Perception - What is it really...

“Perception is strong and sight is weak. In strategy it is important to see distant things as if they were close and to take a distanced view of close things.” Miyamoto Musashi

“Fixation leads to death. Fluidity leads to life.” Miyamoto Musashi

A lot of business quotes are taken from Sun Tzu’s Art of War and is often overdone but still contain valuable strategic lessons. Personally, I prefer to go a little more hardcore and read the more direct and interesting writings of Miyamoto Musashi in his book of Five Rings.  Musashi was not only a strategist but knew personally how to get things done in individual combat. I have picked two quotes from Musashi above that I learn to appreciate more as I get older.

It is a challenge in a startup to look to the future while managing the day-to-day. If you don’t manage the immediate, you will not execute and if you don’t see the future, you will never win. However, too many people mix the data in front of them with the real picture. There is a rhythm in business where things are waxing and waning and knowing/ understanding the rhythm is very important from what markets will emerge to what deviations need to be made to win. After all, (as Mushashi states), there is more than one path up a mountain. If you think there is one route, then your fixation and inability to perceive the paths, will most likely lead to failure.

 In an earlier company, I had a director inexperienced in early stage tell me that I was an Intuitive CEO and I needed to apply some analytics to get the answer. I do agree that analytics are important and a useful weapon but perception is both intuition and analysis applied to the future given the assumptions/ visions you see by looking in the distance and not right in front of you. In fact, if you can see the rhythm in the future, you can use that to shape the present as it will become what you perceived or close enough – Mushashi’s words/ not mine.

Also, there is a desire in humans to pick a path and passionately believe it. I think that is good as it is the first step to winning; however, if not approached with fluidity it leads to a warped sense and a focus on the immediate without the ability to see in the distance and make necessary deviations to win. Lacking real perception, you cannot see the rising or falling of the opportunity, shifting paths to the top of the mountain, timing to strike and crush your opponent or seize the moment.

Unfortunately, it is hard to teach true perception – it often needs to be learned firsthand through experience, commitment and patience. It is forged through struggle and seeing things to consummation. It is something we can all gain but often never do.  I learn more about it with each passing year and pursuing it makes each endeavor more interesting.

More on Ego

I have not blogged in some time. Like most, I have been extremely busy. However, it is a beautiful day in Boston so I feel compelled to pour out some emotion on to paper.

The last two years have been probably the greatest of my life. My girls are growing, and my best friend (my wife) and I have had many wonderful days raising our family with the fun & stress that comes with parenting.

On the business side, I have been able to apply a lot of what I learned from past mistakes. I don’t even see myself as quite the same person as I was two years ago. I have always loved what I do, but now I love it even more because I can accept things from a broader perspective. This allows examination of things with more than sight. In fact, sight alone is very deceptive. I like to try to see things without looking – which is perception. I am not saying that I am great at it, but I understand it well (at least much better than I did).

I did a blog on ego awhile back. This topic sits with me as a top issue beyond my regular sight. I want to restate how many bad decisions are made in startups because it is made about a person and not about a company.  I saw this a lot in previous startups.

Here is a good perspective on ego that sums it up:

In Roman times, when a conquering hero/ general would return to the city, he would enter the gates on a chariot made of gold, wearing a gold robe. Many Romans would line the streets and cheer the hero as he passed.

On the chariot behind the hero was a servant holding a golden crown just above the conqueror's head (as if just out of reach) whispering in his ear, “All glory is fleeting, all glory is fleeting”.

In other words, the glory was about Rome, and not the individual.

Entrepreneurship talk at West Point

Was fortune to have an opportunity to speak to cadets at West Point last week majoring in computer science  and other engineering related majors about entrepreneurship... The audience was a little different for me because I consider my self a sales and marketing person. It was a wonderful experience.  I took my slides and pasted the main points below. (forgive the formatting - on a train and will fix that later)

Looking at a Market Backward To Create Great Products: The Elements

-Passionate dream

-Convergence

-Big change that is blindingly obvious in hindsight

-Introduced in steps that market can accept

Historical Case Study: Galvin Manufacturing Corporation 

Dream – Provide higher quality life through the mass distribution of entertainment & information = Car Radio

Convergence -  Home radio & battery eliminator developed & cars widely distributed to consumers.

Big Obvious Change – in 1930s, consumers were  spending many silent hours in cars. Radio was a perfect fit.

Walking the market -  1^st in home radios using home electricity then a kit for popular cars… then OEM. 

Personal Case Study: GeoTrust

Dream – Enable secure transaction over the Internet to assist the growth of global commerce = enable encrypted transactions/ tunnels over the Internet.

