Archive for the ‘Success’ Category

You miss 100% of the shots you don’t take

December 15, 2009

Something I have just loved about being in the venture capital business is the people I’ve met, running businesses I did not fund.  And of those there are a few I found so relevant to my own interests, and with founders who had such passion and integrity, that I continued to meet with them well after saying “no.”  Trying to be a productive sounding board, making introductions, passing along knowledge or experience where it seemed helpful.

It’s always been such a pleasure to get the updates from these CEOs, they arrive when you least expect them and it’s exciting to see how things are developing, where the connection is no longer the possibility of financing, but a genuine interest in the business and a relationship with the CEO/team.

Dustin Hubbard of Paperspine is one of these.  His company offered a subscription service for books.  Physical books.  He  had the idea for his company after finishing a book, and having no room for it in his already jammed bedside table.  So, he planned and planned, left his job at Microsoft, started and ran Paperspine out of his garage.

Paperspine worked really well, and solved problems that people cared about.  It probably saved my family hundreds of dollars, just with my 16 year-old daughter, a voracious reader, and who routinely dropped tens of dollars at bookstores, only to read the books once.  She loved Paperspine.  She was on a five book out at once subscription at one point, and it enabled more massive reading without bankrupting her.

And while Dustin had gotten Paperspine off the ground with funding from friends and family, he couldn’t raise his next round of financing – in a market where raising money is almost impossible anyway.  But he applied himself to solving this problem with every ethical means imaginable.  Cut costs to get to break even, went back to work at Microsoft, tried to expand into ebook rentals.

Dustin and I spoke every 45-60 days, where he would walk me through his latest set of challenges, his ideas to address them, and we’d then spend the next hour testing his assumptions, plans, and brainstorm solutions.  But he always arrived prepared and ready to dive into a meaningful discussion, and sometimes I could help, other times I think he just valued the opportunity to have someone outside the company to run his thinking by.

But for many reasons, some within in his control, many outside it, he was unable to get his next round of financing.  And he seemed to be reaching the limit of how much this business was encroaching on his life, quality of life, and family.

So, last night I was truly saddened but not necessarily surprised to receive an email from Dustin, saying that he was closing the doors.  I can only imagine how hard this was for him, how heartbreaking.

And he closed off his dreams for Paperspine with the kind of grace and thoughtfulness that we should all take note of, and admire.  You should read his final blog entry, a real fitting testimonial to a worthy business, and an incredibly decent founder.  And you can see pictures of his “warehouse” in his garage, and learn more about how he took his idea and brought it to life.

His wife framed this so well, reminding him that “you miss 100% of the shots you don’t take.”

That phrase captures the essence of what it means to take an idea that crossed your mind, and have the courage to start a company to bring that idea to life.  And you bring it to life focused on why it will and should succeed, while also keeping, in a separate place, the knowledge that there are many reasons why it could fail.

Dustin, you should be very proud of what you accomplished and learned these past two years, but you should also be very proud of how you ran your company, and how you finished.  Well done, not painless, but well done, indeed.

Startup advice brilliance

October 21, 2009

A friend pointed me to a superb summary of advice for startups, specifically calling out the ways that advice can be flawed, along with some perceptive insights into how to identify advice that’s actionable and useful.  The post is by Eric Reis, and is appropriately titled The 10 Ways Startup Advice is Flawed

Eric’s pov is appropriately snarky, and at a macro level he calls out various ways that being lucky and being smart are frequently confused with each other.  Snarkiness aside, the really valuable point he makes is how important it is to be a critical thinker, in general.  The value of making your own assessment of the information you’re consuming, and not just accepting it.

I especially liked his point #6: Maybe the thing they did used to work, but it doesn’t anymore

I think about that a lot in my own context.  I was at RealNetworks back when it truly was pioneering this new phenomena of sending audio and video over the internet, and we owned that market.  In public we said we had 85%+ share of the market, but in reality it was closer to 95% for a good long time.

We called the shots, named the prices, dictated terms.  We muscled into and out of markets we cared about, aligned ourselves with titans of the technology landscape.

And then Microsoft showed up and we fought them tooth and nail.  It was a hard and ugly fight, which they eventually won (once they started paying attention).

Well, they won, sort of.  It was epic, and in a start-up kind of way, it was epic fun.  I remember picking a big fight with the Windows Media team on an internet media list-serve, where I’d just published some user research showing how people preferred our new video to Windows Media’s.

