Category: Entrepreneurship
Recently, I wrote a post titled After Your First Big Success, What’s Next? The comment thread was powerful and fascinating, as was the direct email feedback I got, including the following note:
“I think it would be interesting to hear your perspective on how an entrepreneur should approach “what’s next” after coming off a failed business. How should one manage their own emotions and their own perspectives post failure? It’s easy to play the blame game and it’s easy to be extremely hard on ourselves. There has to be constructive ways to move forward rather than destructive ways that could lead to lack of confidence, or depression.”
Having failed at a lot of things, I’m completely comfortable tackling this. But let me establish my bonafides first. My first company, Martingale Software, failed (we returned $7,000 of the $10,000 we raised.) My second company, DataVision Technologies failed. I didn’t have success until my third company, Feld Technologies. While my first angel investment was a success, I resigned as the chairman after the VCs came in and left the board after the CEO was replaced. In the late 1990s, what looked like my biggest success at the time, went public, peaked at an almost $3 billion market cap, and then went bankrupt three years after the IPO. And the second VC fund I was part of, which raised $660 million in 1999, was a complete disaster.
As the cliche goes, I learned a lot from these failures.
I’ve had many more. I remember firing my first employee, which I viewed as a failure on my part, not hers. I remember the first CEO I fired and staying up all night prior to doing it because I was so nervous and miserable about the decision I’d made to back him. I remember the first company I funded as a VC that failed and struggling to figure out how to shut it down after everyone else fled from the scene. I remember the first time someone threatened to sue me for doing a bad job for them (they didn’t.) I remember the first time I was sued for something I didn’t do (I eventually won.) I can keep going, but you get the idea.
What’s next is simple. It’s whatever you do next. In some cases this will be easy – you’ll already be on to the next thing before the previous thing you were working on failed. In many cases it won’t be easy – you’ll be wallowing in the quicksand of the failure well after the other bodies have been sucked below the surface.
How you deal with your own emotions, and perspectives, is an entirely different matter.
I love the approach of Jeremy Bloom, the CEO of Integrate (we are investors) who I have immense respect and adoration for. In 2006 at the Winter Olympics, he was the best freestyle mogul skier in the world. On his last run, he was expected to take gold. Halfway down he missed a turn and placed sixth. As Jeremy told me, he gave himself 24 hours to be angry, depressed, upset, furious, frustrated, confused, and despondent. I imagine him in his room in the Olympic Village systematically destroying all the furniture. One minute after 24 hours, he was on to the next thing, with the failure solidly in his rear view mirror.
Now, 24 hours is a short amount of time. I’ve often carried my failures around for longer, but never much longer than a couple of days. I separate how I feel from failure from how I feel about life and what I’m doing. Interestingly, for me, failure isn’t the thing that gets me depressed, it’s boredom combined with exhaustion. But that took me a long time to figure out.
I’ve found that talking to people about my failures is helpful. Rather than hold them inside, I talk to Amy (my beloved) about them. I talk to my partners about them. I talk to my close friends about them. I don’t ignore the failure or try to bottle it up somewhere. Rather, I set it free, as quickly as I can.
In our book Do More Faster, we have a chapter on the the wonderful story of the failure of EventVue. After it failed, some of Rob and Josh’s friends from the Boulder Startup Community had a wake for EventVue. We celebrated its life, buried it, and moved on. I loved this idea and have done it a few other times for failed companies. It’s important to remember that even in death you can celebrate the wonderful things that happened during life.
But ultimately, you have to know yourself. There is no right answer or magic salve for getting past failure. If you are going to be an entrepreneur, you are going to experience it a lot. It’s just part of the gig. Start by understanding that, and asking yourself what you are really afraid of. And, after you fail at something, let yourself experience whatever you want to experience, remembering that it’s just another small part of the journey through life. And then go on to whatever is next, in whatever time you are ready for it.
If you are an founder or employee of a public company, repeat after me:
This is one of my favorite Jeff Bezos quotes.
