The entrepreneurial anomaly

There is a core anomaly between the ease of starting businesses today and the challenges around funding their growth and discovering market fit.

There is almost no friction to start something.

From tools to build with and pay as you go services to host on. From a plethora of early stage capital.  And most important, a culture that has embraced entrepreneurship as a legitimate occupation.

It has never been easier to run with a hobby and see where it goes. Never been more possible that your tiny niche could become a global game changer.

The flip side is that while it certainly easier to start something it has become increasing difficult, and much more expensive, to find true market fit if not scale something to a success.

This has turned 360 degrees in my career.

When I first started raising capital it was a challenge to raise your initial funds. There was less funding available as the cascade of capital from successful startups was just beginning to trickle down. The idea of seed funding was in a neonatal state.

It’s much better now, just very different dynamics that have resorted the challenges.

The truth of course is that entrepreneurs are chasing the impossible.

Creating something new from an idea that could become a household brand is the work of the wonderfully obsessed and the unflinchingly unrealistic.

Then as now both.

To change how we as a society work, play, connect and share our lives brings amazing satisfaction—and sometimes wealth–but the odds of winning are not great.

The very framework that this happens against has changed dramatically.

The thresholds for market proof today are as ambiguous as they are stratospheric in most cases.

The attention spans of the consumer for trying new things has diminished to a nanosecond. Capital needed to get started is everywhere. The capital needed to grow it, more and more challenging to get.

You can simplify this to say that there is just so much noise that makes it harder to break through, the odds of success less and less, and the cost to get there increasing all the time.

That sounds to me like an excuse.

My takeaway after a career of doing this is that it has always been hard, damn near impossible actually.

I just see it as uniquely different today on three fronts:

The number of failed companies and emotionally exhausted entrepreneurs will dramatically increase.

This is the exhaust of the process and it will fall on the culture of today to mollify. We give lip service to the acceptability of failure but this is an emotional scar that foreshadowed the emergence of the entrepreneurial psychologist.

Those with capital to invest will become both more powerful and formative as they doll out funding in controlled pieces.

The upside is that from the best investor, the ability to mentor their investments increases. But the innate discordance between the portfolio view of an investor at the top of the funnel, and the single focus of an entrepreneur at the bottom will inevitably increase.

The net of these moving pieces is that the truly impossible is becoming possible to a broad population of entrepreneurs.

A founder with a big idea can truly believe that they can change the world. Not as an isolated instance but part of a culture, with strange analogs to the old Hollywood system that supports this.

We all see the obvious—the issues of creating more accessibility to this funnel to all economic classes, the recent awareness of the emotional toll of failure and the rising tide of wealth creating more for itself.

All this is true but whether it is easier or not, less expensive or not, doesn’t really matter.

What matters is that the impossible has become simply more possible.

That’s a truth that overshadows everything else and makes it worthwhile.

Is ‘lifestyle’ really a business model?

Words matter.

How we think about what we do, with what words, in many ways informs who we are and stylizes the businesses we create.

‘Lifestyle’ as a term is a case in point of this.

A word I rarely use to describe what a business does or its model, but just can’t seem to avoid when out looking for capital.

It’s an interesting conundrum, layered and ambiguous.

I keep wanting to reject the moniker but it sticks around in interesting ways.

Think of it this way.

There are ideas that change our world.

Reinventing how we educate our children, crowd sourcing innovation or rewiring transportation changes our very culture and stylizes how we live. When they succeed, they create enormous wealth that trickles down and reinvigorates the cities where they happen and the ecosystems they touch.

There is no question that what Uber has done for getting around, and what a rock star chef and restaurateur has done to an evening out over an astounding pizza with an approachable wine list are at different ends of the spectrum.

Culturally and financial obviously.

But life and business and intent are more grey, especially early on.

At inception, at a seed stage, what became AirBnB or Kickstarter and a drive to productize your grandmothers Kugel or your mother’s cookies are really starting at the same place.

