The venture capital-backed startup world is a bubble. People outside of it think we're risk lovers, which is reasonable since the our failure rate is so high. I think that the best entrepreneurs are risk managers.
Most people are enveloped by the emotion of risk, and it freezes them. They think about how terrible it will be if they fail, how awful every conversation with be explaining what happened.
It's better to separate the emotion from the risk. Separate the fear of consequences from the consequences themselves. I do that by asking myself "What's the worst thing that can happen?" I explore that outcome, imagine the conversations I dread, think about what would come after the worst thing. Having fully considered the downside, I almost always conclude that the worst thing isn't really that bad.
This same thinking works when I'm at the top of a steep ski slope, or at a cocktail party and have to make small talk, or when I need to have a hard conversation. All of those things feel riskier than they are.
An emotionless view of risk allows entrepreneurs to make better decisions and take bolder action.
I spoke today at Philly's best tech event, PSL's Founder Factory, using these slides. They're borderline misleading without the narrative, nonetheless...
My 17 year old daughter is a sophomore in college, studying computer science. She is one of <5% in the major who are women, and he loves the work but her male peers make her wildly uncomfortable. She shared an NPR story with me (go listen!) that got me thinking about my own start in the field.
I graduated from high school in 1981. We had a computer area in the student lounge with a couple of TRS-80s. Only a few socially awkward boys used them. That was the era when the computer field was transitioning from a relative balance in genders, including pioneering women, to male domination. (Read or listen to the NPR story for why–it is not that women aren't good at it). I had no interest in computers at that time.
I have two men to thank for changing my mind.
Between my freshman and sophomore years in college I worked as a girl friday (yes, we still had those then) at a small architectural firm called Peter Woll Architects. It was in NYC, across from the Brooklyn Bridge on Dover Street, near the Fulton Fish Market. This is what it looked like then. Drafting was all done by hand still and the firm was a very early adopter of CAD. Peter Woll gave me the job of implementing the system. The most difficult, and fun, part of the project was physically connecting the necessary pieces of technology–one might call it networking, but not in any way we'd recognize today. I spent many hours at Cables & Chips, which I am trilled to discover still exists! At that time, it was located on the second floor of a tiny building in the fish market (get the pun?). I'd walk up the steps, slippery with fish scales, and have a long conversation with someone who would hand solder whatever I needed. It usually took a few times before the component would work properly. In retrospect, I don't know if Peter figured that there was minimal risk in giving me this assignment since I wasn't earning much or whether he had some intuition that I'd be good at it. Regardless, I am deeply grateful for the opportunity and for the perspective that early experience gave me: the best way to approach new technology is to try it. I gained a level of comfort and confidence in dealing with technical unknowns which has been invaluable, particularly as a non-technical person in the field. Thank you Peter.
The second thank you goes to Dr. Jonathan Baron. In my sophomore year in college, I took a cognitive psychology course with him. Dr. Baron was doing work related to that of Daniel Kahneman and Amos Tversy, who were pioneering behavioral economics. I was fascinated by the coursework and did very well, and Dr. Baron gave me a job as a research assistant. There were Commodore 64s in his lab, and I taught myself to program, consolidating data from a very large study of Alzheimer's Disease using cassette tapes as storage medium. I loaded the data into the University's DEC VAX and taught myself SAS from a manual so I could run multivariate regression analyses. This all seemed natural at the time, but after listening to the NPR story, I realize that it is extraordinary that Dr. Baron gave me, a girl, this project.
Flash forward 30 years, and I have had a successful career in technology, the last 20 at the helms of a series tech companies, a role that is held <5% of the time by a woman. I don't think any of that would have happened without Peter Woll and Jonathan Baron. I hope that there are many men like them today, assuming that a girl or young woman can do it, and giving them the shot.
p.s. My 14 year old daughter, after reading this, said " Wow Mom, you sure did get a lot of lucky breaks in your career." Yep.
