Alexander Muse of Texas Startup Blog wrote a great post on the dedication required to get past the initial phase of starting a business.

I’ve never heard anyone point specifically to 13 months as a benchmark before, but I like his line of reasoning. I can say that I completely agree with the idea that most people quit to early; before they’ve even had a chance to taste success.

The phenomenon that I see happen to people is that they decide multiple times instead of “deciding once”. “Deciding once” is one of the most important lessons I’ve learned in life, and unfortunately I can’t recall where I picked it up. Somebody deserves some credit!

By “deciding once” I mean to do all of your homework, weigh the risks and alternatives, get yourself to the point of making a decision - and then decide to decide once. Once you’ve made your decision, resolve to no longer let your mind scramble on whether you made the right decision or not - just move forward with all of your energy and 100% commitment. So much time and energy is wasted on reconsidering your decisions after you’ve made them; you are better off just deciding once and being done with it.

Now, I’m not suggesting that you foolishly go in one direction forever just because you decided to many years ago. You should set some sort of time frame and milestones that make sense to base an evaluation on (13 months?), and then commit like hell until you reach your evaluation point and then make another decision…once!

MRC

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Brad Feld and Jason Mendelson wrote a series of posts on the contents of a terms sheet, how to negotiate the key points, etc.  It’s a very thorough look into the terms of start up investments and a must-read for anyone looking to raise money.

MRC

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I’m captivated by the differences in people’s mental game when it comes to crunch time - whether that be in sports, business, or any other high-stress situation.  As an entrepreneur, I always try to stay alert to my mental game because I know it has a huge impact on how I see opportunities and how I come across to my team.  I think most people take this for granted and let their minds run without any “supervision” - big mistake.

David Brooks recently wrote an article in the New York Times about Tiger Woods’ “Frozen Gaze”; his levels of concentration and mental toughness are legendary and have become the model that many athletes and business people aspire to reach themselves.  It’s an interesting read and an interesting glimpse into what makes him the top performer of top performers.

My favorite quotes are from his mother and father.  It should be noted that his mother is considered the tough one in the family.  Her words:

“Old man is soft,” Kultida Woods once said of her husband. “He cry. He forgive people. Not me. I don’t forgive anybody.”

And from Earl Woods:

“I’d say, ‘Tiger, I promise you that you’ll never meet another person as mentally tough as you in your entire life.’ And he hasn’t. And he never will.”

He’s probably right!

MRC

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Getting good feedback from your employees gets harder and harder as you grow.  In addition to the “layers” that get created in the organization, employees seem to be more intimidated by the boss when they’ve been brought into the company at a later stage and perhaps don’t get as much quality time with the exec team.

Obviously any company that wants to continue to grow and grow fast must find a way to get regular access to the good stuff that is in employees’ heads, and employee morale will only be improved if employees feel execs are listening.

At my company, we’ve recently started using the following tool:

https://www.employeesuggestionbox.com

I highly recommend it.  They’ve done a great job of capturing all of the basis systems and processes you need to solicit and review feedback.

Check it out - perhaps it will be a good fit for your company.

MRC

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I never would have imagined that a monitor 6 inches larger would save 2.5 hours per week - that’s a ton!  I use two monitors; I wonder if the results get multiplied, or at least increased.   Read his post here.

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Thanks to Mark for another great post that boils things down to a pretty simple level! A lot of people make being successful in a start up look like some sort of hocus pocus, but it usually comes down to following some simple rules and executing every day.

You don’t have to agree with all of them, but considering his track record, you should at least give them some thought.

MRC

A Couple of My Rules for Startups

Mar 9th 2008 2:13PM

My buddy Jason had a GREAT post about rules for startups. Read it, love it learn it.

Of course, anyone who has started a company has their own rules and guidelines, so I thought i would add to the meme with my own. My “rules” below aren’t just for those founding the companies, but for those who are considering going to work for them as well.

1. Don’t start a company unless its an obsession and something you love.

2. If you have an exit strategy, its not an obsession.

3. Hire people who you think will love working there.

4. Sales Cures All. Know how your company will make money and how you will actually make sales.

5. Know your core competencies and focus on being great at them. Pay up for people in your core competencies. Get the best. Outside the core competencies, hire people that fit your culture but are cheap

6. An expresso machine ? Are you kidding me ? Shoot yourself before you spend money on an expresso machine. Coffee is for closers. Sodas are free. Lunch is a chance to get out of the office and talk. There are 24 hours in a day, and if people like their jobs, they will find ways to use as much of it as possible to do their jobs.

