Sometimes Nothin' Can be a Real Cool Hand

This is part of my Series on Entrepreneurial Culture.

There are many occasions in the life of an entrepreneur or investor when bold action is required: Do we make this acquisition? Should we hire this developer? Do we offer them a term sheet? Tweak the pricing? We've all been faced with such critical moments when a decision needs to be made.

In fact, it's very much the archetype of the "decisive man/woman-of-action" that is etched into our collective imagination when we think of the qualities of a successful "leader". Lately an entire science of leadership has sprung up with an army of "coaches", "leadership experts", leadership masters degrees and the like suddenly available to us. Thousands of business books and academic case-studies extol, analyze and critique the decision-making prowess (or lack thereof) of executives and investors in American business.

It's an amazing phenomenon and I certainly don't begrudge anyone who makes a living from this. I have, however seen this stuff poured into more than one executive's head (by people with zero business experience) with dire consequences for their businesses. Bias based on skewed perceptions of "leadership", "action" and their perceived benefits, leads many executives down a mistake-filled path.

Interestingly, amidst all the noise about leadership and action, one rarely encounters stories about the wisdom of “non-action” – the wisdom to defer or to simply say “no”.  Among investors, for example, one rarely hears a discussion of one's "negative portfolio", (the investments that were considered but that didn't get made). Similarly, among entrepreneurs we only occasionally hear stories about the decision "not to hire that guy", or "not to sign that industry partnership". I guess it's just easier for us to talk about things we've actually done as opposed to things we decided not to do, even though our “non-actions” are every bit as important as our actions.

The reality is, sometimes the best move of all is to wait a bit before making a decision. What's wrong with thinking things over, letting it all settle a bit? Why get into this rush-to-action mentality?  Perform your diligence, lend the decision the time it deserves.

If you don’t feel ready to make a decision, the right answer may well be to do nothing. If you’re feeling pressed into a decision, the right answer is probably “no”. Watch some of the great Russian chess grandmasters play and you'll notice how they'll often repeat moves twice in critical positions before the time-control, giving them extra time to mull over a particular committal move.

Watch some seasoned executives take their sweet time when talking to competing companies hoping to hire them. As everyone else drips with sweat, they're the coolest ones in the room. And let's face it, most of the time deals we're working on take much longer than we thought they would. Sometimes they drag on endlessly and tempers get short. The key is not to react to provocations. Stay cool and watch the situation play out, i.e., do nothing.

So although there are times when decisive action is absolutely required- as Paul Newman puts it in the video above, "sometimes nothin' can be a real cool hand".

Brother Mouzone on Respect & the Value of Your Word

(click on this link to play video)

This is part of my Essays on Entrepreneurial Culture.

Start-up culture is very much built upon people's reputation and their word as opposed to the transactional/legalistic constructs of corporate culture.  Once the word is out on someone being unreliable, mendacious, phony, mercenary or worse, his/her career in the local ecosystem is pretty much over. Angel, VC, Founder, Lawyer- it doesn't matter. No one will fund them or want to be funded by them again and they will have difficulty finding people to work with or for them. So whereas this kind of behavior is often ignored or tolerated in corporate or non-startup environments, the self-regulating "street-justice" of the start-up community is often much swifter.

So if you're just stepping into the entrepreneurial scene, have a listen to the video above (by clicking on the photo) in which Brother Mouzone lets Avon Barksdale understand exactly what's at stake in no uncertain terms. You could tell Avon knew the deal the minute Mouzone stepped into that barber shop. 

As they say in The Wire, "the game is the game".

The Sh*t's Chess, It Ain't Checkers!

Speaking of chess & startups- I thought some of you might enjoy this scene from one of my favorite movies, Training Day, and delivered by one of the true greats, the talented Denzel Washington. (If you're not comfortable with profanity, definitely don't press play.) When you're launching a startup, you've got to have the right mindset. It's competitive out there, everyone and their brother is launching a company these days. Can you really get from zero to one? One important aspect is of course understanding the fact that "the shit's chess, it ain't checkers"! :)

If you just want to hear the "money-line" over and over again- here is a shorter clip:

https://www.youtube.com/watch?v=59RSLhdGWQM

An Entrepreneur's Commandment: Do What Thou Lovest

“I would rather have played for Wales at Cardiff Arms Park than Hamlet at Old Vic”

Richard Burton

This is part of my Series on Entrepreneurial Culture.

