Category Archives: entrepreneurship

Bubbles And Golden Ages… Continued

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The following post is an adaptation from the original one I posted on this topic in May of 2011.

I once watched an interview where Fred Wilson offhandedly noted reading a book which transformed the way he looked at markets and the web in general.  I instantly went to Amazon and ordered it and spent the next week reading it front to back.  Whew… it changed my life as well.  I up and quit my job the next month.  Thanks Fred.

Not a day goes by in 2015 we don’t hear the word bubble in some capacity or another. We are on pace for one of the biggest years in Venture Capital deployment since the dot com bubble of 2000. Massive private funding rounds in excess of $1 billion (Uber, et al) coupled with the sickening obsession of Unicorns have created a market with flu like symptoms. Although I cannot predict the future I tend to agree with others who publicly state it feels like we are in for a correction here very soon. If you are a founder of an early stage company, it would do justice to understand the cycle we are in, where exactly we are in it, and what you should do in your specific situation.

Technological Revolutions and Financial Capital by Carlota Perez is one of the greatest overviews of the incredible economic phenomenon known as the bubble.   What we are currently going though – recessions and expansions, bubbles and bursts, highs and lows, whatever you want to call them – they are inevitable.  In fact, the history of the entire world economy is one big cycle which repeats itself over a period of about 60 years.  I cannot do this entire book justice, just take my word for it, go buy it and read it yourself.  You will publicly thank me later just as I just thanked Fred now.  But I will introduce the general phases a new technology (paradigm) encounters so the “layman” technologist, marketer, social media guru or business person can start to see a clearer economic picture.

I hope I am not being too being blunt, but without grasping this concept you are swimming with your cap over your eyes.  You need to understand what is actually going on in this crazy economic world we live in.

Irruption

As a new technology is developed and deployed into our society, it will enter a cycle of adoption.  Interestingly, Perez notes new technologies are created during the maturity phase of the last great technology expansion.  So although we are starting with the irruption phase, let us take for granted the specific technology has already been created and diffused through very early adopter communities.  During the irruption phase, we see a slowing or declining of the old industries and an early adoption of a new technology.  Carlota notes:

The very intense activity of the new paradigm carriers contrast more and more with the decline of the old industries.  A techno-economic split takes place from then on, threatening the survival of the obsolete and creating conditions that will force modernization.

Old print media anyone?  Taxing industry vs Uber and other on-demand ride services? This irruption phase is started with a big bang (invention and initial diffusion) and will propagate within a small community of early adopters.  Note the image above, depicting very low diffusion, even to a point the general masses dismissing the technology altogether.  Amazingly it is contained within this tight group of people and industries for some period of time.  That is until a tipping point is hit. Today, most people who have taken an Uber or Lyft ride – if given a choice – will only take uber from here on out.

Frenzy

Frenzy is a period of massive growth for a new technology.  It is a time of new market creation as well as for rejuvenating old industries.  Once a critical mass of consumers have been hit, the diffusion of the paradigm takes center stage.  Individualism rules the land, as does speculation, wealth creation and ultimately resulting in over-investment flooding the market.   

Frenzy is the later phase of the installation period.  It is a time of new millionaires at one end and growing exclusion at the other, as in the 1880’s to 1890’s, the 1920’s and the 1990’s.   In this phase, financial capital takes over; its immediate interests overule the operation of the whole system.

Notice the part about the growing polarization between the rich and the poor.  Sound familiar? Capital investments soar during this time, creating a false sense of wealth creation.  This craze attracts more and more individuals wanting to get a piece of the action; so late frenzy is financial bubble time.

Turning point

At some point, the bubble has to burst.   Things that go up must come back down.  Interestingly, the turning point is neither an event or a phase, rather it is a process of contextual change. 

The turning point has to do with the balance between individual and social interests within capitalism.  It is the swing of the pendulum from the extreme individualism of Frenzy to giving greater attention to collective well being, usually through the regulatory intervention of the state and the active participation of other forms of civil society.

The turning point is a space for social rethinking and reconsidering.  It is, in fact, the time when the mode of growth that will shape the next few decades is defined.  I would argue we have been in this phase for a while, maybe starting 5-8 years ago.  After picking up the pieces of the crash of the early 2000’s we are now starting to see realignment in almost every industry known to man.  Name an industry that is not currently being touched by the internet and mobile?  Exactly.



Synergy

This is a time for production.  Since the foundations and infrastructures were laid out during the previous phases, conditions are there for dynamic expansion and economies of scale.   The diffusion of the new paradigm now reaches far and wide, is accepted as standard, and now governs supreme.  It is a time for promise, work and hope.  For many, the future looks bright.   

Synergy is the early half of the deployment period.  This phase can be the true ‘golden age’.  It is likely to be the closest the system ever comes to convergence within the economy of the core countries of the system.

Mary Meeker anyone?  She has identified this expansion phase quite eloquently, particularly in the mobile space.  I would argue we are still at the turning point but on the cusp of this synergy phase.  We should expect to observe massive expansion and economies of scale in almost every industry imaginable for the next few decades.  New industries and markets will emerge.  Old ones will finally die off.  Will it be all golden?  I am not so sure.  But if history is any indication, we shall see an expansion of scale only experienced once every 60 or 70 years.

It was this exact point in the book which urged me finally jump off the fence and into my entrepreneurial pursuits full time.      

Maturity

Once again, the cycle continues.  Every paradigm has a shelf life and can only survive so long.  As it enters maturity, deep questions are asked about the system and the climate is favorable for politics and ideological confrontation.  Markets are saturating and technologies are maturing.  

Gradually the paradigm is taken to its ultimate consequences until it shows up its limitations... yet all the signs of prosperity are still around.  Those who reaped the full benefits of the ‘golden age’ continue to hold onto their belief in the virtues of the system and to proclaim eternal and unstoppable progress, in a complacent blindness, which could be called the ‘Great Society Syndrome’.

During maturity, the stage is set for the decline of the whole mode of growth and for the next technological revolution.  Since we are entering a synergy phase, I will not spend much time on maturity.  According to Perez, the next maturity phase should not be entered for quite some time and the decline of our current paradigm should not influence ones innovation or investment perspective.  Yet it is always smart to keep an eye on something like this.  Interestingly, it is in this period inventors and innovators are tinkering with what will eventually become the next great paradigm.  This begs the question:  What will supplant the internet?  I would suggest not worrying much about the answer to that question and take advantage of the current conditions.  According to Perez, it should be quite good for years to come.

The lesson I see here is to know that we are in a smaller bubble within a larger economic cycle.  The smaller bubbles grow and pop fairly regularly with the net result of growth throughout the 60-70 year larger cycle.  The key is to make sure you have made the correct decisions to protect yourself and your company from the small bubble gyrations.

The Tales We Tell Ourself About Failure

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One thing we humans do really well is self doubt.

In the last week I have had two separate conversations with fellow founders about the grave situations their companies are in, how they are staring “defeat” right in the face and don’t really see any other option than to move on.

Both people are down and out right now.  And rightfully so… They have put years of blood, sweat, tears and money in pursuit of their dreams. They feel troubled with the fact that they didn’t succeed in the way they felt they could, didn’t build a meaningful and growing company. I know what they are going through, I have was there a few years ago and had a hard time knowing when it was time to pull the plug.