7. No offices. Open offices keeps everyone in tune with what is going on and keeps the energy up. If an employee is about privacy, show them how to use the lock on the john. There is nothing private in a start up. This is also a good way to keep from hiring execs who can not operate successfully in a startup. My biggest fear was always hiring someone who wanted to build an empire. If the person demands to fly first class or to bring over their secretary, run away. If an exec wont go on salescalls, run away. They are empire builders and will pollute your company.

8. As far as technology, go with what you know. That is always the cheapest way. If you know Apple, use it. If you know Vista… ask yourself why, then use it. Its a startup, there are just a few employees. Let people use what they know.

9. Keep the organization flat. If you have managers reporting to managers in a startup, you will fail. Once you get beyond startup, if you have managers reporting to managers, you will create politics.

10. NEVER EVER EVER buy swag. A sure sign of failure for a startup is when someone sends me logo polo shirts. If your people are at shows and in public, its ok to buy for your own folks, but if you really think someone is going to wear your Yobaby.com polo you sent them in public, you are mistaken and have no idea how to spend your money

11. NEVER EVER EVER hire a PR firm. A PR firm will call or email people in the publications, shows and websites you already watch, listen to and read. Those people publish their emails. Whenever you consume any information related to your field, get the email of the person publishing it and send them an email introducing yourself and the company. Their job is to find new stuff. They will welcome hearing from the founder instead of some PR flack. Once you establish communications with that person, make yourself available to answer their questions about the industry and be a source for them. If you are smart, they will use you.

12. Make the job fun for employees. Keep a pulse on the stress levels and accomplishments of your people and reward them. My first company, MicroSolutions, when we had a record sales month, or someone did something special, I would walk around handing out 100 dollar bills to salespeople. At Broadcast.com and MicroSolutions, we had a company shot. Kamikaze. We would take people to a bar every now and then and buy one or 10 for everyone. At MicroSolutions, more often than not we had vendors cover the tab. Vendors always love a good party :0

These are all off the top of my head. But they have worked for me so far.

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Warren Buffet always remarks that all he is looking for in an investment is a long-term competitive advantage.

If you’ve ever read any books on starting a company, or asked an investor for cash, you’ve no doubt been reminded that your business should have a competitive advantage.

But what exactly is a competitive advantage?  Are there different kinds?  Are some better than others?  Do you really need one to have a successful business and make a good living, or only if your looking to shoot your company to the moon in the next three years?

Hiking in Boulder got me thinking about these things!

Since we moved to Colorado about seven months ago, I try to hike the trails at Chautauqua Park about twice per week.  For me, it’s the best form of exercise in the world and does more to make me feel stress-free than just about anything possibly could.  I didn’t expect it to provide business lessons as well!

This Saturday I hiked the Royal Arch Trail, which is a pretty tough hike that has some steep inclines that tend to be pretty icy and slick.  I learned a while ago that if you want to make it up during the winter months, it’s a good idea to have YakTrax on your shoes for extra traction.

This weekend was a perfect example of why.  With my Yaktrax on, I easily made it up the mountain while watching just about everyone else on the mountain stumble and slip along, and in almost all cases, stop and turn around before they reached the top of the mountain.

I had the competitive advantage, and beautiful views were the profits I enjoyed!

Now when I hike for exercise like I did this weekend (versus out with company to enjoy a more leisurely hike), I try to make a point of not getting passed by anyone when going up the mountain.  Since I had the competitive advantage this weekend, you’d think that wouldn’t have been a problem.

That’s when I started to understand that there are degrees of competitive advantage.

On this particular hike, a man that was a good ten years older than me and who didn’t have Yaktrax on, passed me towards the top of the trail.  I couldn’t believe it!  This guy was wearing regular tennis shoes and was slipping on almost every step, but he was in such good shape that he eventually went right by me. 

His competitive advantage was better than mine.  At least for the time being.

If you’ve ever done any winter hiking, you know that going uphill on the snow and ice is much easier than going downhill.  Well, on the way down, I passed this guy like he was standing still, and watched him fall three times over a fifty-yard stretch. 

My competitive advantage proved to be more sustainable over the long term!