When I learned that the great Richard Burton had uttered these words I felt I understood him a bit better. After all, here was perhaps the world's greatest actor admitting that he had always treasured the thought of playing rugby for his native Wales above all else- even above the craft for which he was known throughout the world. In Burton's case this was no idle thought as he had been by all accounts a fantastic rugby player in his youth. He was also known to often express great discomfort and ambivalence towards the art of acting with all its inherent 'artificiality' as he put it.

Much like some very talented entrepreneurs I come across from time to time, Burton strikes me as a person who suffered from what I call "the problem of abundance". He was simply supremely gifted at too many things for his own good!

This is actually a real problem certain would-be entrepreneurs face. A combination of enormous enthusiasm, massive intellectual curiosity and wide-ranging interests can make it incredibly difficult for a multi-talented person to choose the right entrepreneurial path for themselves. Some simply sense that one singular venture might too confining, too limiting for them.  Further, the knowledge that driving a company to success requires an absolutely relentless focus can be extremely daunting for someone who suffers from this 'problem of abundance'.

Another type of problem certain would-be entrepreneurs face is simply choosing a business for which they are not well-suited. (I actually doubt Richard Burton had this particular problem though his relationship with acting may well have been one of the love-hate variety). I have encountered many people who get into business by happenstance, or by 'falling into it' by some chance meeting, or worse. This too can be a recipe for disappointment and can lead to years of toil in a field that bears no interest and enthusiasm for them. Burn-out is an inevitable result.

It strikes me that the solution here is to first take the time to understand what drives you and why. Thereafter, you can pursue an entrepreneurial calling that you care deeply about, in which you know can roll up your sleeves and really try to make a meaningful difference.

The late, great John Wooden, (he of 10 NCAA Championships), may have said it best:

"Be true to yourself, help others, make every day your masterpiece....."

Cardiff Arms Park, Wales

Startups Aren't A Fashion Show

This is part of my Series on Entrepreneurial Culture.

A good friend of mine who played in the NFL once told me that the biggest difference between the college game and the pros is the ferocious speed and the sheer density of the players. This stunning contrast was most often encapsulated for him during the course of the many outrageously violent collisions in which he participated. He has remarked on several occasions that the dramatic impression established in those first few days in the pros has never left him. Simply put, the NFL is a reality-check and a wake-up call to anyone and everyone associated with it. You absolutely need to put it all on the line and there is no place to hide. Just looking the part isn't enough, or, to borrow an oft-repeated football phrase, players who are "built like Tarzan and play like Jane" simply don't last very long.

I would hazard that the world of startups and entrepreneurship is very similar. If you want to build a successful company there are simply no excuses or shortcuts. It simply has to be an "all-in" approach that's all about commitment. Putting together a nice powerpoint presentation, executive summary, market analysis and making a nice pitch doesn't mean very much. So don't get lulled into the little self-congratulatory bubbles out there where it's all about "presenting to VC's" and 'honing your elevator pitch' and doing the business plan competition circuit.

Remember, startups are not a fashion-show or beauty contest- it's all about executing in the marketplace.

For better or for worse, the same applies to getting funded these days. Many first-time entrepreneurs have a deep misunderstanding about the investment climate out there and not only waste a lot of time seeking capital before they are ready, but also hurt their company's reputation in the process. More than ever, angel investors and VC's want to see a product that you have launched in the marketplace before they will even consider funding a startup. There are legions of people running around with beautiful and well rehearsed powerpoint presentations that describe pre-product and pre-revenue businesses with essentially the same pitch: "If only you would give me $___, I could build this."  On very rare, outlier-type occasions an investor will back you anyway because he or she thinks you have amazing potential- but remember, this is incredibly rare!