And Microsoft’s head of a/v technology posted to the list, accusing us of fluffing up the research, and he included a three page outline of the ways you could falsify/skew consumer surveys.  And it was so much fun to respond to the list , asking “how was it that Microsoft knew of so many ways to distort research?”

But I digress.

We each became so obsessed with each other we quit paying attention to what Macromedia was doing with Flash and what Apple was doing with the tight coupling of iTunes and the iPod.  So, while we were both wrestling in the mud pit, Apple and Macromedia left the building and started more interesting and lucrative businesses elsewhere.  And until that point the thing we did at RealNetworks really did used to work.

Eric’s “ten ways” are simple and insightful.  The hard part is putting them into action, in the moment.  My experience at RealNetworks is valuable to the startups I work with and talk to if and only if both of us are cognizant of its context.  And it takes discipline and a good dose of humility to walk the talk Eric is alluding to.

I know there’s a ton of stuff I did that was a product of luck and timing, and a lot that was a result of deliberate hard work and applied intelligence.  The hard part is being honest enough with myself to examine where those boundary lines are, to strip out the specific circumstantial knowledge from the generalized, truly durable knowledge.

So, let’s all get a good laugh out of Eric’s list, but also remember how hard it is to actually do what he’s suggesting.

Preparation for a long offsite

July 23, 2009

I’ll be hiking the John Muir Trail in the Sierra Nevada mountains in California next month, which is something I’ve wanted to do my entire adult life.  The Sierras and backpacking really took root with me in high school, where a core group my friends went every summer, and continued through college and a few years beyond before losing the thread to careers and starting families.

Three years ago we restarted these annual trips, and about then I realized how much I enjoy being up in the mountains, away from all forms of electronic communication, as a way to get some perspective and some balance.

So this year I leave on August 4, and my friends and I will start down the John Muir Trail, five days later they’ll leave the trail at Red’s Meadow, and I’ll resupply there and continue on, on my own.  I’ll finish near Mt. Whitney, two weeks and 170 miles later.

And I’ve been doing a lot of reading to prepare for the trip.  Mostly trail guides, even a book on the geology of the Sierras (ensuring I will be the most boring person at the next cocktail party I go to).  But one that’s proven particularly helpful is a book called High Sierra by Phil Arnot, and it’s been great at providing detail on side trips I can make along the way.

300+ pages of detailed route descriptions, elevation changes, permit locations…in short a bunch of data and information about as “touchy feely” as the phone book.  It even has a section on “Hiking Solo” with a set of very pragmatic preparation guidelines regarding safety.   But then it went in a direction I didn’t expect, with the following passage:

“So, in a way the wilderness experience may be catalytic in bringing us to face, really face, the most important questions we can ever ask ourselves:  Am I really living the life I want to live?  Am I fulfilled in my work?  Are my relationships based on sharing and intimacy or are they primarily obligatory?  What do I really want to do with my life?”

Well, for those of us who love backpacking and being in the mountains, that set of questions told me the author truly knows his subject.  For me, these are the questions my mind gets drawn to when my “job” for the day is to traverse six or eight miles (or more) of trail at 10,000 feet, and what separates you from the beginning and end of the hike is a lot of time to walk and think.

Take the “fulfilled in my work” question.  That one’s easy.  I love my job as a venture capitalist.  I love that it requires that you think hard about strategy and equally hard about operations and execution.  You’re on a constant learning curve looking at new businesses and needing to quickly get to their essence to make a funding decision.  And when you find a business you want to fund, you get to go deep with it, for years, to help it (hopefully) succeed and grow.

But that’s the “work” part of this, and what makes my job truly fulfilling is who I work with.  Through equal parts self-selection and deliberate effort, my partners and I have created the kind of transparent, friction-free, trust-based working relationship that up until this point I had only read about.

The fact that we had all worked together before getting into this business helped, but over the past five years we’ve had to make our way through uncomfortable, difficult conversations that required egos to be set aside, and personalities to be parsed from the logic and data.  Everybody talks about this, it’s the first time I’ve experienced it first-hand.

That’s great, but actually making money in this business is getting incredibly hard.  The whole industry is in a state of transition and transformation.  Fred Wilson has done a good job explaining this, but in short, it’s taking longer to get companies sold, the IPO market is dead, and the median valuations at sale have been declining for years.  In order to generate the returns institutional investors need, you’ve got to as a firm perform well above median.

It’s daunting.  We’re doing well as VCs, but looking at the whole industry it gives you pause.  This business will be getting smaller before it gets larger, and as I’ve written in an earlier post, the old stuff gets broken faster than the new stuff is put in its place in industries who are in a state of transition.  And this is an industry in transition.

