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"I want you to be nice until it’s time to not be nice."
- Patrick Swayze as Dalton in Road House
you hear it so often that it has become cliche. to be an entrepreneur you have to listen. listen to your customers. listen to your employees. listen to investors. listen to the experts. and of course, it is the right thing to do. first, its just good manners. second, when you listen to different perspectives you tend to learn things. and learning things makes you a better entrepreneur. so its that simple right? listen to everyone and you will succeed. short post.
not so fast. listening to all these constituents is the right thing to do, until it isn’t.
try to reconcile all this advice about listening to everyone with some of our favorite success stories of the last decade:
google launched their search engine when everyone else was writing off search as a lousy business. they didn’t have a revenue model. how many people do you think were telling those guys to drive forward, don’t worry about revenue or the lack of interest in search. not many. some of those that did are very wealthy (and maybe a little smug) today.
facebook turned down multi-billion dollar acquisition offers for years. Most thought they were crazy. what kind of twenty-something year old ceo flaunts the billions of established giants? (i guess the kind who takes the company public a few short years later at a projected valuation approaching 100 billion dollars).
twitter. what, are you joking? how can 140 characters be a business? who cares what i had for breakfast, or what kind of underwear i put on today?
its fair to bet that the a ton of the advice these companies got from the experts, markets, investors, parents and friends ran counter to the decisions that set the companies on the trajectories they have enjoyed.
My own much humbler success story has some similarities. When we first launched the Right Media Exchange, most of our potential customers thought we were crazy. Ad networks didn’t want to partner with their “competition”. agencies resisted mightily our attempts to “dis-intermediate” them and publishers felt we were attempting to commoditize their content (a cardinal sin in publishing). obviously, there were outliers, but the majority of the feedback we got was to try something else. ad exchanges had been tried before…and failed. we rather stubbornly drove forward, and turns out we were more right than wrong.
of course, for each success story above, there are probably hundreds where the entrepreneur wishes they had listened a little more to the naysayers. don’t misunderstand. i am not saying if you’re hearing your idea is stupid it’s probably brilliant. odds are, if everyone is telling you it’s a bad idea…its a bad idea. but it could be brilliant. if you’re not prepared to deal with that kind of uncertainty, you’ve chosen the wrong path.
it is not easy to decide to do something in the face of a lot of advice not to. if the idea of failure isn’t intimidating enough, imagine all the people who will be waiting to say “i told you so”.
all too often, as entrepreneurs we remember to listen, but forget to make the hard decision to disregard the conventional wisdom.
you probably hear a lot about how great entrepreneurs get comfortable making decisions with limited data. its cliche, but like most cliches it is true.
Listening is just another form of gathering data. as entrepreneurs we need to gather lots of data, and then we need to decide, applying our instinct to all the data, and then sweating it out. sometimes, the data (advice) conflicts with our opinion. that’s either because we have a new, disruptive and massively valuable way of approaching a market. or it’s because we’re dead wrong. the only really bad decision is to do nothing, in which case we neither succeed nor learn anything.
so listen…until it’s time not to listen anymore.
imagine the perfect night’s sleep. For me, it involves sliding into cool bedsheets, closing my eyes, marveling briefly at how tranquil and undisturbed my thoughts are, and fading into a deep and restful slumber. Maybe I wake up once, around 2am, marvel at the fact that I have 4 or 5 hours more hours of rest ahead of me, and fade gently back to oblivion.
In the roughly 7 years between the day I quit my secure (and pretty easy) job to start Right Media and the day I left Yahoo 7 years later I literally cannot remember a single night’s sleep like that. There may have been a few, but they were infrequent enough that i truly can’t conjur a memory of one. Not on vacations, holidays or even when dosed up with more NyQuil than doctors typically recommend.
I don’t think I’m alone in this. I don’t know any active entrepreneurs who sleep soundly at night.
one of my favorite entrepreneurs in the world was telling me the other day about a study he read that said that in certain people making money had the same stimulating effect as cocaine. ”This is why I can’t sleep at night!” he exclaimed. (and he didn’t mean cocaine).
