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If The Shoe Fits: Profit. What Profit?

Friday, October 12th, 2018

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here.

Meet your target audience — no matter their age.

https://hikingartist.com/2014/05/26/the-web-generation-wants-it-all/

Image credit: Frits Ahlefeldt, AKA, HikingArtist

If The Shoe Fits: Bullshit In / Bullshit Out

Friday, August 3rd, 2018

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here.

Have you ever wondered where all the bullshit business terms (BBT) came/come from, especially since their spread predates the Net and social media by decades?

A fascinating article in the Guardian traces the birth and rise of business bullshit that sprang from a 20th-century Russian mystic, was embraced by corporate leaders, inspired Scott Adams of Dilbert fame, and has been re-imagined and added to by consultants and pundits ever since.

It hasn’t always been this way. A certain amount of empty talk is unavoidable when humans gather together in large groups, but the kind of bullshit through which we all have to wade every day is a remarkably recent creation.

Founders and others in tech are especially fond of BBT as they go about changing the world.

There’s even an online generator that takes the effort out of remembering terms yourself.

Business bullshit always reminds me of a guy I worked with, who believed the more multi-syllabic words he used the smarter he would sound.

He didn’t and you won’t either.

The article is long, but well worth the reading time.

It might even help squelch your own penchant for using them.

Hat tip to CB Insights for pointing me to the article.

Image credit: Scott Adams

Becoming a Leader in Fact

Friday, July 20th, 2018

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here.

As a founder I’m identified as a leader, but I don’t believe that any position makes one a leader.

Nor do visions, speeches, brilliant presentations or skilled fundraising.

I believe you recognize a leader by the quality of their team.

That doesn’t mean hiring someone else’s stars, it means hiring good people and providing all of them an environment that helps them become stars.

Over the years, I’ve collected short quotes that inspire me and help me become a leader in fact, not just in name.

Here is one of my favorites.

The task of leadership is not to put greatness into humanity, but to elicit it, for the greatness is already there.
John Buchan,
historian and political leader

I hope you find it as useful as I have.

Image credit: Wikipedia

If The Shoe Fits: Jerry Nemorin and Lendstreet

Friday, June 15th, 2018

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here.

Miki and I want to congratulate Jerry Nemorin, founder and CEO of Lendstreet, a fintech startup. As a board member I’ve been with Jerry from the start and know how hard he’s worked, as well as how much he cares.

He cares about his team, his company, and his investors, but most of all he cares about Lendstreet’s ability to help its customers to a better life.

Lendstreet restructures debt for consumers in financial distress. A badly kept secret is that healthcare expenses is the number one reason that people go bankrupt and families lose their homes. In fact, most middle and low income families live on a shoestring — the average family only has  a few hundred dollars in the bank to deal with emergencies.

As a consequence, a seemingly small thing like the car breaking down can put an entire family spiraling downward to homelessness. Lendstreet interrupts this cycle by using technology to restructure the debt and ensure that the family has the necessary liquidity to get through hard times. In addition, they educate people on financial best practices, including how to improve their credit score.

In essence, Lendstreet provides technology-based solutions and resources that reduce consumer debt, increase credit scores, and improve savings. Since its inception, Lendstreet has helped customers successfully reduce their debt by nearly 40 percent and improve their credit score by an average of 100 points.

Lendstreet was founded in 2013, and Jerry has spent the intervening years building its business to support some of the most vulnerable people in this country. Sure, he’s raised money, a difficult proposition for a business focused on helping the bottom 80% of the population, instead of the top 20%.

He has been relentlessly tenacious in his drive to bring the company and its products to market and in raising the necessary capital to be able to help an increasing number of people.

This week he reached an important milestone in his quest — he managed to get top institutional investors to participate in funding a solution to the tune of $120 million.

“Lower and middle-income Americans are struggling and relying on high interest credit cards for their day-to-day survival. These investments will enable us to scale our platform and reach more consumers who are struggling with too much debt. Prudential, CIM, Radicle Impact, and our other investors share our vision of finally giving mainstream Americans access to an equitable and transparent alternative for their mounting credit card debt.”–Jerry Nemorin

My hope is that by helping people get back on a solid financial footing, by reducing their debt and coaching them on spending wisely, they will be able to stabilize economically and generate upward mobility, as opposed to treading water or, much worse, drowning.

CONGRATULATIONS,  and !

(In 2013 Jerry covered The Innovation Summit for MAPping Company Success.)

Image credit: HikingArtist

If The Shoe Fits: Why Founders Should Embrace ‘Why’

Friday, June 8th, 2018

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here.

Did you read Ryan’s Journal yesterday? One of the things he talks about it the importance of starting with ‘why’, instead of just rushing in.

I get it, ‘because I’ve always been a ‘why’ person.

Founders would do well to ask ‘why’ more often, as in “Why are we building/doing this?”

The importance of that particular ‘why’ is data-driven, which is important, since the tech world especially believes that everything important is data driven.

