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.