I’ve founded a new company, this time all by my lonesome. Depending on how you count, this is at least my sixth startup:
The most common question I get after speaking at entrepreneurial events is always some version of “how do I start?” and the answer is “you just do,” which isn’t very useful for people. The only thing that seems useful is to give them examples. My plan is to tell the story of my next company as it unfolds, in the same way I documented my experience as an Eisenhower Fellow in a long series of posts on my old blog [Cereal CEO, which I'm copying into this new blog]. I hope that it’s useful to other entrepreneurs.
I just finished reason a really terrific book, Born To Run, by Christopher McDougall. An acquaintance suggested that I read it after I mentioned that I recently started and am loving barefoot trail running. I’m very grateful that she followed through and got the book to me.
It’s a shaggy-dog story that leads through the crazy world of ultra marathons, the Sierra Madre and the Tarahumara, and the top distance coaches, biologists, and anthropologists. I ended up understanding why I am running with joy for the first time since I left childhood, and a little bit more about humans beings. (Photo of a Tarahumara running is McDougall’s)
Turns out that persistence, and our natural ability to run long distances are both critical to our species success. (Yes, running is natural - but you’ll have to read the book or at least watch the video at the end of this post to get that story). Our ancestors hunted, and out-hunted our competitors, the Neanderthals, by running our prey into the ground. We ran long and easy, in teams. We chased an antelope until it literally dropped dead.
All if which got me to thinking about start-ups.
I’ve been told - often - that I’m persistent to a fault. Many knowledgeable folks say that persistence is a key attribute of successful entrepreneurs, though I don’t claim to be any proof of that. How could I use my persistence as a strategic advantage?
I’m not sure yet what I’m going to do next yet, but the lead contender today is a project I’m working on with a few great guys who are building a proof of concept that we will be ready to market in the fall. We figure that if we can sell it that’s proof that it’s a good idea and we’re off to the races. If not we won’t have lost much. The idea isn’t earth-shattering, but it would make life a ton easier for a lot of people.
There are many reasons that we think it’s smart strategically. First, the solution is very simple in a field of the very complex; simplicity and elegance are attractive. Second, I like the model - it’s analogous to Salesforce.com in the early days, when salespeople expensed individual accounts because the tool was so much better than Siebel, which they were supposed to be using (this was before Salesforce became Siebel). Third, it’s fun to take on the big guy with something small. It’s a Kopppelman value-destroying idea. And there are a long list of others like the supporting trends, the teams’ experience and expertise, on and on.
The truth is, though, that I was drawn to the opportunity primarily because I think that I’ve devised a way to start and grow it without outside capital. I’ve raised many rounds of venture capital, and I’ve worked with great (and horrible) investors. I’m ready to do it without them, I think. That has less to do with dilution than it does loss of control, and what I see as fundamental issues in the VC-entrepreneur model (I’ll post about that someday).
What I realized, thinking about persistence in the start-up context, is that internally-financed growth is the business version of persistence. It’s a weapon. When you can run longer than your prey, you get to eat them for lunch. When you raise outside capital, get into the habit of burning cash for growth, you have to keep raising money to run. When you provide enough value that customers are happy to pay more than it costs you to produce that value, you can run forever. You’re free.
Of course, there’s a trade-off: slower growth. There’s only so fast that an internally-financed company can grow. Look at the wacky counter-example, the fastest growing company in history, Groupon - it's hemorrhaging cash.
But I’m not that motivated by high-flying growth any more. As I learned from McDougall, great running stems from joy. Yes, you have to train hard and smart, it can be extremely painful, sometimes you fall. But, regardless, the greatest runners run with joy. It’s a deep thing, it’s about being a better person. It’s about giving rather than getting.
It might sound a bit wacky, but I believe that we can build a great company using those same principles. What I love about start-ups is the people - the team, the customers, the partners. I’m old now, and I don’t need any external affirmation. I can follow my slightly nutty ideas and not care what anyone but my team thinks of them. I just want to work with good people to build great things that customers find useful. As long as I’m doing that, I can do it forever. And everyone will be happy.
p.s. Back to running, here’s a great video from Nature that tells the basic story in just 6 minutes.
I've started and/or run too many venture capital-backed software companies, plus one ill-fated food startup.