I can cite dozens of sources, but I’ll use data from CB Insights, since it’s a startup and it’s product is data.

Tackling problems that are interesting to solve rather than those that serve a market need was cited as the No. 1 reason for failure, noted in 42% of cases. Or, as Treehouse Logic said, “We had great technology, great data on shopping behavior, great reputation as a thought leader, great expertise, great advisors, etc, but what we didn’t have was technology or business model that solved a pain point in a scalable way.”

A lot of people don’t like asking ‘why’, because, more than most, it is an uncomfortable question.

It usually requires introspection and frequently doesn’t return the desired answer.

Founders don’t like the why question for the same reasons, especially when it interferes with their beloved vision, let alone their worldview.

There are two ways of internalizing that data.

The obvious: Not asking ‘why’ increases my chance of failing by 42%.

The less obvious: Asking ‘why’ increases my chances of succeeding 42%.

If you subscribe to the less obvious approach, or want to, the simplest was to implement it is to embrace the Lean Startup methodology

Doing so may mean abandoning your initial vision, or, at the least, tweaking it, which could bruise your ego, but the payoff is huge.

And the bruising should be easier to handle knowing that you got a 42% boost on the road to success.

Image credit: HikingArtist

If The Shoe Fits: Management Wisdom From John Buchan

Friday, May 18th, 2018

 

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here.

As you all know, startups are 80+ hour weeks and pre-launch adds at least 10 hours.

However, I wanted to share John Buchan’s words (he was an historian and Canadian politician), because it’s the kind of thing that can easily fall through the cracks when you’re living with intense startup pressure.

But it shouldn’t.

The task of leadership is not to put greatness into humanity, but to elicit it, for the greatness is already there.

It’s what we, as founders, owe to those who dare to take the trip with us.

Image credit: HikingArtist

If The Shoe Fits: High Performer/Expectations Syndrome

Friday, May 4th, 2018

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here.

A few years ago I wrote that good bosses need to be part shrink in order to deal with imposter syndrome and real programmer syndrome (for lack of a better term).

Now, there’s a third mental quirk to add to that list; call it high performer expectations syndrome.

Founders have notoriously high expectations of themselves and everyone they hire.

Those expectations are great motivators as long as things are going well.

However, those same high expectations, both external and internal, can have a negative effect on the best people — including the founder.

What we found essentially is this: When the going gets tough, favorites are more likely to quit. […]  When people walk in with high expectations and they begin to falter and experience setbacks, they have two options. They could persist and try to grind it out, or they could take the easier route that might preserve their self-esteem, be less embarrassing, and exit.

Founders and other high-performance team members aren’t likely to quit, although massively hyped stars are another matter.

Most high performance people know they are fallible, so the hit to their self-esteem is more internal and they are less likely to personalize public embarrassment — both attitudes that usually respond positively to “we’re all in this together” team support and coaching.

Stars, however, typically have a strong belief in their infallibility and a high sensitivity to public embarrassment — not a combination that lends itself to team support or coaching.

Good bosses take care of their people and themselves.

They also meld high expectations with a strong culture; one that makes glitches and even failing a learning experience that leads to both company and personal growth.

Image credit: HikingArtist

Data Says Older Entrepreneurs are More Successful

Tuesday, April 17th, 2018

http://www.hawking.org.uk/

Yesterday’s Golden Oldie ended with my sarcastic comment about tech’s distorted and manipulative approach to data a la “gut instinct” and “pattern recognition,” especially when it comes to age and gender equity.

Data only matters when it supports prevailing prejudice.

A couple of years later I linked to articles that clearly showed that age was more a mental state than a physical one, including this one.

Vivek Wadhwa, a Duke University researcher, worked with the Kauffman Foundation in 2009 to explore the anatomy of a successful startup founder. That survey of more than 500 startups in high-growth industries showed that the average founder of a successful company had launched his or her venture at the surprisingly high age of 40. The study also found that people over 55 are almost twice as likely to launch high-growth startups than those aged 20 to 34.

In March, Forbes again focused on the fact that older entrepreneurs are more successful.

…late-career entrepreneurs benefit from the kind of deep domain expertise that younger counterparts lack. The more intimately an entrepreneur knows their particular industry, after all, the better positioned they are for success. A newly published study of hundreds of companies confirmed just this: the startups most likely to succeed have technically savvy founders who know their space inside and out. A classic example is Garmin, maker of the ubiquitous GPS devices. The company was started in 1989 by two career aerospace contractors (in their 40s and 50s, at the time) who pooled their technical know-how to turn military-grade technology into consumer tools. Today the company is worth more than $10 billion.

Even Brian Acton was almost ancient when he founded WhatsApp at 37.

Earlier this month, KG sent along an article from TechCrunch that added more data.

What they found is that the average age of a startup founder is about 41.9 years of age among all startups that hire at least one employee, and among the top 0.1 percent of highest-growth startups, that average age moves up to 45 years old. Those ages are taken from the time of the founding of the company.

