Series on Entrepreneurial Culture

Stop Looking for a CoFounder

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I recently wrote this article for Amex Open Forum. The original text can be found here.

Everywhere I go, I hear the same refrain from fledgling entrepreneurs I meet: “I’m looking for a co-founder.” I hear it from many of my students, from folks at various entrepreneurship events and meetups, and from people suffering in jobs at large companies who would love to pull the trigger on their startup—if they only had that critical co-founder.

And here’s why they’re on a fool’s errand.

The most common type of co-founder that’s usually sought is, of course, the technical co-founder, someone who can make your latest Internet-enabled business idea come to life by coding it for you because you don’t have the skills to do so. But some people also tell me they just need a co-conspirator because there’s too much work to do and they’d get lonely without a co-founder. It’s a fair point—and one that Y Combinator’s Paul Graham discusses in this incredible post.

But I’m actually here today to tell you: stop looking for a co-founder. Stop asking people to help you find one, and stop talking and thinking this way. I say this not because it’s massively annoying and clichéd by now (which it is), but mainly because the very act of looking for a co-founder is already a sign that you are hopelessly unprepared for the coming venture—and going about things in a completely backwards way.

Think about it this way. Let’s say you had this dream about sailing around the world for a few years. How would you go about realizing this dream?

Would you immediately start looking for an experienced sea captain with whom you could team up? It certainly seems a logical choice on its face, right? And let’s say you miraculously found one such old sea-dog, replete with forearm anchor tattoo and corncob pipe, in your first few weeks of searching—how would that play out?

Well, he’d probably do all the sailing, right? (Mainly because you don’t know how to sail and have zero experience.) He’d probably have to plot the various legs of the journey, too, right? (Because on day one, he would tell you that your plan to take a 36-foot wooden sailboat across the Bay of Fundy in winter isn’t the best course of action.) He’d probably be the one standing at the wheel whenever you hit rough weather, right?

Hmm. I also bet you’d have to pay him something to actually participate in this venture as well, no?

Let’s say after six months he tells you he’s run out of his favorite pipe tobacco and bails on you while you’re docked at some far off port. What do you do now? You probably should have stayed home and read some Melville or Joseph Conrad. Let’s face it—real sailing was never for you.

But hang on. Let’s say you had said this dream of yours was all-consuming and you were dead set on making it happen. Let’s say you just disappeared for a while and learned how to sail, became intimate with the latest technologies and the best routes, and became a fixture at your local sailing clubs and docks?

What likely would have happened with this approach? My guess is that you would have made great friends in the sailing community, over time. The relationships would have been genuine and based on mutual fascination and love of sailing, adventure, and the sea. You would have learned a ton about this new world and, slowly but surely, you would have become a part of it. When you finally decide to make that journey to Timbuktu, one of these friends—maybe someone with a lot more sailing experience than you, but who respected you a lot and knew your character and talents—might just suggest that you embark on that journey together.

Business is the same. Even though it’s just little old you steering your company, take comfort in the fact that we’re living in an era in which the individual entrepreneur is empowered with tools and access in a way that people could barely have imagined as recently as a decade ago. You want to open a store? In 10 minutes you can be up and running on Shopify. You want to amplify your voice with a marketing campaign? Facebook, Twitter, and YouTube are massive communities you can tap into for free. Don’t know how to build a website? Hop on Codecademy or take a Skillshare class and you’re on your way.

Even without a co-founder, you can acquire skills and employ powerful tools to get to a minimum viable product all by your lonesome. In fact, it’s so easy and accessible, there really is no excuse not to. Imagine how powerful this is. You can generate a massive amount of value before even thinking about having to dilute your equity. Ironically, this is actually the best way to find co-founders, early employees and investors—just get a real business up and running by yourself!

If and when the time comes to partner up, just know that great partners come in all shapes and sizes. You can’t predict and plan for their arrival, just like you could never decide to meet a potential spouse next Saturday night. So how will you know they’ll make a good co-founder once you meet? You won’t.

The key is not to rush into business with someone. Spend plenty of time with them, bring up difficult issues directly when appropriate, and see how they handle themselves in a variety of situations and circumstances. Are they thoughtful and considerate of your point of view? Do you share values with them? What are their other life relationships like? Like any journey, the key is slow and steady.

