How many times have you heard founders say similar things?
Yup, it reads like a generic laundry list of the reasons “why startups fail.”
And they end the post with a fervent Valley paean to failure.
At Cards Against Humanity, we believe that you can only become a master by trying and failing. In this way, failure is life’s greatest teacher; failure is actually success. At Cards Against Humanity, we fail all the time. We are veterans of failure. And constant failure, plus unlimited capital, is what led us to greatness.
Now you know why this post is called “if the shoe fits”…
I was thinking throughout the week about culture again. Obviously, that is a theme, but I was thinking about it from a self-centered perspective. How does the culture of a company impact me personally? I am sure you have thought similarly in the past as you have dealt with different organizations in your day to day activities.
I read a book recently by Tony Hsieh, “Delivering Happiness: A Path to Profits, Passion and Purpose.” This book is written by Tony Hsieh, founder of Zappos, and highlights the growth of a fledging company that was eventually acquired by Amazon for nearly $900 MM.
I highly recommend it to anyone who wants to see how a radical pursuit of culture can drive a company to immense growth. Now I have not had the pleasure of meeting Tony personally, but just reading that book made me feel like I could speak to him on a first name basis if I met him on the street.
One takeaway I had from the book was the fact that Tony truly wanted his employees to feel happiness and joy while they were at work. He did and continues to do this in a variety of ways.
He hosts epic parties, they have a relaxed work environment and they pay people to quit during the on boarding process. That last part may seem a bit radical, but they basically offer on boarding employees the opportunity to take a severance package if they don’t feel like they are a good fit.
This has a two fold impact; it weeds out those who probably shouldn’t be there and it prompts those writing a blog to mention it in their blog.
Even though Zappos has been around for a while and I am technically a millennial, I had never purchased shoes from the website before. I tend to be a tactile guy who wants to hold something in my hands before I buy, so the concept seemed at odds with my buying style.
After I read the book I decided that I needed to at least try out the service and see what I thought. I chose some shoes that I have worn in the past (I don’t want to dive head first here) and placed my order. Typically you get delivery in two days so before I knew it I had a box on my doorstep. I eagerly opened my box, discarded the paper and put on the shoes… and they didn’t fit.
So at this point I have a conundrum, I never order online for this very reason. Well the book did mention that they offered free returns as a part of their culture and that they actually preferred for you to call, so they could speak directly with you.
Tony has a 24/7 operation where you can call and place orders, make returns and so on. I decided to follow this experiment to its natural conclusion and make the call. This is the opportunity to learn how Zappos’s culture would impact me personally.
I made the call and explained the issue of the shoes being a bit too large. The person I spoke with was nothing but kind. He talked about the weather and things that were going on in his neck of the woods, which happens to be Vegas.
He also placed an order for a smaller size to be sent, as well as a return label so I could ship the other shoes back for free. Now this may sound like standard fare, but the entire call was relaxed, personable and memorable.
Now I am by no means a frequent customer of Zappos, but I know I can rely on them for a quality experience and they are no longer this faceless entity swallowing up my money.
At the heart of it, that is culture’s impact on you and I. We interact everyday with companies and people and we have a takeaway from those interactions.
In Japan, nearly two thirds of single people aren’t in a relationship and there are quasi-similar results in the US, although not exactly parallel. (The big difference in the studies is the focus on sex. Unlike Japan, not being in a relationship in the US has nothing to do with having/not having sex.)
However, craving companionship seems to be universal.
Enter Gatebox, which is similar to Amazon Echo, but with a platonic, She-like twist.
Yes, that is an artificially intelligent character who lives in a glass tube in your home. Her name is Azuma Hikari, and she’s the star of Gatebox — a $2,500 Amazon Echo-esque device that acts as a home assistant and companion.
At $2500 it isn’t cheap and there are a lot of caveats around it’s operation in the US, but that isn’t the point of this article.
The point is that even with a $2500 (298,000 yen) price tag and a year-long delivery wait it’s still pre-selling both here and Japan.
What a sad, lonely, connected world people inhabit these days.
A group of nearly 60 employees at major tech companies have signed a pledge refusing to help build a Muslim registry. The pledge states that signatories will advocate within their companies to minimize collection and retention of data that could enable ethnic or religious targeting under the Trump administration, to fight any unethical or illegal misuse of data, and to resign from their positions rather than comply.
Not luminaries, but people like you.
As of 10:30 pm Pacific Wednesday there were 1215 signatures.
The full text is at the pledge link (above) as are the instructions on how you can sign. There are also links if you want to be a more active participant or just want more information.
Why should you do it?
The words of Martin Niemöller, a prominent Protestant pastor and rabid anti-Nazi, who spent seven years in a concentration camp explain it best.