To any normal person, this would have just been another hike.  But I LOVE business, so this is the way my brain works.  Strange, I know.  But look at what I learned:

1. It’s great to have a competitive advantage.  You can still be successful and reach some nice profits without one, but it’s much more of a struggle and has much more risk of falling down before hitting your goals.
2. There are degrees of competitive advantage - some are better than others.
3. Sometimes competitive threats aren’t what they seem.  Business is more of a marathon than a sprint.

Not bad for a hike in the woods!

MRC

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If you are in business in any way, you should read everything from him that you can get your hands on.  I am always amazed by how much I learn and how simple he makes the toughest concepts seem.

This is a link to notes from an interview with him - fantastic stuff:

http://undergroundvalue.blogspot.com/2008/02/notes-from-buffett-meeting-2152008_23.html

MRC

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Every would-be entrepreneur should read this recent post by Furqan Nazeeri.  I can distinctly recall a time in the late nineties when I thought that in order to start a company you had to raise money from vc’s.  People were brainwashed by what was happening in Silicon Valley; many people still are.

You need to realize that vc’s are just one form of financing.  They have their own investors that are expecting certain results, and because of that only certain types of investments make any sense for a vc to put money into.  This doesn’t mean that other types of investments aren’t good, they just may not be right for vc’s to invest in.

Entrepreneurs must have a high degree of self-awareness around building their company.

• Do I want a business that earns me $500k a year and I answer to nobody?
• Do I want a business that reaches $1 billion in revenue within X years but I answer to vc’s, wall street, and everyone else?
• Do I want something in between those two?
• Do I really want a job with a steady paycheck now that I think of it?

The decision  you make will dramatically impact which opportunities make sense for your personally, and which types of investments make sense for your company.  The last thing you want to do is rush into raising vc money without having put some thought into it!

I’ve re-posted Furqan’s full post below:

How much of your business do you want to own? by Furqan Nazeeri

I hear from both entrepreneurs and VCs that one of the most commonly cited reasons for not investing is because the “business won’t be big enough.”  Usually that is delivered by the uninterested investor in the negative as, “we don’t think the market is big enough,” or “we think the market is going to take a long time to materialize.”  Steve, one of the Softbank partners I work with, has a great saying that puts a positive spin on this and really gets at the heart of the issue (actually Steve has a lot of these Steve-isms, but that’s a post for another day).  Anyway, what Steve often says is, “that’s a business that would be great to own 100% of, but I’m not sure if I’d want to own 20%.”

First, a little background.  Early stage VCs like to own about 20% of a company.  It took me a while to get my head around what seemed on the surface a random number.  But, there are a lot of reasons for 20% including that they typically like to invest between $5MM and $10MM in a company over time, that they like to have a co-investor or two with roughly the same interest and that software companies usually take $15-25MM-ish to achieve an exit of $100MM-ish based on revenue of about $25MM.  Add to that the need for an option pool and make room for founders and it basically works out to a rule of thumb of 20%.  That’s the “typical” deal.

Now, if your business doesn’t have a real shot at $25MM+ in revenue with a healthy growth rate or have a need for $15MM+ in investment, but instead has a very solid chance of achieving a few million in revenue, take a few hundred grand to launch and has the potential to throw off $50-100K per month in free cash, then that’s a business that would be great to own 100% of!  Frankly, I see a lot of the latter companies pitching VCs for money, getting turned down and being frustrated when in reality they’re in a great spot of potentially owning all of a valuable asset and not having to answer to nagging investors!

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I recently attended a lecture with David Bonderman, founder of private equity firm Texas Pacific Group, at the University of Colorado Law School.  He seemed like a very interesting guy; didn’t fit the stereotype of a big-shot dealmaker at all.

As you would expect, a alot of law students and others in the audience wanted career advice from him. 

How can I get into private equity? 

What’s the right job to get first? 

If my grade point average is only X or I didn’t go to Harvard or Stanford, should I just give up?

His response was classic!  Here is David Bonderman’s career advice:

1. Relax
2. Develop a good sense of value
3. Be likeable

I love it.  He says he’s never planned in advance in his career, and that he thought he would be an archeologist. 

People get so hung up on making all the right moves.  One of the most important things you can get through your head is that nobody can or needs to give you permission to be successful or to do the things you really want to do.  If you are waiting for something or someone to say it’s ok, you’re in trouble.

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