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Should you learn to code?

Professional athletes and pop singers make millions. All-star technology entrepreneurs make billions. Kids now grow up on Facebook and Snapchat, not with baseball cards and CD players. And while traditional manufacturing jobs face constant downsizing, Silicon Valley is a boom town once again. Is it time to embrace your inner nerd and join the nearest coding class?

I love the new generation of startups and organizations, from Codecademy to Girls Who Code, who democratize access to educational opportunities (and career flexibility). But if you see coding skills as a winning ticket to immense wealth, you’re better off trying your luck at the next Mega Millions lottery instead. Here are six more pros and cons to consider before signing up for that new coding class:

  • CON: Following trends doesn’t lead to success. I’m only four years out of college, but have witnessed a huge shift of coding skills into the mainstream since my adolescence. In high school, kids still associated with coders with Steve Wozniak-like nerds. Our school didn’t offer a single computer programming class. The smartest kids already had their eyes on law school, medical school, or Wall Street. Now, teens can’t wait to put “Harvard dropout, startup CEO” on their résumé. Simply mimicking the path of the latest billionaire is a terrible way to chase success.
  • PRO: You can build early prototypes. The best technology-driven startups have a “Show Me” mentality at all levels of the company. If you have the talent to turn your great idea into a working prototype, this significantly increases the likelihood that it will become a reality.
  • CON: It’s not actually your job. Many startup founders believe that the best way to run a technology startup is from the coding front line. While ‘Sprint and Follow’ Leadership is an excellent short-term way to inspire your tech team, your job as a startup CEO is to manage the toughest parts of the business. Mark Zuckerberg and Larry Page haven’t touched a line of company code for years. If you are truly on your way to building a huge, disruptive business, there will be little room on your long-term job description for coding.
  • PRO: You’ll better understand product development. When we plan a new feature launch, I can accurately estimate how long it will take to build. If something breaks on our site, I can dig into the code and search for an answer. I’m miles away from building any independent part of our product, but if you strand me in Techlandia for a couple days, I know enough of the language to navigate around town and keep out of danger.
  • CON: You’re just checking off requirements. Like with Spanish and Mandarin, we are approaching an era where coding languages will be considered a required subject in schools and a valuable addition to résumés. But these skills will never be the only prerequisite for success in Silicon Valley, let alone in other industries. ‘Experts’ will always tell you to learn new talents, from networking to blogging to coding. But being great at any of these skills takes years of commitment. Never start a project because it’s what you are “supposed to do.”
  • PRO: You’ll develop new synapses. Your brain loves a challenge. Instead of picking up a Sudoku book or a Rubik’s cube, try your hand at a new website. Start in beginner mode by editing existing code templates before moving on to novel development.

Jack of all trades. Master of one.

In my hiring process, I love candidates that are great at one thing and willing to learn everything else. If you are preparing to enter the startup world, find your special sauce. Five years ago, Silicon Valley was begging for more developers. Now, skilled designers are in the shortest supply. And, if you are a master salesperson, you’ll be a coveted asset for any team.

If brilliant, efficient code is your thing, own it. But technical novices like Steve Jobs and Jeff Bezos earned their stripes (and market caps) alongside masterful technologists like Bill Gates and Mark Zuckerberg. Identify and cultivate your A+ talent, and you will maximize your chances for success.

Note: This blog post first appeared on Forbes.com.

Dealing with rejection

It happened again. You walked into a VC partner meeting with a ton of confidence. Your first meeting went great, with the associate gushing over the potential of your startup. Then, you got an introduction to the partner specializing in your industry. Another slam-dunk. But today at the partner meeting, you took some hard shots. There were a couple questions you didn’t handle cleanly. The partner at the far end of the table had her arms crossed defiantly the whole pitch. And by the time you made the drive from Sand Hill Road back to your office, you already had that dreaded email in your inbox:

“Thanks for taking the time to present your company to XX Capital. While we were very impressed with your passion and knowledge of the industry…”

All of a sudden, you’re getting flashbacks to being 17, opening the mailbox, and pulling out that little, standard envelope with your favorite college’s emblem on the top left corner. You know that they can’t fit an entire enrollment packet into that one-page letter.

Even the very best entrepreneurs in the world get rejected over 50% of the time that they pitch an investor. When Mark Suster tells his fundraising story, he makes it very clear that 75% of investors turned him down. And this was when he was pitching two startups that ended up with very successful exits.

So how do you handle the constant pressure of rejection?