Not so crazy as you may think.

Did they ever think Shake Shack was going to be a spun off as public company on its own? Or even Etsy?

We dance around this all the time.

We start projects today as we used to have hobbies.

We follow our passions and toil to find structures that platform them, communities that connect them, and invariably capital to support them.

I run into this divide often on the funding front—between concepts of tech and consumer, between future platforms and present satisfactions, between causes that are just damn right to do and things to make money.

What’s interesting is that while it is trivial to start anything today, it is more capital intensive to be successful and grow at any scale.

Sure, some things are by definition go big or go home.

Huge bets, huge wins by design. But even those, often at the first seed stage are so embryonic that it is unclear what they are about.

Some things are by definition, especially around hard goods, all about brand and figuring out how on a small scale they make business sense from a cash flow perspective, but at scale can be game changing home runs.

As a businessperson, I certainly understand that multiples matters and depending on your investment strategy, you determine how big a bet you need to take to make it pay back. As there are obviously markets that scale and cross sectors with more ease.

But this is breaking down quickly both in tech and out of it.

Within tech—or within an explosive network growth reality–the odds of any idea becoming the next Facebook is about the same as winning the lottery.

The belief and the possibility of creating something of value that can become an acquisition target and fit into one of the infrastructure giants that layer out our world—not as crazy.

Some investors, the most successful ones I know, approach this with a theory. Focusing on possibility more that the how of it.

For others, especially at seed stage, it’s just gut feel, looking for the cool and interesting. Invariably and counter intuitively, this group seems to force a model on the idea from the outset. An unnatural act in most circumstances.

On the consumer side, I’m discovering the same bias, the idea that disruption comes from a distribution strategy rather than a brand perspective.

Just not so, tech thinking on consumer realities is a bad mashup.

Are there more or less brands on the consumer side then on the tech side? Does selling pickles by definition create a limitation what with co-packing, franchising and geo distribution possibilities?

Sure—building something that captures human behavior where the users themselves are the content is more explosive than creating something that needs to get made and distributed.

But the maker revolution is cross sectors.

From consumer hard goods to green city guides to software that is a piece of the stack. The odds and the size of success are equal in my mind.

The power of a consumer brand surfacing above the massive din of social noise, an entity that has value equal if not more than many software solutions.

This to me is food for thought, not data for conclusions.

About the reality that capital is needed for the hard goods startup as much as the software company or a community platform.

The fact that solving problems is only a relevant piece of a plan for a very small, often a very limiting approach, to tackling a market.

The truth that bootstrapping is becoming more and more impossible, and I think often, the wrong way to start a business.

And mostly, the idea of defining and finding market traction that speaks to a future model, more and more aspirational if not stifling.

Where does lifestyle play into this?

Lifestyle in our mind’s eye, speaks to the idea dog friendly offices, sushi on Friday, and fully funded insurance plans.

Interestingly, I surfed over to a hot, well funded, huge-burn research start up job page this morning.

They are in SF, but the job page read like the ad copy for leasing a high end condo in the Meat Packing district in NY. All lifestyle and poise and to the P & L, lots of burn.

Light years away from most early startups and small companies living off credit cards and family support, scraping for the first deal to cover cash flow.

This is the take away thought about dangers of encapsulating ideas and possibilities before they are fully market formed.

Worth thinking about when we pitch for funds. Something for investors to ponder as well.



Few things are as mentally clarifying and personally satisfying as closing the deal that matters.

I’m a marketer by nature and understand that what you don’t say is what makes what you do, memorable.

I’m an expert at this.

Selling though at it’s best is like professional sports to me.

I stand in awe of the best.

It’s a unique activity where strategy and training are the long tail of preparation to be perfectly poised to recognize and capture that nanosecond of opportunity that drives the close. Truly a game of skill and inches.

Truly an expertise where manipulating time and urgency are the core elements of success.