But that’s where the exciting part of this job is.  Transitions create no shortage of opportunity, and challenge.  I’m grateful I have the chance to put some more thought into this, during my long offsite.

Between now and when I “go off the grid” on the 4th, I’ll be posting on some related topics.

In defense of the echo chamber

May 28, 2009

I had two interesting conversations this week with super smart technology execs, and found myself uttering the same phrase to them, in different yet related contexts. The phrase was “…and it made me feel a million years old”. The context in both conversations was remarking on how long it takes for real, pervasive technology innovations to take root and how you reconcile that with early stage investing.

And I can’t really explain it to myself. I spent a 15 year phase of my career at companies transforming the entertainment and communications sectors, totally in the thick of the “next big thing”, and felt so urgently and palpably that we were shaping and enabling the next “normal”.

At one of those companies, C-Cube, we were making the foundational video technology that enabled the whole transformation to digital cable, satellite and DVDs. I spent countless hours with executives in these industries while we figured out how this would all work, and around 1994 I heard them tell us all that “500 channel cable” would be here, the coming year, maybe the year after that. Right around the corner.

Except it wasn’t. It only took about another 15 years.

But it never would have happened if we all hadn’t been working away, really hard and for a long time, acting, believing that “right around the corner” was really true.

I felt like I was a little smarter when I was at RealNetworks in 1999, and I heard many of these same executives talk about how by using the internet over cable (or telephone lines) they could deliver movies and 500 channels of TV the next year. Maybe the year after that.

And I remember leaving some of these meetings and telling my colleagues I’d heard this before, and it wasn’t going to work out that way, that they were “breathing their own exhaust fumes”. But I still worked really hard, and for a long time, trying to make that “right around the corner” become true too.

So here we are, in 2009, and I can order a movie from Amazon over the internet and have it delivered to my Tivo. Just ten years later, or 15 depending on whose vision of the future is the reference point.

And it struck me in the conversations I was having with the execs, that perhaps it’s not so much feeling a million years old, it’s realizing that early stage investing and startup companies places you in this strange place, where you straddle two worlds. The world “inside” the vision, where the idea is bold and the future seems right in front of you, and the world “outside” where you can look at these companies and understand it will take a decade, maybe more, for that reality to be commonplace and accepted.

There’s a semi-derogatory name for this inside world, and it’s “the echo chamber”. Most of the time it’s focused at Silicon Valley, but I actually think it’s not geographically constrained. The boundaries are more around the locus of a really big idea and a group of people who can pull it off. They get a bunch of other people to believe them, to buy into the vision – customers, partners, press, analysts – and now there’s a cohort that reinforces the belief system.

You can see this playing out, right now, with all the convulsing about Twitter. It’s been ascribed to being useful just to folks in the valley, just the people whose whole focus in life is in the development and consumption of technology most of “the rest of us” will never need or see the use in.

Kara Swisher of the Wall Street Journal wrote about Twitter in this context a year ago. And I read her column at the time and my reaction was “I’m glad she called this one out, it’s ridiculous how much hyperventilating goes on in the valley about stuff like this – it really is an echo chamber”.

But there’s nothing wrong with this, in fact it’s exactly how we ended up with Tivos at home and can’t imagine life without them, how we watch Susan Boyle shatter our expectations and assumptions about image and substance, and how a billion apps can be downloaded onto iPhones in nine months. And how we will all be tweeting and wonder how we ever communicated without it. In about ten years.

The collateral damage of a missed opportunity

May 21, 2009

Sometimes life just steps right in and provides an illustration of a key principle, almost as if on cue. My apologies for the length of this, but the topic merits it.

For those of you who have read my bio, you know that I work in Seattle but commute from a small town in the Midwest. There’s a separate blog post needed to explain why, but the town I live in is small enough for us to know everyone, and be very actively involved in our community.

Last week someone at our high school wrote racist comments, a death threat, and the names of a number of the black students at the school on a stall door in one of the boy’s bathrooms. No ambiguity here. Horrible, fundamentally unacceptable, reprehensible thoughts. Scary too.

How the school responded to this presents a crystal-clear example of how ambiguity + fear of failure = colossal missed opportunity for a community and for its students. And it offers a heartbreaking follow-up to my post last week about ambiguity and alignment of your principles and ethics.