The first lesson is to never shy away from it. The only way to successfully run an investment round is to run startup funding as a sales funnel, identifying as many qualified leads as possible, then running through them with passion and intensity. If you get so afraid of rejection that you slow down your process at all, you’re finished. There’s no way to half-ass the funding process.

The second lesson is to just get used to it. Over the course of two startups, I’ve already run through close to 100 pitches. My rejections are definitely over 50%, and likely even higher than Suster’s 75% number. Prepare yourself at the beginning of the process for short-term failure, and know that they’re practically a requirement on the path of startup success.

The third lesson is to celebrate the wins. All those rejections become worth it when you finally get an investor to say yes. Really savor those wins. Drink a six-pack with your team. Accept the pats on the back from your friends. Don’t let anyone tell you that it’s not a big deal to raise money for a startup. Fundraising is hard work, and is often a vital part of growing a rapidly growing, scalable startup.

The fourth, and most important, lesson is to learn the ‘why’ of the rejection. Sometimes the investor doesn’t feel comfortable with the industry. Other times, they’ve been burned in this space before, and are hesitant to jump back in. There are times where investors are simply distracted by external causes, from an upcoming trip to a pending divorce. These are all things that you are not expected to control.

However, if the investor was confused by your pitch, missed the key value of your startup, or disliked the delivery of your presentation, there are lessons to be learned. I wince when I think back at some of my very first pitches. The slides were poorly organized, I stumbled through my words, and the business model was practically incomprehensible. It is no wonder so many investors turned me down in the early days. But after nearly every meeting, I opened up this laptop, and performed a brain dump of all the lessons I learned in that pitch. Where had I connected with the investor? Which parts piqued her interest? Why did I get the ‘confused puppy’ look during the monetization slide?

After every few pitches, I would tweak slides to make them clearer. Then, we would bring the team together and form a fake VC meeting, where everyone was allowed to interrupt me, grill me on specific details of my pitch, and generally force me to hit as many curveballs as possible. Afterwards, I still continued to face rejections, but now they were a little less common.

At the end of the day, that’s the lesson. Fundraising is hard. You’re asking someone to give you thousands or millions of dollars to spend on an extremely high-risk venture in an industry where most investors lose money. Treat fundraising season like you do the rest of your business, with extreme energy and passion, and you’ll survive the rash of rejections just long enough to put money in the bank.

On being ‘first’

As entrepreneurs, we’ve all experienced the rush of excitement that accompanies the arrival of a bright new startup idea. There’s something magical about the belief that you are the very first person in history to figure out this secret. It’s hard not to start counting the billions of dollars in your future bank account.

The next time this happens to you, remember this: You are definitely not the first person to conceive of this idea. You are likely not the first startup to enter this market. In fact, the space is likely littered with companies that have already seen real successes and/or dramatic failures.

Too often, a naïve entrepreneur will carefully approach an investor with their unique, precious idea. They’ll pitch it as the next billion-dollar concept. Worst-case scenario, they may even demand an NDA. And then they’ll be crushed when the investor asks them how they compare to an existing, similar product on the market.

I almost experienced this exact fate. Before starting work on LabDoor in early 2012, I had never considered launching a technology startup. As an analytical chemist running a small laboratory in Michigan, I was far away from the hype and excitement of Silicon Valley. Coding tutorials were a fun diversion, but didn’t seem like a business opportunity.

A chance encounter with a business mentor sparked my obsession with product safety ratings. Consumers needed an easy way to understand the safety, efficacy, and price of products like pharmaceuticals, supplements, and cosmetics. Equipped with this vision, along with my knowledge of regulatory chemistry, I spent my nights and weekends for months testing products, building wireframes, and dreaming up strategies to bring my solution to market. Eventually, I exited from my laboratory business, and began full-time work on LabDoor.

Then, I stumbled upon the website for GoodGuide, another application that rated the quality of consumer products. This discovery crushed me. Not only had GoodGuide launched years before me, but they were also backed by huge venture capitalists, and had recently been named one of the most innovative companies in the world. It felt like all of my work on this new startup was a total waste, and I sat and drank a few drams of whiskey while contemplating my failure.

I shouldn’t have reacted this way. To be fair, the idea of product quality certifications has been around for nearly a century, with companies like Underwriters Laboratories, Consumer Reports, and Good Housekeeping originally leading the charge. GoodGuide was just the latest to take a shot at fighting marketing hype with consumer-focused data.

