way, most startups don’t respect—or keep an eye on—the competition the way they should. Give the competition their due: The analysts who cover your market—and who have probably had nice things to say about the competition—don’t want to look like they’re stupid. Same for the prospects who either own or are considering the competition. So keep your derisive comments to yourself.
“Data driven marketing is…one of the best investments an early-stage start-up can make.” -Moe Kermani
How can past failures translate to a positive experience?
It all starts with humility and honesty. Virtually every team has one or more scars from failed past ventures. The key is to admit it to other key team members and then use the lessons learned to avoid making the same mistake a second time. The other element is pattern recognition: If you can use your past failures to recognize a mistake in its early stages (say, a bad hire), you can take corrective action before the mistake takes root and does damage.
“Less is more. If you think you have focus, focus some more.” -Jishnu Bhattacharjee
I love this. Many people think diversity is for more mature businesses, yet you argue otherwise. Why is diversity important for startups?
Diversity of multiple types is healthy and invigorating for startups, not only to build a strong culture but to build better businesses. All the survey data shows that diverse teams make better decisions and improve profitability. So, just like startups benefit by being able to start fresh at the whiteboard to design a better product or service, we believe startups should try to build in diversity from their founding. We encourage startup founders to focus not only on gender and ethnic diversity, but also to consider hiring staff who bring both big-company and small-company backgrounds and to consider embracing the oddballs and misfits who represent “disruptive” thinkers. When tech titans like Apple, Google, and Salesforce have heads of HR and cross-functional teams chartered to lead diversity initiatives, you know diversity is a big deal, not just because it’s the right thing to do but because it translates into better businesses.
“You never really know what the market really is until you go to market.” -Pete Sonsini