Why Do So Many Partnerships End in Disaster?

In my last post on OPEN Forum, I made the case that entrepreneurs should stop actively looking for a co-founder. Now I’m here to tell you that if you think you have in fact found the right partner, you should be extremely careful and not rush into any arrangements.

Although it’s shocking, the fact is, a huge percentage of the companies I come across in my various roles as an entrepreneurship professor, mentor, and investor are doomed to fail essentially before they ever get started, due to founder incompatibility.

The reasons for these breakups that are given in retrospect by the founders are some variation of the following:

“The equity split was wrong from the beginning.”
“We had different visions for the direction of the company.”
“We never saw eye-to-eye on major issues.”
“He took advantage of me and stabbed me in the back.”
“Once the VCs came in, she sided with them and pushed me out.”

Guess what? These are symptoms, not causes.

I would say that the most frequent cause of co-founder disputes is the simple reality that the founders were never well-suited to each other (and often unsuited for the market they sought to enter) for any number of reasons. Some of the typical incompatibilities I have seen over the years include:

  • The reason they’ve teamed up is simply because they’re in the same class, they’re roommates, or they live down the hall from one another in college.
  • They’ve never spent significant time with each other outside of one familiar setting (e.g., school, dorm, work) and thus haven’t seen how the other handles stress and operates in a variety of environments.
  • They haven’t considered each other’s values and motivations carefully enough. In all likelihood, these are quite different.
  • One or both of the co-founders has no experience in the market.
  • One is totally committed and the other just likes the idea of being “part of a startup.”
  • There are simply too many founders in the equation and everyone’s equity has been diluted from the get-go—you shouldn’t need more than four founders.
  • Instead of working from mutual and complementary strengths, the entire reason for the union is based entirely on the insecurity of having to go it alone.

No doubt there are plenty of success stories out there in which the founders were roommates—or there were “too many” of them—but in my experience, these are truly exceptions to the rule.

Here’s the qualities that successful co-founders usually possess:

Complementary skill-sets (such as a designer and a coder)

There’s a lot to do when you’re launching a company. It makes sense to have a co-founder that has aptitude where you don’t, doesn’t it? Some teams have one founder as the frontman/woman and one as the ops person, while some companies are founded by a coder/designer combination. Jobs and Wozniak are the classic example of the hacker and creative partnership.

Shared values and mutual respect

I tell this story to my students. Years ago a prospective investor interested in a company I was launching asked me if I had ever been to my co-founder’s house. I was literally tongue-tied. The answer was no, but I had never even thought that this might have been important. I didn’t realize at the time how right he was. When I then visited the co-founder’s home, I realized that I was not going to be in business with him. He treated his wife somewhat disrespectfully, the place was a total mess and in one fell swoop I saw a completely different side to the façade he had been presenting to me and others.

Shared motivation

John Doerr at Kleiner Perkins is well known for saying that the best teams are comprised of missionaries, not mercenaries

What this means is that the best entrepreneurs are motivated by the mission of their startups and not the money. Make sure you are in this for the right reasons—and that your co-founder is, too.

Deep loyalty and friendship

There’s an old saw out there about never doing business with a friend. I always thought this was a flawed premise.

As I’ve stated earlier, the primary reason for co-founding with someone needs to be the value they bring to the table, but if that other person happens to be a true and loyal friend, you are extremely lucky. You’ll never need to waste a minute worrying about his loyalty or about getting stabbed in the back.  If you’re not that close yet, take your time—but if you don’t at least see yourselves getting to be super loyal to each other as co-founders, don’t partner with him.

My main point is you really have to know the other person deeply. You both must be self-aware and understand how important the relationship is, and be mature enough to handle the inevitable disagreements with great professionalism and understanding. Remember this—if you both want what’s absolutely best for the company, you’ll always find a way through.