After my literal and figurative hangover wore off, I reevaluated my startup idea in the light of my new discovery. As I dug deeper into the fundamentals behind GoodGuide, I quickly learned about the huge challenges that face applications like ours, from customer acquisition and engagement to business models and monetization. One month later, GoodGuide quietly sold their product and assets to Underwriters Laboratories, having struggled to surmount these obstacles.

With this knowledge, our team regrouped and redoubled our efforts to build LabDoor into a sustainable, profitable company. We interviewed every target user we could find, and became obsessed with providing value to our early customer segments. We purposely took meetings with investors who had previously backed GoodGuide, knowing that they would ask us the toughest questions. We raised a smaller amount of money, and carefully built monetization into our go-to-market strategy. The result is our current product, constantly evolving, rapidly improving.

About a year later, I actually met the original founder and current CEO of GoodGuide. I’m sure they took my meeting with a mix of curiosity and skepticism. While they were very interested to see another company take a shot at their space, I definitely sensed in them a cynicism about the market. After nearly five years from great data scientists and over $10 million from leading VCs, GoodGuide was unable to effectively alter consumer purchasing decisions from bad products to good ones. How would we be any different?

A smart investor once told me: “Identify the biggest risks in your startup, and attack them first.” Instead of being the biggest impediment in our path, GoodGuide actually helped to highlight some of the largest roadblocks to our success.

In the months since, I’ve identified other companies in the space, and even a couple startups that have launched behind us. Now, when I hear about a potential competitor, I take a little time to study their story, and then get back to work at LabDoor. There will be a winner in this space, and I know we won’t be first or last, but I can guarantee we’ll diligently pursue our grand vision with a clear knowledge our market’s ecosystem.

There was commerce before Amazon, search before Google, social media before Twitter and Facebook, and computers before Apple. As cliché as it sounds, startups truly are about execution. When you find a company who got there first, calmly take note, learn from their mistakes, and most importantly, keep building.

Playing poker with investors

Poker Short Stack

“This round is closing in two weeks. Are you in or out?” vs. “This term sheet self-destructs in two weeks.”

Take it or leave it. Investors are particularly good at this. Here’s why:

  1. They are way more experienced than you. Let’s say you’re pitching First Round Capital. They have invested in 185 companies and participated in 297 rounds (at time of publication). I consider myself a somewhat experienced entrepreneur, and this is my second company and third round.
  2. They have a way bigger stack of chips.

You’re never going to win a staring contest with a VC. In six months, they’re still going to be collecting their management fees while you start making plans to move back into your parents’ basement.

But entrepreneurs have three great things going for them:

  1. Carried interest. VCs often make 2% management fees on the fund and 20% carried interest on the fund’s profits. Nothing kills an investor more than that fund-maker that slipped through their fingers (See Bessemer’s Anti-Portfolio).
  2. The rest of the table. VCs try to get you to focus on a one-on-one battle. But you can engage with hundreds of investors at once. Don’t let a few rejections get you down.
  3. Your cards. Your startup is your gamble. But you get to pick the team, build the product, and target the market. Do it right, and your odds skyrocket.

I walked into every negotiation with a great hand and a tiny stack of chips. Be supremely confident that you’re holding a future billion-dollar company, and then go all-in.

Surviving the first few months of a startup

Four months into LabDoor, I came home one night especially worn out following another 16+ hour work day. My girlfriend Shoua sat me down and asked me about my day. I said it was fine, and tried to change the subject. She then asked me how it really went. I decided to unravel all the things that were going wrong, from product development problems and troubles validating a business model, to our dwindling cash reserve. As my internal vent broke open and startup issues spilled out, I suddenly stopped in my tracks. Tears were running down Shoua’s face.

That’s when I realized how tough my recent startup journey had been. Shoua had been with me through the entire lifecycle of my last startup, Avomeen. She was used to my long work schedules and knew how much pressure I put on myself to succeed. In LabDoor, I had bitten off an entirely different challenge. We were taking on a $36B industry filled with fakes and frauds, and attempting to fill a regulatory role previously only performed by government agencies with billion-dollar budgets. After months of fighting a strong current, it felt like we were exactly where we started, minus all of our energy.

There are many signs that your startup is taking a toll on you. Are you a 25-year-old with permanent dark circles or bags under your eyes? Experiencing unhealthy weight gain (or stress-induced weight loss, which may be even worse)? When you walk home at night, do you shuffle your feet, too exhausted to even pick up one foot at a time?

