Category: Entrepreneurship
I like Memorial Day weekend and Labor Day weekend a lot. They are my bookends for summer and kick off the official “back to school” fall cycle. I realize that kids are back at school already, but even when I was in school I viewed Labor Day weekend as the official market.
I’m noticing an enormous amount of anxiety in the air. When I reflect on what’s causing it, I suspect some of it is the public market gyrations along with the endless discussion around it. Some of it is the Republican Primary circus and the crazy and apparently unwanted popularity (at least by the Republican establishment) of Donald Trump. Some of it might be that it’s just been really hot outside for a while and it’s time for the cooler, softer tones of fall. And some of it might be all of the construction everywhere, which is at a fevered pitch right now.
I’m in a consistent conversation with a lot of entrepreneurs. “Is my burn rate too high?” “Will I be able to raise the next round?” “Are valuations going to go down?” “What should I do about the coming _fill_in_the_blank?”
Fall is coming. I don’t know what the public markets will do, nor do I know what the private markets will do. But the weather, at least in much of the United States, will cool off and the leaves will turn different colors. And, if 49 years of life on this planet is any guide, there will be an emotional shift from summer to fall.
Let your body, soul, and mind reset this weekend. Turn off the electronics. Don’t try to “catch up” before things get crazy. Watch a movie with your sweetie. Eat some ice cream. Sleep late. Go for a long walk in the mountains somewhere. Read a book. Take another nap. Have a long, slow dinner. Play with your dogs. Or do whatever you like to do to relax.
The fall is always intensely busy. Charge up your batteries and get ready for it.
I was in a conversation last week with a friend who asked “do you think this is the beginning of the end?” We were discussing something totally wacky that had just happened that clearly could be viewed as an indicator that we have crested the peak of this economic cycle. Then, earlier today, I was on the phone with one of my favorite lawyers and he made a joke about a deal I’m doing as harkening back to the late 1990s. He asked if I thought it was an indication of the top of the cycle. We had a good chuckle (probably PTSD gallows humor from 15 years ago) and I suggested that they slow down the hiring of the associates at their law firm so they wouldn’t have to lay off so many in the inevitable downtown.
Somewhere in between these two conversations I told someone that I thought this was actually the “end of the beginning.” And, tonight at a wonderful dinner, I made the statement to the friend that we were having dinner with that I thought the next 30 years were going to be incredible.
I think we are at the end of the beginning of a dramatic shift in how our species deals with existence. Depending on who you believe, we are either 30 years from the singularity (Kurzweil) or only 15 years away (Vinge). The new science fiction coming out is doing a remarkable job of helping us set a context for the different aspects of what we’ll need to deal with. Some of it will be just as off as Philip K. Dick can be while some will be just as accurate as Philip K. Dick can be. If you are a fan of Philip K. Dick, like I am, you know exactly what I mean. And if you aren’t, I suggest you start with Do Androids Dream of Electric Sheep?
Humans have serious issues with exponential curves as we want to make everything a line. But a lot of the stuff around us is happening exponentially and we don’t realize it. As a result, we’ve dramatically underestimated the impact of technology on – well – everything. And, since so much of it is exponential, it compounds at an incomprehensible pace. When we look outside at concrete, steel, and glass going up slowly, it lulls us into a sense of normalcy.
The machines want us to feel this way.
Think about it for a brief moment. Suspend disbelief. Wind the clock forward 100 years. Do you think, as a species, we will still be struggling with the things that vex us today? Will we still be arguing about the same stuff? Will physical instantiation of things have the same meaning? We will still be eating Cocoa Puffs?
We are at the end of the beginning. It’s going to get wild. Buckle up.
Last week I participated in a podcast hosted by A16Z titled How Innovation Ecosystems Grow Around the Globe.
I got to talk with AnnaLee Saxenian, the Dean of the UC Berkeley School of Innovation. Her book, Regional Advantage, had a huge impact from on my thinking around Startup Communities. From a 2010 blog post of mine about a bunch of books that I had read on a week off the grid.
Regional Advantage: A+: I’ve read bits of Annalee Saxenian’s seminal book about the differences between the evolution of Silicon Valley and Route 128, spent a tiny bit of time with Annalee at a Silicon Flatiron event, and have thought hard about this, but I had actually never read her book. It’s awesome – anyone that cares about how entrepreneurial communities work must read this.
The other guest was Chris Schroeder who recently wrote a book titled Startup Rising: The Entrepreneurial Revolution Remaking the Middle East. I’m definitely going to spend more time with Chris in the future – he’s been spending a lot of time in the Middle East exploring entrepreneurship and has deep current experience and ideas that I’m interested in.
