Startup Success and Startup Mistakes

Sam Altman, Ycombinator, Who knows more than this guy? 

1.  A product so good, people tell friends.
2.  Easy to understand; simple to explain
3.  Market exponential growth
4.  Real trends vs. fake trends
5.  Evangelical Founder
6.  Ambitious Vision
7.  Hard Startup vs. Easy Startup
8.  Confident and Definite View of the Future
9.  Huge if it Works
10.  Team
        a.  Optimists
        b.  Idea Generators
        c.  "We'll Figure It Out"
        d.  "I've Got It"
        e.  Action Bias
        f.  The Blessing of Inexperience
11.  Momentum
12.  Competitive Advantage
13.  Sensible Business Model
14.  Distribution Strategy
15.  Frugality, Focus, Obsession, Love
16.  Why Startups Win
        a. One No vs. One Yes
        b. Fast Changing Markets
        c. Platform Shifts



 Kathryn Minshew: 7 Classic Startup Founder Mistakes (And How to Avoid Them)

1. Idea vs. Product - Market Fit
2. Any founders with skill will do
3. Perfect vs. Done
4. Productive or Impactful?
5. If you build it, they will not come.  Create Velocity.
6. Team building
7. Don't believe the hype 


 
Guy Kawasaki - Top 10 Mistakes Entrepreneurs Make

                 Mistake                         Solution

  1.  Big Numbers * 1%          Calculate from bottom up
  2.  Scale too fast                   Eat what you kill
  3.  Focus on partnerships      Focus on Sales,  Sales Fixes Everything
  4.  Focus on Pitch                 Focus on prototype
  5.  Too many slides              10 - 20 - 30 rule
  6.  Proceed serially               Proceed parallely
  7.  Retain Control                 Make a Bigger Pie
  8.  Patents for Defense .        Use Success for Definsibility
  9.  Hire like you                    Hire to complement you
10.  Befriend your investors    Exceed expectations

Ikigai: your reason for being


Ikigai is a Japanese concept that means "a reason for being." The word "ikigai" is usually used to indicate the source of value in one's life or the things that make one's life worthwhile.



生き甲斐
Image result for ikigai

Show up, work hard, and listen


One of my clients (first time CEO, first startup) went bust recently and I've been doing a private post-mortem on the reasons why. When I first met (name redacted), he was the very model of potential success, but things slowly devolved to the point where I could see he was going nowhere.

In our meetings, he took copious notes, and I was fascinated by how painfully detailed he was with these notes, which unfortunately interrupted the flow of our meetings. Although I suggested several times that he could simply record the audio of our meetings and take notes later if he wanted, and that it would give him more value for our time together, he ignored that advice and slowly, painfully, kept with the detailed notes on paper. I let it go, deciding to focus more on his results rather than the process. I should have seen it as a sign of things to come.

The results were never there. It was truly frustrating to watch him take no action on the items we discussed, but even worse was his penchant for taking action on major shifts in his strategy without ever discussing these things with his advisor. 

The results were predictable. He spent way more money than he should have, and he spent it on the wrong things. This put him into cash crunch mode all too often, taking focus away from executing. He never developed his story, value proposition, or product/market fit, didn't expand his fundraising efforts beyond one source who eventually, as predicted, dried up when there was no progress. He lost focus on his main product and spent valuable time developing a only slightly related business line that was completely undifferentiated, pivoted his main product into something much less unique in the urgent search for sales, and completely missed what the market was saying to his sales efforts (crickets: not a compelling business model), then pivoted again into a business model that would take much, much more capital to execute at a time when he had no capital left. All of this without discussing these moves with his advisor. These are just a few of his mis-steps. Too many to list here. Seriously, WTF? 

I took pains to repeat key suggestions, but it was if he was completely deaf. 

I kept holding out hope that he would turn it around. Eventually, he decided to make the ultimate pivot: pull the plug.

The bottom line is that he just didn't take action on the basics of what he needed to do. Success happens in the startup world only by taking action, quickly. If the action proves to be wrong, then take action again, fast.

"Fear is the disease, Action is the antidote."  His problem was that his actions were the wrong ones, and he didn't take action on the most basic of recommendations. He built no foundation for success.