Startups are never easy. Here are six key tips to lessen the personal stress on your system:

  1. Remember why you’re here. Any startup founder worth their title knows exactly why they’re here. And it’s not the life-long dream to own the supercar that sat on your wall in your middle-school days. The great majority of startups don’t have an opening bell at the New York Stock Exchange in their future. Instead, focus on the big vision that launched this ship, and the tangible achievements that you can earn along the way. Savor the small wins, and keep your eyes on that audacious goal.
  2. Join an entrepreneur club. It doesn’t matter what form you choose – from a formal startup incubator program to late-night bar crawls – but it’s essential to share your experiences with other crazy startup folks like yourself. It always helps to know you’re not alone. And, if you’re lucky, you may even find a solution to your problems from an entrepreneur who recently tackled the same challenge.
  3. Hit the gym. The first thing that every new startup entrepreneur drops when work gets hard is their health. Don’t think you have time? I guarantee that you will be more productive in 14.5 hours/day of work after hitting the gym than you will with 16 hours/day of sedentary desk time.
  4. Take a day off. I promise your startup will survive 24 hours without your presence. Now whenever I feel like I’m in a serious startup rut, I make a point to stop spinning my wheels, stow away the laptop for a day, archive the unimportant emails, and take a personal day. When I return to work the next day, I can see the ruts, side-step them, and get on with my projects. (Note: This lesson took me until my third startup to figure out. Be smarter than me.)
  5. Regularly vent your pressure. We’ll call this the pressure cooker rule. This one is obvious. Don’t let it all explode.
  6. Loved ones are everything. Whether it’s a parent, sibling, spouse, roommate, or friend, the people who stick with you through these hard times are your true family. Be real with them, and accept their support with open arms. Just try not to make them cry.

Note: This story was initially published on Medium.com.

‘X for Y’

Or: How to create the next ‘X’

One of the most frustrating parts of my early investor pitches for LabDoor was my inability to generate an appropriate ‘X for Y’ comparison. The easiest way to help investors ‘pattern recognize’ and understand the concept and business model of a startup is to connect it to past successes. You’re bound to hear companies pitch ‘Uber for healthcare’, ‘AirBNB for boats’, or ‘Kickstarter for science’ these days. But think back to the launch of the predicate startups. How did Travis Kalanick, Brian Chesky, and Perry Chen first pitch their companies? The same goes for oft-imitated startups like Twilio and Jeff Lawson.

The hidden fact is that these startups faced serious hurdles in their early fundraising process. AirBNB and Twilio both repeatedly faced insolvency in their early attempts to gain traction. Good investors capitalize on a trend and ride the wave to outsized returns. But it takes a visionary investor to predict a new trend in its infancy. There are too few true visionaries in VC offices, just like there’s a limited set of real disruptors leading today’s startups.

The worst way to innovate is to find the last product with a billion-dollar exit and set up shop nearby. A number of startups jumped into the ‘Instagram for Video’ space right around the big Facebook acquisition, raising huge money at unearned valuations. A year later, Viddy and Socialcam were smaller, not bigger. What happened? Two things. First, market conditions change. Instagram definitely wasn’t the first photography app, but it was the best positioned for shifts in social and mobile usage. Second, platforms change. Viddy and Socialcam’s main distribution funnel was shut down by Facebook, which had been the major reason why they rose to prominence in the first place. Third, market leaders change. Facebook, Twitter, and Instagram itself all now have video sharing tools. The copycat applications usually have two fates, either get acquired quickly, or face a slow death at the hands of stronger players.

Founders have to resist the urge to chase incremental efficiency in established industries. It’s worth it to innovate in all aspects of the startup ecosystem, including the business models. Creating a new path certainly isn’t the fastest way to a million dollars, but it’s where most of the billion dollar companies start.

I absolutely expect to see ‘LabDoor for Y’ comparisons spring up in the upcoming decade, especially in industries where LabDoor itself opts not to pursue. It is part of the startup cycle of life. While we will be mildly flattered by this imitation, we will also be preemptively moved to lead this movement away from incremental improvements and rapid exits and towards the creation of long-term value.

An ‘X for Y’ comparison may make it a little simpler to fundraise at the seed-stage, but most entrepreneurs miss the fact that it’s now easier to launch a startup than practically any time in history. The hard part is building it into a real business. Work diligently to innovate in that part of your company. This won’t make you an overnight success, but it will help you avoid becoming a one-hit wonder.