(Click here for the original post on Amex OPEN Forum)

When All Hell Breaks Loose, Startups Need a "Wartime CEO"

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In his great book, The Hard Thing About Hard Things, Ben Horowitz talked about being a “Wartime CEO”. It was the first-time I had ever heard that expression but it resonated powerfully. Reading that book was akin to drinking a double espresso at 10pm. I did not put it down until the wee hours of the morning. It is now “required” reading for all my students. So what’s the difference between a peace-time and a war-time CEO of a startup? Every startup is rife with incredibly trying experiences after all. My understanding of what Ben means by the term “wartime CEO” is a CEO who is running the company when all hell breaks loose- not for a few weeks- but for months- even years on end. It means you’re living on the knife’s edge between survival and death for long periods. It is evident that Ben’s difficult experiences at Loudcloud/Opsware indelibly shaped his mentality and approach to startup life. He’s the unique combination of someone who has both a kind and gentle demeanor and the courage to do whatever is necessary to pull a company back from the abyss.

He says that "peacetime in business means those times when a company has a large advantage over the competition in its core market, and its market is growing" and gives the example of the Eric Schmidt era at Google. Ben added that at Loudcloud he was probably "a peacetime CEO for three days and wartime CEO for eight years"!

Upon reflection it occurred to me that you don’t choose what kind of CEO you’re going to be. Circumstances dictate what goes down in your entrepreneurial life and you need to play the hand that you’re dealt. It’s how you play that hand that ultimately defines you as a startup CEO.

I too was forced by circumstance to become a “war-time” founder in my first startup. I was young and naive about so many things. There were no blogs and “startup communities” back then to go to for advice and support. We were expanding and opening our healthcare facilities in states up and down the east coast. In one state, however, BCBS & Medicare pulled the rug out from under us just months after providing written assurances that they were going to cover our treatment. I’ve written about this before here.

This was the equivalent of walking into a bar with a smile on your face to meet up with friends and suddenly getting cold-cocked by a massive punch. That blow immediately put our existence in jeopardy. People’s livelihoods were at stake- people I had hired- people who in some cases had moved across the country to make this happen. Long-term leases had been signed with personal guarantees to banks. If this facility blew up we were screwed in more ways than one. This decision, by an influential insurer with many tentacles, could have spread to other geographies and other insurance companies. We could not allow this precedent to stand.

It took us two years of jungle warfare to come back from that blow. In the meantime the survival of that facility hung over our heads like a black cloud. For those 24 months, tough and brutal decisions were the only decisions that presented themselves. There was no respite; there were no “breathers”. It was an ugly and scarring zero-sum-game. Ultimately we fought our way back and won but the personal and psychic cost was immense.

This experience (and others) deeply shaped my mindset forever. It molded me as an entrepreneur, as an investor, as a teacher and as a coach to many.

As an investor now, I’m always on the lookout for entrepreneurs “on a mission” who have the courage to face outrageous and unexpected challenges- people who have no quit in them.

As a coach and teacher- I’m giving out smelling salts early. I want folks to know what they’ve signed up for and to expect the unexpected.

 

Bitcoin's Dark Underbelly

 Werner Herzog

Werner Herzog

An' the dawn comes up like thunder outer China 'crost the Bay
Kipling

 

Watch this video below before we talk, (yes it's worth your time):

Questions for you:

Is this the trailer for a new Werner Herzog documentary?

Or is it just another awesome example of what journalism can be with the likes of @Vice as opposed to the shallowness of the MSM?

Is it the story of a new kind of entrepreneur (Chinese in this case) the likes of which the world has never seen?

Or is it merely the story of the new generation of railroad barons or oil magnates- the new Carnegies and Rockefellers ?

Is it merely the story - (as the genius/protagonist/entrepreneur himself states) of "the mining era of Bitcoin",  as we might now talk of Picasso's blue period or the Bronze Age?

Or is it the post-modern riposte to the mythic, Campbell-esque dark subterranean workshop of the smithy of the gods, Hephaestus?

Or is it a mere expression of "Schopenhaurian will" expressed via an entrepreneurial venture with shareholders and employees and cables and fans and hollow rooms...

Is it a precursor to the soulless world of the predominance of machines and their hapless lackeys who oil them and tweak them assiduously only to take breaks for video games and cigarettes - much like a prison guard might relax from his shift?

Or is it the same soulless furnace of production we see throughout the world at the beginnings of any Industrial Age- the same menial dank conditions we saw on the lower east side in the sweat shops, that we see throughout the developing world in factories a la Foxconn, or in the coal mines where men and children destroyed their youth and their lungs?

