Luck be a Lady

Let's keep this party polite
Never get out of my sight
Stick with me baby I'm the guy that you came in with
Luck be a lady tonite

This swinging song from Guys and Dolls by the incredible Frank Sinatra in his prime, is a plea to lady luck to stay close by his side at the craps table. It's definitely a song to take along on the roller coaster ride.

Now, there are many aphorisms such as -- luck comes with hard work and luck is what happens when the prepared mind meets opportunity and the harder I work the luckier I get.  All that and more from many brilliant and successful people.

But that's all a bunch of crap.  Useless crap.  When it comes to creating a successful business, the reality is that hard work and a prepared mind are table stakes -- if you are not a phenomenally hard worker and are not prepared for the ride, then you have no business being an entrepreneur.  You're better off keeping your day job or going for your advanced degree.

But even if you do have a killer work ethic and your eyes are wide open for opportunities, you will still fail without luck on your side.  This is not fair, but it is true.

There is also the saying that is something like, "I'd rather be lucky than smart or good".  But luckiness is not a character trait -- people or companies can only be seen to be "lucky" in hindsight.

Luck be a Lady ToniteSo how do you court Lady Luck?

It's all about market timing -- nearly 100%.  The fact is, if you are "lucky" enough to time your startup right, it's pretty difficult to fail -- you'd have to do something phenomenally stupid.  Daily.

Conversely, you can have a great product, great team and great investors, but if your timing is wrong, you are roadkill.  To add insult to injury, several months or years after you fail, someone will pick up your idea and make a killing on it.  As Mark Suster, a VC at GRP Partners (and host of This Week in Venture Capital) likes to say, "Being too early is just like being wrong".  And he's correct.

Case in point -- as I write this, Groupon is filing for an IPO which will probably be priced at or around $20B.  A similar concept involving online group buying was pioneered by Mercata, a Paul Allen investment, back in 2000.  Mercata failed in 2001 just before they tried to raise $100M in an IPO.  Has the model changed?  Yes, Mercata started with consumer products (which didn't work very well) and Groupon is mostly about services (which seems to work better).  Has the technology improved?  Certainly.  Are more people online and more social?  You bet.  But the large part of the reason for Mercata's failure had to do with the crash and their ill-timed IPO filing.  Would they have been able to find their 'Groupon' model?  Perhaps.  But they didn't live long enough to find out.  Bad timing.

Could there be another bubble crash before Groupon's IPO?  Possibly -- in that case that would be pretty unlucky for them as well.  The red ink is very, very deep over there.

If it's all about market timing, how do you tip the scales in your favor and 'get lucky'?  The answer is -- the pivot and the money -- and they are interrelated.

I don't have the statistics, but probably 95% of successful companies started doing something else (including Groupon) and then pivoted to a better opportunity.  There's a bunch of stuff written about minimum viable product and the pivot, so much that's it's gone beyond cliche, so I won't cover it here.  But the fact is that growing companies are nearly always pivoting -- not necessarily in a major way as they mature -- but I will say this -- companies that fail to continually pivot to the market demand will either fail or not reach their potential. 

In short, you can move Lady Luck one step closer to you by always being able to pivot to a better opportunity.  If you learn how to pivot in the early days, don't forget how to pivot again and again as markets and technology change.

However, if you don't have the money -- either because you blew through your seed capital or your venture round, or because you didn't get to at least ramen profitable, or because, like Mercata, you filed for your IPO about 6 months too late, you will run out of gas and won't be able to pivot.  This is also true of public companies that have to hit a quarterly profit.  People ask why the giants (say, in the music industry) didn't see the writing on the wall and move to where buyers were going.  They probably did see it -- but they were so constricted by their current business model that they could not respond.  Read "The Innovator's Dilemma" if you haven't already for great examples of these types of failures.

In startup world, one of the problems with raising venture capital is that in many (but certainly not all) cases, you are literally forced to bet the company on the original idea -- the one you pitched with your business plan.  VCs bet big and they have a time horizon for their returns.  If they are wrong, they have 10 or 50 other companies that might hit over the next 5 to 10 years.  But you, little courageous startup founder, are dead in the water because you've been running the company deep in the red (at their suggestion -- 'Go Big or Go Home' is a board room favorite) and there is no money to keep funding you to the pivot and potentially to new life.

You'll be sitting on the side of the road watching everyone else zooming by through red and teary eyes, as some of them take your very idea to the bank.