This struck me as funny for a couple reasons. First of all, I don’t think this particular founder/ceo is remotely interested in money. he’s already got way more than he needs, and as far as I can tell he doesn’t entirely know what to do with the wealth he has already generated. i don’t think he’s staying awake at night dreaming about a bigger house, the high stakes room at the Wynn resort, or his own personal jet.
it kinda begs the question - what keeps people who have already had so much success awake at night? they should be comfortable, happy and should sleep like babies, right?
when I think about what keeps me awake at night (thankfully, less frequently than in the past) I think it boils down to 2 things: fear of failure and the double edged sword of success.
fear of failure is fairly straightforward. failure in business means embarrassment, probably public. it means dealing with conflict of all sorts. failing, even gracefully causes problems with investors, partners, employees, spouses and so on. so naturally, we stay awake worrying about failure, particularly when things are not going well with our venture. do we have the right product? have we made the right bets? will our cash hold out long enough to get to breakeven, or raise another round? can we afford the new vp of sales we just hired. are we personally up to the task of being founder, ceo or whatever our role is. the list of ways to fail is endless, and its damn near impossible to keep from running over and over it in your head when you should be resting.
success on the other hand - now that ought to give us some rest, no? i think not. in some ways its worse than fear of failure. yes, fear of failure tends to retreat to the shadows of your mind a bit when things are going well, replaced by the prospect of bright, shining success! which of course occupies your mind just as intensely as fear of failure. you start thinking of all the ways you can accelerate the success you are starting to have. you see the future laid out in front of you, a series of clearly defined steps. how can you sleep when you know what needs to be done?
success of course also creates new opportunities to fail. once you start thinking about those - how your customers will respond the the downtime caused by your unprojected growth, the organizational and cultural growing pains you will deal with, keeping your burn rate under control in the face of escalating costs caused by usage, customers etc- the more success you have, the more you understand how much you have to lose and how much more public your failure will be. which leads you right back to fear of failure. kiss a good night sleep goodbye.
so, how does one sleep soundly as an entrepreneur. i’m afraid i’ve got nothing for you. i have no idea, and I don’t know anyone who does it. i don’t think it matters how successful you’ve been, how much security you have, or anything else. entrepreneurship is about seeing the world in a certain way and then making that vision a reality. for me, that is the essence of it, and that is completely decoupled from financial success, reputation and all the other trappings of being a successful entrepreneur. which means no matter how secure you are, and how satisfying your previous experiences have been, you will have the same anxieties and dreams and sleeplessness every single time.
i wish i had a better answer - but i’m pretty sure most entrepreneurs just don’t sleep well at night.
when i first started investing capital in startups someone told me - “be careful, successful entrepreneurs usually make terrible investors because they are too optimistic.” naturally, i scoffed at this. i know business, i know what’s going to work and what’s not - i’ll be a great investor.
turns out my friend was right…and wrong also.
i think entrepreneurs generally make terrible “professional” investors. We do tend to be overly optimistic. we tend to fall in love with ideas and don’t think deeply about who’s executing them, where the downside is etc., because our experience tells us “we will figure that out when the time comes.” some of my biggest failures as an investor have been the ideas that I loved the most - executed by people who really didn’t have much chance of succeeding - or in markets with really toxic dynamics. I invested because I loved the idea, and I thought about how I would go about executing it…and I expected it to succeed. this isn’t to say i would have snatched success from the jaws of failure…in most cases the ideas had their own fatal issues. my point is simply that being a great investor is about more than falling in love with ideas.
great early stage investors handicap the changing market. they handicap the ability of the team to evolve, pivot, and find a way. they don’t think “how would I do that?” as much as entrepreneurs do…and my guess is they’re less surprised when the team doesn’t act in the way they would. If you’re an entrepreneur who wants to become a professional investor, you probably have to train yourself to think and act differently. You need to be a little less optimistic. after all, to invest at scale, you can’t get involved operationally with every investment.