Or is it the dawn of an emerging age that will liberate us from the servitude and obeisance to a financial system that subjects us to transaction costs and fees upon fees layered upon each other so as to chip away at the honest labor of hardworking men and women around the world?

Or is it the threnodial hum of a new dawn that the cosseted western mind cannot yet fathom?

Or is it the visual manifestation of an Andreessonian distopia where software eats the world?

Or is merely the colossal manifestation of a brilliant, focused entrepreneur's vision?

How do you see it?

(I am officially long Bitcoin)

:)

'Tis the Season for... Pro-Rata Rights?!

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'Twas the night before Christmas and all through the country families had gathered around the hearth and reveled in the peace and quiet of the season. Children were on their best behavior having been reminded of the impending arrival of all-knowing Santa Claus. Angels and VCs had consumed large quantities of alcohol and food and were borderline comatose.  Even the internet had slowed to a crawl.  Not a creature was stirring…....  wait, that is except for my friend @semil who catalyzed yet another epic tweet storm of opinion on Twitter- this time on the subject of pro-rata rights! The effect? Bile was spilled, ghosts were invoked for sure- but of course, it was a rollicking discussion. I too was roused from my reverie by @semil's unexpected X-mas rabble-rousing and he and I had the following exchange:

"Leave it to the one and only @semil to stir-up a pro-rata discussion on Xmas eve?  :) "    - dave lerner (@davelerner)
"LOL it was my master plan entirely! :)"  - Semil (@semil)
"families of angels and VCs from NYC to SV are wondering where we all went :)"   - dave lerner (@davelerner)

This wasn't the first time pro-rata rights had been discussed on the internet. Leading voices had weighed-in via their blogs. But I did note that plenty of folks on Twitter that night, (including plenty of would-be entrepreneurs), had little understanding of what pro-rata rights actually are nor how they effect real-life funding scenarios.

Also, as many have pointed out- with the advent of dozens of new seed funds, AngelList syndicates and the emergence of more and more super-angels, the "pro-rata" right at the very first round has become extremely relevant of late... 'tis the season for pro-rata rights indeed.

Let's do a quick definition so we're all on the same page and then I'll try to give my own perspective on the underlying dynamics via real-life scenarios.

QUICK DEFINITION:

Pro-rata rights allow an investor to maintain their equity percentage of a company, in which they have invested through multiple rounds of investment. As an example, if an investor has 0.5% of a company after she invests in the angel round, she "has the right" to maintain that 0.5% through subsequent funding rounds, by reaching back into her pocket and investing however much $$ it takes to maintain that 0.5% (so that dilution cannot be forced upon her).

DYNAMICS and SCENARIOS:

Scenario: Entrepreneur Raising an Angel Round

The entrepreneur is raising her angel round. Is it safe to assume that she would want her earliest investors, (who are backing her before she has had any success at the riskiest point of her startup's life), to at least have the right to maintain their equity percentage if she ends up doing well and raising more money. Right? Yes?.....  Uh, well, sometimes, maybe not. What's going on here?

  • Maybe she's a first-time entrepreneur and never even heard of pro-rata (this happens a lot!) Her lawyer may not include the term in the funding paperwork. One angel asks her about it and she speaks to her lawyer, who says something like "No, it's not necessary- when you raise future rounds- the VCs won't like it". Or maybe the lawyer says- "No- he's only putting in $25k, this is really for major investors- meaning people putting in $250k or more". Here, the entrepreneur doesn't know any better and might have an awkward conversation with her potential investor: "Sorry, counsel really has advised me against it".
  • Now if that angel happened to be someone like Joanne Wilson (yes, she happens to be @fredwilson's better half), she might respond by saying: "If you don't give me pro-rata- I'm walking" and she might think to herself- (as she elaborates in this post): "That's bullshit". Joanne's general philosophy is:
"I will walk away from a bad document.  I am also willing to walk away if I don't get my pro-rata rights.  Many angels invest in the first round and sometimes they invest again in the second round, and then they are out when round three takes place.  I don't want to be out.  I feel like I took the biggest risk coming in at the very beginning and with that I want to continue keeping my percent of the company that I bought in the first round by continuing to participate (invest) in each round at my pro-rata share.  I am in it for the upside.  If the company is proving to be successful then I want to be rewarded in the upside for my risk."