I’m pretty good at this and you can send me in to make the play, but more a seasoned practitioner than a natural Olympiad.

Case in point.

At the end of last month, I woke up painfully early, the last day of an important month for a project.

Aching over coffee to find a reason to connect with key customers. Wanting an excuse to post, a rationale to make a call. An action that didn’t smack of Crazy Eddie.

The motivation was wanting the close. The gap, as it always is, was the reason to connect. And knowing when to fold for now.

That to me is the Zen of selling.

Sales on one side is driven by pure need and want.

Whether you’re company is running on fumes. Whether you are running 2x quota, is of no consequence.

Your need, your want is irrelevant. It clouds actually, not motivates, and the market can somehow smell it.

The truth is that in sales there is a direct relationship between energy in and dollars out.  And sales more than any other activity is only about the outcome.

There are better customers. There is the long game of repeat sales. There are deals that close and those that shouldn’t.

But at the end of the month, it is about dollars in. And the very best month’s close makes the next month’s growth more possible.

I do believe that metaphorically at least, sales starts where marketing ends.

In that blurred space between surfacing a market and making someone feel good buying. It is no mystery why sales and marketing costs invariably are on the same expense line in the budget.

I also believe that the patter that you are always networking and always raising funds on the entrepreneurial front is somewhat misguided. If not pacifying.

Those who get the raise closed know that networking is indeed marketing and that those who win, who do the raise, do it with specific and timely sales intent.

When you are sitting with the person with the pen, usually two people at the end of a long conference table, this is the salesperson in the seat and the closer is certainly in the room.

What did I do, end of the month to channel my needs?

I decided that it was not the time for sales at all.

I sat down and sent thank you emails to top contacts and customers. Just checking in, thanking them for their support, and in some cases, for their friendship.

Not a hint of a passive aggressive sales nudge in any way.

Not a deal came of it. This will pay dividends over time big time.

The marketer was in the room.

Raising a glass to Em and Asa

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I just returned from my son Asa’s wedding.

A beautiful spot, high on a knoll above the Pacific in Sayulita, Mexico.

This laid back, hippy Mexican surfing town was the ideal setting for an astoundingly beautiful and iconic celebration.

A whole new group of people to meet from Em’s family. Time to hang out with Asa’s friends, many that I’ve know for a decade or more.

It was perfect actually.

The entire scene was from the heart, tradition made personal and casual.

It felt just right and natural.

I gave a little speech–the toast–and was uncharacteristically nervous.

The evening and the wine (I was drinking Belluard Gringet from Savoie) made me forget the words completely and recreate it again at the spur of the moment.

It went down really well.

The DJ was great and we danced for hours.

A magical evening.


(The Toast–Raising a Glass to Asa and Em.)

Thinking about Em and Asa is easy.

I know them well and love them both.

Finding the right words for this occasion has been surprisingly difficult.

Predictably I went to the movies for the answer.

And been thinking a lot about a scene from one of my favorites, Lost in Translation.

In the scene Bill Murray is chatting about what it means to be a parent.

He says:

That the most amazing thing about having children is that from the very moment they are born, they become the most interesting person in the world to you.

They simply draw their first breath and immediately they are the center of the world.

An amazingly simple truth that captures today for me.

True for myself and Asa.  True certainly for Em and her parents. True for every one.

I’ve also been thinking about my obsessions with movies and how I’ve passed it along to Asa.

I remember that when he was 12, we powered through an all nighter watching Godfather 1 and 2, then headed to the theatre for the first showing of Part 3.

This mania binds us together even today.

We are constantly texting each other lines from Trading Places—Looking Good Billy Rae– or Waynes World—You will be mine!– or a thousand others.

To you Em–You had us at hello!


We have loved you since the first time we met you.

When you walked into our apartment, beat from the redeye and understandably nervous at meeting me.

Today, you are simply part of our lives. Part of our family even before this beautiful ceremony.

I need to step aside and let my mom, Shirley, the 96-year old matriarch of the Waldstein clan have a say here.