First they came for the Socialists, and I did not speak out—
Because I was not a Socialist.
Then they came for the Trade Unionists, and I did not speak out— Because I was not a Trade Unionist.
Then they came for the Jews, and I did not speak out— Because I was not a Jew.
Then they came for me—and there was no one left to speak for me.
Actively or passively; loudly or quietly you need to speak out over the next two years.
And in two years it will be up to you to help take back Congress.
Vator’s Post Seed Conference last week in SF was another enormous hit for those who missed it. The consistently high level of speakers, content and relevancy of the information shared is what was perhaps the most salient take away. The open and frank candor of the discussion was also refreshing.
It’s a bit of a challenge to write this article because there is so much to communicate in a succinct way, but I’ll do what I can. While most of the content is geared to entrepreneurs, and some applies to both, I gave the info specifically for investors its own section at the end.
In the interest of brevity, most of what follows are generalized thoughts, bits and bytes summarizing points expressed during the meeting. My goal being to give you the most info succinctly as possible.
For starters, the cost of starting a business is way down. Now, it can be anywhere from 50-500K. So it’s a disruption in Venture. In the 90’s, it used to be 4 – 5M to start. In an early A round, proper sequencing of funding is important. As is being capital efficient. Be a contrarian. Because everybody bets on the consensus winner.
Raising a series A can be a crunch! 2009 was a peak. Rate of graduation from seed to A is less than 10%. It’s getting hard to get more seeding, although initial seed VC’s are plentiful. Getting to A round nevertheless remains difficult to very difficult.
Why post seed? More control. More optionality, more likely to supersize A, so stay lean to accomplish that.
Great Companies solve big problems and work at 2X the speed. Optimize processes. It’s about onboarding . The 15% of your best accounts pay for everything. Commit to winning. Great venture takes risks on non-traditional things.
Money is tightening. Less competition is good for choosing spaces. It’s going to be hard to raise the next round. Milestones are key. Corporate investing is currently very passive. In good part because in venture, you’re wrong 90% of the time.
There are 3 types of companies: 1) Bits to atoms – exp: Tesla. 2) Sticky bits – exp: Facebook. 3) Everything else is poo and a time suck.
Social media is modern feudalism. We do the work but don’t get paid. New media eliminated scarcity. There is no “Truthiness” in social media. A monetization formula dominates social media.
Hard things take time and are worthwhile. Everyone thinks everything happens in 2-4 years, it doesn’t. Be thoughtful about experimenting.
VALUATION MEANS NOTHING! Value it at zero until you go liquid. Less liquidity in last 5 years than ever.
There is more profit in hard businesses. Winning is about recruiting. It’s getting harder to be successful and get funding. Companies that produce the most with the fewest people and resources win.
Series A difficult to raise yet big successes still happen. Top 5 companies in the world are in tech. There is no certainty in raising funding.
Originality and how you tell your story is absolutely key. It is as important as anything. The product / story / solution has to sell itself. It’s a crowded angel and seed stage market.
Raising series A is hard. Seed round is much easier. Partner with seed investors who will help you with getting an A round. We’re in a tougher market. Spend as little as possible to get to market fit. Premature scaling is the main reason companies fail.
Book Recommendation written for the entrepreneur: Magic Box Paradigm A Framework for Startup Acquisitions. Startups wait too long to think about M&A. Acquisition isn’t an exit but an entrance. An entrepreneur’s narrative to a VC should be; “I’ve got everything figured out.” How do we fit into the direction of the acquiring company? Value only exists in the eyes of the buyer. Have a shared view.
You’re going downhill when they’re coming to you and uphill when you’re going to them.
Entrepreneur’s need passion to get through the tough times. You’ve got to love the customers you’re serving.
Remove friction to innovation. In biz, create more at-bats for yourself. When investments work, double down on them. Convince your customers who will then convince investors. Tell people what you’re going to do, then go do it. It’s the best way to get people on board. The #1 thing you’re selling is trust. Values and culture matter. Why do people continue to walk through the door? Add meaning to your company.
Bits for investors
The idea of 10 – 15 great co’s a year is not consistent with the data. There were a lot of great companies in a little period of time. 38% made greater than 10X in last 10 years. Market fit and momentum work together. Post seed is about data. Look at a company’s value creation. Listen, ask difficult questions. How do you define success?
Figure out what people are all about. It’s more about how a company is performing rather than a funding round. Do you really click with the founder?
Liking the CEO is of paramount importance. Do they have high EQ? Empathy is critical. The ability to see forward from multiple perspectives. Are they ambitious and bold? Are they willing to try at what has been failed many times before. On the other end is founder drama which is a huge killer.