Bootstrapped companies (or pre-funding startups) have different challenges (another post will unpack this in depth) -- but they are inherently more able to move decisively to a bigger and better opportunity.

In short, to be a lucky entrepreneur, you need to do and be all the things the great thinkers tell you to do and be. 

But for you to have Lady Luck close by your side for the entire journey, you also must have the flexibility, market insights -- and cash to move very quickly and decisively to the lucky craps table before you seven out.

The Loneliness of the Long Distance Entrepreneur

Loneliness.  The ability to push through periods of indescribable loneliness is going make a big difference in whether you will succeed during the crucial early days of your venture. 

This is perhaps one reason some tech founders succeed where many business founders fail.  Because hacking is inherently a one-on-one game -- you and the software, through long periods without human interaction, some hackers are pretty accustomed to it and even thrive on it. 

On the other hand, business founders, those with a very outgoing sales and marketing personality, find the loneliness of the early days to be so painful that they quit.

Here's why.  In the very early days, business founders will have typically have left a comfortable income and a great group of colleagues, customers, vendors -- or their MBA buddies that went to Wall Street.  They left the comfort and security behind to pursue their dream.  They may have given some of their close friends the elevator pitch, looking intently for the excited response that would give the founder the initial liftoff and the confidence to say, "I am going to do this".  The problem is that excitement -- real or feigned -- comes way too easily -- people that are friends first may not have the discerning eye that a prospective customer would.  So the business founder starts off with a big head of steam, quits his job (or exits the job hunt) and starts off.

The Loneliness of the Long Distance EntrepreneurGood so far.  Here's what happens next.  You start calling potential co-founders, customers and partners -- and you always get voice mail and nobody returns your call.  Well, maybe you get a sympathy call back very occasionally, and you may get a very tepid response from prospects.  Maybe you try to talk to some VC friends.  Same thing.  The fact is that everyone is too busy doing other things -- and until you get some real traction, nobody is going to give you much of their time. 

The result -- terrible loneliness, waning self-confidence, a sinking feeling, maybe a feeling of regret as you start draining your savings while watching your friends buy cars, homes and the trendiest consumer products.  Determined, you spend time googling, reading research reports, studying the competitive field, forwarding your thoughts to your network and asking for feedback, growing more confident that you're onto something.  Then you suffer the humiliation of getting no responses or a patronizing, "sounds great!"  While the days ahead, should you continue, will have their own challenges, this may be the most difficult one.  And it's one of the reasons far too many would-be founders give up the dream -- and go back to the 9 to 5.

Nearly everyone goes through this.  Sadly, not everyone emerges intact.

This is why it makes a lot of sense to get started on the evenings and weekends before you get on the rollercoaster.  You can make a lot of progress in your post 40 or 50 hours at your day job -- you still have your day-to-day contacts, you can find ways to float ideas with colleagues and even customers if you're clever about how you do it -- and most importantly, you're not the unemployed leper that nobody wants to call back.  It is also important to network -- and build contacts with fellow entrepreneurs at the same stage.  Not to host a pity party, but to help one another through the toughest part of the roller coaster ride.  Read books and blogs by entrepeneurs.  The better ones are honest and personal -- and don't try to put a fine shine on the process.  Consulting is another path that some have successfully taken -- earning works-for-hire dollars from customers that may eventually buy your solution is a great way to get into the game.

I have direct personal experience with this.  The early days of starting Tradavo were among the loneliest of my life.  I had to endure the fact that I had only token support from friends and family.  I can remember the days of getting a call back maybe once every couple of days and hanging on every word of the conversation.  One late afternoon, I heard my phone ring and raced across the room, breaking my foot on a dumbell I had carelessly left in the middle of my office.  It was a telemarketer.

In the end, I powered through it.  Had I not had the unquenchable desire for success -- or the ability to get comfortable with the loneliness, I might have called it quits.  But I knew that I was on a mission to succeed and if emptiness and loneliness was the price I had to pay, I was going to step up.  But nearly every day required me to re-commit, to re-connect with the vision, to look past the problems of the day and into the future I had imagined.  Being scared to fail -- more scared than lonely, also helped a lot.