My advice to them is this:

It’s okay. You think the company (and you) are a failure because you have to move on and go do something else. You may have put your self worth into the company so much so that as the company faces a failure in operation you are feeling like a failure in life. You might be feeling a bit embarrassed because of all the things you said to your friends, family, coworkers, and industry partners now make you look at best untrustworthy, and at worst fraudulent.

These are all normal fears and feelings. They are all accurate and a normal part of the grieving process of a failed attempt at a startup company. But these are all fairy tales we repeat internally.

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The reality is the very fact you set out and tried something unique and different is the success in this story. The very fact that you had the courage to attempt something most people would be afraid to do is the success. The fact that you were looking to be part of the solution rather than part of the problem is the success. Most likely your entrepreneurial decisions inspired at least one other person to jump up and start their own entrepreneurial journey. And further, maybe that person and their project turns out to be a massive success, impacting millions of people around the world, lots of that due to you. You may never know… but it’s a possibility isn’t it?

Many people lean on the stat that something like 75-90% of all startups fail, they don’t reach a point of self sustaining profits. I feel this stat is misleading since it only measures financial outcomes of each entity. Is the company alive, or dead? Red or black? Running or shuttered? Successful or not?

A better measure – albeit much more difficult – is to evaluate the impact each person and their endeavors have on the people around them. I guarantee if we were to measure the impact and success of each founder who ventures out on their own by looking at how they affected, influenced and inspired others we’d be talking about a whole different number. I bet it would possibly be the inverse, which would be quite inspirational. We’d be saying something like “Only 10-15% of startups really fail to impact the world so you must go and do it!”

To all those who are currently struggling with what to do and which decision to make for your company right now, heed this advice. The only failure in your situation would have been not choosing to attempt the impossible, since that is the only reason you are able to sit in the chair you are sitting in right now, reading this on your device you are holding in your hand, sipping the drink you are tasting right now, and driving in the car you just drove in.

Success is simply choosing to attempt the impossible and inspiring others to do the same.

How To Get Out Of A Rut

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We all know the feeling of being in a rut: tired, frustrated, challenged, stressed, worried, uninspired, etc.. It’s okay to fall into a rut at times.  But what can you do to get out of it and return to your former self?

I found answer lies in doing that very thing you are not excited to do.  Whether it be a sales call, a coding project, tough conversation with an employee, yard work, workout, or whatever… embracing the pain, leaning in and executing on the one thing you seem to be shying away from is the best way to rid yourself of the rut. Overcoming the issue and achieving something again triggers a dopamine spurt and kickstarts your energy. In The Road to Success is Paved with Discomfort, Leo Polovets describes the same concept as one of his secrets to success. Do what feels uncomfortable:

If you want to be successful, you have to be willing to push through discomfort. If you’re a founder, you’re going to have to fire people, you’re going to have to talk to customers and sometimes hear negative feedback, and you’re going to have to make cold calls. If you’re not willing to do those things — or at least hire someone else to do them — then that’s okay, but your likelihood of succeeding will drop dramatically. At the end of the day, you have to ask yourself what’s more important: your comfort and your ego, or your success and your company’s success?

So true.  So true.plyazh-bereg-more-okean-volny

Recently I encountered this feeling with my day job, as well as with all my other projects. I wasn’t in a traditional rut, per se. But the great weather of the summer here in Seattle teased me so much I gave in and took it a bit more easy in the months of May through August.  Although I had a lot of fun, that a little voice inside my head was nagging, cursing at me to get with it and get back to work on all the various projects I have going.

Of course, I did what was required and expected of me at work this summer but I knew I had more in the tank.  Yes, I started writing again this summer after taking a number of months off but I could have written much more than I did. Founders RAW was sitting on the back burner for many more months than I wanted it to, purely due to laziness and lack of attention.

I now realized I fell into a comfort zone, and once in that zone I started telling myself all sorts of things to defend my laziness.  I started to shy away from working harder, not driving the company I work for and my projects forward.  I shied away from the discomfort and paid the price for it – falling into a sort of weird rut.

The farther I go along on this journey the more I understand success is really just learning to leverage the ebb and flow of energy similar to the flow of the ocean tide.  Sometimes you are up, driving forward, leaning into discomfort and making things happen.  And sometimes you are leaning back, relaxing, enjoying your take and being lazy in the comfort zone.

The beauty is once you start to identify those ebbs and flows of your energy you can start to time it right, and use it to your advantage. The best way to break from ebb and back into flow is to do the very thing you are not wanting to do, to start the thing you seem to be putting off.  Do it, and you’ll see it wasn’t as hard, scary, difficult or challenging as your mind was telling you it would be.

Summer ebb-ing is fine and I have enjoyed it. Now it’s time to jump back into the flow.

Founders RAW Is Looking For A Seattle Based Videographer

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We are gearing up for a new season of Founders RAW and I’m looking for a new videographer.

This individual needs to be local in the Seattle area and familiar with both recording, post production and slicing of longer videos into short clips.  You can get an idea of how we shoot Founder RAW by viewing of our previous videos here, as well as the video below.  If you are interested, or know of someone who might be interested in being a part of a fun team producing great entrepreneurial focused videos, please reach out to me asap.

  • Part time position, estimated 10-20 hours per week
  • Portfolio and previous video production experience strongly recommended
  • Compensation depends on experience as well as project sponsorship status
  • Establish yourself as an experienced video professional within the tech industry
  • Opportunity to meet well established CEO’s and founders of tech startups who possibly have other video needs

Is It Fair That Founders Get The Lions Share of Equity?

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Something has bothered me for some time and its just now starting to get talked about.  Below is not a rant, but rather an exercise in thinking about fairness in compensation.

Founders receive huge amounts of equity in the companies they start, yet over time as more and more employees join on and work incredibly hard to help grow the business into a successful enterprise the percentage ownership (cap table) doesn’t reflect adequate compensation.  Why is it that an employee that joined just a few months or a year after the founder receive orders of magnitude less equity – and cash after a liquidity event – than the original founders?

Does it really matter if you were there first and if it was your idea to begin with?  If so, how important and impactful is it?  Millions of dollars?  Billions of dollars worth of difference?

Yes, founders do take inordinate amount of risk in starting a new venture and they should receive compensation to reflect that.  But when we are talking about $billion+ outcomes we then start to talk about income inequality on absurd levels.  The difference between a founder receiving $1 billion or $2 billion is not the same as taking that extra $1 billion and spreading it over 100 or 500 employees – that which makes quite a bit of difference in each of those people’s lives.

The fact is early and middle employees are hugely important to the success of a startup and should be compensated accordingly.  More so, they might even be vital to the company’s success, such as a Director of Sales or VP of Engineering may be in helping a gangly startup grow up into a mature and profitable company.

A recent podcast from Andreessen Horowitz covers this issue, and touches on how founders can think about structuring their equity grants a bit differently so that they can appropriately compensate early and later employees.

Anyway, listen to the podcast as it covers a lot of points in this touchy subject.