This morning's email from James Clear seemed to speak to the issue. He discusses a famous coach's essential elements of success, albeit for athletes rather than CEOs, but the concept is the same. See if you agree:

Tim Grover was the athletic trainer used by Michael Jordan (and many elite NBA players). Here he is describing the three things he asks of every player:

"I don't care how much you can lift, how fast you can run, how many pull-ups you can do, or whether you can hit a three while blindfolded. There are only three things I ask of every client... Show up, work hard, and listen. That's it. It requires no talent, no special genetics, or any skill whatsoever to show up, work hard, and listen."

He adds:

"When I train my athletes, it's a dictatorship with three rules: show up, work hard, and listen. If you can do those three things, I can help you. If you can't we have no use for each other. I will bust my ass for you every way possible, but I expect you to do the same for yourself. I'm not going to work harder than you do for your benefit. Show me you want it, and I'll give it to you.”   Source: Relentless by Tim Grover


My ex-client continues in his delusions while he is going through the pain of dealing with the devolution of his startup. We all learn in different ways. Some can learn from the experience of others (advisors), and some have to learn the hard way, from their own experiences. 

I'm reminded of that old saying "There are none so blind as those who will not see. The most deluded people are those who choose to ignore what they already know."  This is the dreaded "Knowing - Doing Gap" that has been discussed. Hopefully, he will learn how to learn in his next adventure. That is the only silver lining in this dark cloud.   

What could I have done differently? I should have given him fair warning, earlier, that he was going to fail, and that he would be fired as a client if he continued on his path of inaction on key points, and for making major strategy shifts without discussion and planning. My learning experience here is that I was too optimistic and supportive. I hate to give up and fire a client. It won't happen again. I must realize that if I can not inspire taking the right actions, then they should find another advisor whose advice they will follow. Life is too short to spend on those who do not "Show up, work hard, and listen."

The good news is that now there's a spot in my calendar for a client who will show up, sincerely wants to learn, and is absolutely dedicated to taking action. 


Focus

Focus is, quite possibly, the most essential trait a startup entrepreneur can have.

"Focus"
a sculpture by Dale Evers


The successful warrior is the average man, with laser like focus.
Bruce Lee



Pursue one great decisive aim with force and determination.
Carl von Clausewitz



Focus on your customers and lead your people
as though their lives depend on your success.
Warren Buffett



These are just a few of the 56 excellent quotations on the subject of Focus that you'll discover in the app called "ToBeWise" that is available Free for Android and Apple devices.  

This extraordinary app contains a collection of 2000+ of the smartest things ever said by the smartest people who ever lived, from Socrates to Warren Buffett, with a special collection for Entrepreneurs.
Check it out at ToBeWiseApp.com


Private Unicorns: the List


Here are the 346 Private Unicorns (valued at $1B+) according to data gathered by CBinsights.com, with permission. Improved to Google sheets format, totals added, and many other much needed improvements by Michael McCafferty at DBLM




Mary Meeker's Internet Trends Report 2019




Eliminate Low Quality Information for More Productive Life and Business



I have eliminated *all* TV for the past 30 days, and I'm getting so much more out of life, and contributing so much more to my life and the lives of others who are important to me...

Next challenge: eliminating "news" which has become infested with click bait, and has become a virtually worthless time sink.

Start with this article from James Clear, my favorite habit-master. It's highly recommended reading for those seeking a more peaceful, rewarding life and business. 

Namasté...

I wish I knew Now Me when I was Young Me...



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I don't know these people. That's not Now Me and it's not Young Me. And I sure don't wear suspenders or t-shirts like that. Just some photo I copied to get the point across. And the point is to imagine if Young You could have Now You for guidance. Impossible, of course, but it is totally possible to...

“Be the person you needed 

when you were younger.” 

Ayesha Siddiqi


I wish I had a coach/advisor when I was dealing with all of the stress and challenges of the businesses I started over the years... I wish I knew Now Me when I was Young Me.