If you make it past that point, you've proven you have the mettle to get past the next several patches of loneliness.  Those inevitable bouts of loneliness will come when you wonder when customers will show up, when they will start paying and when you can't imagine how you are going to pay vendors or make payroll.  Even with co-founders, who can provide great comfort and solace through the rough spots, you're still the one with the heavy weight on your shoulders -- and you might not feel comfortable sharing with your co-founders, friends or family that a light breeze might knock down your little house of cards  (Yes, your early stage business is a house of cards -- another blog post will clarify this).

The loneliness of the early days builds great character for the days that will follow -- embrace it and learn from it.  You will learn about yourself and you will learn about your business.  While some may have overnight successes, most of us won't. 

So it's a long distance loneliness you need to be ready to endure -- and conquer on the road to success.

Five tell-tale signs you might be an entrepreneur

Quite a few would-be entrepreneurs wonder if they have what it takes to start a company and build a successful new company.  Put another way, they ask, do I have what it takes to ride the roller coaster?  Even if they have a great idea for a new company, they never quite get out of the starting blocks because they may fear that they don't fit 'the mold', based on what they believe 'the mold' is.  And 'the mold' -- in their minds -- seems to be centered around a particular background and set of circumstances.

The fact is, there is no such mold -- don't believe for a minute that you need a Harvard or Stanford MBA.  But if you have one, that's fine.  Don't believe you need a 4.0 GPA -- but if you do, that's also fine.  Your parents don't need to be wealthy.  If they are, good for you.  As a kid, did you have a paper route, lemonade stand or perhaps you mowed lawns?  Oh, you didn't?  Fine.  You needn't have had a single success in your entire life.  Your past can be riddled with abject failure, you could have had flashes of brilliance but nothing sustainable.  Or you could be coming off a single or a double and may be wondering if you can ever hit the long ball.  All fine, fine, fine.

However, all entrepreneurs do have a certain, Je ne sais qua,  which means I don't know exactly what, but it's a (mostly) genetic makeup, helped along by circumstances -- and has little to do with background.  I'll put some things out there that have convinced me that I can be nothing if not an entrepreneur.  These are quite personal, but they are also based on my perception of the hundreds of other entrepreneurs I have met over the years.  And maybe you can help by adding a few to the list.   The important thing is if you have some or all of these traits and you're not starting a company, you're wasting your time and your opportunity.

