A company I have a small investment in has been struggling to get the most recent version of their software shipped. A few weeks ago I ran into the CEO who grabbed me and said "we are almost ready to go live." I looked at him and said "when is the release." His answer was "Friday."
I gave him a Bronx cheer and said "when on Friday?" He looked at me like I was an alien. I clarified – do you mean "12:01am on Friday, 4:59pm on Friday, or 11:59pm on Friday." I then clarified some more: "and I mean in Mountain time." We agreed that 11:59pm on Friday was a good time (which they missed, but they got it out a few days later.)
At my first company (Feld Technologies), our client base got to the point where we were often doing multiple releases of different software on a weekly basis (we were a custom software company but used a very traditional software engineering approach to our projects.) For a long time, we used dates to mark releases (e.g. "Friday.") After way too many 11:59pm releases (where our clients definitely were not sticking around the office to wait for us) and missed Fedex deadlines (this was back when you had to Fedex the disks to the clients in another state because modems were too slow to transmit the files), we learned that a release has both a date and a time. We also learned that the external release is – at the minimum – date + 1 of the "internal release" especially on systems with live data. We also learned that the only appropriate days of the week for a release are Tuesday, Wednesday, or Thursday. I’ll let you guess as to why this is.
As I work with new startups and first time entrepreneurs, I see people learning this lesson over and over again. I think it’s just going to be part of the endless education of new software entrepreneurs that you never really learn until you are in the real world.
Andrew Hyde – the wonderful, fun, and friendly founder of StartupWeekend – wrote a great post recently On Burning Out. He’s back – after taking a long break – which is great. Last week I had dinner with another long time friend and entrepreneur who told me he "had the blues." His company had a strong 2007 and is well positioned for 2008, but he’s been sick since the holidays, has been feeling down, and can’t seem to shake it.
Burning out is a chronic problem with entrepreneurs. In the early 1990’s – for a year before and after I sold my first company – I went through a tough period where I got very depressed. I held it together and got through it, but the memory of how I felt is never far away. I was completely burned out. I’ll be forever grateful to Amy and my business partner Dave for putting up with me during this time period since they were the ones that had to deal with the brunt of my depression.
A week ago, while lying in bed, I told Amy that I felt inappropriately anxious. Very little rattles me and whenever I feel anxious, I know something is up. I’d had a mild cold for a couple of weeks, had just come off three weeks of "chill out time" in Keystone at the end of the year (where I worked, but not that hard), and was off to a really intense start of the new year. I’m also running a marathon in mid-February and even though I had been sick have been logging plenty of miles.
I woke up at 4am (an hour earlier than normal) – wide awake. I got up, worked, and at breakfast with Amy a couple of hours later repeated that I felt weird. She looked at me and wisely said "I bet you are just exhausted." This didn’t really make sense since I’d just had three weeks of chill time, but I hadn’t slept much the first week of the year.
I fought through the day, got home early, and went to bed at 7pm. I slept straight through to 8am the next morning, got up, and felt great. The anxiety was gone and a week later I don’t really remember it very well.
I put in another 14 hours in bed on Friday night – sleeping well into the afternoon on Saturday. I ran 16.33 miles on Sunday and felt great. Whatever vestiges of my cold, fatigue, or anxiety were completely gone.
I have simple advice for all entrepreneurs – listen to your body. Remember the quote from Dune "Fear is the mindkiller" and remember that most fears and anxiety are born of fatigue. Sometimes I forget, but I have this awesome life partner who reminds me on a regular basis. Don’t worry about "pacing yourself" – that’s probably not possible – but when you see signs of burn out, take it easy for a little while.
I was a keynote speaker at the University Venture Fund Conference last Friday. I had a great time and was blown away by the quality of the 300+ undergrad and graduate students from around the country who participate in the UVF program.
Most of the conference was very relevant and substantive, including a great list from Martin Plaehn’s (Bungee Labs CEO) titled Quick Hits: Do’s and Dont’s of Entrepreneurship which was posted earlier today on Will Price of Hummer Winblad’s blog. I’ve known Martin since the mid 1990’s when the company he was running (Viewpoint) bought a company I was chairman of (Thinkfish) and while we haven’t worked together since, he was in fine form on Friday and brought back good memories.
It’s so rewarding to spend a day with young people that are interested in entrepreneurship and venture capital. I did it again today with Amy where I co-taught a class on Social Entrepreneurship with Lucy Sanders (NCWIT CEO) to a Wellesley College winter session course. If the future of the US is represented by these young men and women, our future is bright.
My friend Dave sent me a hysterical Onion article titled Failure Now An Option. I hate the phrase "failure is not an option" – of course it is. Some choice quotes:
And some data.
"Other data seem to confirm the Interior Department’s findings. A recent CBS News/New York Times poll revealed that 64 percent of Americans are "perfectly comfortable" with coming up just short, 43 percent are content to try only once rather than try, try again, and an overwhelming 95 percent admitted that after falling down, they now prefer to stay down. Only 4 percent indicated having "some interest" in applying their balls to the wall."
While this is typical Onion satire, the brilliance of it is its underlying relevance.