Look for problems when thinking about what company to invest in. What’s on demand? Realize 6 – 10 years equals how long until a market gets created.
The above is just a smattering of the shared wisdom from the conference and proof positive why attending future Vator events is well worth while. Not only for the insights, but also for an incredible networking opportunity that is far above most others, not to mention engaging, fun time well spent.
Tuesday I commented on the ‘duh’ factor in relation to Amazon finally eliminated forced ranking reviews, AKA, rank and yank, recognizing that they did nothing to foster teamwork or improve retention.
Like I said, “duh.”
Today we have Facebook offering up another duh moment.
Facebook is trying to accommodate millennials and its younger predecessor by talking to each worker and figuring out how their individual skills can be used to make a more personalized career path, not something more traditional and cookie cutter-like.
I defy you to think of anyone who works at any job and any level who doesn’t prefer this approach.
Millennials may walk faster than Gen X and Boomers when they don’t like the culture, but that, too, will change as they take on more responsibilities, such as kids, mortgages and aging parents
Whenever I hear how different the needs of millennials are compared to previous generations I’m reminded of these words from Socrates.
“Our youth now love luxury. They have bad manners, contempt for authority; they show disrespect for their elders and love chatter in place of exercise; they no longer rise when elders enter the room; they contradict their parents, chatter before company; gobble up their food and tyrannize their teachers.”
Give it a rest.
You hire individuals and need to manage them as such.
So put away the cookie cutter and provide everyone, no matter their age, with an environment in which to grow and flourish and the tools needed to do it.
Not just a woman, but a woman of a certain age, 55, who built her company, BlackLine, over the last 15 years the hard way.
“I funded the company up until 2013, and there were some very difficult times,” she said. “I ended up putting in everything that I had into it. First the nest egg from my options from my previous company. But then I drained my bank accounts and my 401(k). I told my kids, had I been able to access their college savings funds, I probably would have taken that, too. I second-mortgaged my house. I maxed out my credit cards. I begged from friends to cover payroll.
It was difficult and humiliating and scary. I thought, ‘Oh my god, I’m going to be a woman in my 40s who’s bankrupt and starting over,'” she said of the years through about 2005.
That’s grit — the thing everyone is talking about.
BlackLine went public $2 above the target price and soared from there.
On Friday morning, the shares opened at $24.52, a 44% pop. The stock was trading at around $23.31 midday, giving the company a $1.15 billion market cap.
The result of that $2 increase meant raising $46 million more than than the $100 million planned.
Tucker didn’t build BlackLine by raising round after round of funding in an easy money environment—she bootstrapped it.
She did, however, jump on a still unproven new technology/business model.
The turning point happened in 2007, when the idea of cloud computing was very new. She and her team decided to quit making old-fashioned software and sell the service exclusively through the cloud.
And that was true grit.
Congratulations, Therese Tucker.
One Ceiling Down and a few more to go.
This post is dedicated to every woman of every age who has put herself at risk to follow her dreams — whether as an entrepreneur or something else.
Mainly because plans are made and remade over and over again, so why plan at all if it’s going to keep changing?
Because the most valuable part is the act of planning, not the result of it.
Planning forces you to think in depth—an often painful process that most of us would rather avoid.
For example, it is impossible to plan an upcoming product launch without considering all the things that could go wrong simultaneously with defining the steps to take and the results you seek.
The discussion (even if it’s with yourself) engendered by stating that you are going to do A forces you to consider what will happen if A doesn’t accomplish what you want or what to do if doing A becomes impossible for whatever reason (time, money, manpower, etc.)
It is plan-the-verb, as opposed to plan-the-noun, that distinguishes the winners from the also-rans and it is the verb that keeps you ahead of the competition.
Just as importantly, it’s plan-the-verb that should be pushed down throughout your organization.
This is accomplished by giving the goal to the next level down and asking them to plan how they will achieve it.
They, in turn, should create multiple goals from it and pass those down to their direct reports and so on down the organizational ladder all the way to the lowest level.
At each handoff the goal is divided again and again and each person has to plan how to achieve their part with the help of their group.
Always plan in pencil, because plan-the-noun needs to be a living organism that grows and changes, just as a tree bends in the wind to avoid breaking.
The benefits of this process are enormous.
Embedding plan-the-verb in your company’s culture means it to become a core competency.
That gives your company the ability to react far more swiftly as the waves and eddies within your industry and the economy in general constantly change your market.
Plan-the-verb boosts initiative, encourages taking responsibility and speeds professional growth, providing you with a stronger in-house bench from which to grow.
It is always detrimental to value the noun—plan, leader, manager—more than the verb—plan, lead, manage.