A Friday series exploring Startups and the people who make them go. Read allIf the Shoe Fits posts here.
The words and images people share through social media have enormous spin.
This is especially true in the startup world where image is everything and perception is key to the next round of funding or investment.
The purpose is to tell the world how world-changing the tech, amazing the team, great the opportunity and how perfectly they are executing.
In other words, they are ‘crushing their goals’, ‘wowing the world’ and ‘killing it’.
Not only that, they are doing it with nary a bump or pothole along the way.
(If you believe that I have a great deal on a lovely orange bridge that would look great in your backyard after you IPO.)
Lee Hower, Co-founder & Partner of NextView Ventures and former entrepreneur at LinkedIn and PayPal, wrote a very needed commentary regarding the hyperbole that irrigates the startup ecosystem.
As he says, “not everybody is killing it and certainly not all the time.”
If anything, the constant social media barrage claiming to be ‘killing it’ is increasing denial, making it harder to admit the challenges, let alone actual problems, and further limiting entrepreneurs ability to talk about it.
Entrepreneurs who go public do so after the fact offering useful insights on how they overcame. While this is valuable, it can make it even more difficult for those in the throes, with no one to talk to.
Entrepreneurship is a double-edged sword; while it can be enormously rewarding, it can also destroy and even kill you — or all of the above.
There are two important take-aways in all this.
Don’t believe everything you see/hear about how others are doing.
Never forget that your pursuits won’t thrive unless you survive.
A Friday series exploring Startups and the people who make them go. Read allIf the Shoe Fits posts here.
Although I rarely get comments, I would really appreciate any insights you can offer on this subject.
KG sent a press release he thought would interest me; it should interest you, too.
The Montreal-based artificial intelligence startup Lyrebird today unveils its voice imitation algorithm.
With this innovation, Lyrebird is going a step further in the development of AI applications by offering to companies and developers new speech synthesis solutions. Users will be able to generate entire dialogs with the voice of their choice or design from scratch completely new and unique voices tailored for their needs.
First, a quick story.
Years ago a friend got in trouble when someone spoofed his email, catfished him and made a bomb threat to a local school. Fortunately, he was able to prove it wasn’t him.
It turned out that it was a kid who was mad at his teacher.
People are catfished all the time. Usually it’s not a big deal, but sometimes, as with my friend, potential repercussions can be very serious.
Nobody likes being catfished, but think of the damage that could be done using Lyrebird’s algorithm.
How could you explain a threatening or obscene phone call in your voice?
Lyrebird talks about benign uses, such as “personal assistants, for reading of audio books with famous voices, for connected devices of any kind, for speech synthesis for people with disabilities, for animation movies or for video game studios“ and shows off audio examples, including Donald Trump.
Now think what the outcome could be from a highly inflammatory call to Kim Jong-un mimicking Trump’s voice.
Tech people talk all the time about how they are “changing the world” and making it better, but they seem far more focused on enhancing their personal brand and making money, while turning a blind eye to any potential negative effects.
Are they truly amoral?
Or do they even owe humanity at least some consideration of the possible negatives?
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.