1. Lack of Common Sense.  Okay, that seems ridiculous, but hear me out.  I was told numerous times by parents and teachers that I didn't have common sense.  That didn't mean I stayed out in a lightening storm raising a steel beam skyward crying out, "I'm Thor!" (I didn't, but Ben Franklin did something close to that).  So it took me a while to see what they were getting at.  I always approached problems in an unconventional way, and with a different type of thinking.  As an example, I can remember taking a multiple choice test where I kept looking for the answer, "none of the above" because I had a better answer than those that were listed.  I called the teacher over to explain my answer and was told to pick the "best" choice, and that my idea showed I lacked common sense.  Okay, then.  These days it is called "thinking outside the box" or "contrarian thinking".  Back then, it was "lack of common sense".  If you "lack common sense", it means you are something of a dreamer, instead of living 100% in reality, you spend a fair amount of your most productive time dreaming of a different and better future.  That also has a negative connotation to it, because if all you are is a dreamer, then you'll never achieve anything.  But you must have the dreamer gene to be an entrepreneur.  Whatever you call it, if this has been part of a pattern for you, you have at least one critical quality of an entrepreneur, and one that will serve you very well.
2. Are Never Too Careful.  My Dad, an immigrant from Poland, grew up in the Greenpoint area of Brooklyn.  Through sheer determination and hard work, he managed to get himself a BS in Physics, which guaranteed him lifetime employment and a great career in the aerospace industry.  Yet, having lived in poverty, he was very risk-averse, very concerned that all he worked for could disappear in a flash.  In trying to convey his life lessons to me when I was about eight, he said, very sternly, "You can never be too careful", and by that, I now know he meant to err on the side of caution.  However, I took it the opposite way from what he intended -- I thought he was telling me, "You should never be too careful", thinking he meant that being too careful was foolish.  I went through life thinking I was honoring my father's advice, and as a result (and counter to his best advice) I became a risk taker and still am.  If you have more of a risk taking personality entrepreneurship is for you.   If you think you can never be too careful, aerospace may be for you.  Not a bad career, but not exactly a hotbed of entrepreneurship.
3. Think "No" means "Yes".  Ideas and new ways of thinking are always battered down by those without imagination and those who have a vested interest in maintaining the status quo.  So, if you have a well conceived idea and are trialing it out with people (which I strongly suggest you do all the time, even while working on your startup), then getting negative feedback, particularly irrational negative feedback, is a good marker that you're on to something good.  The seed of a great business is when you conceive how something can be ten times better and the experts say, great idea, but it's just not possible.  Particularly if the "experts" don't understand the power of technology or how you would apply it.  Try this out on yourself -- how many times did you have what you thought was an industry changing idea -- you ran it past a few people and got discouraged.  Then years later you found out someone else ran with it.  That happens to all of us (though some won't admit it) -- so don't get down on yourself if you've 'passed' on your idea.  What matters most is that you don't make the same mistake again.  Remember, "no" means "yes".
4. Have a Chip on their Shoulder.  If you feel like the world owes you a living, if you're surly and rude and if you don't play well with others -- you probably have a chip on your shoulder, but that's not what I'm talking about.  An entrepreneur has a particular type of shoulder chip -- one that comes from a previous failure, from being put down and smacked around unjustly or from being just plain unlucky (by the way, luck is the single greatest factor in success -- although it's not sufficient for success -- that will be another blog post).  Whatever or whenever the cause (although the earlier in life you discover you have a shoulder chip, the better), you now have something to prove.  It's important that the person you have to prove things to is you -- if it's others, then the chip is not as powerful a motivating force and will dissipate quite easily when things get tough.  You need the confidence to know that you have every reason to be in a better place -- and you're not going to be happy until you get there.  No matter the past.  So think about whether you have a shoulder chip -- and if you do, cultivate it.  It will serve you well.
5. Are Passionate.  The last one is tough, because I thought of so many more that I would add to the list, but didn't want to make this a Ten-er.  I ran through "scary smart", which describes a number of iconic entrepreneurs -- Gates, Jobs and Zuckerberg, to name a few.  I think uber-intelligence helps, but there are quite a few successful entrepreneurs that are not scary smart, and in fact, intelligence can sometimes get in the way of success -- especially when it leads to over-analysis.  There are a few, but not many, PhD entrepreneurs -- I would guess less than 5%, maybe even 1%.  And those that "went native" probably felt lost in the wilderness for all those years in academia (of course, they will tell you a different story, something about how they couldn't have done what they were doing had they not gotten two or three graduate degrees; everyone needs to justify their past). That brought me to consulting firm terms like "decisive", but I don't think any of those are key.  Helpful, but not top five.  To be sure, "lucky" is a factor, but I don't think anyone has figured out how to be lucky or even how to tell if you are lucky.  Luck is crucial, but luckiness is all hindsight.  I finally settled on passionate, because without passion, there is nothing.  With passion (and luck) nearly anything can be achieved.  Even with passion alone, you stand a better than even shot.  So how do you know if you are passionate?  How do you measure it?  And how much is required to be able to call yourself an entrepreneur?  You can look to your past to see how many things you were truly, truly passionate about -- not hobbies, not passing fads, but so passionate you would stop at nothing until you achieved your vision.  I graduated summa-cum-lousy with a degree in Geology, but decided I wanted to be a programmer and I wanted to live in California.  Took me two years of backbreaking work, but I did it.  Five years later, I wanted to run a software division.  Done.  And three years after that, I wanted to start a company.  Did that four times.  All because of passion.  And when I failed, I can directly attribute the root cause of the failure to waning passion.  As far as how much is enough, unfortunately, I don't think you'll know for sure until you try to get something started.  Passion will get you through the countless bumps and turns in the road.  It will get you through 100 VC meetings until you get funded or decide to bootstrap your idea.  It will take you through thousands of customer rejections and defections.  It will help you find and hire the right co-founders and employees.  You cannot be successful selling to key customers without passion.  And at last, when you get to the level of success you set out to achieve, there is no doubt at all that you can call yourself "passionate".  Few can.

Soundtrack for the Ride, Top 5 Songs for Entrepreneurs

Everyone knows that having an iPod loaded with songs that inspire is critical to success and makes the arduous journey bearable, even delightful.  For all the times that the roller coaster is at the bottom of the ride and it doesn't look like there is a way back up, there are a number of songs that lift my spirits.   

I have a playlist called "Up" and I use it at times when making payroll seems impossible, when there are team problems, when we lose a deal to competitors (that we should never have), when we have a sales miss, when the next rounding of funding is looking doubtful and when success seems like a far off fantasy. 

What's in your iPod?  Here's are five from my Up playlist:    

1) "Lose Yourself" - Eminem.