She has a serious bond with Asa and we spoke about the wedding before I left. Actually many many many times!

I’ll try to be her voice.

Em, she told me that she loves your unabashed smile, your big heart and an even bigger capacity for happiness.

She loves that you and Asa have teamed up together.

In her words, she considers each of you a great catch for each other!

She’s is seriously thrilled, actually in Yiddish she is kvelling, from the bottom of her heart that you have found each other

If she was here now, I know exactly how she would end this toast.

She would most raise her glass and shout:

Mazel Tov and Le Chiam and welcome Em to the family.

We couldn’t agree more.

So congrats and Mazel Tov to the both of you. We love you very much.


Startup revenue as the truest KPI

Few things are as pure as a transaction.

It’s the aggregate of factors affecting customer choice.

Where marketing, sales, customer want, brand value and UX mash together.

Where belief and timing intersect. Where trust meets the swipe of a credit card. Where a decision—a vote of commitment–is made.

Marketing generates scads of data. It’s inspired the science of analytics and measurement. We measure reach, build conjectures around engagement and social touch points. We even attempt to measure brand, the purest connection of belief to a market.

This data is really useful and essential to our job. It’s a tool of the trade but all of it is conjecture around behavior. None of it is not as revealing as what we learn from customers during the sales process.

In startups where you are in the business of selling things, putting a price on value, revenue is more a marketing data point than proof of a model. Especially early on.

More an indication of product market fit than anything else.

It is the truest KPI.

Think about your first $1M in revenue.

When you cross it. When you seriously  believe that you are on the run rate towards it, it is pure magic. Emotive and primal and a damn epiphany.

It’s also a reality check and bellwether for investors. A gateway to a host of fundraising opportunities.

It’s certainly time to take the team to the bar.

Truth be told though, revenue, especially that first couple of million, has little to do with your future business model. Almost nothing to do with how efficient your model is today.

I’ll take the bet that 90% of the time how you are making money at the $1M mark will look completely different than at $20M, even $10M. The value you are selling at 20x today’s revenue may be the same but how you are delivering it won’t be.

Today you are muscling things into place. Creating consulting services before productizing the value.

You are touching flesh with each and every one who shows interest to find a connection. It’s romance that feels more solid than a fling.

It couldn’t however be more important, more indicative and more valuable.

What early revenue does is give you a glimpse of what your market could possibly look like.

You get the chance to see, maybe for the first time, what your brand looks like to the only individuals that matter, the customer and the superset of them, the market.

Marketers dream of visceral touch points with the market.

The best go out into the world and sell products to understand their customer behaviors at the point of sale. Online we fuss and obsess about every piece of data that implies a connection, a dynamic, or an understanding. But we are always one step removed from reality.

We desperately want to know what the customer thinks and are invariably stymied in that understanding.

The art of business is about creating an environment where sales is a natural process and where it is comfortable for a customer to discover and choose you.

How you do that is what defines success.

Marketing as a discipline builds the touch points and creates the environment for that to happen. Sales manages the timing of that choice, the understanding of how the thing you sell plays into the urgency of the customer to buy.

Revenue early on for startups is where this comes together.

I’ve been at that first $1M revenue mark a bunch of times.

Every time it happens it’s a wonder and invariably I can tell who bought what, when, how they felt about the purchase and where they found us.

This is information to die for.

This is the data to understand the connection between what you are selling and what the customer thinks they are buying. From that data you start to figure out how to scale what you have. How to price, deliver, expand the line and support it.

At my core I’m a brand builder who simply loves numbers, sales data especially.

I love them later on when they are the scorecard for company health and wealth. I love them early as they show you how to get there.

Building a business is all about making decisions.

Often from the gut, invariably through presupposition. Too frequently in the dark.

There is nothing like a transaction, like sales exposure, to make your assumptions and your decisions more concrete and more valuable.

That’s the real definition of a KPI.