Imagine now how different your pitch would be if you could show investors your product, your customers, your adoption, etc. That first impression would be so dramatically different! Think about it- you have struggled, boot-strapped, put your own sweat and sometimes money into making this real. Most investors will immediately respect you for this, whether they like the business or not.  It distinguishes you immensely- especially in these tough times.

Below are a couple of quotes I will end with from some of the 'pro-level' guys out there. I insert them here both as a reality check, a challenge and perhaps to fire you up. I like these guys because they don't put a veneer out there and let you know exactly what they are looking for or what they think.

"If you’ve made an amazing product that I should consider for one of my ten yearly investments please send the URL of this product to------------ and cc me -------------- to get the ball rolling. No business plans, models or decks–I won’t open them. I only invest in real products built by killers. I don’t invest in powerpoint decks or bullshit business models–show me the product!"

Jason Calacanis

"The startup is a magical place. It's a place where expenses are someone else's problem..... It's a place where you can spend other people's money until you figure out a way to make your own..... The problem with this magical place is it's a fairy tale....

.... So don't use the idea of a startup as a crutch. Instead, start an actual business. Actual businesses have to deal with actual things like bills and payroll. Actual businesses worry about profit from day one. Actual businesses don't mask problems by saying, 'It's OK, we're a startup." Act like an actual business and you'll have a much better shot at succeeding."

Fried & Heinemeier-Hansson in Rework

Entrepreneur Alert: Don't Choose the Wrong Song!

This is part of my Series on Entrepreneurial Culture.

Sometimes, when Simon Cowell tells American Idol contestants that "you chose the wrong song" or "that was a bit indulgent", it makes me think of entrepreneurs I've seen jumping into the wrong business without enough thinking and preparation. Often, the Idol contestants will sheepishly nod in agreement or mutter some sort of wistful explanation such as "well, the song really spoke to me", or "I saw it and just started playing it in rehearsal". Simon, more so than the other judges then will often remind the contestants that they are actually participating in a competition.

It's of course great to be enthusiastic, but one thing I've learned over the years is that one has to save that enthusiasm and energy for the right opportunities! Starting a new business is such a massive commitment that simply being "enamored with the idea" does not suffice. Too many entrepreneurs looking for their next business look at opportunities through the prism of their eagerness to get cracking right away and don't ask the hard questions about the market, customer adoption, the competitive landscape, etc. Inevitably this leads to a lot of wasted time, money and enormous disappointment. So if you are between start-ups and by nature an incredibly enthusiastic person, here are some things to consider:

• For once in your life, just take your time- do your diligence and don't rush into a new venture
• Put out a lot of feelers and meet with lots of people who see a lot of deal flow in your community
• Surround yourself with a few sober, experienced advisors who can help you assess things
• If you have no domain expertise in the proposed venture no matter how cool it sounds, it's probably a bad idea- so be really careful
• Approach this in-between phase professionally and impose a disciplined approach on yourself
• As candidate opportunities arise talk to potential customers, investors, domain experts and develop a keen understanding of the addressable market, the competition, barriers to entry, capital requirements, etc.

I hope this helps. Let me know your thoughts.

When in Start-Up Hell, Keep Walking

Firewalker

This is part of my Series on Entrepreneurial Culture.

Let's face it- sometimes, no matter how much you prepare, anticipate and execute- things can go terribly wrong in your start-up. It's happened in varying degrees to every entrepreneur for sure. Sometimes though, you get hit by an absolutely devastating blow that comes out of nowhere. It's the start-up equivalent of a ten on the Richter Scale and it ain't pretty.

An entrepreneur friend of mine recently got hit with one of these punches and I shared with him the experience I had in my first company of having been hit with not one, but with two of these seismic knock-out punches over the seven or eight years I was building out treatment facilities across the country.