The Very First Thing To Do When Opening Your Eyes Each Morning

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Close them for another 10 minutes.

The deeper I go in this industry the more I realize success is determined by the quality of my mental fitness.  It was with that realization I recently started the practice of mediation. This new direction might come to some as a surprise, as it does with me. I’m not a very “spiritual” person and have up until recently thought of mediation and other methods of silence with a “not my kind of tea” nonchalance.

What we view as different we tend to be afraid of and to be very honest I was afraid of meditating. It was just foreign to me. Yet that might be why I found myself in a situation where I was desperately needing it!

I realized in my first month of meditation it’s not as weird, shamanic, spiritual, or cult-like as I thought.  In fact, I realize now that it quite possibly could be the secret to a happy and successful life no matter what country you live in or what religion you claim to believe.

Why?

With so much stimulation, media distraction and impulsive opportunities today, clarity of thought is our most scarce resource. By not taking the time to center oneself in their purpose before they start their day, one may find each day harder and harder to complete. I felt this overcoming me during the last year or two – the subtle feeling of losing my compass and lacking the fulfilling energy of pursuing a direction that aligns with a purposeful life.

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So with a suggestion from my girlfriend – who has been meditating for more than 10 years and glows with its benefits – I jumped in.  Boy do I have a long way to go.  I haven’t established a strongly held habit yet but here’s what I learned in the first month.

1. Calmness.  I found I was becoming more tense as the years went on, and given my laid back nature this was starting to really bug me.  It probably has to do with the nature of our industry and the difficulties of being a founder or working for an early stage company.  As I started the practice of meditation I began to feel the tension ease off a bit.  It’s still there to some extent, but I am now learning how to deal with it and shift the excess energy to a more positive area of my life.

The main reason I feel better is with the consistent nature of meditation you are able to think, ponder, and review; this leading to an adequate evaluation of the difficult things happening over the course of your daily life.  Stress overcomes us not because of something that happens to us, but because we haven’t adequately perceived the reality of the situation and are uncertain of what we are going to do about it.  We lack clarity. My calmness has resulted from taking time each day to let my mind wrap itself around the challenging things developing in my life, and allowing my mind time to determine the next step.

2. Centeredness.  I never really knew what this term meant before starting to meditate, but now I understand the power of allowing your mind to focus on certain aspects of your life, steering away from harmful and negative things while steering towards ones more beneficial. It actually takes effort to think about what you are doing here on earth, what you want to accomplish, how you want to live each day, how you want to treat people each day and the trajectory you want your life to take.  All this becomes clearer when one consistently starts their day in deep thought.  Although just a month in, I am feeling more centered and aligned and I can’t wait to see where the next 6 months or year directs me.

3.  Slowness.  It seems like things are going faster and faster each day.  Computing power speeds up each year, and computers just keep getting smaller and more ingrained into our existence.  Emailing went to text messaging.  Taking pictures with a digital camera and uploading to a website went to snapping a pic and sending a quick Snapchat to a friend. We expect to grab our phone and instantly find a restaurant whenever we are hungry. We also expect a response from someone we communicated with – immediately.  Each day seems to be speeding up and taking our whole society with it. It’s no wonder people are so stressed out.

Meditation has shown me the power of slowness and what it can do in a world where people and ideas are flying by at the speed of light.  Slowness allows for thoughtful consideration of the world around you. It allows for deeper comprehension of all the things happening to you and around you.  There are many things in our world that are simply too complex to fully grasp only after a few seconds or immediately after a meeting.  Not taking the time to allow your mind and body to fully comprehend the world around you is a grave mistake.  Through slowing down and practicing mental clarity each morning I set the tone for a stronger, more agile, more flexible mind which now has a better understanding of when to make quick hasty decisions or to slow down and contemplate all angles of a situation.

Take it from someone who used to shrug off the concept of meditation, you are making a huge mistake by not starting your day with your eyes closed in deep thought about the day you are about to experience.

How To Approach A Startup When Looking For A Job

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A friend recently asked me a good question:

What’s your feel on whether or not to contact a company without a clear position opening. There are a few startups I really dig, but they don’t currently have a job opening that fits my role. Is it worth it to shoot them an email to introduce myself and possibly talk about carving out a role if they like me enough? Or should I not waste my time?

My answer:

Best to naturally network and get to know people in real life like you have done with me, rather than reach out cold knowing they aren’t hiring for your skill set and hoping for the best. They’ll probably just think it’s spam and not respond – that’s what I do.  Most companies/startups hire for personality + skillset, and the only way to find that match is to meet them first and get to know them over time, illustrating your value.  So.. find a way to get to know the founders and employees of the startups you like first, then work the angle of getting a job at their company.

Reaching out to startups in an effort to connect and get to know the company is definitely a great idea.  But cold emailing thinking you will be able to land a job is a longshot at best, and shows you have no savvy way to integrate yourself within their operations.  Especially if they display on their website they are only hiring for certain positions- and you don’t see a good role that fits your skill set. (If they DO show they are hiring exactly for what you are great at, by all means reach out to them!)

The secret to getting hired at a startup is to get to know the people within the company by any means necessary. This effort will provide an opportunity to determine if you are a good culture fit – and you might find out there isn’t a good fit after all.  And just like a lot of things, that happens over time. It’s all about learning as much as you can about the founders, the employees, their product and what type of office environment they have. No startup I know of will keep the best engineer in the world on staff if they are also the biggest asshole in the world.  And vis versa, no person will want to work with a company/founders who have no idea how to treat employees with respect.

Seek First to Understand, Then to be Understood.

And that is the root of networking – connecting with people in your industry.  “Networking” has gotten a bad rap and has been misconstrued in today’s fast paced transactional world. It’s not about the one night stand and getting hired as soon as possible.  It doesn’t happen overnight.  It happens over time and over repeated positive interactions with various people within the startup, to the point where numerous people are asking “what does that person do and why don’t they work for us?”

So if you want to get hired by great founders in the industry, get out there and make sure they know who you are and why they should want you to join their team.

Dealing With Startup Uncertainty

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I was asked a great question yesterday from someone who is just beginning their startup journey:

“How do you handle the uncertainty of being a founder?  I mean, there are so many unknowns how does one even start?”

long-pathThere are a few ways to take this question but the one I see and hear the most from people is from the angle of how different a startup is from a typical job.

Most of the time a job has a description, some requirements, parameters, metrics to be measured upon, and a boss to report to. In and of itself, a job is limited and defined.  And most people are comfortable with being limited, since the limitations that are placed upon them at least provide an outline of the playing field where they will have to perform.  Do what’s expected of you and stay.  Don’t do what’s expected and you’re let go.

Requirements + measurement = outcome.

This is not so in a startup, or is not as apparent I should say.  The unknowns are vast and immense – such as what market are we focused on, what’s the product going to look like and how is it function, whom should be my cofounder(s), what ownership levels does everyone receive, what happens when people aren’t using our product, or when a larger competitor copies what we are doing, when do we know when to pivot or quit, when should we sell, etc…

In my opinion, the best approach to dealing with such uncertainty is to understand what a startup is and what the journey is all about.