"Capturing pro-rata” is sooooo important in early stage venture."

  • Or, as @Jason, (prominent angel investor), said in the epic Xmas-Eve Pro-Rata Stream:
"all angels should get prorata, period. if you don't get it you're a sucker."   - jason (@jason) December 24, 2014

My Take:

Of course you should give your earliest investors pro-rata, (if they want it). They are taking the most risk of anyone and should be able to participate in the upside (if there is one). To me this is just honest business. But this advice comes with a warning:

Only let value-add angel/seed investors into your round to begin with (especially in the cash-flush funding environment we are in now). You’ll be rewarded with a cap-table full of productive investors and a reputation as a stand-up entrepreneur.

Scenario: Entrepreneur is now Raising a Second Round (probably a Series Seed or Series A) An entrepreneur is raising his Series A. He had a great group of early-stage investors in the previous round, with fair documentation including, pro-rata rights. Because his company is doing extremely well he's being courted by multiple top-tier VCs. He ends up choosing a term sheet from Fund A that is syndicating with Fund B. The entrepreneur is looking for $3M total, and the two funds agree on a $9M pre-money valuation. Unfortunately for the previous investors, the VCs want the ENTIRE allocation. This means that they want to put in all $3M. They are not leaving room for anyone else. Gulp!

This is the "THEY SAY NO" scenario. You might remember it from this snippet from the opening scene in Gladiator. What now! Guess what- this happens all the time. The entrepreneur is a stand-up guy and wants to do right by his early investors and implores the VCs to allow for some room. So- what are the dynamics?

  • The entrepreneur goes back to the angels and sheepishly tells them there is no room. Yes, they have pro-rata rights but the VCs don't care and having the entire $3M allocation is a condition of them investing. The entrepreneur asks the angels to understand that his hands are tied. Often what happens here is that the early investors are quite understanding but direct their ire at the VCs. 

As @Jason mentioned in the Xmas Eve tweet storm:

"sharp elbow list"  - jason (@Jason) December 24, 2014

  • But what if one of the early investors is actually my fellow Brooklynite, @Jason, and he says:
"people are going to treat you as poorly as you let them; if you're right hold your ground. period."  - jason (@Jason) December 24, 2014
  • The entrepreneur might have to go back to the VCs again and say that some of the earlier investors won't budge. We now have one of these "ugly" scenarios involving what Mark Suster would call #RealPolitik. Here's his tweet from the Xmas Eve Stream:

Not really new normal. Always the case. Each party uses leverage #RealPolitik #Unpleasant  - Mark Suster (@msuster) December 24, 2014

What are potential outcomes:

  • The VCs might cave and open up a few hundred grand for some of the "prominent" early investors, (meaning the ones they want to piss off the least)
  • There is a high likelihood that some of the early investors (smaller checks) will get cut-out
  • The founder may actually decide to "sell" some of his shares to his early investors and "take some $$ off the table"
  • No matter what some people will be angry and these folks have long memories

My Take:

In these difficult scenarios, legal rights actually mean very little. It boils down to loyalties, relationships, leverage and reputations. Things can get ugly and feelings/egos will most likely be bruised. Even the most well-meaning founder can fail to navigate all these opposing interests and people will get angry and upset. There is no easy way through.

My practical advice is that if you are an early-stage investor you should have been absolutely doing everything you can to help the founder all this time. If you're a founder, fight like hell to honor your investors' pro-rata, especially for the ones that really helped you get you off the ground. These are the ones who have truly "earned their pro-rata".

Final Thoughts and Resources:

So you can see that I'm a big advocate of founders giving pro-rata to those investors who want it during the first round of funding. Of course this presumes that you have chosen your investors wisely and done your diligence on them.

In subsequent rounds founders should do everything they can to honor these rights- but when they are between a rock and a hard place- they need to go to bat for the early investors who added the most value along the way.

Some additional posts:

- Here's a humble post on the subject by @semil himself who describes his impressions as an investor relatively new to these dynamics.