Here’s what happened:

  • A death threat naming six of the high school’s black students was discovered on a bathroom stall door at around 2:30 pm last Thursday.

Here’s what was done:

  • The six students were pulled from class that same day by the administration, informed of this, asked if they knew of anyone who might have done this.
  • The next day the police department was pulled into this, and spent the day at the school investigating the incident.
  • This same day – the day after the discovery – the administration met with the six children’s parents.
  • A letter was finally sent home to students this past Tuesday, identifying this as a student safety issue, and stating that “racist or threatening behavior will not be tolerated.” You can see it here.

Here’s the issue. With one exception, what they did wasn’t wrong, it just could have been a whole lot righter. And bolder. And more educational, for everyone.

The one thing they did wrong? Waiting until the following day to tell the parents. My heart goes out to the parents of those six children when those kids came home and told them what had happened at school that day. How alone they all must have felt. I don’t need to dwell on the tragedy here, the local Fox affiliate got there way before me.

So, the police got called in to investigate, and a letter went out to the students and parents. A safety issue. My daughter summed this up well by saying it screamed ‘this is not our fault.’ I was profoundly let down, feeling decisions were guided by a desire not to fail, not to make a mistake, and to minimize the visibility of this incident.

Retreating to this being primarily a safety issue is a red herring. This is unequivocally a racism issue. And it’s not about the high school. It’s about the entire community. Whoever wrote these threats does not live at the high school. Any one of us may be running into this kid on a ball field, in a supermarket, anywhere. The school provided the medium for the expression, but those racist thoughts leave the school ground at 3:05 and go somewhere.

The school administration got the whole visibility opportunity wrong. They claimed raising visibility would satisfy “that person’s need to do it and maybe there is more that will happen.” Huh? I can’t think of a better way to ensure this doesn’t happen again than getting the entire school and community to get out in public, now, and express their opposition to this kind of behavior.

And “out in public” is where the six students and their families need to feel supported, and safe. These six children and their families should feel comfortable knowing more than the school and the police are looking out for them. Worse, time matters here, a lot. These children and their families needed that support the moment this was discovered. Importantly, the opportunity for members of the community to show their support in a timely manner was also taken away too.

What if the actions were guided by a fear of not succeeding? Success is not about catching whoever it is who wrote the graffiti. It’s about demonstrating unambiguous intolerance to racism, in the school system and community as a whole.

How could this have been handled differently?

  • They could have held a school-wide assembly to inform the students not of the threat as much as of the intolerance of racism. Of the vigilance to eradicate it.
  • They could have called a joint City Council-School Board emergency public meeting to shine a bright light on these two institutions’ intolerance to racism and vigilance to eradicate it.
  • They could have held a community-wide rally to ensure no one missed an opportunity to show support for these children and their families.

Hiding this or minimizing its visibility means that if whoever it is who made these threats is never caught, then he or she or they will have won. Even if caught, the legal process will be conducted in rooms, in buildings, away from the community.

What a spectacular opportunity to bring the community together and shine a big, bright light on this. And what a colossally great learning opportunity, missed. My daughter is taking a “Race, Prejudice, and Intolerance” class in that very school, right now. Holy cow, why not get the entire student body in on a real-time lesson. How many people can say they’ve taken part in an anti-racism activity, as a student, in their own school?

And that list I came up with about how this could have been handled differently? It can all still be done too.

And this isn’t personal or about the people involved. It’s about the direction they chose. I know the school principal and many of the school administration and teachers. These are smart, caring, very hardworking people. People that make you proud that they do what they do to provide a great education for our kids. That’s why it’s so heartbreaking to witness the straightforward, sensible path that produced this missed opportunity.

A fear of failure produced this. Nothing done wrong, but plenty of collateral damage, and six students, their families, and the community poorer for the experience.

Ambiguity and alignment

May 13, 2009

My last few posts have been very much “inside the world of vc and high tech” and I wanted to get back to the broader theme that underpins this blog – meaningful failure and what you can learn from failure.

I had one of those wonderful experiences last week where a friend connected me to a friend, and I subsequently found myself deep into a conversation I hadn’t expected.  In this case, I was on the phone with a former technology executive who left his career to pursue his passion for poetry.  There we were, getting to know each other, locating some common ground in our shared interests of startups and writing.

One of the subjects we lingered on was how whether you’re at work or at home, you’re the same person deep inside.  And that the converse is perhaps more interesting: what happens when you’re a different person at work than you are at home?  I was thinking alignment of values and areas of ambiguity.  This sent me in an interesting arc.

