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.

A look in the review mirror: Learning

I took a few months off from blogging – it is amazing how time passes in startup life. It seems that I measure my business life in months (not quarters) and there is never enough time.

I am reflecting today during abnormally nice weather in Boston, as I get ready to make a trip out west.  I am thinking about people that I have known over the years and situations I have experienced. I have had a lot of diversity in experiences and I have seen a lot. However, I know that I am still constantly learning. When you stop learning, you stop living. Also, stop learning and your business skills become non-adaptable because every startup is different like every journey is not the same.

In a not so distant startup, I had a board member tell me the product needs work after we grew a lot in the year. Whenever, someone criticizes, I pay attention. However, I ask questions to understand the validity of the issue. In this case, I asked her/he how she/he knew it needed work and if she/he had tried the product.  She/he stated that she/he did not need to use the product because she/he sat on many other boards in many industries and knows what she/he was talking about with product issues.  (Sorry about the she/he – I just don’t like to get too specific about people to make a point).

Reflecting on this incident, one thing comes to mind. I feel sorry for her/him because she/he stopped learning a long time ago…

We stop learning for a variety of reasons and here are my top two reasons below:

1.     Ego – we begin to believe that we did everything ourselves and we are smarter than almost anyone else. We separate people into classes and put ourselves at the top.  This is a really silly reason to stop learning, but it happens. If this is you, you just need someone close to you to be honest and firm. You need to ground yourself in a foundation made of stone and not sand.  In this scenario, sand if often money, power and recognition while stone is faith, family and community.

2.     Tired – we no longer have a passion for what we are doing which happens from years of wear and tear/ stress. This is understandable, but as in the book, Who moved my Cheese?, you need to find new cheese and move on to something you enjoy. (read the book – it will come in handy some time in your life)

I always have to do a gut check every single day to learn and some days are better than others.  I spent some time in the Army going through Ranger School and being a platoon leader in Desert Storm. I had a basic premise that on one day you could be very brave and on the next day you could be a coward. To me, courage is reborn every day. You have to commit. If you don’t commit, your ego may make you relax or your fatigue may get the best of you. Vince Lombardi had a saying that “fatigue makes coward of us all”.

You could also say that ego and fatigue make us bad business people while learning feels like a bright, sunny spring day full of promise.

It is a beautiful, sunny day in Boston.

How to Spend the Dash

If I can see it, then I can do it

                           If I just believe it, there's nothing to it

On a train from NYC to Boston reflecting on how much fun I have had over the last decade....

I have found startup endeavors to be marathons & not sprints. You need a product, market and great team. However, more than anything you need to “believe” in your heart you are not only going to make it, but you can impact the world with your work.

I would not say, “there is nothing to it”, but it does not feel like work. It feels like a mission – something very personal that you cannot separate from easily. Not to over plagiarize R Kelly, but you do think about it every night and day. You go to bed thinking about it and you wake up thinking about it.

For a founder, a company feels like a child that you want to grow and nurture. It is extremely hard to release though acquisition and if it happens you have an empty nest/ a sense of loss even if it comes with gain.

Being an entrepreneur is a contact sport so your unshakeable motivation and sense of purpose matter more than any other factor. Being this way, you are on the edge most of the time feeling every speed bump in your path.  But man.. you feel alive….

Personally, I feel very blessed to be part of the startup mosaic. They say between birth and death, you have a dash on your tombstone that represents your life. The question is how you will spend the dash – doing what you love or doing what you don’t love.  Many would love startups, but never take the leap because of the risk, emotion and financial danger.

If you can see it, I think it is a great way to spend the dash..

Preventing Startup Fratricide - Who to Trust

I know that this sounds paranoid – I don’t think someone is out to get me (well maybe). In business you have to watch your back and often it is hard to know the people you can trust.  There are individuals motivated by the wrong purposes. Intentions are not always clear and frequently hidden.

I found through the years that it is often hard to tell the good from the bad and the ugly if you are not careful. For this reason, you need to de-risk your venture with the best possible hires, independent board members and investors. It is often easy to settle for the money at hand or to forget the importance of a truly independent director or a first class executive. If your goal is to surround yourself with the best people for a particular type of venture, your bad hires/relationships will be mitigated. You will not be perfect, but you will have enough rational thought in your company to prevent internal destruction. At that point, only the market can defeat you or you defeat it.

Too many companies are destroyed internally before they can succeed in the market through maneuvering, politics and irrational behavior. You can see all these traits in many organizations and they are greatly magnified/ intensified in a startup. This issue is why the best investors invest in people as much as ideas. Everyone will say that they invest in people/ teams  - it is easy to say and hard to really mean.

Sometimes you have to receive a few prior scares to see things clearly. What I have said here is not new - many people in the investment community and startup world say it. However, companies still run into trouble every day because they don’t mean it.

Here are the rules:

1.     Every executive hire matters a lot – hire the best you can find and don’t settle. Speed matters, but hires matter more than speed. This is the “speed” exception for a startup because in most cases speed is of the utmost importance.

2.     Make sure your investors and directors meet the same quality as your hires. If you would not want to hire them, why take their money or put them in a position of influence? Speed once again matters less than quality.

3.     If you hire the best and work with the best, trust is not something you need to focus on as much. Rational thought will prevail and you will be free to live or die in the market without the fear of fratricide.

fratricide [ˈfrætrɪˌsaɪd ˈfreɪ-]

n

1. the act of killing one's brother

2. a person who kills his brother

3. (Military) Military the destruction of or interference with a nuclear missile before it can strike its target caused by the earlier explosion of a warhead at a nearby target

[from Latin frātricīda; see frater¹, -cide]

 Neal