It’s easily to get bummed out when your stock price drops. I believe the emotions follow the +1/-5 rule. Each time it goes up, you get one unit of happiness. Each time it goes down, you get -5 units of happiness.
Think about that for a second. If you look at the stock price every day the market is open, you’ll look at it about 250 times a year. Let’s assume that your stock is higher at the end of the year, but that on 125 days it goes up, and 125 days it goes down. You’ll have +125 happiness for the up days and -625 happiness for the down days. Even though your stock price is higher at the end of the year, you’ll have -500 happiness points.
Now, in the above case, if you only look at your stock at the end of each month, you’ll have 6 up days and 6 down days. That’s +6 – 30 = -24 happiness points. Still unhappy, but less so.
If you look at the stock only one time at the end of the year, you’ll have +1 happiness points.
Lesson: Don’t look at your stock price. Run your business. Work in your business. Do amazing things. Build value. Derive your happiness from the amazing things you are doing for your customers, the great people you work with, and the mission that you are on. Oh – and all the great things in the rest of your life outside of work.
Remember: You are not your stock price.
A few weeks ago a I wrote a post titled It’s Not Right vs. Left, It’s Old vs. New about the conflict between innovators and incumbents. As a society, we are just starting to wander into the real structural conflict around this and I don’t believe our government, either at the local, state, or federal level, really knows what to do about it, or how to effectively engage in it.
If you want a magnificent example of this, all you need to do is look at what’s going on with Bitcoin. Actually, you just need to read two relatively short “open letters” which appeared on the web this morning.
First, read U.S. Senator Joe Manchin (D-W.Va.) letter asking regulators to ban Bitcoin.
Now, read Fred Wilson from USV’s blog post A Letter To Senator Manchin where he explains how regulatory activity in the US is already inhibiting innovation around Bitcoin, rebuts Manchin’s perspective, and analogizes Bitcoin to the Internet.
It’s probably no surprise that I completely agree with Fred’s perspective.
For disclosure, I don’t have much of a financial stake in this game – I own slightly less than 20 Bitcoins (I’ve used fractions to buy some stuff), have no intention to be a Bitcoin trader (I don’t actively trade individual public company stocks or currencies either), and I don’t have a direct equity investment in any company around the Bitcoin ecosystem (although I have several investments in VC funds who do.) I originally bought the Bitcoins for the Coursera course Startup Engineering which I managed to get through the fourth week of before I couldn’t make enough time to keep up with it. I thought I’d bought 10 but was surprised to see a few months ago that I had 20.
While I don’t have a financial stake, I have a huge intellectual and emotional stake in this. Bitcoin is a fascinating innovation. It has the potential to transform a number of different things, where fiat currencies and payment mechanisms are merely two of them. As a computer science problem, Bitcoin is a fascinating one. And, as an innovation vector, it’s a great example of “new” in a world that is desperately trying to hold on to “old.”
We are going to have a very rocky road as a society over the next 40 years. As with every generational shift, there is a lot of disruption (the 1960’s immediately come to mind.) But the amount of change, pace of change, democratization of innovation and entrepreneurship, connectivity of communication around the world, and intellectual complexity of the new innovations being created will dwarf anything we’ve seen as a species since our first moments of sentience.
Bitcoin is just a visible 2014 example of this. As Fred says at the end of his post
“When something as new and as different as Bitcoin emerges, it is tempting to want to “put the Genie back into the bottle” and protect ourselves from it. But thankfully the US did not do that with the Internet. The impact of the commercial Internet on the US economy and our society as a whole has been massive and overwhelmingly positive over the past twenty years. We should approach Bitcoin in exactly the same way and if we do, I expect the benefits we will see will be equally important, impactful, and beneficial to our economy and our society.”
My message to all the incumbents out there is a simple one. The more you try to organize and control “the new”, the harder it is going to be on society. The new is going to route around things, just like the Internet routes around things. Rather than fight innovation, embrace it, encourage it, iterate on it, accept the mess of it, and play with it, rather than against it. It’s more fun and will serve us better in the long run.