- If you really want to understand more of the high-level dynamics and market forces at play with regard to pro-rata rights, simply read this tour-de-force by "Big Sus" himself. As usual, @msuster takes us through the many nuances.

- Aaron Harris from YCombinator has voiced his point of view here

- And Joanne has described one of her unpleasant experiences here

The Sh*t's Chess, It Ain't Checkers!

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Speaking of chess & startups- I thought some of you might enjoy this scene from one of my favorite movies, Training Day, and delivered by one of the true greats, the talented Denzel Washington. (If you're not comfortable with profanity, definitely don't press play.) When you're launching a startup, you've got to have the right mindset. It's competitive out there, everyone and their brother is launching a company these days. Can you really get from zero to one? One important aspect is of course understanding the fact that "the shit's chess, it ain't checkers"! :)

If you just want to hear the "money-line" over and over again- here is a shorter clip:

https://www.youtube.com/watch?v=59RSLhdGWQM

Update on My New Role @Columbia

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If some of you were wondering why I've been so slow on email for the last few months or more likely- where the heck I've been of late- here's a quick update:

I'm happy to say I've recently been appointed as Director of Entrepreneurship @ Columbia University. Our mission is to take the whole university to the "next level" and establish the conditions wherein startups and the culture of startups are encouraged throughout the university. Obviously there's a ton involved with stimulating cultural transformation- but a large part of that is helping cut through all the silos and encouraging the various schools to work towards the same goal. As we all know Entrepreneurship is multidisciplinary by nature and great founding teams by definition are comprised of people with complimentary skill-sets.

In the short time we've been operating we've had great speakers to campus (including Jack Dorsey: video here), tons of events and programming, have launched VC office hours, legal startup office hours, immigration office hours and are planning Columbia's first entrepreneurship festival for the Spring. We've also unleashed an elite layer of startup-school/acceleration for some of our more advanced startups called CSuite. Some heavyweight Columbia alums are helping move the needle for these teams- including Amol Sarva, Inaki Berenguer, Jared Hecht, Brandon Kessler and many others. 

I'm also just so fired-up to be working with some incredibly accomplished colleagues. These guys think big and just make stuff happen:

  • On a day-to-day level I work with Emeritus trustee Richard Witten, a former vice-chair at Goldman Sachs, who really initiated the push for this initiative @ Columbia 
  • Our Board is just incredible: the legendary Bill Campbell, Ben Horowitz, Chris Dixon and others of this ilk to give us direction and advice along the way.

We just launched the website. Check it out when you have a moment and if interested feel free to sign up to receive periodic updates. Follow us on twitter here.

Lastly, I'm still blogging here and still teaching my startup classes at the Business School where I enjoy working with so many talented and enthusiastic Columbia students.

I'll keep you posted as all this develops.

Hope all is well, Dave

@jack during his visit to Columbia. cofounder of Twitter and Square

Be A F---ing Pro

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This is part of my ongoing Series on Entrepreneurial Culture. I see people in the startup world being careless, screwing up, cutting corners, making excuses, and worse (a lot worse)- all the time. I'm far from perfect just like the next guy and have made my share of mistakes as we all have. Most of the time I see the little things- but sometimes- and that's when it gets really unfortunate- it's the big things.

Some little things I see:

  • People in the tech world being petty, small, selfish and manipulative - and not helping out the community (translation: only out for themselves)
  • Folks who go into every meeting with an agenda and see the world entirely through the lense of what can I get from this person (translation: robot, non-human)
  • CEO sending out invite for a call to his advisors without checking with them on dates/times. I tell him to use doodle, etc. He tells me he's too busy and whomever's available will join call. (translation: sloppy)
  • Fledgling entrepreneur comes to meet with me, we discuss his proposed business- at end of convo he says, "that sounds like a lot of work". (translation: a joke)
  • Entrepreneurs talking smack and minimizing others (competitors, other entrepreneurs) the first time you meet with them.  (translation: insecure- shows weakness)
  • People intro'ing others to strangers without asking for permission. (translation: laziness & lack of consideration)
  • People with huge problems with their calendar and email. I know some great people that just can't get organized, are always canceling meetings last minute- and are just a train wrecks. (translation: a real shame)
  • People ask a direct question and the person responding evades the question with a long-winded response full of hot air. (translation: pathetic)
  • Forwarding emails clearly marked "confidential" without a second thought. (translation: careless)