According to Steve Blank, a startup is  “an organization formed to search for a repeatable and scalable business model.”  Clearly he’s stating that during the early years of a startup everything is uncertain.  The whole purpose of a startup is to go from uncertainty to certainty – or from nothing but an idea to a repeatable and scalable business model, to use his words.

The secret to being an entrepreneur is becoming comfortable with being uncomfortable.  Just as Lewis and Clark set out from St. Louis towards the west, they had no clue where they would end up.  They just went west!  They were comfortable with not knowing what they would encounter during the journey or where they would end.  Lewis and Clark were explorers, but they were also the epitome of an entrepreneur.

Coming to terms with the fact that thousands of decisions lie ahead in the future and are totally unknown today is the #1 thing founders need to do on the outset of starting a company.  And simply focusing on the two most important decisions sitting in front of their face is the 2nd most important thing a founder must do. Tomorrow, two more things will present themselves and will need to be addressed, and you will focus your attention on those.  Outside of establishing a vision and plotting the direction of how to get there, most other aspects of building and growing a company will fall into place.

How do you climb a hill?  One step at a time.

Founders, We Have A Problem

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Another month, another story of a founder committing suicide.

This is becoming a problem.  It’s high time we set aside pride and bring these issues out into the open.  Massive amounts of stress that possibly lead to depression are symptoms of a larger problem haunting founders and entrepreneurship right now, and I feel its getting worse.

Explaining-Depression

Previously I wrote about my experiences with stressful times and depressive thoughts.  I emerged from it and discovered it’s quite normal given what a founder puts himself through when starting a company.  Although it can be one of the greatest things you will do in your life, choosing to be a founder is NOT normal and whomever chooses the path must understand it takes extra effort to handle the stress.

I learned through the process: it’s not if you are going to experience depression, but when.  Will it happen right out of the gate due to anxiety about starting something brand new?  Will it grip you once your honeymoon phase wears off and you realize startup life is not as easy as the media makes it seem?  Or will it be once your bank account balance is red with parentheses around the numbers?

It’s just a matter of time.

Any one of those scenarios can trigger a withdrawal reaction deep inside your psyche, which kicks into motion a series of events that can end in a downward spiral.  And you may be so focused on your task at hand you won’t even know its happening.

I believe this is a huge problem, and its getting worse.  Much worse.  So bad that we need to start paying a lot more attention to the causes of these pressures before it’s too late.  We need to figure out how to battle back, because one more founder suicide is too much.  I mean really, we should never accept people jumping from buildings simply because they missed their monthly projections and received another NO from a potential investor.  Never.

I will point to us (as a society) and the media (wanting evermore clicks) for creating this nightmare, and here’s why.

The pressures of being a founder have magnified with social media.  Heck, today the pressures of being a decent human being seem to have magnified to scary extremes due to technology pervading our every second.

All this real time social sharing of our “awesomely magnificent” lives places unattainable standards on the most average of people.  Back in the day you would have had to pick up a US Weekly magazine when standing in the line at the supermarket to see bikini clad women on a beach partying with a group of good looking guys. Or an exotic beach house someone is renting for a weekend get away. This was all normal because it was typically celebrities living a life of abundance or random paid models in a magazine or on TV. Psychologically, we could deal with the dissonance.

Now, all you have to do is open Facebook on your phone to feel the pain of missing out. The excruciating difference is you know them personally, and maybe were even invited but couldn’t make it!  And now you have FOMO.

“Man, look at them.  They’re all are having a great time and I’m laying here on the couch like a loser.”

Can we all agree that most of the shit we see Facebook, Instagram, twitter is not real life? It’s people’s highlights.  It’s the best of the best pieces of their lives. When surfing Facebook and Instagram we must keep in mind no one shares the boring, crappy and mundane stuff (okay, yes there are those people we end up hiding but most sane people filter their thoughts and posts).

If you look at Facebook, Instagram or other social photo sharing apps – numerous times a day – you are subconsciously beating your self up.  EVERYDAY.

You are doing this because as humans we naturally compare ourselves to others.  It’s a survival mechanism.  Survival of the fittest, and if someone is doing better than you, or stronger, or better looking, or more fit, prettier, wealthier, smarter, free-er, etc… it threatens your very existence.

Of course, all the above is a function in startups and happens to founders as well.  We read about such and such new startup raising a huge round of funding on TechCrunch and wonder why we haven’t hit it big yet.  We hear about a big acquisition deal and beat ourselves up because we haven’t earned our millions yet.  Couple that with the pressures of supporting a company, sharing the vision with everyone when they don’t believe you, making the employees payroll and all the other things to worry about. A founder’s shoulders can only bear so much weight before they break.

I don’t have the ultimate answer but I can say this: depression happens – probably to most everyone – so it’s not the thing to worry about here.  What is most important is what you choose to do before and during your most challenging times in an effort to ebb and flow through it.

Do you have a pet who can be your best friend and bring you joy no human can do?  Do you meditate or frequently reflect on your thoughts?  I just started and I’m excited to see where that journey takes me.  Do you have a therapist or someone unattached you can counsel with on a consistent basis?  Do you get enough physical exercise to blow off steam and stay healthy?  Do you monitor your social media and technology usage so you maintain the proper perspective about yourself and yourself worth?

Depression happens and quite possibly outside of your control .  What you do about it is up to you.

Pulling The Plug Takes Courage

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A common challenge many founders experience is when it’s time to pull the plug on their startup.  This issue has been brought up a number of times in recent conversations and given my experience in this area I thought I’d lend a little perspective on the subject.

First a little background.  About 4 years ago I cofounded a startup called Seconds with a handful of people.  We ran it for a while but really didn’t hit breakout velocity to raise venture capital and build out the business full scale.  So after 2+ years I decided to pull the plug and move on.

That is about the shortest and easiest way to describe what I went through at the time, which was much more excruciating and painful than those last few sentences describe.  I’ll save you the 10 page novel!

But it’s a horrible place to find yourself. If you are anything like me, you don’t quit. You uphold your promises. You are competitive and want to win.  You and your cofounders have stuck together through thick and thin and you feel if you bailed right now you would be quitting on them and going against your word.  So you just keep holding on, thinking it will get better.

Well, I quit and it’s great to finally be able to say things are much better now for me compared to 2 years ago. I finally realized I was really stuck and the best thing for me to do was to stop and look at all my other options.  Like an addict, I needed to step away from my daily habit of trying to make things work in my company and focus my energy elsewhere. I committed to improve in the areas in my life that were giving me the most stress – namely money (or lack there of) and that meant I needed to get a job. I realized I could move myself forward in our industry as an employee of a startup, not having to be the founder.  I decided I’d join another startup so I could continue to grow as an entrepreneur and startup executive, being able to learn all the things I wasn’t able to learn during the time with my company.

In the summer of 2014 I joined Knotis as Director of Business Development and was able to pick up right where I left off in my own startup. I am now heading up strategic partnerships and assisting with investor relations to help raise money for the company.  The last year has been chock full of investor meetings with people held in high regard in our industry, strategic partnership conversations with companies we read about in the news, and a continuation of my entrepreneurial path void of massive stresses like how will I afford to eat and drink each night.