When I first started thinking about this I thought the issue was more about decency and less about ethics. 

Except people can be incredibly decent, treat others well, communicate compassionately and still be unethical.  They can define “truth” in a way that is not true at all, and exploit this ambiguity motivated by fear, or greed, or insecurity, you name it.  But it means who they are on the outside (defined truth) is different from who they are on the inside (actual truth) 

Which made me think of Entellium.  This is old news, but offers a rich example.

Entellium was a high flying venture capital backed startup in Seattle, where the CEO and CFO created a second set of financial statements that overstated revenue and presented these to their employees, board, and investors. Only these two executives knew about it, and they compartmentalized the truth, keeping it deep inside.  For a long time. 

John Cook of TechFlash summed it up well:  “More than $50 million in venture capital down the drain. Over 200 people out of work. And two Internet executives — both fathers — going to federal prison.”

They didn’t do it because of greed – they didn’t even profit from this deception.  In fact they ended up spurning a $100million offer from Intuit, knowing the fraud would come to light during the accounting review.  

One of the executives admitted the fraud was driven by the fear of failure.  A missed sales objective one quarter and the fear of confronting that caused them to overstate actual revenue.  And then the next quarter of course they were even further behind, and well you know the way these things play out.  So, they lied to their board and employees.

And to their families too, who were blindsided by the fraud.  The police showed up at their houses and took the execs away in handcuffs in front of their wives and children.  Imagine what was going through their heads, and the heads of their families in those moments.   And the comment I kept hearing from people who knew both men was “they were such decent people.”

So I guess you can be decent and have a very ambiguous ethical foundation.  In fact, the belief that your your ethical foundation has ambiguity is the tell-tale that you are no longer behaving ethically.  Entellium was all about the difference between what was true and what could be gotten away with.  There’s plenty of ambiguity to go around in those last six words. 

But deception is a whole number, there are no fractions of it.  There is no ambiguity.  So it’s really not about being a different person at work or home, it’s about always being the same person inside and outside.  Having truth be the connective tissue between the two.

David Foster Wallace said this well in his 2005 commencement speech at Kenyon College “The trick is keeping the truth up front in daily consciousness.”

If it’s up front, then it’s there for everyone to see.  A nice alignment between who you are inside and who you are outside.

Lots of low cost experiments

April 22, 2009

The really interesting improvements companies make come from takings risks, but in a lot of cases risk-taking can be held hostage by needing data to support every decision.  Being conservative and careful across the board may be safe, but it’s not where breakthrough learning happens.

This is where I see a lot of startups struggle:  confronting the tension that is created between knowing when to apply disciplined fact-based decision making to avoid failure, and when to be disciplined about making decisions where failure is accepted as a likely outcome.

The best companies create a culture that can foster two seemingly conflicting organization abilities: precision and failure.  In fact, you need both to reliably profit from your mistakes.

The key is understanding where in your business you can afford to routinely experience failure, and where failure has more costly significance.  You need internal processes that measure performance, coupled with a culture that has a pretty solid foundation of trust – where anyone and everyone feels comfortable taking a risk, and reporting the results as data.  I wrote on this earlier, it’s a culture where bad news has got to travel faster than good news.

Steve Blank wrote a pithy essay on how to navigate this decision making quandry and I love the quote he referenced from General Patton: “A good plan violently executed now is better than a perfect plan next week.”  This is a variant (or perhaps the inspiration) for another saying “the perfect is the enemy of the good.”

To me they drive home the value of action and experience placed on par with the value of planning and data.  Patton would never go into battle without a well thought through and justified plan, but he speaks to how perfecting the plan is different from winning the battle.

The same is true in startups.  It’s critical that they operate with a well thought through plan supported by data, but it’s equally important that they understand when the plan is no longer as important as what the real world is telling you.  It’s another way of understanding why the numbers in your operating plan are wrong, and is in fact healthy.

Steve talks about a simple heuristic, that decisions have two states: reversible and irreversible.  With the reversible decisions you can liberally experiment, and should.  This is where you can create significant breakthroughs for your company by being highly creative, and surprise yourself by taking risks, and failing, perhaps a lot.  If you’re wrong, re-load and try again.  For me the construct is learning to try “lots of low cost experiments”.

He makes an even more interesting observation about tempo.  It’s not sufficient to be able to take risks with reversible decisions, it’s to do so at a brisk tempo.  Quick, responsive, hungry.