Why?
Being a CEO/founder is a tough job not only because of all the responsibility involved but because you are so alone at the top of your pyramid. There's really no one you can talk with. Your wife/girlfriend can lend a sympathetic ear, but they are probably not qualified to give you advice based on a lifetime of experience going through what you are dealing with. You certainly can't discuss your fear, uncertainty, and doubt with the people in your company. They need you to be the strong, confident leader who always has a plan. 

If Young Me knew Now Me, life would have had a lot less stress, less problems by far, faster results, better outcomes; I would have been smiling a lot more!


Now Me
That's where I come in. Been there, done that. Made lots of mistakes, and that's where the real learning happens. We don't learn as much from our successes as from our mistakes. So that's a big part of my job is to help my clients plan to avoid the big, ugly mistakes.

A big part of my job is to help with seeing the future clearly. Setting business and personal goals is probably the most important thing a CEO can do. Unfortunately, almost nobody does it. Less than 1 in 30 people write their goals. If a goal is not written down, then it has no power. 

After the goals are set, then the plan must be created, and then executed with high energy.
I like that part! I like being a CEO's secret superpower, the guy in the background. all the credit goes to the client. Complete privacy is assured. 

Who?
Clients are almost always from referrals. I'm not into Global Domination, so I don't do travel, speaking engagements, book signings, panel appearances, and networking.  I work with a small number of highly motivated people, one-on-one, here in Del Mar and online.

Begin it now
The first and best indicator of how a person will do in the future is if they have written goals. Most people will not do it. Doing it shows that they are serious. Depending on their goals and the nature of the business, then it would be good to meet and talk more.

Read Stephen Covey's First Things FirstIt's well written and complete, giving perspective into the various roles we have as individuals as well as business executives.  

Read this book, then write your goals and get committed to them. Do this, and you will be well on your way to achieving the life you have imagined. 

Let There Be Cash (Elements of a Fundraising Process)

Image result for checklist
Fundraising is a Continuous Process

If I had a client who needed to raise capital FAST,
here's what I would advise them to do:

1. Commit to Fundraising as a Continuous Process
that has many steps and interactions with prospective investors,
and others.

This "Continuous Process" occurs every day
Some portion of every day must include energy and resources
applied to the Fundraising Process.  

The shorter your Runway
the more time you must spend each day on the Fundraising Process.

Here's a rough guideline:

   Runway         CEO time in Fundraising Process
12 months              1 hour per day
  6 months              2 hours per day
  3 months              6h+ hours per day
  2 months              12-14 hours per day - Total Focus 

The most fundamental mistake a startup can make is to 
start their Fundraising Madness when they are out of money.

Actually the true mistake is stopping the process
once they get a little bit of money in their pocket.
Taking a break from fundraising can have fatal consequences.

Therefore, heed Commandment #8 carefully:

VIII. Let There Be Cash

Project, monitor, and conserve cash and credit capability. Cash flow is the blood of a growth business. A company's ability to continue is determined daily, not at year end, by the contents of the checking account rather than the financial statement. Keeping money in hand or readily available for both planned and unplanned events is not only prudent but necessary in unsettled times. Cultivation of financial sources is an enduring duty.




Fundraising Madness is a condition that occurs when the 
CEO/founder realizes that they can't make payroll all of a sudden.
There may be no recovery from that level of madness.

It may be counter-intuitive, but
you must raise money when you don't need it,
so that you have it when you do need it.

Fundraising is a Relationship Sell.
Relationships take Time and Trust to develop,
Many founders are Product oriented
and this Relationship building may be uncomfortable territory,
but it needs to be done, 
so relax and enjoy becoming a Master of the Process.

We are what we repeatedly do,
Excellence then, is not an act, but a habit
(Aristotle)

Think of building a process that provides all the cash you will ever need,
if you just continue the Process.

Showing up out of the blue,
when you're broke,
is a sub-optimal relationship strategy.

2. The Fundraising Process takes Time to bear fruit,
but if we Iterate quickly and Learn quickly
we can see Results that are undreamt of by most startups.