Anyone looking in the mirror wondering if they should continue hammering away at their startup when it seems like it’s not moving forward should take note.  It does get better.  But you may have to quit your startup to get there.  You may have to stop dead in your tracks, notice the road you are on is not heading in the right direction – in fact it dead ends right up there around the bend – and turn around.  Find a new road.  There are more roads and options for which direction to take your self and your creative career than you actually realize.

All it takes is courage to own up to the fact you didn’t succeed THIS TIME and creativity to find a new opportunity so you can succeed NEXT TIME.

Emerging From A Break In Writing

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Wow.  February 3rd, 2015 was my last post.

Most readers will know I have been consistently posting on this blog for about 4 years – we’ll 3 and a half due to the 6 month break noted above.  For some reason, around February this year I hit the skids.  I don’t know what really happened or what was the reason for the break but simply put sometimes we just need a break from things we do on a regular basis.

About a year ago I took a full-time position as Director of Business Development at Knotis, a startup here in Seattle.  It’s been a fun year full of lots of meetings and getting to fully embrace a whole new vision and business direction.  Couple that with the Bitcoin related company called Coinme I helped get started last year and my schedule definitely started to get full by end of summer.

So suffice it to say I have been a busy guy.

Add to all of this a year-long relationship with a great woman and now you can see why I might have gotten a bit burnt out on things.  In the end, my writing took the hit.

So here I am, getting back into it and finally getting a post out after thinking “Damn, I need to start writing again.  I’m not exactly sure as to what I will post, hopefully similar things to what the last 3 years have been all about.  But until then, I’ll post a few pictures from my last 6 months to show you what I have been up to.

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Photo 1: We jumped on a friends sail boat during one of the Duck Dodge nights here in Seattle to enjoy some sailing.

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My Dad came to Seattle to visit myself and my sister in early June.  Here we are chilin’ with two of my nephews.

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I went to Austin for a weekend getaway, and rode a water hover-board.  (That’s not me but I did ride it!)

Left to right, Fred Thiel, CEO, Local Corp; Anne Bezancon, President, Placecast; Manish Patel, CEO, Where2GetIt; and Nick Hughes, Business Development, Knotis, speak on the “Facing the Challenges Inherent in Building Local Companies” panel at Street Fight Summit West, the premier event for businesses working in local commerce, marketing, media, and technology. It was held this year at TerraSF, San Francisco, California, June 2, 2015.

Left to right, Fred Thiel, CEO, Local Corp; Anne Bezancon, President, Placecast; Manish Patel, CEO, Where2GetIt; and Nick Hughes, Business Development, Knotis, speak on the “Facing the Challenges Inherent in Building Local Companies” panel at Street Fight Summit West, the premier event for businesses working in local commerce, marketing, media, and technology. It was held this year at TerraSF, San Francisco, California, June 2, 2015.

I hosted a panel discussion at the Street Fight Summit in San Francisco in June.

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I had the awesome opportunity to go to the U.S. Open when it was held at Chambers Bay in Washington.

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Here’s Jacci and I.

Is Depression Actually Normal?

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I wrote a post recently touching on my brief bout with Founder Depression.  As a result, many mentioned it on Twitter or reached out to personally thank me for writing it and to let me know they also struggled with it.

This sparked a few thoughts: “Is depression actually normal?”  And “if everyone deals with some sort of depression in their life then what can we do about it?”

I have come to realize depression is something all of us deal with at one point in our lives.  It should not be taboo or anything.  It should be addressed and talked about openly as part of the entrepreneurial education process.  As founders, we encounter depression usually from external events such as failure of a business or a negative outcome of something in which we had hoped for when we first started out.

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I am starting to realize being a great entrepreneur starts by perfecting how to handle the shit in your life.  Because it hits the fan waaaaay more times than you plan.  I have also come to understand the successful ones figure out how to identify the piles in the road ahead of time, and navigate accordingly before they hit something fatal.

Athletes strength train and stretch in prevention of injuries.  Why are we not doing this in the startup community?  Why are we not helping people to prevent what inevitably happens to those of us who strive for more?

The point here is to understand its not IF it will happen, its WHEN it will happen to you.  And then go into your entrepreneurial journey armed with the idea that you will at times feel very down about yourself and your company.  This is reality and this is serious.  If a founder doesn’t take it as such they are potentially setting themselves up for disaster.

Like I did.

In a recent conversation with my father we touched on this.  I noted that only when I realized I had dug myself into such a deep hole emotionally could I fully grasp where I was and what I had to do to get out of it.

I realized even though I was not in control of external events I was in control of my thoughts, feelings and internal dialog. And I was the only one who could bring myself out of the funk in which I had brought myself into.  I had to consciously think and make decisions that would place me in a neutral or positive place.

No more negative self talk.  No more whoa is me. No more pity parties and thinking I had let myself, my family and my community down.  I had to stop fighting myself, put my ego aside and choose a different path.  One that – although it has a few more twists, turns, roundabouts and curves to it – is leading me into an even better position than when I was CEO of my own little startup.

The fact is, if you are a high performer and things don’t turn out exactly the way you planned you will naturally tend to go into a dark place.  Those sort of feelings will not help you move forward in any way whatsoever, so please think now about how you will respond once you sense yourself going down.

Bitcoin and the False Dichotomy

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This post originally appeared on Geekwire.

You might have asked someone recently, what the heck is going on with Bitcoin? Or maybe you are still wondering what Bitcoin is, or even questioning its relevancy?

A lot has changed in the last year in the cryptoworld — most notably Bitcoin’s price. It’s a good time to dissect a few points about Bitcoin and the cryptocurrency market, things I couldn’t help but notice during my first year in the industry.

The biggest point is the false dichotomy in the general perception of Bitcoin. I’d like to unpeel this and provide a deeper evaluation of the industry, because people who commit the mistake of false dichotomy do themselves a disservice by not taking a full view of what’s going on.

First, a definition to help us here:

A false dichotomy is a logical fallacy that presents two opposing views, options or outcomes in such a way that they seem to be the only possibilities: that is, if one is true, the other must be false, or, more typically, if you do not accept one then the other must be accepted.

As one of the few people here in Seattle who frequently (attempts) to explain Bitcoin to non-technical people, and being the one who handles customer interactions for Coinme, I have noticed a problem. The media, tech executives and the general public talk about Bitcoin mostly by committing to a false dichotomy. Quite amusingly, I find people either preach the positives of Bitcoin or they dismiss it, like Gagnam style. One side thinks we’ll live in a libertarian world where Bitcoin will eventually be an anonymized currency to rule us all, and the other believes it’s only for crooks in the shady, dark interwebs. “It’s doomed to fail!” they pronounce enthusiastically.

Well, neither are true.

When I read about a new random Bitcoin startup here, or a larger funding round there, I start to understand how things are changing, and in what direction. The more I talk with highly technical people who mine Bitcoin or build on top of the blockchain, I learn we’re very early in something very special. Even though we aren’t living in Crypto-utopia, there is a subtle rumbling deep within the Internet we should pay attention to.Studying Bitcoin and watching the markets adjust has taught me a very important lesson: nothing ever ends up being 100% of what you think it will be. Innovation cannot be predicted, and the future cannot be known ahead of time. Correctly predicting the future is simply a function of luck. But seeing around corners can be a function of deep listening, observing and learning. So the best action for success is to (safely) get as close to the something as possible, and learn as much about it as you can, so you start to identify where the world is heading. Only then are you equipped with perspectives on where to invest your time, capital and energy.