The first time around the Director of Blue Cross/Blue Shield & Medicare of a certain region (which I will not name) gave us his approval in writing that our treatment would be covered in-full for our patients should we open a facility there. On the strength of that official letter I re-located, hired a terrific staff including therapists, physicians, admin folks, etc. and signed a six-year lease on a 3,500 sq. ft. facility, (committing to it with a personal letter of credit!), and got to work. Before we knew it things could not have been going better and everyone was absolutely loving life. Our team was humming along, patients were getting much needed help and were incredibly grateful and it was just pedal to the metal for everyone. And then, a few months into this charmed existence- suddenly and without warning, the hammer blow came:

We received an official letter from BCBS/Medicare telling us they would no longer cover our patients' treatment. No reason was given. In the region we were in this was equivalent to a death sentence for the business.

When something like this happens in a start-up, everyone, especially the founders, get shaken to their core. All the herculean efforts of the past however many months and years seem all for naught. It is a physically sickening feeling that does not go away for a very long time. I'll bet a lot of you have been through something like this. It's a time when the temptation to fold up your tent and go home is at its strongest. I went through all the negative emotions that bubble-up- outrage, anger, hostility, and worse frankly. Thankfully some better part of me prevailed and at some point in the ensuing days I decided that this would not stand. We were going to fight this.

Basically I was in start-up hell and decided that we were going to keep on walking...

Over the next 12 months we waged an all-out battle for survival. We steadily closed deals with all the HMO's in the region, cut costs wherever we could including lowering everyone's salaries, (I didn't have one myself), lobbied congress intensely, organized letter-writing campaigns, enlisted the assistance of support groups and national advocacy organizations, law firms, physicians, patients, journalists, you name it- and all this well before any of us had even heard of the internet! Everyone chipped in and performed tasks they never imagined they would be doing when they first joined the company. In some ways it was beautiful and humbling to be a part of this sort of inspired effort.

After twelve months of this unrelenting siege, our opponents finally reversed their decision and relented. Of course it never is quite so simple. It probably took us another 12 months to get back on our original stride, recoup what we had lost- and this doesn't even account for the psychic, physical and emotional damage of going through such an experience whether one realizes it at the time or not.

What a nice story, right? Well, a few years later, despite taking extra precautions with all sorts of official guarantees, and with a new facility in an entirely different state to which I had relocated once more, the same thing happened to us all over again.

You guessed it... I kept on walking.

And the buddy of mine I mentioned above? Yea- him too- he's walking.

The Ideal Venture Capitalist: Top Ten Reasons Sherlock Holmes Fits the Bill

This is part of my Series on Entrepreneurial Culture.

If you’re in the mood for a really enjoyable film I recommend you see Guy Ritchie'sSherlock Holmes. In it he uses the latest movie-making technologies to literally bring-to-life 19th century London in all its dark immensity and brooding menace- from the elegant halls of parliament to the ornate rooms of masonic temples to the labyrinthine sewers beneath the city. The sets and staging in and of themselves are a masterpiece and are simply breathtaking. I think the production designer should be nominated for yet another Academy Award.

For the Sherlock Holmes aficionados out there, I’ll also venture to say that Robert J. Downey, Jr. is terrific in this latest incarnation of the great sleuth. He brings an athleticism and playfulness to the role that is a fresh twist to any cinematic adaptation I have seen. I have an inkling that his performance would bring a smile to the face of the venerable Basil Rathbone and perhaps even to that of the great Holmesian master, Jeremy Brett himself, were they still living.

I too came to this film with a sensibility that I did not have when I first encountered Holmes as a young boy reading Conan Doyle. I was of course neither an entrepreneur or an early-stage investor back then. Not surprisingly, this time, soon after leaving the theater something I had never considered before really hit me. I was struck by the realization that Sherlock would have made an amazing venture capitalist! "What a perfectly silly notion my dear Watson!", he would no doubt have replied. But I would have to insist and say that VC's and Angel Investors young and old would do well to emulate some of Sherlock’s best qualities. Here they are as I see them: 

1) Complete and Utter Attention to his Clients:

When he meets with someone, his total absorption in their presence is legendary. (He would, for example, never dare distractedly glance through his mail when receiving a guest- as many a VC are criticized for doing with their smart phones.  He also is incredibly respectful and courteous to his clients, always responding to their telegrams promptly. 