If you are interested in startup communities, I hope you will listen to this podcast. It’s one of the better ones I’ve done around the topic.
I got the following email recently, titled “Unicorns Without The Magic.”
“With the rise in venture capitalism it’s hard to say the word “start up” and not be offered an abundance of accelerator programmes, free office space, free apartments & a free bible of connections. I myself have felt the pressures of the world of start up wonders & the prospects of investment. Whilst finishing my finals at university, I created my own algorithm for a business model to achieve a sustainable competitive advantage in a digital space. Through this I’m now building my first digital ecosystem, but along with it I’ve been offered numerous places in accelerator programmes, numerous loans and a wave of unicorn magic dust that seems to be collecting in my inbox. I’m not complaining, but what happens if the purpose of a business is greater than ones own self interest and certainly greater than a VCs interest? Our purpose is to give other people the tools to create their own opportunities, which is not necessarily in line with most VCs sentiments. I know in the next five years my company will make a lot of money, but what I don’t know is how as a 23 year old entrepreneur to says yes to the right VC and no to all the magic dust.”
My short answer was:
“My advice is simple – if it doesn’t feel good / right, say no. Keep focusing on building your business. Don’t avoid the interactions, but use your filter – which seems well tuned and appropriate – to make sure you are only spending time with people who you want to spend time with.”
I was reminded of this by Fred Wilson’s post this morning Go East Young Man (or Woman). He tells Henry Ward’s story of the financing for eShares.
“We were 0 for 21 with Silicon Valley VCs. I never got close. Most of the big firms wouldn’t even meet. A few had an associate do a Skype call even though we were 20 minutes away.
After 21 meetings in SV, I took a Hail Mary trip to the east coast and met with 3 funds. All 3 invested.”
We see this all the time. Founders who are entranced with Silicon Valley VCs. They pursue them with no focus on anyone outside of the bay area, get rejected right and left, often by associates, and end up feeling like they’ve failed. Fred’s post – and Henry’s at eShares Series A – has a great punch line that reinforces the importance of a founder having an effective filter.
“Fundraising is simple: find investors that get excited about your company. It is a filtering exercise. Too many founders believe they have the wrong pitch instead of realizing they have the wrong audience.”
Special bonus points (and some 1990s nostalgia for you): Do you remember the other company named eShares which Fred previously invested in via Flatiron Partners? I sat on the board of with Fred’s partner at the time Jerry Colonna. (a) What did they do? (b) Who acquired them? (c) How much where they acquired for? (d) Who did they compete with and what happened to their competitor?
Sometimes I Ask Myself If The Juice Is Really Worth The Squeeze
One of my all time favorite blog posts is Ben Horowitz’s The Struggle. If you are a founder and you haven’t read it, open it up in another tab for after your finish this post.
On Friday, a CEO I know sent me the following message.
“Brad – I crafted the entry pasted below this morning for my eyes only (and for my own therapeutic purposes), but in thinking about it today, I realized that you’re probably one of the only people I know who might be able to relate or who has interacted with others with similar sentiments. I’m in a good place mentally and it simply feels good to share this with someone else.”
I read it and immediately asked if I could post it anonymously. It’s in the same category for me as The Struggle, but with a different tone. Fortunately, the CEO said yes so I can share it with you. It follows.
Sometimes I wake up and look in the mirror and don’t recognize myself.
Sometimes I haven’t slept properly in days or weeks and I look in the mirror and most certainly don’t recognize myself.
Sometimes I get frustrated that going to bed is like suiting up for battle. I know that many sleepless and restless hours lay ahead before it’s okay to go back to work.
Sometimes I see how physically drained and weak I’ve become. Long gone are the days of being a muscular collegiate baseball player with MLB scouts at my heels or a lean and mean Ironman triathlete and marathon runner. My mental desire to achieve athletic greatness is at an all-time high, but my physical prowess leaves a lot to be desired.
Sometimes I wonder about underlying health issues that aren’t noticeable in the mirror and might not rear their ugly head until years into the future.
And sometimes, I see the disappointing medical test results and wonder if I’m on a path towards failure. Sometimes I don’t even know where to get started to get back on track.
Sometimes I look around and realize that many childhood friends have steady corporate jobs, children and other pursuits. They work to live rather than live to work and they are able to parse work stresses from the rest of their lives.
Sometimes I’m jealous, but mostly I’m lonely and longing for friendship with those who understand how emotionally and physically draining running a business can be. Can’t someone else understand why I can’t commit to an 8pm dinner on a Tuesday night when I’m absolutely drained?
