EPT
In the last couple of years, I gave up my life of being a fat cat in the corporate world and dove head first into the chaos of new companies and ventures – more common know as "start-ups." They are two very different worlds, and it was one of the most difficult transitions I ever had to make.
However, once I overcame the learning curve and began to grow comfortable in the start-up industry, I found there were a lot of things to appreciate and enjoy. Now that I've been neck deep in both the corporate and start-up worlds, I'd say that if I had the choice to start my business career again, I'd have ignored the corporate side and gone straight with "start-ups."
Capital Investment Ain't An Issue
With the US passing the JOBS act (wiki "Jumpstart Our Business Start-ups") and allowing for greater funding options at the start-up level, and with existing things like "crowd funding" e.g., kickstarter.com, and a host of seed funding companies which will set you up for $20k and a 3 month crash course, e.g., Y Combinator, life has never been better for those who want to engage in a "start-up" and things are really heating up now.
I have a friend who is a VP of a major investment bank's regional office who graduated from MIT, and she is seriously contemplating giving up her job and going to a start-up. I think the options are, in terms of jobs with high "upsides," really just that: finance or start-up. Simply put: we live in uber interesting times.
Let's Do a Start-Up, Together!
The biggest barrier has been capital investment; with that really eased considerably, and with technology being what it is, e.g. that things that would have cost $2m to set up 10 years ago but will now probably run you only $50k, the world is your oyster. And what kind of business you do doesn't need to be about the quest for money, but rather doing projects which matter to you, that are good businesses (enough to sustain your work), but also your passion.
The things, which are possible today, simply weren't possible even 5 years ago, such as video streaming at such a high level of production and ease, as well as the advent of the smartphone, which really has exploded the mobile space. For everyone with an idea or passion, the world really is a very delicious oyster, simply because the main barrier of capital investment has been so greatly decreased on a technological and accessibility level. Via crowd funding and the general cost of technology, there has never been a better time and open opportunity to engage in a start-up.
BUT WAIT! Like seriously...wait.
Before you jump off the proverbial deep end, let me tell you something important. Easy money = momentum for a huge crash and burn. Even with a great idea, great passion, and great skills, you still need perfect business fundamentals. Sure there will be a rush for the gold mine with people throwing money at you, but if you don't use it properly, not only will you not have learned anything, but you'll have screwed your own reputation as well.
There is a very common Silicon Valley saying along the lines of "Failure is the best learning experience, and that failure is seen as experience for entrepreneurs." They say this in context of being in Silicon Valley, 100% committed to your project. It is true that failures lead to experience which leads to success, but you should fail for the right reasons and not because you were ignorant of basic business fundamentals and that includes your commitment.
So I've decided to share what knowhow I have on the business fundamentals as they relate to start-ups and new companies, and I'm not going to bombard you with thousands of reference books, but would rather work through a few books in great detail.
TL KnowHow and Your Own Personal Kickstarter.com Learning Project
- Just go off and learn what kickstarter.com does and let's use us making a hypothetical kickstarter campaign and company as a framework for our own knowhow.
- I'm not saying go off and make a new company now, but if it turns out to be something, then great, if not, you can hypothetically just fail here and take it as progress.
Exciting isn't it! As a disclaimer – again, on a corporate business side – I rock the free world, but on a start-up side, I'm just getting my legs, so the knowhow I share here is more of the business fundamentals alongside the knowhow of start-ups presented by certain writers. But more than anything: unlike most things that you simply read or absorb on the internet, we really want to make TL Knowhow something that you can engage in. A start-up isn't easy, and probably – if you engage in it – will be the most difficult and the most fulfilling thing you could do to engage your passion and ideas.
The First Book of Reference: Reality Check
Luckily there is one very awesome quick and dirty guide that is packed with start-up knowhow called Reality Check: The Irreverent Guide to Outsmarting, Outmanaging, and Outmarketing Your Competition, by Guy Kawasaki. He has now 10 books out, but he basically blew his load with this one, so just pick this one up as an essential.