Some big things I see:

  • Founding team (first-time entrepreneurs) "goes dark" on their early investors for months and then emerge saying they are shutting down company. They do so with an evasive email full of legalese and nonsense. When called-out on it, they say they were pressured by their lead investor and "didn't know better" because they were "first-time entrepreneurs". (translation: pathetic & corrupt)
  • Junior VC's and Venture Partners taking meetings with entrepreneurs knowing they'll never invest but wanting to gather competitive intel. (translation: jerks)
  • Guys in the startup world hitting on every woman they meet with in professional settings. (translation: deeply uncool and pathetic)
  • Broker-dealer types posing as angel investors that take advantage of unsophisticated/fledgling entrepreneurs. (translation: predatory)

If you do any of the "little things", I highly recommend you stop doing it. It will serve you well in your career. If you do the "big things", well, I've got nothing to say to you other than "take a hike".

I recommend that if you see others doing the little things to call them on it and help them out. If they're doing the big things- I recommend you stay away from them permanently.

There's really no room for this in the startup world. We're a small community and we shouldn't be cutting corners, short-changing each other or worse.

As Marvin Lewis says below- Be A F----'in Pro.

The Supremacy of Warm Introductions

This is part of my ongoing Series on Entrepreneurial Culture.

In the tech world, we hear the term “warm introductions” bandied about ad nauseum, often from the horse’s mouth—namely, that it’s the best and sometimes the only way for entrepreneurs to meet angel investors and venture capitalists. A so-called warm introduction occurs when person A introduces person B to person C with an express endorsement of person B. Person A is basically telling person C that they are vouching for the character and worthiness of person B.

That’s the explicit message, of course. The implicit message is quite powerful as well and can best be expressed by what types of behavior just won’t suffice when it comes to introducing yourself. The short list includes some or all of the following admonitions:

  • Don’t wait in a long line to talk to an investor after she speaks on a panel.
  • Don’t cold email an investor with a long email and business plan.
  • Don’t assault an investor in the hallway with a cold pitch of your business.
  • Don’t email an investor asking for five minutes of his time.
  • Don’t ping an investor on LinkedIn with your pitch and 18 hyperlinks to your deck and press coverage.

Any of these sound familiar? Well, you’ve probably been either on the delivering end or on the receiving end of some of these, if not both. That’s because this sort of behavior is endemic in the business world. These behaviors are all symptomatic of the root problem, which can be summarized as “being lazy and thinking short-term about your human relationships.”

Let’s go deeper.  Are any of these behaviors familiar to you as well?

  • You haven’t heard from someone in years and they reach out asking for you to recommend them to someone. Why? They’re looking for a job now. Typically their email begins with “Hope you’re well, it’s been too long since we last spoke.”
  • Someone you know pretty well makes email introductions to you without ever checking with you first.
  • You receive multiple emails and phone calls from someone you don’t know who insists on meeting with you.
  • They’ve never heard of or respected the habit of a double opt-in

All of these behaviors are the result of deeply flawed understanding of how human beings operate and what they value. They also reflect a rather selfish and opportunistic way of looking at the world. In the age of the internet and social media, it also reflects an immense laziness and amateur approach to connecting with other people.

So let’s get back to this concept of warm introductions. Why are they the sine qua non of business world interaction and the supreme currency of all business networks? Well, at its core, a warm introduction is an endorsement wherein the one introducing is explicitly vouching for the value, authenticity and character of the person, and making an implicit statement that there is mutuality in the sense that he or she is worth the time of the person to whom an introduction is being made. If this currency is abused, the one making such introductions will no longer be respected, his judgment will be called into question, and his reputation in the community will suffer. That’s a pretty high standard indeed. 

To facilitate a warm introduction, first get permission from the person to whom you’d like to make the introduction via a short, crisp email that gets right to the point. If they are amenable to being introduced, here’s an example of what the actual intro could look like:

Liz,

Thanks so much for your willingness to be introduced to Arthur. As I mentioned, he is a veteran business development professional who is looking to join his next venture. Given that your company is right in his sweet spot of enterprise security, I thought it would be good for the two of you to meet.