Convergence -  2001 Browsers widely distributed, VeriSign providing SSL enabling technology, many new sites and applications coming on line.

Big Obvious Change –Enabling technology- Digital Certificates were hard to obtain due to manual authentication (old world authentication methods in a  world that wanted instant gratification and automation). GeoTrust automated the authentication of digital certificates and was able to distribute in seconds what took VeriSign weeks.

Walking the market – Gained early adopters & credibility through retail and then later integrated into every hosting & merchant provider package facilitating billions of  $ transaction per year. Today method accounts for 70% of all certificates issued.

Current Case Study: CounterTack

Dream –  Create the next generation of anti-virus designed to stop unknown threats allowing governments & commercial organizations to maintain control of secrets, intellectual property & customer data.

Convergence – Attacker persistence, tools & techniques have become more advanced than technologies used to protect (Symantec, McAfee, Trend, etc.)

Big Obvious Change – Most anti-virus/ anti-malware technologies are designed to prevent known threats (seen before threats) with signatures. Most malware is encrypted and unrecognizable  so it evades current technologies. We need new technologies that look at complete malware behavior in the operating system to stop these attacks.

Walking the market –  Deploy the technology as an advanced honeypot/honeynet and malware analysis engine as customers become more comfortable running it on production systems to replace AV software. 

Building a Team

-Start with a large group of co-founders with different expertise (marketing, engineering, etc.).

-Understand that skills required in one phase of growth may be different from the next (initial prototype versus a product that scales to many customers).

-Try to find a group of people with the correct skills who you trust and work with them over-and-over.

-Use the same technique to recruit your board (independent directors & investors). This is often overlooked, but can destroy a company faster than any other factor.

Working with Venture Capital – What are they after?

-A return that is well above market. 5x+ Money invested within 4-6 years.

-They are looking for a hit rate of 20%-30% (80/20 rule). If 20% of their companies hit their 5x + criteria they should be successful. The other companies will fail, breakeven or provide a modest return.

-They are looking for repeat entrepreneurs & teams that they can invest in over again. Repeat successful  teams increase the probability of success and spawn new teams.

-They are all looking for the next thing that is obvious in hindsight, but disruptive now. These can apply to niche as well as large markets. However, the bigger market is more exciting.

Working with Venture Capital – What are you after?

-A fund that is early in its lifecycle where there are plenty of reserves for follow on investments.

-Domain expertise in the general area related to your company.

-A real partner willing to put in long hours to assist the team and who understands that startups are more art than science. However, does not try to run the company.

-Well connected to all the strategic companies in your space – connections matter.

-Someone who is also passionate about your dream with a track record of success

Looking backwards at a market

Every year brings a bit of hope and excitement for me.  There is nothing like working with a team to try to do something important in this world. Personally, I can’t get enough of it. I think we are all better off when we find our professional passion in life.

I also like to reflect on what it is like to be an entrepreneur in today’s world. There is so much opportunity and growth that many have the chance to be part of numerous startups. Our journey is not just one company, but a few at least. Along the way, there will be success and failure. The quest is for the meaningful success that will add value to this world.

I will never forget a talk by the CEO of Motorola when I was an idealistic MBA student. He said that his grandfather had started the company after failing at two previous attempts. He also said that successful entrepreneurs often think differently about markets. They look at an existing market backwards and see what everyone missed. In Motorola’s case, everyone was competing heavily in the radio entertainment set market and beating each others heads in. One day, while sitting in his car, the Motorola founder had a backwards moment. Why are there no radios in automobiles? After all, we spend so much time in our cars.  Motorola made the first car radio and the rest is history.

I believe that this talk was inspiration for GeoTrust where we looked at an existing security market and reinvented it through authentication and distribution methods that made a lot of sense looking backwards. You can look at existing markets today like Palo Alto’s reinvention of the firewall market and Apple’s reinvention of the smart phone market to see this concept in action.

There was another lesson in the Motorola CEO’s talk. Failure is often a requirement for success and persistence pays off. I learned in my time at US Army Ranger School that your mind often fails before your body. If you can conquer your own mind and hold out just a little longer, you can accomplish more than you think.

Part of this resilience requires thick skin. Not only must you learn from mistakes, but also the people who contributed to a failure cannot consume you.  I must admit that I have spent time festering over why certain people could do such things. However, I always do better when I put that aside and focus on the fun of building something new. People who do the wrong thing generally get the final outcome they deserve after a number of years. A bad VC may have her/his fund fail and a bad entrepreneur may never build a company of value or cooperate with a great team… Mostly, it all comes around. It is best to keep moving forward and focus on your passion to try to build something that brings great value to this world and correct your own mistakes. Keep your glass always half full.