2) Immensely Perceptive and Observant:

LP’s looking for capital efficient managers take heed! Forget about your GP’s spending money to perform diligence on entrepreneurs. With Sherlock as the Managing Director, he can tell you a person’s entire story and background after the first meeting! He takes the meaning of due diligence to another level entirely.

3) He’s a World-Travelled, Experienced Entrepreneur Himself:

Worried (as Hoegaerden is) about “sub-prime VC’s”? Holmes is no newly-minted, blue-blazered-stiff-of-an-MBA just off the VC conveyor belt with no life-experience. He’s traveled the world, has enormous wisdom and runs the 19th century equivalent of a garage start-up consultancy with Dr. Watson.

4) Massive Intellectual Curiosity, Great Erudition:

Here’s a VC who doesn’t rest on his laurels and past accomplishments. He is constantly learning, reading, studying and staying abreast of new trends, the news, the latest technologies. He is the first Western martial artist, a naturalist, an amateur chemist par-excellence and an early adopter of the newest technologies and techniques available.

5) Loves the Big Idea, Huge Risk-Taker & Admires Disruption:

Here’s a true innovator not content with following the herd and investing in the latest incremental fad. He himself is disrupting the law enforcement industry with his own super-lean startup! The bungling bureaucracy of Scotland Yard and Inspector Lestrade are no match for Holmes’ home-grown operation with a staff of two, (three if you include his landlady, Mrs. Hudson).He’s confident and capable enough to trust his own vision and therefore is ready to tackle the biggest, toughest, most elusive problems in the marketplace!

6) Great Mentor, Coach and Board Member:

He leads by example, has intelligently advised innumerable clients and has helped Watson hone his now considerable skills as a crime-stopper. He anticipates events, predicts how people will react and has a keen sense of danger. Such a mentor could help any entrepreneur with the sales, marketing and hiring process, not to mention with the design of an effective strategic plan. He would make a great Board Member.

7) Great Ear for the Customer:

When it comes to understanding the views of the man on the street, no one is better than Holmes. He’s as comfortable in the elegant drawing rooms of 221B Baker Street as he is on the vilest lanes of London, has roughed it in disguise many a time and is known to have eyes and ears throughout the city. He has no allegiance to class, no patience for pomposity and judges a person on their individual merits.

8) Driven with Enormous Energy:

Here’s a guy who loves his job, pulls all-nighters regularly and will take almost any meeting. He’s relentless and ultra-determined when trying to solve a problem and this is infectious to the entrepreneurs he funds and advises.

9) High Standards & Innate Sense of What is Right:

Holmes is always very exacting of Watson and those around him, but never more than he is on himself. He takes on each engagement with an enormous sense of purpose and sense of what is inherently right. As many have said, he has his own sense of justice that is at times distinct from the rather blunt and un-nuanced version often displayed by his lemming-like colleagues at Scotland Yard.  A loyal teammate with an unfailing moral compass, he is an enormous asset to the companies in which he invests.

10) Sense of Humor:

Lastly, as Robert Downey Jr. exemplifies so well in the film, Sherlock has a terrific sense of fun and playfulness and mischief- rarely taking himself too seriously. It is always disarming and endears him to Watson and many of his clients.He is respectful and yet irreverent all at once.

Mischievousholmes

Etymology of the Word Entrepreneur

This is part of my Series of Entrepreneurial Culture.

I was actually thinking about the word entrepreneur itself recently and found this entry from Wikipedia interesting: http://en.wikipedia.org/wiki/Entrepreneur

“…The word "entrepreneur" is a loanword from French. In French the verb "entreprendre" means "to undertake," with "entre" coming from the Latin word meaning "between," and "prendre" meaning "to take." .... Entreprenuer also sounds close to a sanskrit word anthaprerna which means self motivation.”

One can sometimes learn a lot from the root etymologies of words. This one seems to boil it down to its essence quite well doesn't it? Entrepreneurs evidently “undertake” things and they are “self-motivated”. It’s quite an elegant word as well. Entrepreneur. Sounds better than under-taker :)