My time around Bitcoin has shown me that our world will not be changed as much by the cryptocurrency you read about today as by the underlying technology.

Joichi Ito, who has been involved in building many layers and pieces of the Internet — from helping start the first commercial Internet service provider in Japan to investing in Twitter and helping bring it to Japan — recently wrote about the similarities between Bitcoin and the internet:

The similarity is that Bitcoin is a transportation infrastructure that is decentralized, efficient and based on an open protocol. Instead of transferring packets of data over a dynamic network in contrast to the circuits and leased lines that preceded the Internet, Bitcoin’s protocol, the blockchain, allows trust to be established between mutually distrusting parties in an efficient and decentralized way. Although you could argue that the ledger is “centralized”, it’s created through mechanical decentralized consensus.

What Ito is saying is that we could actually be witnessing the early stages of the next phase of the connected world, a time not so dissimilar to what we experienced in the early 1990s.

An often quoted example of a false dichotomy was when the Internet first gained media attention in the early to mid-nineties. Back then, many people thought it was a fad, hard to understand and a waste of time and money.  They simply couldn’t get their head around the fact that there were more than just two possibilities: A (success) or Z (failure).

And therein lies the fallacy of the false dichotomy around Bitcoin.

What we witnessed with the Internet was the invention of the web and the browser, which commercialized the internet and brought with it every major corporation in the world. By ending up somewhere between A and Z, the world changed forever.

It’s clear to me and many others in the industry we are still in the “pre-browser” era of Bitcoin and blockchain technology.  It’s there, but you really don’t know how to interact with it. What happens when we reach the “Netscape” moment of Bitcoin?

Could Bitcoin — the currency — pop and crash?

Yes, it could.

But seeing investment dollars in the cryptocurrency/bitcoin market grow each quarter, one has to believe that if Bitcoin the currency pops, then something else will emerge even better and more suited for the general public.

What will that be?

I could take a guess but in reality I don’t have a clue. Yet committing the false dichotomy sin here is a grave mistake. An important point to understand is that Bitcoin, the cryptocurrency, is just one app that runs on the blockchain technology. People well-versed in bitcoin are familiar with the blockchain, the underlying open-source technology (or rails) that bitcoin the currency runs on. Looking deeper, theblockchain stack presents interesting solutions to problems which have hindered our society for quite some time — outside of finance. Issues such as trust, security and identity can be improved with applications built on the blockchain.

In fact, here are a few other areas where the blockchain serves as underlying technology.

  • OpenBazzar: An open peer-to-peer marketplace not controlled by any specific organization such as eBay or Craigslist. Ideas like this, using a decentralized platform to exchange goods and services, could change e-commerce as we know it.
  • Factom: A conceptual framework for a system that secures and proves the authenticity of records, documents or other important types of data that are later enshrined on the Bitcoin blockchain. This could transform how we handle record-keeping online.
  • Counterparty: An example of digitizing property and identity. Developers are starting to build networks that work in parallel to the Bitcoin blockchain to perform tasks that the bitcoin network can’t, but that make use of the bitcoin blockchain to, for instance, timestamp or validate work.

The reality is that no one really knows what will happen next — that is why it’s called innovation.  But something is going to happen in this area to improve our lives and I hope you don’t get caught up in thinking only A or Z is possible.

Most likely somewhere in between A and Z we’ll see Bitcoin technologies enhance our digital lives. There’s more down there than you think.

 

Some Awesome New Resources For An Entrepreneur’s Daily Learning

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No one knows it all.  When it comes to startups and entrepreneurship things seem to change so quickly generally accepted conventional wisdom is actually becoming obsolete before our very eyes.

For that reason I strive to stay up to date with the industry, what’s taught at the major universities like Stanford, and what young founders are learning in accelerators like YCombinator.

Here are some resources I have been using recently to gain more insight as a founder and entrepreneur in the tech industry.

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The Stanford ecorner is something I have been listening to for almost 6 years now.  They record one speaker each week addressing the class and then post it to the site the next week. Topics range from Creativity & Innovation, Opportunity Recognition, Product Development, Marketing & Sales, Finance & Venture Capital, Leadership & Adversity, Team & Culture, Globalization, Social Entrepreneurship and Career & Life Balance.  Stanford University’s Entrepreneurship Corner offers 3000 free videos and podcasts, featuring entrepreneurship and innovation thought leaders. I highly recommend it!

downloadStartup Class – Stanford CS183B, taught by Sam Altman of YCombinator.  CS183B is another class taught at Stanford. It’s designed to be a sort of one-class business course for people who want to start startups.

Videos of the lectures, associated reading materials, and assignments will all be available here. There will be 20 videos, some with a speaker or two and some with a small panel. It’ll be 1,000 minutes of content if you watch it all.

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Reboot.io (podcasts) is a new resource put together by Jerry Colonna and his business partners.  Jerry Colonna is an executive coach who uses the skills he learned as a venture capitalist to help entrepreneurs. He draws on his wide variety of experiences to help clients design a more conscious life and make needed changes to their career to improve their performance and satisfaction.   The Reboot podcast will showcase the heart and soul, the wins and losses, the ups and downs of startup leadership. On the show, Entrepreneurs, CEO’s, and Startup Leaders will discuss with Jerry Colonna the emotional and psychological challenges they face daily as leaders.

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The A16Z blog and podcasts are one of the best new daily resources an entrepreneur can read.  As previous entrepreneurs and now some of the most popular venture capitalists, they provide their unique views of the technology market that will help any founder gain valuable insights on trends, investment thesis’ and the newest startups that are raising money and making a dent in the world.

ENJOY.

The Secret To Launching A Successful Startup

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What’s your secret?

In his book Zero To One, Peter Thiel asks the question “What one thing do you know that no one else in the world knows?  What’s your secret?”

The answer to that question is the secret to starting a successful company.

downloadWhat Thiel is suggesting is there are things in this world you observe, intuitively know and understand more than anyone else.  By peeling apart those layers and understanding where there could be value creation you will find the golden nugget.  Then it’s as simple as creating a new company, building the product and releasing it to the world.

What he is also illustrating here is that success comes from ingenuity and uniqueness, not copying others.  The world doesn’t need another anonymous messaging app or social network.

It needs your secret.

Do you realize there are things only you know about the world?  Most likely there things you continually notice about your everyday life, the city you live in or the technology you use that keep bugging you.  There are problems you continually encounter where you might be wishing someone fixes them.  Do you maybe see a better way to do them?  Do you keep getting frustrated at the same places and times each day?  There might be something you can do about it…

Once we come to grips with the magnitude of this reality starting a company becomes a lot different.  You now realize each and every one of us have the ability to create successful companies.  All it takes is a little focus and observation of the world around you, and then having the fortitude to create a scalable solution.

Today, think about what might not ever be created if you don’t build it?