Where this comes in especially handy is with sales and marketing performance and new product development.  In both cases you’re in a race to discover what works, and then what works on a repeatable, scalable basis.  I forwarded Steve Blank’s article to one my CEO’s who is focused on improving her sales and marketing team’s pace and performance.

Jenny Hall also made a similar observation in her post about what she learned as CEO of Trendi.com when it failed.  For her it was “if it won’t matter in three months, don’t spend too much time on it.”

She’s got the necessary ingredients: a culture of trust within the company, data-driven decision making, and performance measurement processes.  When she first arrived, these ingredients weren’t as prevalent, and she worked hard to put them in place, and placed a priority on reducing errors and increasing predictability.  But that was then, this is now, and she’s making the transition to fostering more appropriate risk taking as a way to increase performance.

Lots of low cost experiments combined with a brisk tempo supported by a disciplined acceptance of failure.  That sounds like a lot of fun.  Try it.

The next big thing

April 7, 2009

“What’s the next big thing?” I get asked this a lot, and a lot of VCs get asked the same question too about what’s the next big trend/device/web-service/… and that always makes for an awkward detour in whatever conversation preceded the question.  The truth is “I don’t know.” And it’s a great answer, because none of us do. 

The next big fill in the blank only becomes apparent in hindsight.  It’s not that I’m not smart nor anyone else who gets asked this question, it’s just that you can’t really tell.  Sure, I’ve got favorites (twitter is now at the top of my list, but I wouldn’t have said that a year ago). 

Remember when Google actually was in beta, in 2000?  It began appearing on people’s desktops where I worked at RealNetworks.  We thought it was cool and efficient, but there were ZERO people talking about it being the next big thing.

Last Thursday’s NY Times had an interesting article about the rising popularity of “netbook” computers, and how these are a big emerging phenomena enabled by a structural technology shift in the computing landscape: we no longer need Microsoft, and probably Intel.  The next big thing?  Maybe.  More on that in a second.  Let’s look at newspapers.

Clay Shirky did a phenomenal job explaining the collapse of the newspaper industry on his blog, pointing out it too results from a structural technology shift – the internet.  Clay references Elizabeth Eisenstein’s book, The Printing Press as an Agent of Change, where she observes that during these technological transformations the only obvious effect in the moment is the destruction of the status quo.  What transcends the status quo takes time to emerge.  Clay sums this up well: “That is what real revolutions are like. The old stuff gets broken faster than the new stuff is put in its place.”

In the case of netbooks, we’re about to see a lot of old stuff get broken, but it’s not clear if netbooks are the transcendent replacement, or just one of the convulsions of the revolution.

But netbooks are significant because they’re exploiting the growing vulnerabilities of Intel (price, performance) and Microsoft (price, legacy support, integration) at the low end in the same way that Apple is (more elegantly) exploiting them at the high end.

Netbooks have traction because they focus on where people spend the majority of their computing time: web-based documents and services, and the consumption of digital media.  That’s it. 

Whether or not someone buys one, netbooks educate the average citizen that GoogleDocs and a browser are all you need, and that MS Office is both irrelevant and overpriced.  My belief is the impact of netbooks will not be felt so much in unit volumes, but as catalysts speeding the unraveling the Office franchise. 

But wait, there’s more.  How much distance will separate the Office franchise “unraveling” from prying MS’s grip off the operating system?  Apple can’t do it, and is smart enough to steer clear of this outcome.  Will Android and Linux be good enough at the low end?

We’ve already seen the indifference that’s greeted Windows7, and the reluctance to even adopt Vista, with people scrambling to stick with XP.  My family did exactly this in February when our five year-old XP home computer died, and we scrambled to find someone who could sell us a new XP machine (we succeeded).  It was an intelligence test.  XP or Vista…hmmm.

Maybe this reveals a nuance to Clay’s “revolution” observation.  Perhaps the path to destruction takes you through the terrain of irrelevance.  What netbooks show us is how irrelevant the once mighty Microsoft and Intel platforms are to the needs of people today.  They may be lucrative businesses but they just no longer point to the future like they used to.  They’ve become what’s broken in the revolution. 

It’ll be exciting to see the new stuff that’s put in place.  I’ll be sure to blog about it, after we all see what it is.

Man On Wire – Best Startup Movie Ever?

April 1, 2009

I saw Man On Wire for the first time in February; I’d read a snippet somewhere about this being the story of the man who tight-rope walked between the two World Trade Center towers in 1974.  And at a certain level, that’s exactly what this movie is about.  It’s exquisite.  The tight-rope walker, Philippe Petit is almost a caricature, his vision and ambition equal parts boundless and focused.  I’ve seen the movie three times now, and each time it’s more revealing.