No question this is the number one song.  What is there in common between a rapper trying to make it big and an entrepreneur?  They are virtually indistinguishable.  A clear vision, relentless persistence, fear of failure are common to both, as is the unwillingness to desist in the face of all odds.

There are many great lines in this Oscar winning song (from the movie Eight Mile), starting with the intro -- "Yo, if you had one shot, one opportunity, to seize everything you ever wanted, one moment.  Would you capture it, or just let it slip."  

 And it ends with, "You can do anything you set your mind to, man".

Throughout the the driving rap are other gems including the chorus, "You only get one shot do not miss your chance to blow, this opportunity comes once in a lifetime". 

And the powerhouse line is, "Success is my only [melon farming] option, failure's not. So here I go it's my shot...this may be the only opportunity I got".  

This song articulates the absolute drive entrepreneurs need to have so well, it should be on everyone's playlist.  I challenge anyone to listen and not get totally revved up for success.  And if a barely educated white rapper from the wrong side of the tracks can overcome incredible odds and achieve his vision, anyone can.  

2) "I Won't Back Down" - Tom Petty.

Why? This is a classic song, the title serving as the mantra of any entrepreneur when confronted with the bigger challenges in startup life.  Within the song are some great lines, such as "You can stand me up at the gates of Hell, but I won't back down". 

Envisioning fighting the good fight with your back up against the gates of Hell for your very survival is a great technique for getting through the darkest hours.  Another great line is, "and I'll keep this world from dragging me down and I won't back down".  It's been said the the best entrepreneurs have a chip on their shoulder, the bigger the better.  If you resonate to that line, you're in the club.

 

 

3) "Bandlands" - Bruce Springsteen.

Why? "Old Bruce" -- the knock-down-the-walls Bruce versus the newer "Itinerant Socialist Bard Bruce" is truly inspirational.  Pick yourself up by your bootraps, damn the torpedos, your life is what you make it approach. 

Badlands is the prototypical song from early Bruce --  "Talk about a dream, try to make it real.  You wake up in the night with a fear so real.  You spend your life waiting for a moment that just won't come.  Well don't waste your time waiting."  If that doesn't describe your startup life, then you are one of the lucky few.

 

Then there is this, for anyone who couldn't stomach working for someone else because they had a vision of a better world -- and couldn't make it happen in a stifling corporate atmosphere: "For the ones who had a notion...that it ain't no sin to be glad you're alive.  I wanna spit in the face of these Badlands".

 

Interestingly, Badlands is the opener for the album, Darkness at the Edge of Town -- and the closing song is the title track.  Darkness is less a rousing inspirational anthem and more a haunting storyscape, but with a final climatic line that speaks to every rollercoaster rider,

"I'll be there on time and I'll pay the cost, for wanting the things that can only be found, in the Darkness at the Edge of Town". 

 

4) "Free Bird" - Lynard Skynard.

  

Just kidding.  Apologies to the band and I love you guys, but this song kind of sucks.

5) "Empire State of Mind" - Jay-Z and Alicia Keyes

This song is a winner, although I have more than a slight bias being from NY, more precisely, Brooklyn. 

The other reason it made the list is that it WAS the theme for the This Week in Startups podcast hosted by Jason Calacanis.  Not sure why they replaced it, maybe copyright issues.  The theme song really got me into the right frame of mind for learning more about fellow entrepreneurs and their failures and successes.  

Although some of the rap is inspired and inspiring (and some isn't) the best line is the chorus --  In New York, concrete jungles where dreams are made of, there's nothin' you can't do". 

And if you are from New York, you totally get, "tell by my attitude, that I'm most definitely from... 

6) Love Rollercoaster -- Ohio Players and Chili Peppers 

 

Since "Free Bird" was a joke entry, here's the actual 5th song in the list.

Whether you prefer the original funked up version from the Ohio Players (the controversial album cover to the left) or the Chili Peppers remake which was the theme of Bevis and Butthead do America, this is the quintessential (and maybe only?) song about the rollercoaster ride. 

Not much on lyrics and not truly inspirational, but it does make for a good song to have in the back of your head when you are riding the rollercoaster rails of your own startup.

Personally, I have the original on my iPod because it is just -- funkier.  The Chili Peppers do it justice, but it kind of sounds like they just knocked something out for the movie soundtrack.

Definitely want to expand my list -- What's on your yours?