For the past 15 years, I’ve signed everything in green ink. I don’t remember how it started – it just did. I think I found a green Paper Mate felt tip pen that I liked and just started using it. So – if you have something from me signed in green, you know it’s an original. Otherwise it’s a copy or has an electronic signature.
About once a month I get a document back from a lawyer with the request to “please sign in blue ink.” I’ve always found that amusing, so I do.
This morning I wandered by my partner Jason’s office and told him about the regular, recurring requests to please sign in blue ink. He looked at me like I was from Mars, which might be true. I showed him the request. He said, “I don’t remember which class in law school taught that documents need to be signed in blue ink.”
Just a reminder that it takes a long, long time for archaic business practices to completely disappear. Fax machine anyone?
I had a wonderful time interviewing Larry Gold last night at Entrepreneurs Unplugged. Larry is a special guy and someone I learn from every time I’m with him. Among the many great stories he told, including a doozy about the time he was a sophomore at Yale, he had a powerful one about how entrepreneurs assess potential outcomes. It resulted in a fun version of entrepreneurial math.
Envision a scenario where you there are 10 separate things you need to do to have a successful outcome. Each one has a 90% probability of success. What’s the probability that you will achieve a successful outcome?
I struggled with 6.041: Probabilistic Systems Analysis and Applied Probability (the probability course I took as an undergraduate) – it was one of those courses where I felt like I was a week behind for the entire semester. I did better in 15.075: Statistical Thinking and Data Analysis – maybe I was a little older, it was a little easier than 6.041, or I was more interested because I liked the professor better. If you are having trouble with a quick answer, both courses are available to you on MIT OpenCourseWare.
Back to the question. If you guessed around 35% you are correct. It’s actually 34.87%, which is (.9)^10. Now, by using the word separate, I’m implying 10 independent events, but this is the nuanced joy of theory versus practice.
Larry pointed out with glee that regardless, entrepreneurs believe when they start down the path of doing these 10 things there will be a successful outcome. Hence entrepreneurs math is (.9)^10 = 1.
Whether you agree with the math or not, it’s a great anecdote. So many things that we try as entrepreneurs and investors fail. We never make an investment thinking “this isn’t going to work”; we always invest thinking “this will work.” I don’t know any entrepreneurs who started their business thinking “this will fail” or even “this only has a 35% chance of working out.”
This shit is hard. And it’s low probability. Even if you have an ultimately successful outcome, many of the things you are going to try along the way are going to fail. But to do them, you’ve got to believe they are going to work. You’ve got to enter into the illusion that (.9)^10 = 1.
“In Washington DC, it’s not right vs. left, it’s old vs. new” – Senator Michael Bennet
I’ve been thinking about this since I heard it last Sunday evening in a conversation with FCC Chair Tom Wheeler. I was part of a fascinating private group discussion with him and came away with a lot of respect for him and appreciation for how he approaches things. While I’m on a year hiatus from political stuff, I was intrigued by the opportunity to meet with him given my close relationship with Phil Weiser (CU Law Dean), and Phil’s deep respect for Tom.
In the midst of the conversation, this line from Michael Bennet, one of our Colorado Senators, popped out.
Michael’s statement rang true with me. But it’s not just in Washington, it’s everywhere. This is the classic incumbent vs. innovator challenge and we are seeing it play out aggressively across all industries and geographies as the machines, especially the software in the machines, have the impact on society that many of us have been anticipating and investing in for a long time.
The confusion – and conflict – in our society around this is just beginning. The mess in DC is just a starting point. Suddenly cities like San Francisco are struggling to reconcile two diverging classes – the rich and the poor – with the middle rapidly being squeeze out of the city. Cities like Chicago and Seattle are seriously considering trying to regulate a new generation of innovators, in the form of Uber and Lyft, while at the same time trying to present themselves as forward thinking innovative places to live. We went through this last year in Denver with Uber and my instinct at the time was that this is just the tip of the iceberg.