Sometimes I ask myself if the juice is really worth the squeeze.
And sometimes, I admonish myself for such thoughts. My life is not that hard relative to those who have more physically demanding jobs.
Most of the time, however, I love my life and my job has been a source of great energy and inspiration. I know we’re onto something big and the journey has allowed me to surround myself with amazing colleagues and supporters. I only wish that I could find the perfect harmony between health, happiness and my career.
Has the word entrepreneur become too trendy as to have lost its meaning? I’m hearing it and the word entrepreneurship being used in so many conversations incorrectly.
Here’s a simple example. On a daily basis, I have an email exchange with someone who says they are an entrepreneur. I respond “What company did you start?” They respond, “Oh, I didn’t start a company, I was the fifth employee of Company X.”
Another example is the email that I get from someone in a large company who says “I want to create more entrepreneurship within BigCo.”
Now, these are well-intentioned people so I’m not critical of them. But I’m critical of the use of the word entrepreneur in these contexts.
I like Wikipedia’s definition.
“Entrepreneurship is the process of starting a business, a startup company or other organization. The entrepreneur develops a business plan, acquires the human and other required resources, and is fully responsible for its success or failure.”
Merriam Webster’s is also solid.
“a person who starts a business and is willing to risk loss in order to make money”
This morning I read an article in the New York Times titled With Start-Ups, Greeks Make Recovery Their Own Business. Other than the fact that the New York Times hasn’t yet figured out that It’s Startup, Not Start-up or Start Up it was a good article that got me thinking about this rant.
In 2010, the Startup America Partnership finally got the US government to separate the notion of small businesses with high growth businesses. The word startup was firmly introduced into our lexicon as shorthand for high growth business and now is a comfortable one. While we are still stuck with one government organization – the Small Business Administration – that tries to help both small businesses and startups, the language around this continues to evolve.
For example, I think we are finally starting to differentiate between local businesses (your local restaurant, coffee shop, bookstore, gas station, movie theater, clothing store, art store, or anything else that sells to your local community) from a startup business (a company that might be small, but is selling to anyone anywhere in the world). The language isn’t quite right, as local businesses can evolve into startups (The Kitchen, run by Kimball Musk, is a good example). But we are getting there.
And then there are a several words trying to characterize different stages of startups. A scaleup is a startup that is scaling quickly. A gazelle, a word that has been around for a while and is becoming popular again, is a startup that has achieved critical mass and is a rapidly growing company, kind of like a scaleup, but falling comfortably into the animal taxonomy that seems to include unicorns and dragons.
And that takes us back to the word entrepreneur. Theoretically, the entrepreneur is a person who creates any one of these companies (local business, high growth business, startup, scaleup, gazelle, unicorn, but not a peppercorn.) And entrepreneurship is the act of creating and operating the business. Note the and clause – you need to be the creator and the operator to be an entrepreneur, not just the operator.
As I type this, I realize I’ve buried the lead. I’ve always loved the word founder to describe the person the word entrepreneur refers to. When I started Feld Technologies, I referred to myself and my partner Dave as the founders of Feld Technologies. This was well before anyone used the word entrepreneur (the 1980s) and for many years I used the word founder. Somehow my brain shifted to entrepreneur and entrepreneurship and that’s taken over for me. But it’s now uncomfortable, awkward, and tiresome.
I think I’m going back to founder. It’ll be interesting to see how hard it is to rewire my brain. We’ll see if it lasts. While it’s not clear to me that it matters, given my pedantic obsession with eliminating the hyphen in words like startup and email, it’ll be fun – at least for me – to see where it goes.
This weekend you can catch up on Halt and Catch Fire, Mr. Robot, or the talk I gave at Big Omaha in May.
I tell stories about my favorite investment (Harmonix), an investment we clearly missed and why (Twitter), and my worst and most heartbreaking investment (Interliant), along with lawsuits and eating babies.
I then go on a riff on Startup Communities and Fundraising, where the phrase “Any rich people around here?” popped out and got some applause.
I covered the inevitable question about dragicorns and big financings, went on my culture – competence rant, and then answered whether entrepreneurs are born or made.
I had fun at Big Omaha. While I think Halt and Catch Fire and Mr. Robot are way more interesting than me, this was a pretty good interview.
I just pushed out a major update to the Startup Revolution site. This is the URL that I use for all the books I’ve been involved in and all the discussions around the books.
Take a look and give me feedback. Special bonus points for finding bugs.