3. The Process must be Written Down, and followed as Written.Measure Results,
Continuously Improve the Process as you go.
(Do it, Document it, Delegate it.)
This is commandment #4:

IV. Write It Down

Prepare and work from a written plan that shows who does what, by when. Until committed to paper, intentions are seeds without soil, sails without wind, mere wishes that render communication within an organization inefficient, understanding uncertain, feedback inaccurate, and execution sporadic. Without execution, there is no payoff. The process of committing plans to paper is easy to postpone under the press of day-to-day events. In the absence of a document, fully coordinated usage of the resources of the business is unlikely. Each participant travels along a different route toward a destination of his or her own choosing. Decisions are made independently, without a map. Time is lost, energy squandered.


A Simple 10-step Fundraising Process:

1. Initial Contact - Top of the Funnel
     Cold Call - have a written agenda, talking points, the sole purpose is to qualify the investor to see if they make investments now, in your industry, in your stage (friends and family, seed, series A, etc).  If they qualify as an investor, then you want permission to send them your exec. summary.  They might want you to send your pitch deck, but resist the urge. Stick with the Process. Send them the exec. summary. You'll get a lot of voicemail, so have a powerful scripted message that will make them want to call you back Now. Practice it. Be enthusiastic! DO NOT WING IT. 

2. Send Executive Summary
      Cover Executive Summary in PDF format attached.
      The cover email must be well thought out. 
                  See direct mail advertising principles.

      The purpose of the Executive Summary is to get investor to take next step.
       
3. Follow up Exec. Summary
       They contact you, or you contact them, and 
           they will be not interested (get reason) or want your Pitch Deck.
           Never send Pitch Deck unless requested and Exec. Summary sent first. 

4. Send Pitch Deck (PDF format)
        Before you send the pitch deck you want to know that they want it and that they are a qualified investor prospect. The best thing you can do in a relationship Process is to give the investor plenty of opportunities to disqualify themselves, to opt-out of the Process. This save you a lot of time and gives you greater productivity dealing with the ones who opt in.

5. Follow up Pitch Deck.
         The purpose of the pitch deck is to get a meeting with the investor.
The prospective investor will signal their interest, or not (they will no longer respond to your calls, email, etc, so just let them go. They are interested or not. Keep them in your database to send your Quarterly/Monthly Newsletter (Progress Update).

If you call, have a clear script. An email sent before your call. The only purpose for your call is to schedule a meeting as the next step.

They may barrage you with questions. This is good. Write the questions down. Answer best you can if on a phone call, but in any case respond to all questions in writing as soon as possible. This is an Absolute. Doing this establishes Trust and helps build the Relationship. You will get pretty much the same questions, so it will be easy to have a library of questions/answers so all you do is cut/paste to reply. Again: Write it Down.

6. The Pitch Meeting. See Pitch Anything. Follow the process. 

7. Due Diligence. Have the documents they want (online "data room"). Be completely open.
Reply to requests in writing.     
    This step takes so much longer than you ever think it will. Lawyers are involved.

8. Term Sheet.
    This step takes so much longer than you ever think it will. Lawyers are involved.

9. Closing Documents.
    This step takes so much longer than you ever think it will. Lawyers are involved.

10. Party. (Cash is in the bank)
   This is the bottom of your Fundraising Funnel.  Congratulations.  Now...

11. Repeat.
    Do not skip this step!

----------------------------------
Notes:
1. Delegate much of the process if possible, Administrative details such as scheduling and emailing, answering the phone, etc.

2. Start with google searches for each step to achieve massive learning in a short period of time. For example, there is a very standardized format for Pitch Decks and Executive Summary documents, so it is a waste of time and effort to figure it out from scratch. Investors want their communications in a standard format because it is faster for them to deal with. Distinguish yourself as a person who understands this and respects their time. Talk to them in the language that they want you to speak. Follow the rules, respect the Process.

3. The current status of each investor must be recorded in your CRM database. Measure your productivity by creating reports from this database.

4. You will be tempted to change the steps and the order of the steps, but resist the urge until you have Tested the results and know the change to be better. This is commandment #10:

X. Test

Anticipate incessant external change by continuously testing adopted business plans for their consistency with the realities of the world marketplace. The past will not come again. Neither isolation nor insulation from tomorrow is possible. The problems of the times are the opportunities of the times, as always.