Category Archives: Startup Blog

Are you running your business like a lemonade stand?

On day one of your new business, you have a hundred job functions. Try to fit “CEO, President, CFO, Technical Director, Web Developer, Accountant, Sales Representative, Receptionist, Janitor” onto your business cards. To millions of experienced entrepreneurs, this feels like what a small business is always supposed to be.

Wrong. The problem is you. There is currently a 1:1 relationship between your work output and business operations. That’s your Growth Multiplier.

Think back to second grade, an age of lemonade stands and multiplication tables. That’s when we learned that you couldn’t change anything by multiplying by one, either in the classroom or selling sugar water by yourself on the corner.

An entrepreneur’s passion, drive, and intelligence can be a startup’s greatest asset, but for a company to grow, it must expand beyond its founders. The best leaders develop key systems and personnel and trust them to succeed, freeing up time for innovation and vision and multiplying their businesses’ growth potential.

So What Are The Key Multipliers?

1. Add a Super Assistant. Find someone you trust with your schedule, your customers, your money, and your life. Make them the hub between your business and the outside work and give them the power to tell you what to do, where to go, and when to be there.

2. Create a hierarchy of business functions in your job description, from lowest to highest impact on growth and profitability. Start at the bottom, and delegate like it’s your job. Because it is.

3. Forget the old corporate cliché of boring, slow HR departments. Hiring and developing A+ talent is a powerful engine for company growth. Hire and train well early, and you’ve built your future leadership team. Hire poorly or ignore training, and you’ll lose valuable time, customers, and profits.

4. Plan for explosive growth. The best businesses will grow too large for an entrepreneur to manage alone and linear growth brings exponential complexity. Mastering business growth requires an early focus on key operational systems. Consistently gather customer feedback for inputs into the product development process. Track key business metrics and attach them to an employee compensation plan.

5. Give away your corner office. Find someone you trust to run daily operations, and let them. Then go start your second business. Or sit on a beach.

It’s hard to scale a business using Growth Multipliers.

Only 21% of businesses in America will grow to 10+ employees and only 4% ever make $1 million in revenues. The average entrepreneur is most comfortable while manning their own little ‘lemonade stand’, living and dying with every sale. Fight this false sense of security, build your way out of daily operations, and become the leader and visionary your business needs. The payoff is immense, both for your life and the bottom line.

Note: This blog post was initially published at Under30CEO.com.

Surviving a failed tech startup

What to do if your first company isn’t the next Facebook

In my first startup experience, I worked nights and weekends in an entry-level position with the founding team while finishing up my college degree.

Now that I’ve finished school and launched two startups of my own, I’m beginning to reflect on the lessons I learned outside the classroom, especially in that first startup job—and how they came to influence my decisions as a startup founder four years later.

Timing does matter

I absolutely loved that first team’s product concept, which aimed to improve the in-stadium experience at sporting events by providing live statistics, video replays, and even concessions orders to a mobile device. The in-stadium atmosphere is great for fans, but teams are increasingly fighting to increase ticket sales against the free and convenient experience of watching games at home.

I knew that bringing some of those comforts to a stadium seat could be valuable for both fans and teams. But after working on the product launch team for a season, I was in a unique position to project the long-term viability of both the product and the overall company. Unfortunately, the view wasn’t promising: It always felt like the company was too early for its time.

We initially loaned out iTouch devices at the venues, since not enough people had smartphones at the time. This iPhone/iPad sales chart shows the market growth in these categories from under $5 billion in sales in January 2008, when I started at the company, to close to $100 billion now.

Failure is not the end

We had difficulty gaining traction. Whether it was the market, the timing, or the business model, I didn’t see much of the company after I left in mid-2008. Four years later, new companies are having success in that market, including FanVision, owned by the namesake of my alma mater at the University of Michigan at Ann Arbor.

Meanwhile, the founding team has gone on to do other great things, which led me to research what drives serial entrepreneurs. It’s a common theme in Silicon Valley and elsewhere, but is it really true that startup failure breeds future success?

2008 study from four Harvard researchers argue the answer is yes, but barely: They found that a successful serial entrepreneur has a “30 percent chance of succeeding in his next venture. By contrast, first-time entrepreneurs have only an 18 percent chance of succeeding, and entrepreneurs who previously failed have a 20 percent chance of succeeding.”

The lessons I learned

Clearly, past success is a better indicator of future success. Employees, investors, and customers are all drawn to big-name entrepreneurs. Nevertheless, my college experience working with a failed startup greatly shaped my future successes at both Avomeen and LabDoor.

Specifically, they taught me:

1. Customers come first. I loved that first company’s focus on customers. They only had a few full-time employees back then, so they did a great job of leveraging associates like me to be at every sporting event interacting with customers. I followed their lead at Avomeen, where we constantly requested feedback from our clients, especially when launching new services.

2. Analyze—and capitalize—on market trends. My early exposure to mobile development and its user growth informs our work at LabDoor, allowing us to time the launch of our product-safety applications at a key inflection point in the market. Mobile health users doubled in 2012, and we’ve capitalized on that growth.