Finally Emerging From A Founder Depression

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At times we can be our own worst enemy.  The challenge is to minimize those times.

We often hear choosing to become an entrepreneur – and the life that accompanies it – is not for the faint of heart.  This is absolutely true.  But for the longest time I didn’t really understand what it meant.  Or moreover, I didn’t fully respect the ramifications of the simple choice of taking my entrepreneurial leap.

Yet now being on the other side of this experience, I understand on a deeper level what entrepreneurship all about, and how to best navigate through it the rest of my life.  As I describe some of my thoughts and observations, I hope they might resonate with you as well and help you through whatever your situation you might be in currently.

Entrepreneurs, by default, are high performers.  And high performers, by default, are hard on themselves when times get tough.  Combine those two and you could get a deadly combination.

Entrepreneurs hold themselves to higher standards than others and often are disappointed when things don’t necessarily end up as great as they had thought when they initially set out.  But you know what?   Entrepreneurship never ends up like you initially thought.  It’s messier than anyone ever imagines and more extreme than anyone ever describes.

After I experienced a failed startup I dropped into what I now can identify as a depression.  I was not – and am not – depressed as in the clinical sense, but it was more like what you would think when people refer to the last economic depression we recently survived.  It was temporary and externally triggered.  Things weren’t right and I was responding to them certainly in a negative and self deprecating way.

It was painful.  It felt troubling.  It sucked because I wasn’t supposed to be there.  Or so I thought.

What I discovered was I denied myself some truths I should have admitted at the time.  I wasn’t admitting things like: 1) I really didn’t know what I was doing, and neither does anyone else.  2) The business was not working the way we had positioned it.  2) Startups actually do fail!  3) It’s okay to walk away rather than being so committed to a project you drive yourself into the ground.  4) Your personal value is more than just your company’s success.

I did not admit those things and the result was just that – nose dive right into the ground.  Being a friend or family member you probably wouldn’t have known it by being around me.  I am a damn good actor.  I do a great job of burying the issue and grabbing another beer to selflessly talk about your challenges and issues.

Yet deep down inside was some of the worst self talk anyone could imagine.  I was not my biggest cheerleader, supporter, believer and best friend.  If you are wondering, negative self talk is not the path to success.

It took a few years to pull myself out of it.  It took me accepting the fact that although I knew I could be a great founder at some point in my life, now was not the time.  It took me putting my ego aside and accepting positions with other startups and companies where I could add value and learn more about building companies.

It seems elementary now, but letting go of the founder dream and using my skills in an another company was the farthest thing from my mind at the time.  It took me admitting I did not know it all and I need to place myself somewhere to both earn a living and learn more about the world of technology and growing a business around it.

This type of wisdom and perspective is almost impossible when you think you are worthless.  And that is exactly what people think when their startup fails.  They think since they could not make their own company work – one where they pretty much put every ounce of effort they possibly could into making it work – what’s their value anywhere else?  This and other similar thinking is obviously incorrect and ill applied.  Yet, I am telling you this is exactly what I and other founders find themselves thinking.

I have since pulled myself back together, landed a great position with another company here in Seattle and on the path to learning and earning!

The resulting mental and emotional clarity is refreshing. It has allowed me to stabilize my life and opened up space for other projects like Founders RAW, Coinme, and getting back to writing.  It has allowed me to establish myself as a mentor and advisor to other entrepreneurs, here and elsewhere in the world. It has allowed me to embrace and fully enjoy a meaningful relationship for the first time in a long time.

The lesson here is not that you can do things to avoid the founder depression.  More than likely it’s inevitable for you, me and every other entrepreneur.  The lesson is in identifying the oncoming founder depression, quickly observing its symptoms, and then finding mitigation strategies you can deploy to keep you afloat – and happy.

Entrepreneurship is not for the faint of heart.  But it is for the wise and honest.

When A Founder Crosses The Line Towards Godlike Hubris

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I recently noticed a frightening trend with certain founders in the tech industry.

–> Have a great idea.  Get a few key people to join you and build it.  Launch the product and raise money from investors.  Experience massive success.   Raise more money.  Gain hundreds of millions of users. Raise billions of dollars and fight off regulators.  Have unfiltered access to billions of people’s data.  Exploit it.  Believe you are the second coming of a God.  Act like an uncaring, immoral capitalist.  Care only about your wealth and not what you are doing to everyday citizens.  And so on…

With the recent Uber misteps and observing the resulting outrage which ensued, it has come to my attention that we, as an industry, need to take a long look in the mirror.  Founders need to take full consideration in how they are running their company, the culture they are creating, the data they are generating, and the ultimate consequences of their actions.

I hope Uber realizes they are doing to their users exactly what they were furious (I assume) about the government doing to them as citizens when the Snowden files were revealed last year.

We all need to understand we are standing at an unprecedented time in the history of business and technology.  Everyday Joes now have the opportunity to create an app or platform that one day might just become indispensable to mankind.  With its use, Joe will collect billions upon billions of data points on everyday citizens – like where they are currently, where they are going, who they talk to, what they typed, to whom, what they viewed on their phones, whom they connected with socially, etc..  With all this happening, Joe will find himself directly in the middle of our society, holding a treasure trove of personal data and a devil on his shoulder just waiting for the right time to temp him into exploiting it.

I mean, it’s like big brother!

But surprisingly it ain’t the government doing these things.  Imagine what Facebook knows about you.  Couple that with your Uber or Lyft usage data.  Toss in your twitter clicks, Instagram photos, Gmail history and Google Chrome browser history.

We are doing this to ourselves.  We are the ones creating this new world of massive data collection which is resulting in unprecedented spying, snooping, breaches of security, cloud hacks and the like.

This is your fault.  And mine.  It’s all of our faults.  All in the name of making more money.

I am not here to end the data analysis, in fact I believe in it and when done correctly it makes for a better end user experience.  I also know data collection is only going to get more prevalent with the expansion of categories like the Internet of Things and connected homes.

Yet, I am urging us to start thinking about things using a different filter, or scope of perspective.  Start asking yourself these questions:

Recognizing all possible data about myself and every other person is now being collected, how to I structure my platform to preserve mankind and the humanity inherent within our society?

How do balance personalization of my technology with personal security of my users?

How do I proceed when I know I CAN do something but unsure if I SHOULD do something?

Where’s my “do not cross line?”

How can we best usher in a new era of technology applications where security is inherent within the structure of the product, not an afterthought when plugging holes after launch?

How do I shift my perspective from making the most money possible with my application towards making the world a better, more secure and protected society?

Please start thinking about these questions and more…  It’s time we call a spade a spade – WE are the ones creating the exact surveillance society we were deathly afraid of growing up.  We just thought it would be the Big Bad Government or another foreign country, not ourselves.

Please understand hubris will sink anyone who thinks they are immune to it.  You – as a founder and someone desperately wanting to change the world – can now no doubt do just that.  You and your technology can alter the history of humans here on earth.  Just make sure you know what change you are putting in place.

3 Startup Principles Every Early Stage Founder Needs To Know

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I recently gave a talk to early stage entrepreneurs at a weekend hackathon in Bellingham, WA.  It was fun, challenging and educational for all.