The researchers broke down the population of founders along a number of lines, including geography and industry. They found little difference in their results between subcategories, and, in many cases, the subcategory definition actually increased the average age. For instance, industries like oil and gas can have average founder ages as high as 51.4 years old. The researchers wrote that “The only category where the mean ages appear (modestly) below age 40 is when the firm has VC-backing. The youngest category is VC-backed firms in New York, where the mean founder age was 38.7.”

One interesting dynamic in the data is that older entrepreneurs appear correlated with better startup performance. “For example, the 1,700 founders of the fastest growing new ventures (1 in 1,000) in our universe of U.S. firms had an average age of 45.0 (compared to 43.7 for the top 1% and 42.1 for the top 5%),” the researchers wrote.

As you mull these numbers, stay aware that these are companies with actual, and often substantial, revenues, as opposed to valuations based on fundraising and hype.

Image credit: Hawking.org

Golden Oldies: The Shallowness of Youth and the Myth of Age

Monday, April 16th, 2018

https://www.flickr.com/photos/deryckh/2884858619/

Poking through 11+ years of posts I find information that’s as useful now as when it was written.

Golden Oldies is a collection of the most relevant and timeless posts during that time.

This post is from 2014. Study after study has proven that more successful founders are in their 40s and 50 than in their 20s. More on the most recent studies this week.

Read other Golden Oldies here.

On one hand you have Jim Goetz, partner at Sequoia Capital, lamenting the lack of enterprise startups and on the other you have Sequoia’s Michael Moritz, “an incredibly enthusiastic fan of very talented twentysomethings starting companies. They have great passion. They don’t have distractions like families and children and other things that get in the way.”

Other things such as experience.

The shallowness of so many of today’s startups makes a great deal of sense if you remember the advice given to every aspiring writer, i.e., write about the things you know; write from your own life and experiences.

Investors give entrepreneurs similar advice, which is probably why you have an abundance of hook-up apps, gossip apps, games and social time-wasters.

And then there is the question of what purpose our economic growth actually serves. The most common advice V.C.s give entrepreneurs is to solve a problem they encounter in their daily lives. Unfortunately, the problems the average 22-year-old male programmer has experienced are all about being an affluent single guy in Northern California.

Monday we looked at the economic dangers from Silicon Valley’s generational gap highlighting the incredible waste of talent engendered.

But the real stupidity in the rush to fund the young is that their success is a myth and not backed up by any kind of hard data.

A 2005 paper by Benjamin Jones of the National Bureau of Economic Research studied Nobel Prize winners in physics, chemistry, medicine, and economics over the past 100 years, as well as the inventors of revolutionary technologies. Jones found that people in their thirties contributed about 40 percent of the innovations, and those in their forties about 30 percent. People over 50 were responsible for 14 percent, the same share as the twentysomethings. Those under the age of 19 were responsible for exactly nothing. One study found that even over the last ten years—the golden age of the prepubescent coder, the youth-obsessed V.C., and the consumer Internet app—the average age of a founder who could claim paternity for a billion-dollar company was a rickety 34.

Everybody in tech focuses on the importance of “data driven” decisions—until the data doesn’t support the decision they want to make.

That’s when they start talking about the importance of “gut instinct” and “unconscious pattern recognition.”

Data only matters when it supports prevailing prejudice.

Flickr image credit: Deryck Hodge

If The Shoe Fits: the Tao of Founders and Hedge Fund Managers

Friday, January 26th, 2018

 

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here.

I had a $15 K lesson in founder ego when I lived in San Francisco. That’s how much I lost when I invested in a startup run by a guy with a bad case of it.

The only thing to do when that happens is to move forward and forget it. Money is replaceable — your sanity isn’t.

I haven’t thought about it in years, but reading the abstract from Do Alpha Males Deliver Alpha? Testosterone and Hedge Funds reminded me of “Craig,” in spite of its focus on hedge funds. (The full paper is available at the link.)

Using facial width-to-height ratio (fWHR) as a proxy for pubertal testosterone, we show that high-testosterone hedge fund managers significantly underperform low-testosterone hedge fund managers after adjusting for risk. Moreover, high-testosterone managers are more likely to terminate their funds, disclose violations on their Form ADVs, and display greater operational risk. We trace the underperformance to high-testosterone managers’ greater preference for lottery-like stocks and reluctance to sell loser stocks. Our results are robust to adjustments for sample selection, marital status, sensation seeking, and manager age, and suggest that investors should eschew masculine hedge fund managers.

This makes one wonder if the lack of testosterone is an underlying factor in the outstanding success of women-led companies outperforming those led by men.

Hedge fund managers have a number of traits in common.

They are white, attended ‘good’ schools, graduated from elite colleges and are connected through a web of similarly privileged friends.

Sound familiar?

That description fits much of Silicon Valley, both founders and investors.

As does the abstract.

As do the egos.

Image credit: HikingArtist

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