I loved the experiences at my first startup and will be eternally grateful to my bosses there for giving me my first shot in the tech-startup world. I didn’t work there long and definitely never made any money in stock options, but it was a transformative experience that I still refer to when running my current startups—and one I’d recommend to any entrepreneurial-minded student weighing entry-level work versus a startup gig.

Note: This blog post first appeared in an edited form at Upstart Business Journal.

Are you building a small business or a startup?

Note: This blog post first appeared in an edited form at Forbes.com.

In 2012, I officially left my rapidly-growing, profitable small business to launch a tech startup with a huge vision and zero salaries. Why did I do this? For me, it came down to the huge differences between a small business and a startup.

First off, the difference between these two company types is in their top objectives. Small businesses are driven by profitability and stable long-term value, while startups are focused on top-end revenue and growth potential. Steve Blank’s three-minute definition provides great insight.

And why did I quit? Early this year, I got the opportunity to meet Mark Cuban, Kevin Plank, and Scott Case, who asked me a classic question with a special motive: “What do you want out of your life in five years?” I knew how Cuban and Plank had made eight-figure companies in their 20’s, so I said “30 million dollars,” thinking it would impress them. Instead, Plank said, “That’s a terrible goal!”

That remains the best piece of business advice I have ever gotten. Instead of focusing on great products and huge customer bases, I was too focused on dollar amounts — a small business mentality instead of a startup mentality. I spent the rest of the weekend working with Case on new business models and products, and left these meetings with a grand new business idea. My startup journey led me to LabDoor, where we use dietary supplement testing to help consumers choose safe, effective products.

To be clear, there is nothing wrong with starting your entrepreneurial career with a small business. Building a solid financial base will help create a longer personal financial runway for future startup ventures. Also, establishing a successful small business can build credibility and networks through the business community that will be hugely valuable when launching a startup that requires outside Angel and VC investments. However, be careful not to get too comfortable with a steady paycheck.

How do you decide which one is for you? Ask yourself, what is your tolerance for risk? What is your tolerance for failure?

My advice – no matter where you are in your life, it is a great exercise to stop everything and visualize your absolute top-end potential. It’s the kind of brainstorming you did as a kid, when you imagined being the President or, even better, an astronaut.

Start by deciding the biggest problem in the world that you want to solve.  Develop your ideal solution to this problem, and then invite your trusted friends and family to poke holes in it. Iterate until you’ve got an awesome idea. If you can build a great team around your awesome solution, now you can stretch one foot into the world of startups.

Finally, determine your top objective. Is your long-term goal to build a nest egg or make a dent in the universe?

What do you want out of your life in five years?

Blogging for yourself

The idea of writing in a journal seems like a quaint or juvenile pursuit, the domain of Moleskine-toting hipsters or angst-ridden teenagers. More recently, this style of writing has been co-opted by the startup culture as a part of a ‘content strategy’ to ‘build brands’ and ‘acquire early adopters’.

For me, writing was truly a personal project. I put over 40,000 words into a word processor before even considering a WordPress theme for a blog or a distribution method for my content.

I write for three reasons:

  • First, for nostalgia. It’s the same reason why I’ve saved every version of my one-page pitch for LabDoor. It’s fun to look back on my vision for the company on the day the concept was conceived. During a time where I didn’t stop to consider a name for this future venture, and instead furiously keyed in the words that described the company I wished existed.
  • Second, for introspection. I used to have weaknesses as an entrepreneur. I still do, but I also did then. The best way that I’ve found to become a stronger leader and entrepreneur is to diligently study the strategy and actions of my past self and unmercifully play Monday Morning Quarterback against myself.
  • Finally, for posterity. There’s a chance that current and aspiring entrepreneurs could learn something from my short, but eventful startup life. It would be a shame to see my past failures wasted without turning into a teachable moment.

So how does an entrepreneur working over 100 hours a week find time to blog? It’s simple – just wait until the words force themselves out of your head, and rush to a tape recorder or word processor to record your thoughts. Forcing yourself in front of a blank screen or notebook on a daily basis is a fool’s errand. Good writing cannot be summoned on demand. But you’ll be amazed how quickly 1,000 words on fundraising pour out of you during a stressed hour between two crucial VC pitches.

The most important thing about blogging as an entrepreneur (or investor for that matter) is not to let elecution get in the way of execution. The grammar, sentence structure, or word choice matters little. Just get the words on paper, or into bits and bytes. I also rarely use my first 10-12 hours of daily energy to write in my startup journal. My best writing instead often comes during the last 1-2 ‘wind-down’ hours between work and sleep, sometimes fueled by a half-bottle of wine.

The key to great writing is to write for yourself. Be excessively honest. Save the hype for your next TechCrunch interview. Just record your thoughts, watch them evolve, learn from your mistakes, and most importantly, keep building a company worth writing about. With a great story, the words will write themselves.