Given these individuals were just starting on their journey, I chose to focus on things they should be considering coming right out of the gate.  Below are the three things I addressed with them and what I feel every founder needs to think about as they hack together their team and build out a first version of their product or service.

Cofounders

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The very first thing you must think about is your team – whom should be on it and whom shouldn’t.  Get it right or pay the price later.

Especially when you are starting something at a weekend event like a hackathon or Startup Weekend, it’s tempting to just grab abled bodies from anywhere so you so you can fill empty seats.  This is not advised, since the wrong person on a can bring down the entire ship.  It’s very important to fill specified roles within the team to put your company in the best position to succeed.

Here are the three positions I feel need to be filled if you are considering forming a team to build a software/app based startup:

The Developer.  First – and especially if you are starting something in tech – you’ll need a technical person.  This individual is the one who architects the product and who writes the code. Great engineers are able to balance pragmatism and perfectionism, are not averse to debugging and bugfixing, and employ a healthy skepticism of their code and the world around them. This is the engineer.

The Designer.  Second, you’ll need someone who makes the code look pretty, readable to the layman allowing for a great user experience.  Great designers understand that 90% of good design is not about the pixels, they understand basic coding and have a well rounded view of other sciences of the world.  This is the designer.

The Hustler.  Lastly you’ll need someone who can sell your product, or the one who understands how to get it in the market and found by people.  This is generally the business person, the CEO, and the Hustler.  To quote Fred Wilson, CEO’s really need to just focus on 3 things.  They set the overall vision and strategy of the company and communicate it to all stakeholders. Recruit, hire, and retain the very best talent for the company. And lastly, make sure there is always enough cash in the bank.  That’s the Hustler.

Fill those roles first, or deal with the consequences later.

Customer and User Validation

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The second thing early stage founding teams need to think about is finding out who will actually use the product by doing customer discovery and validation.  The knee jerk reaction of most founders is to believe they are so genius they can think up an idea in the shower, grab a few developers to build the app and then sit back and enjoy millions of downloads from all over the world.

NOT-GONNA-HAPPEN.

It’s imperative to get out of the door and talk to actual people who YOU THINK would be your end users.  You need to interview them, asking questions about what problems they are encountering, why they are having those problems and how are they trying to solve them today (they usually just piece together a few random tools to solve it until something better arrives.)  Figure out how they are doing it now so you can offer a solution 10x what is available on the market today.

And rather than trying to plan the entire thing out before talking to customers – like sitting in an office and writing a 30 page business – just start with a hypothesis, do some interviewing and testing on a few good ideas on how to solve it, and then adjust and pivot with the results you observe.  You will learn more in a week or two of testing hypotheses than months/years of preparing a well written business plan full of (mostly) wrong assumptions.

Do your customer interviews now or learn later no one wants what you just built.

Product Simplicity

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The last one is a biggie!  It’s paramount a founding team understands their vision, know what they are trying to change in the world and then break it down into approachable pieces to start with.

As a founder you need to think about your entire vision as a large iceberg. The challenge is to find the tip of the iceberg and only release that as the first version. The rest of the iceberg is under water and very large, just as your entire vision is in your head and not visible to the rest of the world. Some think of this as an MVP (minimum viable product) and I concur, I just like the illustration better.

Most founders make the mistake of not finding (or determining) the tip of the iceberg and thus end up building the whole iceberg, resulting in lost time, a bloated product and a lost value proposition.

For every Uber – a very simple and easy to use app – there’s thousands of apps that get it wrong and initially build a too complex product. They end up confusing users and not even getting to the point of an exponential user growth curve.

Twitter was simply a status update and following what others were updating. That’s it and people could easily talk about it and share it with their friends. Snapchat was pictures you could send to friends that disappeared after 10 seconds.  YO was absurdly simple, yet at least it was simple enough where millions of people got it and downloaded the app to mess with friends.

The key is to break down your complex problem into its essence. Know the end game and the large vision but find the simple starting point where millions of people will understand what to do with the app. Find the least amount of features and code possible to solve your initial problem.

These three principles are essential to a successful product launch.  If not paid attention to they will hinder a startup team from building a product, launching it successfully and achieving any traction in the market.

The #2 Founder Sin is Getting Married On The First Date

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Would you ever consider marrying someone after the first date?

Thought so.

Since we are on the topic of Founder Sins (you can read my first one here) let’s talk about the second one real quick.  Another very common thread I see fraying from the rookie founder sweater is how quickly they are considering whom to choose as their cofounders.

“I met this developer at a networking event and I think we’re going to build something together.”

“Do you know anyone who codes?  Do you think they could help me with my idea?”

“The six of us started a company at a Startup Weekend!”

I hear these all the time.  It’s not a bad idea that people are “hustlin” and looking for skilled people to build out their team.  It’s just that it ain’t easy.

Just as dating the right person takes time for the relationship to develop into a marriage, so does a business partnership.  I am not saying you need to “court” the person for years on end, but I am saying it takes more than one event, one week or a few short meetings to grant a random person a large stake in your future company, basically legally binding the both of you.

Las Vegas Welcome Sign 3/30/11

Here’s why I know.  I have lost a cofounder myself.

In the fall of 2011 I was approached by an awesome developer – whom I didn’t know at the time – about joining the founding team of his newly forming startup.  He read an article I had written, emailed me and said we should meet.  When we met for coffee he showed me the prototype of the mobile ordering/payment stystem he was building and said he was looking for a CEO.  I was impressed and intrigued.  We booked another meeting or two and within 2 weeks we were talking “marriage”, better known as personal responsibilities, founder equity and company formation.  Before I knew it I was CEO of a tech startup (Seconds) and diving into leading a founding team I did not know two weeks ago.

But unfortunately, 6 months after that initial meeting he was on a plane moving down to SF to do contract work, leaving me to find another CTO.

What happened?

I am forever grateful for Jacques to have sought me out and single-handedly placing me on this path I am today.  Yet, in hindsight it’s clear we jumped in too quickly.  We were excited, thought time was of the essence and needed to get to work today!  Within a week or two of knowing each other we were having the “how much percentage of the company do you get and how much do I get” conversation.  I was immediately in charge of estimating product timelines, leading a team of developers, laying out our fundraising strategy, talking with the media and figuring out how we’ll make it to the next phase of the company.

All this and I didn’t even know who these people were!

I didn’t know how they handled stress (although I found out pretty quickly!)  I didn’t know how they had performed in the past on other teams and projects.  Did they run from challenges quickly or where they the ones to stick it out and find a solution?  I was not aware of their tell-tale signs of when things weren’t going right.  And I hadn’t learned how to best approach them to talk over difficult situations and touchy subjects.

In the end, I didn’t know them at all.

And now I know why investors ask about the backgrounds of the founders and how long they have known each other.  It’s very important you take the time to get to know people you want to work with in the future.  If you have a long view on your career – your entrepreneurial journey – you will see there’s decades of time for you to work on various projects and many different people you will work well with.

The thing is it’s very hard to determine that after one or two meetings.

Take it from me, it’s best to start laying the foundation for your future cofounder relationships now so that when the time comes for you to form your dream team you will already know who you will pick.

That, or get used to signing divorce papers…