Now, Guy has an interesting place in the great scheme of things, and you could say he is an old man of Silicon Valley, and some people love him and some people love to hate on him for a number of reasons, but at the end of the day, this guy knows what goes on in high tech start-ups and he provides his knowhow for the price of his book. And it is more than worth it. His insight is deeply cutting so it does stand the test of time regardless if things like kickstarter and smart phone market didn't exist at the level they did now when he wrote this book. His insight and knowhow is extremely solid.
If you were to take your kickstarter plan, then just go through this book and just write one or two sentences for each point presented in the book, you'd have a pretty comprehensive
As I'm going to be here to answer any questions about what is in this book and how it may relate to your start-up etc, I'd say just quote the part and we can discuss from there. Part of this Knowhow section is not just pointing you to some really key resources, but to work through it with you and to share that with our general TL community.
But what I'll be doing, as people buy and read the book, is systematically going through it and adding in my own comments and experience. Think of this knowhow thread as a reading commentary of sorts.
The main thing I want to really impress upon everyone is that crowd funding is going to to be cool, but how long it lasts for...who knows. This may simply be because there might be a glut of idiots who try to scam the system for easy cash or there ends up being too many failed small projects, and that all adds up.
- Again, the point here is not to be wasteful with the resources granted
- Learn as much as you can about the business side, even as you pursue your non-business passions – because I'm not going to debate this point – you need money to do things in this world. It isn't the be-all-end-all, but it definitely makes things a bit easier and saves time.
Stuff You Should Do
- Go to kickstarter.com and read up on it and all the projects!
- Think about your own passions in film, writing, product design, etc and just have the confidence to know "Yes, it is possible to start something!"
- Don't think of business as bad. You need business fundamentals to make things work, and you shouldn't be wasteful with other people's investment and trust in you.
- Go buy this book and read it from cover to cover.
- Then participate in this thread.
Even if you don't buy the book through us, just go to library and get it. But it is a good investment in any case. And, if you buy through the Amazon link provided, a portion of the sale goes to supporting TL and initiatives like this as well as things like TSL4!
In Closing...
a. About Me
So I would say I actually am an integral part of 3 start-ups right now and a senior adviser to another.
As my main background is marketing and strategy, most of my dealing with product development is purely on the function side. I say what function the product needs to be in relation to the market or how the user experience should be adjusted and so on. I don't know how to code (and I wish I could), but it doesn't stop me from demanding this and that from the programmers, simply because I understand how the product works in the market place for clients and against competitors.
But in terms of setting up supplier relations, brand design/positioning, marketing and investment strategy, and so forth: I do it all. It has been a real killer in changing my expectations and approach to that of a start-up situation from that of a big corporation salaryman and honestly, while I feel like I fucked up for a half a year straight, did I recently begin to understand the difference in approaches. Basically because of the different context of established corporation/start-up environment, there was little applicable cross over in my actual expertise. It was brutally humbling to say the least.
So even with all the knowledge and experience I had, all business is about practical application in that market context, so you can be prepared as much as you can be, but really, you're never prepared enough until you fail a few times. And as the cliché goes, the trick is how quickly you get back to your feet. To fail is to learn and if you aren't failing in some areas, then you're probably burning money like a mofo and you're probably going to have very quick and painful descent.
b. About Start-Ups
The key point that Guy makes is: always keep an idea on what is really happening in your start-up – e.g., Reality Check. Simple right, lol, absolutely not, but again, you're not really going to get the gist of any great business book by reading it, cause this ain't fiction of a how-to-guide, this is dealing with real life financial expenditures, competition, and even people's financial well being.
The only thing constant about a start-up is that every day is a day of problem solving, nothing is routine and it is an exciting ride. So if you are in the midst of a start-up, or one day hope to go this route, I can recommend no better starter guide than this book!