What viscerally strikes me is how it tells the story of starting up a company.  This is all about having an idea so audacious it’s almost not believable to someone who hasn’t drunk your kool-aid, yet.  It’s about staying focused on the one reason why you will succeed and not the 10,000 reasons why you will fail.

Man On Wire reveals four super-compelling principles that underscore what it’s like to be in a startup, and if you haven’t been in one, it’s a wonderful way to get a sense for what it feels like to be there:

  • A meticulously constructed plan, discarded.  Philippe Petit spent six years planning this act, including building scale models of the towers’s roofs, constructing a tight-rope the same length as the towers in a field, and on and on.  And guess what?  The day of the “coup” huge elements of the plan had to be thrown out, the real world just didn’t cooperate.  This is “why the numbers in your operation plan are wrong” writ larger than life.
  • Repeated visualizations of the outcome.  This is one of the critical mechanisms to ensuring you’re focused on why you will succeed.  Philippe from the moment he learned of the Towers construction, visualized walking between them.  For years and years visualized walking that wire, how he would do it and succeed. This is critical when you only get one shot at an opportunity, like he had. 
  • Significant emotional toll.  Getting something done that’s ambitious, with a visionary leader means you will do things that are difficult and way outside your comfort zone.  You will find out who the chicken killers are, who can be relied on and who can’t, and most importantly what you can rely upon yourself for.  It’s messy and painful, and you will be different as a result of this experience.
  • The fear of not succeeding.  Philippe’s obsession was on success.  Startups are all about being laser focused on why you will succeed, and your only fear is success NOT happening.  I just can’t say this enough.  People who are afraid of failure may very well get great things done, but just not at startups.

For me the most piercing and fiercely honest confession of the entire movie is when Philippe describes the moment when he committed himself to walking that wire.  A simple shifting of weight from the foot resting on the tower to the foot resting on the wire.  Silent and internally deliberate. 

Compare/contrast this with the article in this April’s Outside Magazine about why people participate in risky sports, and profiles BASE-jumper Ted Davenport.  Neuroscientist Russell Poldrack asserts that there are three ingredients to risk taking: desire for adventure, relative disregard for harm, and acting on your desires without fully thinking them through.  That last factor strays way, way too far into the landscape of recklessness and separates Philippe from Ted.  There was nothing reckless about Philippe Petit.  Deliberate, honest, ambitious, meticulous.

So see this movie for the reasons I outline above.  Also, let yourself ask the other questions.  Like “how can someone afford to spend six years planning this”?  How “real world” is that?  We’re not getting the full story here, but it sure is enjoyable. 

Before your Netflix delivery arrives watch Philippe break Stephen Colbert out of character on the Colbert Report, and you’ll hear Philippe describe that moment when he shifted his weight onto the wire.  Mesmerizing.

Failing in Style – Guest post by Jenny Hall, former CEO of Trendi.com

March 16, 2009

Jenny Hall has graciously agreed to a guest post.   Jenny was the CEO of Trendi.com, a social networking destination focused on young women’s fashion that was shut down in October of 2008, and discusses what she learned as a first-time CEO through the startup and eventual failure of Trendi.

This blog focuses on this juncture of success, failure, and finding the meaning from each.  I think you’ll enjoy what Jenny tells us through her first-hand experiences at Trendi.  Thank you, Jenny, for being OpenAmbition’s first guest writer.

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I really don’t like failure, but I know it’s one of the best sources of learning. I learned a lot the past few years working at a startup, and I learned even more as a result of it failing.

I joined Trendi.com in March of 2007 as the head of marketing and I ended at Trendi in October of 2008 as the last employee and CEO. We had investors, a smart team, a fabulous domain name, a popular blog and so much more going for us- so many reasons to succeed– yet we failed. 

When people ask me “what happened?” I usually say we ran out of money. That’s the cop-out answer- running out of money is a symptom of the underlying issues. I think our underlying issues were communication related (unclear communication with each other, of expectations, and with our customers) and experience related (being young, excited, wanting to do it all and getting nothing done.)

I learned lessons from the mistakes we made as a company and my personal mistakes. Of the many lessons learned, these are the ones that stand out the most to me.

Your target audience should be so excited about your product that they’re pushing you to launch, even if it’s crappy when it launches.