It’s a really big iceberg. The incumbents are extremely powerful and love the status quo. Sure – they aren’t stagnant, but they’ll use all the tools available to themselves to protect their flanks. And the attackers aren’t from the left or the right, but from the new.
I’ve spent my entire professional career working on the new. I’ve always felt frustrated by the incumbents, by the bureaucracies, and by the old way of doing things. I’m not very nostalgic and spend most of my energy looking and moving forward, rather than trying to protect what I have.
Over the past few years, I’ve felt like the dynamic I’m describing was accelerating. There were days I just felt like I was getting older, but when I reflect on it, it’s no different that it always has been throughout history. While time marches on linearly at a very consistent cadence, change does not. It comes in fits and spurts and is as chaotic as the early days of any fast growing company. It’s not predictable, and when it accelerates, lots of crazy shit starts to happen.
I don’t have a solution to this, nor do I think there is one since it’s a completely unstable and dynamic situation. Many humans instinctively resist change. We fear the uncertain. We try to control what we can’t control.
Accepting the mess is part of the beauty of being human. All this has happened before, and all of it will happen again.
Techstars is rolling out a short video program with some of the entrepreneurs and mentors favorite quotes. I recorded a few of them recently – my first one is up.
I’m a huge Battlestar Galactica fan and think Commander William Adama has amazing leadership lessons for any entrepreneur. If you don’t know what “rolling the hard six” is, it’s a classic example of a high risk / high reward scenario. Per Urban Dictionary:
“Rolling a hard six has a probability of about 3% whereas rolling six by any other combination has about a 14% chance. A hard six pays 7 to 1 whereas a regular six pays only 7 to 6”
I’m not a craps player, but I love the metaphor. As an entrepreneur, you often have to combine luck with the right call at the right time. You can make the right call and be unlucky, or you can make the wrong call and be lucky. But when you find yourself in a jam, you often need to make the right call AND be lucky.
My imitation of Adama is pretty lame however.
“Passion is temporary. It doesn’t last long. Love is enduring. And that’s the important thing. If we all had love in our lives to the degree that we should, it would be much happier.”
— UCLA Anderson | John Wooden Global Leadership Award ceremony (May 21, 2009)
Last night I had dinner with my partners and our significant others. It was a wonderful evening with the three people I work most closely with, the people they love, and the most important person on the planet to me.
Earlier this year I had dinner with Jamey Sperans, one of our investors. Late into the night we talked about a variety of things at an outdoor restaurant in Philly under the heat lamps as a chilly spring night unfolded. Much of the conversation was personal, as in addition to being one of our largest investors, Jamey has become an incredibly close friend. I was struggling with my depression so we talked some about that, but that merely served as a launch point for a deeper conversation.
In that discussion, we talked about the concept of “Business Love.” For a long time, I’ve talked about “business intimacy” – it’s the relationship I try to develop with the entrepreneurs I fund and the people who I work with. It’s a level of emotional engagement that is much deeper than “friendship” or “respect”, is not easily developed, and can be quickly lost if one party isn’t interested in investing the energy or violates a fundamental principle such as trust or honesty.
Jamey and I agreed that “business love” was more profound and significant than “business intimacy.” We discussed the concept of business love in the context of Foundry Group with the unambiguous agreement that the four of us (Ryan, Seth, Jason, and I) have a “business love” relationship.
Once a month we have a full-day offsite. We try to keep our process to an absolute minimum, so we have lunch together on Monday’s and a once a month offsite. The rest of our interactions are continuous and real-time, including almost all of our investment decisions.
Yesterday’s offsite was a perfect example of business love. We spent the day sitting around Jason’s dining room table (the general location of our offsite), got calibrated on a few things that are new initiatives of ours including FG Angels, a new treat coming out next week from us, and a new project we are launching in January. We talked about a few deeper, long range things we want to get right, especially in the context of several of our very successful investments. And we argued about some stuff that we disagreed on in an effort to both understand the data and get aligned.