Just to leave you with a taste of the book, a great excerpt of real knowhow by Guy:
Chapter 10: The Top Ten Lies of Venture Capitalists
The goal of the next two chapters is to foster greater understanding between the investors and entrepreneurs. I debated whether to call this chapter the top ten lies of the investors or of venture capitalists. I chose "venture capitalists" because they lie more often and are better at it. If you can handle their lies, you can handle any investor's...
"If you get a lead, we will follow." In other words, no. As the old Japanese say, "If your aunt had balls, she'd be your uncle." She doesn't have balls, so it doesn't matter. The venture capitalist is saying, "we don't really believe, but if you can get Sequoia to lead, we'll jump on the pile." In other words, once you don't need more investors, the venture capitalist would be happy to invest. What you want to hear is, "If you can't get a lead, we will lead the deal." That's a believer."
He is a geek through and through, and he is a super geek for sure.
This is me with my angry face on (actually not really) in a random hotel somewhere in Bangkok
Chapter 1 Commentary
+ Show Spoiler +
***CHAPTER 1***
EXCERPT & SUMMARY
Guy talks about that it is more constructive to talk about how ordinary non-entrepreneurs become entrepreneurs and develop great things; that in some ways there is a myth that says that serial entrepreneurs are what we should be striving for, a great team with a win under the belt, whereas must great start-ups were done by relatively first timers: google, facebook, yahoo, apple etc.
So he ends the chapter with, 'Instead of pursuing professional entrepreneurs, we should figure out how and why ordinary people can do heroic things,' and he says to google, 'The Banality of Heroism' for more detail into it.
As TheFish7 stated, 70% of all start-ups fail, I think that is actually pretty optimistic, I'd say, 90% of start-ups fail in terms of making the leap to being successful and not just some empty shell of website. I mean, probably most new companies will fail within 3 years as well, whether it be a hair salon or whatever.
But you need to know, that if you embark on starting anything new, whether it be a new business or whatever, that has an inherent risk that is also an unnecessary risk, you will be tested, but if your drive to do these new projects/businesses is driven by a need to 'compete with the status quo...building a product or service on the hope that people will love it.' then I reckon you're already in that 10% of persons who will be successful.
PERSONAL STORY
When I went off on my own, initially, it was to take a job that paid a lot more and I thought it was going to be the crowning achievement of my corporate career path: government analyst, management consultant, senior corporate executive, then private equity associate.... but the private equity part didn't work out and I didn't pursue it. I realized it wasn't where my heart was at. But when faced with the choice of going back to a senior corporate executive position, I balked.
The reason why wasn't because I wanted to make more money, cause I was making enough, but I really wanted to know, for myself if I could hack it on the other side of the fence. Someone who did start-up a company and make it into a huge company. I wanted to understand the strategy and get the knowhow at that level because I wanted to know that I was the best at what I do. I wanted to have that self knowledge and this was the only way to get it.
When I was at an industry conference a couple of years back, junior staff from another division of the same company I use to work for basically snubbed their noses at me because now I was at this tiny start-up in the same industry. Of course my own former direct staff were told not to have any further contact with me, but I gotta tell you, I was actually quite pissed off that these little punks had the nerve to do that, as I did know what their actual positions were and really if I was still part of the company, they wouldn't even be able to address me directly. But in putting things into perspective, if things like industry respect were important to me, then I should have stayed or gone back to my old company. Was I really being honest as to why I had gone on this route for start-up hell?
I'm glad that actually occurred, because it got my head straight. I wasn't doing this so I could have people fear my industry influence or put people in their places -and when you're a senior executive, sometimes you need to play a certain role of politics and influence within your company and industry- but I realized, I was doing this because I really did want to head a start-up. I really wanted to run the business exactly as I thought it should be run and I was extremely lucky to have the investors who gave me that faith and freedom to do so. I wanted to know if my strategies were really good as they were, not backed by a big name company or resources, but simply because they were right. Some people want to be the best they can be, and I wanted to be (and still do) the best business strategist ever.