It’s always useful to put failure in perspective. While Citigroup is likely to announce a $20 billion writedown tomorrow, that’s difficult for most of us to relate to.
However, I bet most people that have traveled in the US have had the privilege of having their bags misplaced on a trip through Denver International Airport.
The original amazing DIA baggage system cost $300m. It never worked. The city eventually turned it over to United Airlines (the dominant carrier at DIA.) United Airlines stopped using it in 2005. It’ll now cost $9m to dismantle it and get rid of the scrap metal.
Oops.
Every day I get emails from people working on new startups. I’m continually amazed at how many of them come from their existing corporate email address.
There are lots of quick reasons I can think of why this is a bad idea.
I could come up with lots more. It’s so simple to get a free gmail (or yahoo, or hotmail) email account. Be bold – take the plunge.
I heard a great line recently. Michael Price – one of the senior guys at Evercore and a long time friend (we were on the PeoplePC board together) was interviewed. Buried in the middle of a bunch of questions was a gem when the interviewer asked Michael about trust. The following popped out:
"Trust is the business word for love."
Perfect.
Creating companies from scratch is really difficult. Every successful entrepreneur knows the daily challenges and struggles that conspire against him. Sometimes the entrepreneur thinks to himself "there must be an easier way." A long time friend and successful entrepreneur – Steve Munroe – provides a creative solution.
I don’t know if I ever explained to you my premise for a business model whose main goal is to own a business that squelches the entrepreneurial drive. It is called Just Gas, the premise being that I would buy a Marina on the lake and just sell gas, nothing else. By naming the business Just Gas, it would force me to not expand into other areas, or maybe leave enough room on the sign so you could expand after a couple of years and sell Ice also, thus: Just Gas and Ice. But that’s it. The focus would force the expansion, entrepreneurial part of the brain to shut down, thus decreasing stress and increasing quality of life. That’s the premise.
Anyway, if you pay attention to this groundbreaking business philosophy, you will begin to see examples of it everywhere. And, to tie this whole ramble together, my favorite example was a restaurant in the Dominican Republic called Solo Pollo, Just Chicken. Brought a tear to my eye.
I love a good rant. I got one several months ago from Janet Stites in reaction to a post I wrote about financial projections. I asked her if I could publish it and she said "yup." Here it is. Janet’s thoughts are her own and come from her experience, but I thought her perspective on entrepreneurship and VC’s was a useful perspective to ruminate on.
Dear Brad: I’m Janet Stites, cofounder/ former publisher of AlleyCat News now founder/publisher of Talent Pool New [east]. I came across your posting on the issue of projections always being wrong and how you mentioned (in a small way) the value of creating a business which scales. I wish you could open this dialogue on a larger basis with VCs and particularly early stage investors because one’s company can go under while taking the time to create these models. If VCs, early stage and particularly angel investors, would begin to ask for the revenue model, price point, universe of the market, competitive advantage and, from there, try to ascertain how flexible & creative, in terms of tweaking the b-model, the entrepreneur might be if the market changes, war starts, economy falters. Investors might see a lot better deal flow in terms of quality and management in terms of tenacity and the entrepreneur might be able to avoid having to walk away from a potentially great company because his/her credit line has run out…spouse left…child starts college (I remember when the founders of iVillage thought, in 1995, chat was their model and TheStreet.com, thought, in 1996, they would make their fortune off of subscriptions.).
As you mentioned, it often takes one and a half to two years to start accruing revenue. I bet what stands between entrepreneurs and the finish line a few months out is often about $75,000 to $100,000–which may be too much to come up with personally after two years of no income and, no doubt, already a second mortgage, college fund diminished, etc.
I wonder how many viable businesses have had to fold because the entrepreneur wasn’t a trust fund baby or student just dropping out of Harvard (often the same) and able to live with 6 friends in a closet for a year or so (don’t forget the Teva’s and the bike!) What missed opportunities for investments and innovations in general? VCs might say that "if it was really worth it, you would make the time," but that is easy for them because VCs get a money management fee–you don’t have to wait until one of your investments has been acquired, gone public, or is simply in the black, to make your money. During the dot.com boom any number of VCs made a fortune as their portfolio companies were acquired or went public and they could cash out, even though the companies were never profitable and shareholders lost their shirts.
Also, often VCs –based on the many I know–are not the primary care takers of their kids so they are not choosing between making sure there is something fresh and green on the table for dinner, all the permission slips are signed, etc. or sitting in front of a computer all night creating multiple case scenario spreadsheets. One VC who has a blog once wrote that if he wasn’t writing the blog, he’d be changing diapers. My heart went out to his wife. What if she wanted to start a blog or a business? That would be one stinky baby.
Unlike the west coast, many early-stage or angel investors didn’t make their money as entrepreneurs —never even sweated payroll or signed personally for a credit line, so it’s hard for them to understand the time-value ratio of seeking money vs. credit card debt, vs. just calling it a day.
Anyhoo–I wonder what would happen if someone with your visibility in the financial community would encourage VCs/angels to re-think what they want in terms of projections (given they’re always wrong). You are in a position to create change…but your audience has to be your peers, not the entrepreneurs.