I joined Trendi after the founder received funding for his idea. (I know- that never happens! We were lucky.) I talked to my target market occasionally, but didn’t seek their regular input for 2 reasons- 1) I trusted the investors and founder were right in their beliefs that the idea was a winner and 2) I was afraid of the reaction if I discovered we were wrong and proposed changing the concept.

I should have let my market share what they value, even if it differed from what we wanted to create. Sometimes we get caught up in what we’re building, fall in love with it, and fail to realize other people don’t see it the same way. It’s like parents with ugly babies (hey, there ARE ugly babies) that filter out all negative comments because they’re so in love with what they created. Trendi was, in some ways, my ugly baby.

Launching a product your market is begging to use, even with a few rough edges, will have more success than a fully developed site that doesn’t add any value. Plus, you’ll tie your market emotionally to the product. They feel invested and valued and voila- you have your first product evangelists. Furthermore, their input is the ammunition needed when confronting a team, investors, or a board about why a major change needs to take place.

Keep the focus simple and narrow.

Once you know what your audience values, keep your focus only on the features you need. Trendi started out (on paper) as a simple 8-page design. We quickly escalated the site to include a robust back end, picture management system, full social network, etc.

Extra features added time to our launch, increased the burn rate and made the user experience…fragmented. We assumed the users would like what we built only to find out they didn’t like or use all the features and it was difficult for them to figure out the ‘point’ of the site when they arrived.

We over-built Trendi for one main reason: We didn’t have a plan.

Sure, we had some general milestones, but we didn’t have an actionable, communicated business plan. When there is no plan, startup employees turn into hormonal 13 year olds with severe ADD. Anything catches their attention and can change the intended course of action. What are the competitors doing? Why don’t we have this cool feature? Let’s make it pink! No grey! We need a YouTube video STAT! (Get the idea?)

People often ask where our board was during this process and I’m embarrassed to say we didn’t have a formal board. We had our investors who would give us time when they could and we had some friends we would call on informally…but no board to help us keep focus.

Don’t do it just because all the cool kids are doing it.

There were an onslaught of “social shopping” sites in 2006 and early 2007. We jumped onto that trend and while it’s important to know the trends and competitors, it’s more important to figure out what your substantive differentiation is, how that difference adds value and how to make money because of it.

This is a mistake businesses and people make all the time- doing something because everyone else is doing it. Why do we feel more comfortable when we’re doing what everyone else is doing?

I now know questioning the trends and value proposition needs to be done regularly- at least monthly- to ensure the choices made are in the best interest of the company.

Hire only when it’s absolutely needed.

Everyone should be fully utilized before anyone else is hired and increasing the number of employees doesn’t always speed up the launch. For a company like Trendi, we probably only needed a CEO, two developers, and a designer. Ideally the CEO would have been someone who deeply understood the target market, could raise money, inspire the team, and was a stellar marketer, writer or able to contribute another key skill.

Instead, we were almost a year into the project and 15 employees deep before our Angel (who owned the majority of Trendi at that point) stepped in and made a drastic change that involved laying off most of the employees.

Yowza. Hard lesson learned. The team stayed lean and more productive after that.

If it won’t matter in 3 months, don’t spend too much time on it.

We could spend a whole day talking about how our rating system would look or a week bantering back and forth about a press release. I should have asked myself – will this matter in 3 months? If it won’t matter then, why spend too much time on it now? Time is a precious commodity in a startup and should be spent on what matters the most- quickly building a product your customers love.

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Funny how our resumes show our successes and we take full credit, yet we leave off the failures and if they come up, we blame others. I wish I could blame Trendi’s failure on other people and circumstances, but I can’t. No startup has it perfect- we all deal with difficult employees, investors and economic strains. I have to accept that as a company we made mistakes, but I also have to look back and accept my personal contribution to those mistakes.

Accepting the personal mistakes hurt my ego. I screwed up and it made me question my ability to lead others, my knowledge as a marketer and my future ability to start another business. But somewhere in facing my failure and accepting these mistakes, I was able to learn how I can be a better leader, new things I can try as a marketer, and that I do have the strength to try again.

I always hope for success and aim high, but I now face failure with a humility and thankfulness I didn’t have before. Ignoring failure only hurts you later- you can stuff it away and try to pretend it didn’t happen, but it’ll bite you in the butt at some point. I know that if I face failure as a teacher (a harsh one, but still a teacher) I’ll become stronger and smarter.

I like tea, Thai food and good happy hours. If you want to join me in Seattle for any of these, email me at jennymhall@gmail.com.