Anyway, as I sit on a train bound for NYC, I am thinking back to my MBA years. I feel as passionate and idealistic as I was then, but with a small dose of reality and experience around the concepts I heard in that speech. For a quick talk, there was a life time of substance..

(etaerc gnihtemos) I spelled that in reverse for fun.. you have to look backwards to see it.

Happy Holidays

Happy Holidays to everyone! I hope to extend my blog in 2013 and I appreciate all the visits and numerous emails in 2012.

Specifically, I hope to extend my publishing around venture capital. I have had some great and "not so great" experiences in this area which I hope to share with those starting companies for the first time in 2013. As a country, we need to continue to innovate and founders are the heart and soul of our economic engine - times remain excellent to start a company and there are great investors to help you achieve your dream.

As for me, 2012 was a very meaningful year and I look forward to the excitement of 2013 in my current business venture.

Neal

Ego - The Great Multiplier or Destroyer

On a train from New York to Boston, which gives me time to ponder an important subject that has bothered me for years at former ventures. The subject is how much ego is too much in a start-up.

Ego is an important part of a successful person that reflects confidence and leadership traits. However, too much ego becomes counter productive in a start-up. To be direct, a little narcissism exists in most of us; however, when it dominates a person’s thought process it can lead to division and destruction of a business and personal failure.

For me, the issue of ego feels like an enigma. Why would a person go so far to sacrifice collective and personal success to be right or have his/ her name temporarily in lights? It seems like a powerful contradiction because collective success leads to more opportunity, confidence and lasting satisfaction.

This problem exists in every business, but becomes greatly magnified in early stage companies where the stakes are high and the personalities are strong. I believe that it may be a problem without a firm answer. I am a believer that the extremes of our personalities make us great or a disaster. Every successful business was generally accomplished with large risk, drama and a degree of ego. Apple is one example where the founder was minimized and the company floundered on the brink, but made the most amazing comeback in business history. You could argue that the young Steve Jobs extreme personality drove him out of the company and the confident/ more politically savvy Jobs brought him back and saved Apple. His ego came into balance.

The only possible answer I can see here is to encourage team play. The more you are comfortable with a team effort, the better you will control your ego and needs as you interact in business. Much like a football/ basketball team, everyone has his or her own strengths and weaknesses. The idea is to maximize the strengths and minimize the weakness – which can only be done through a group effort. You cannot have all the answers yourself and you must be open to criticism to improve the team. Also, everyone cannot be the quarterback/ point guard – you have to understand your role. Having a role less than being in charge is extremely difficult for highly confident/ high ego/ high performing employees, but is a necessity for success. This also makes you better when you are in charge because you understand teamwork and how it relates to achievement & performance.

Ego is a great multiplier or destroyer of fantastic business ideas. If you get the balance right, everything works. I am sure this extends to personal life as well as business and has many applications.

Too much of a good thing makes it a bad thing… and it can be really, really good if you can tame it.

Learn to Bounce.

“It’s not how fast you run or high you climb, but how well you bounce that leads to achievement”

I have not blogged in some time. I have been heads down with my latest venture and have greatly enjoyed the last 9 months. I was reflecting a bit over the last ten years, which have been the best years of my life. They have not been easy years, but they certainly have been meaningful ones.

When I was young, my father insisted that I play sports – especially team sports. He inherently knew that sports help you adjust to losing and winning. Losing is something we all experience. We need to find courage to learn, dust ourselves off and get back up to try to win. Winning is a moment when we need to demonstrate modesty and acknowledge credit to the team. My father told me, “When you win, look like you have done it before - when you lose, look like you have done that before as well”.  Watching the Olympics this year, we could see everything that is great about competition and all the emotion that comes along with winning & losing.

I have done a lot of reading on start-up success. However, I think the truth is somewhat fuzzy. At the end of the day, the difference between success and failure comes down to human judgment.  Of course, there is market timing, great teams and luck that play a role. But along the way, decisions have to be made based on imperfect information by imperfect human beings. It’s not a roll of the dice at all, but there is a lot of intuition & gut backed up by data points that are at best directionally helpful.  Here is where you bounce…

Every startup will make a change to get it to work. Some changes will lose and some will win. You may have to try a couple times to get it just right. This is not surprising as it is the same with life. You have to work with your kids and adjust to help steer them the right way – same with all your relationships and career choices.  It’s the ability to take an educated bounce that moves things into the win column.

Everyone needs a good butt kicking in life to get it right. Also, victory is that much better having tasted defeat... like the feel of a hot fire after hiking on a cold, cold night.

Happy Labor Day.