I worked with Arthur for four years at -------- and can’t say enough about his effectiveness and work ethic.

Best,

Dave

Notice I asked for permission first in an earlier email, and then in the actual introduction I reminded Liz of some of the details about Arthur. I also expressly vouched for Arthur once more. I didn’t go overboard, but kept it short and sweet while still hitting all the relevant points.

So who are people that often receive and give warm introductions? Here’s my take on what qualities they typically possess:

  • They value human relationships and are in business for the long haul.
  • They are exceptionally thoughtful about who they introduce, how they introduce and to whom they introduce, always looking to provide mutual benefit.
  • They are open to helping out quality individuals and giving of their time.
  • If they want to get to know someone, they do it in an authentic way and are out to build a relationship, not just to consummate a transaction. This might involve spending time commenting on the person’s blog or Twitter feed, inviting them to an event as a speaker, or to a breakfast, lunch or dinner gathering that might be of interest to them .
  • They don’t finish every meeting they have by saying, “My takeaway is…” or “What are the next steps?”
  • They respect other people and don’t take advantage of others or of their time.
  • They don’t look at people as a means to an end.
  • They have integrity.

Apart from capital, warm introductions are literally the most important currency in business. They get people jobs, initiate partnerships, help people raise funds and can often make an extraordinary positive difference in people’s lives and the lives of businesses. When they are made carelessly they can literally be devastating. If you think about it, it was a warm introduction that probably got you into most of your jobs, most of the capital you’ve raised, and possibly even how you met your spouse. Treat the whole process with great thoughtfulness and care—it will make a huge difference in your career.

(Click here for the original post on Amex OPEN Forum)

Remembering Dersu Uzala, Siberian Entrepreneur

This is part of my Series on Entrepreneurial Culture.

It occurred to me recently that when you find yourself around folks that take great care to cultivate the particular ecosystem in which they dwell, the environment is always uplifting and enriching. A recent venture event I attended of this kind brought to mind that great character, Dersu Uzala, who Kurosawa immortalized in one of my favorite films of the same name.  So as to set the stage for my main point, I’ll recall now one of the early scenes from memory, so forgive me if I omit some details.

On a freezing cold night in the Siberian forest a group of Russian soldiers are suddenly joined by a mysterious Nanai tribesman as they sit warming themselves around a fire. He seems ancient and does not greet them as they sit in stunned silence watching him as he slowly lights his pipe. After some minutes he breaks the charged silence and strikes up a conversation with them. It turns out that this is the beginning of their remarkable adventure with this nomadic tiger hunter who serves as their guide through the wilderness. The men soon learn that wherever he goes he is looking out not just for himself, but for those around him and who might come after him. Twice he saves the lives of Captain Arseniev and his men by virtue of his great experience and wisdom and in one scene they watch with fascination as he leaves some food behind in a remote shelter for anyone that might stumble there after their departure.

The Russian soldiers never forget Dersu. If you’re able to rent the film from Netflix, I doubt that you will forget him either. Let me know what you think.

We who make our livings in the world of start-ups also dwell in our own precious ecosystem comprised of entrepreneurs, investors, advisors, inventors and technologists. It seems to me that how we tend to it and how we treat each other along the way will be the ultimate measure of how much we can achieve.

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Etymology of the Word Entrepreneur

This is part of my Series of Entrepreneurial Culture.

I was actually thinking about the word entrepreneur itself recently and found this entry from Wikipedia interesting: http://en.wikipedia.org/wiki/Entrepreneur

“…The word "entrepreneur" is a loanword from French. In French the verb "entreprendre" means "to undertake," with "entre" coming from the Latin word meaning "between," and "prendre" meaning "to take." .... Entreprenuer also sounds close to a sanskrit word anthaprerna which means self motivation.”

One can sometimes learn a lot from the root etymologies of words. This one seems to boil it down to its essence quite well doesn't it? Entrepreneurs evidently “undertake” things and they are “self-motivated”. It’s quite an elegant word as well. Entrepreneur. Sounds better than under-taker :)

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