It was awesome and one of my favorite days of the month. When we split up around 3pm (we end when we are finished) I had a permagrin on my face. I walked home and spent a few hours grinding through email. I went to a meeting and then picked up Amy to head back to Jason’s for dinner. We had an amazing dinner as a group to end the day.
I woke up this morning thinking about business love. I remembered my conversation with Jamey. I recalled that Jo Tango had written a post on business love a while ago and went back and looked it up. I’m guessing that Jamey was the LP in the post that Jo is referring to, since the principles of business love, that Jo refers to, are exactly what we talked about.
- Members of those firms really respect and like each other. They’re very tight. In fact, they love each other
- They have a sense of mission. They want to make money, but that’s not the most important driving force
- How they treat each other spills over to how they treat their entrepreneurs and investors
The process of creating and building new companies from nothing is hard. It’s incredibly rewarding when it’s successful, but the process can be an excruciating, chaotic, and messy. There are moments of extreme stress. Failure is always lurking in the background. Working alongside people you truly love makes a huge difference, at least for me.
I get demos every day. Multiple times a day. I don’t want to see a powerpoint deck – I want to play with something. I don’t want to hear a description of what you do – I want to see a demo. I don’t want you to tell me your background, where you went to school, or where your grew up. I want to see what you are working on.
I still remember my first meeting with Bre Pettis at MakerBot. I walked into the Botcave in Brooklyn and was confronted with a long, narrow Brooklyn-style industrial building where I could see people working away in the back. But before I got to them, I had to walk through a 1000 sq. ft. area of MakerBot Thing-O-Matics printing away. This was an early “bot farm” and it probably took 15 minutes before I walked the gantlet. They were printing all kinds of things, there were display cases of other stuff that had been printed, and a vending machine for Thing-O-Matic parts.
When I got to the back where people were working, I totally understood what MakerBot did and what was possible with 3D printing.
We are lucky to be investors in a bunch of companies creating amazing new products. One of them, Oblong, as been working on spacial computing since John Underkoffler’s early research in the 1990’s at the MIT Media Lab. For a number of years they were described the “Minority Report” technology (John was the science/tech advisor to Spielberg and came up with all the tech in the movie.) The following video is John showing off and explaining the core G-Speak technology.
The demo is iconic and amazing, but it takes too long and is too abstract for their corporate customers buying Oblong’s Mezzanine product. The short five minute “overview video” follows.
While this gives you a feel for things, it’s still showing the “features and functionality” of the tech, applying a general use case. For several months, I kept banging on them to set up a simple use case, which is the how I use the Mezzanine system in our office. I use it every day and it’s been a huge factor for me in eliminating all of my travel.
A few months ago, Oblong had a sales off-site to go through the progress they’ve made this year and to focus on the balance of the year. They’ve had a great year, with a strong quarter-over-quarter sales ramp for Mezzanine on both a dollar and unit basis. The customer list is incredible, their classical enterprise land and expand strategy is working great, and new high-value use cases are being defined with each customer. So I smiled when I the following slide popped up on my Mezzanine during our weekly leadership team call.
While a little abstract in writing (I don’t expect you to understand the first three bullet points unless you know how Mezzanine works), when it’s shown in the first five minutes of a demo it simply blows your mind. And you totally get all three of the core technologies that Oblong has incorporated in Mezzanine (spatial computing, pixel virtualization, and data pipelining.) Your next reaction is “I want one.” And then you are ready for the feature / function discussion, which can easily go on for 30 minutes.
There is endless talk about product development and getting “personas developed” while you figure out how to build your product for them. This approach is equally useful for demos, but it is so often overlooked. I can’t tell you the number of times people start just showing me stuff, rather than saying “here’s the problem I’m going to solve for you that I know you have” – BOOM – and then I’m totally captured for the next 30 minutes.
Try it. The first five minutes is the most important with someone like me. Don’t waste it.