After 2 years, I think the start-up has left a small mark on the industry already, and just for that, it has made it all the worth while. But it has been a very long term perspective as well. I guess what I'm getting at is: if you're going to do a start-up for money or fame, you're fucked. If you are doing it because you have that passion to make something wonderful or new or just can't help but challenge the status quo, then you're on the right track. And you need to ask yourself and be honest with yourself about this. Because if you don't sort this out first, then you're already in the 90% fail bracket for start-ups
EXCERPT & SUMMARY
Guy talks about that it is more constructive to talk about how ordinary non-entrepreneurs become entrepreneurs and develop great things; that in some ways there is a myth that says that serial entrepreneurs are what we should be striving for, a great team with a win under the belt, whereas must great start-ups were done by relatively first timers: google, facebook, yahoo, apple etc.
So he ends the chapter with, 'Instead of pursuing professional entrepreneurs, we should figure out how and why ordinary people can do heroic things,' and he says to google, 'The Banality of Heroism' for more detail into it.
As TheFish7 stated, 70% of all start-ups fail, I think that is actually pretty optimistic, I'd say, 90% of start-ups fail in terms of making the leap to being successful and not just some empty shell of website. I mean, probably most new companies will fail within 3 years as well, whether it be a hair salon or whatever.
But you need to know, that if you embark on starting anything new, whether it be a new business or whatever, that has an inherent risk that is also an unnecessary risk, you will be tested, but if your drive to do these new projects/businesses is driven by a need to 'compete with the status quo...building a product or service on the hope that people will love it.' then I reckon you're already in that 10% of persons who will be successful.
PERSONAL STORY
When I went off on my own, initially, it was to take a job that paid a lot more and I thought it was going to be the crowning achievement of my corporate career path: government analyst, management consultant, senior corporate executive, then private equity associate.... but the private equity part didn't work out and I didn't pursue it. I realized it wasn't where my heart was at. But when faced with the choice of going back to a senior corporate executive position, I balked.
The reason why wasn't because I wanted to make more money, cause I was making enough, but I really wanted to know, for myself if I could hack it on the other side of the fence. Someone who did start-up a company and make it into a huge company. I wanted to understand the strategy and get the knowhow at that level because I wanted to know that I was the best at what I do. I wanted to have that self knowledge and this was the only way to get it.
When I was at an industry conference a couple of years back, junior staff from another division of the same company I use to work for basically snubbed their noses at me because now I was at this tiny start-up in the same industry. Of course my own former direct staff were told not to have any further contact with me, but I gotta tell you, I was actually quite pissed off that these little punks had the nerve to do that, as I did know what their actual positions were and really if I was still part of the company, they wouldn't even be able to address me directly. But in putting things into perspective, if things like industry respect were important to me, then I should have stayed or gone back to my old company. Was I really being honest as to why I had gone on this route for start-up hell?
I'm glad that actually occurred, because it got my head straight. I wasn't doing this so I could have people fear my industry influence or put people in their places -and when you're a senior executive, sometimes you need to play a certain role of politics and influence within your company and industry- but I realized, I was doing this because I really did want to head a start-up. I really wanted to run the business exactly as I thought it should be run and I was extremely lucky to have the investors who gave me that faith and freedom to do so. I wanted to know if my strategies were really good as they were, not backed by a big name company or resources, but simply because they were right. Some people want to be the best they can be, and I wanted to be (and still do) the best business strategist ever.
After 2 years, I think the start-up has left a small mark on the industry already, and just for that, it has made it all the worth while. But it has been a very long term perspective as well. I guess what I'm getting at is: if you're going to do a start-up for money or fame, you're fucked. If you are doing it because you have that passion to make something wonderful or new or just can't help but challenge the status quo, then you're on the right track. And you need to ask yourself and be honest with yourself about this. Because if you don't sort this out first, then you're already in the 90% fail bracket for start-ups