I do think entrepreneurs can be great investors when they get directly involved in a small number of projects. When I can approach an investment as a “lightweight” personal startup, I have more fun and the success rate is much higher for me and the company. i get to be more involved than i could be as an investor doing a lot of deals, and it is more personally satisfying. it is “lightweight because i don’t have to be ceo and i won’t get involved unless there is a strong ceo and team. it is really important that i choose the projects i invest my time and capital in, because i can really only be involved in 3 - 4 of these at a time total. i’ve taken on one of these per year on average for the last four years, and now i’m in a place where i can’t/won’t take another one until one of the ones i’m working on doesn’t need me anymore.
the reason this doesn’t work as a professional investor is that it’s just not enough deals to mitigate risk and create portfolio dynamics. pro investors need to do a lot more than one deal a year and have more than four investments at a time. I have tremendous respect for what these guys do. I’ve tried it and it is very, very hard. one way i mitigate risk is to invest passively alongside as many great “real” investors as I can. but i’ve learned my lesson, and i am happy to leave the professional investing to the professionals.
i love startups. sometimes it’s in hindsight, cause they can be a real pain in the ass, but if you’re a real junky you wind up looking back on a lot of the painful times fondly. like when you get together with your college friends and talk about the really bad hangovers.
one of my favorite stages of a startup is the part I like to think of as “when all hell breaks loose” around you.
it goes like this. you make a plan. you get organized, and put the team together. make some more plans. probably do a little too much planning, and then you do something. you launch a product, or get some customers, you have just a little bit of success…and the shit just hits the fan. sometimes is in a good way, and sometimes not such a good way (i’ve experienced both and both are stressful).
you usually realize around this point you are totally unprepared. the plan, for all the effort you put into it, largely goes out the window. its still important, but rigid plans don’t hold up in this kind of environment. because the reality is you’re reacting to so many different things at once, and your team is undermanned and overworked, and probably only half believed you were going to get to this part in the first place.
and you realize that the plan you made so painstakingly really doesn’t fit the situation anymore, so you do the best you can and struggle through it. because more than your plans, and your carefully crafted pro-formas, and release schedules, and go-to-market plans, what you do by instinct and common sense when all hell breaks loose will determine your success or failure. these are some of the best and worst moments of being involved with startups. but the thrill of watching something you dreamed up come to life - even if that life is shaky, and fragile, and sometimes doesn’t last too long - is hard to describe, and once you feel that its hard not to want to do it over and over again.
i grew up working in restaurants. dishes, busboy, waiter, bartender, manager, cook - i pretty much did every job there was to do in a lot of different place. i’ve always dreamed of being owning a restaurant.
i also love Montauk. i fell in love with Montauk on my first trip, and over the last 5 years as a part-time resident that feeling has only deepened.
this week i finalized plans to open a great dockside restaurant in Montauk. Its an amazing location. I have an amazing chef/operator for a partner…and we have a tremendous amount of work to do to be open by May.
if doing business is like shooting at targets, and winning is hitting them, then there are a couple ways of going about hitting targets.
large companies tend to aim very carefully before firing any bullets. my experience working at a large company often felt like this. ready, aim, aim, aim, aim, aim…fire…maybe. when you do fire, you’re much more likely to hit the target, and you waste fewer bullets, but it takes a lot longer to get a shot off. sometimes all that aiming meant we never got a shot off.
in startups, the firing cadence should be more like ready, fire, aim, fire, aim, fire, aim, until you hit the target, or run out of bullets (time, money, etc.) you fire a lot more bullets, but you are going to hit the target a lot faster.
there are merits to both methods of course, and the point here isn’t which one is better. what I know is that I vastly prefer the startup method. I love to see bullets firing down the range even if they hit nothing. with every one we fire, we get some data, we have a chance to hit the target and taste success. its fun, exciting, and occasionally very painful when you are left standing there with no more bullets, no money left for ammo.