Reblog of my post from two years ago. Feels as right today as then.
All day yesterday working on my schedule, whenever I noticed the date, my concentration ground to a halt.
I kept thinking back to that Tuesday, 12 years ago, being stranded in San Francisco on business with the country’s air space shut down. Sitting in bars, watching the news with strangers and having the reality of what happened burned into memory by the incessant replaying of the events on network news.
Talking on the cell to friends in New York, every one of them, shell-shocked. Many of them seeing the plane hit the second tower. Watching the buildings crumble and a very different world appear as the dust settled.
I came back on the first flight out, the Saturday night redeye, circling into JFK over the smoking debris. I remember walking to the intersection of West Broadway and Canal, staring at the barricades on the South side of Canal Street. The surrealistic image of a Schwarzenegger movie billboard that was coming out with him fighting terrorists somewhere. In smug contrast with the real grim reality on the streets.
I’m not going to recap. We all have our memories and have dealt with them. Many moved out of town. Many took years to come to grips. Everyone moved on.
This was a pre iPhone camera world. A pre Facebook and Twitter reality where real-time sharing and connections were absent. Rather than post, you walked around seeing scores of make shift memorials with flowers and pictures of people. Telephone numbers scrawled on papers to call if you saw or heard of someone.
In retrospect, it feels like a black and white photograph of a different time. Frozen yet wrapped in very real memories. My memories as I was there.
People need memorials of horrible events to place them. I light a candle for the passing of my father and grandfather and it helps ground my thoughts. The fiasco of building the new Freedom Tower and the passage of time has squandered the memory of this event somewhat. Even today, more than a decade later, the memorial is not really complete, surrounded by a fence and a construction site.
The reality of 9/11 was that we felt attacked where we lived. As you went further from the physical event, even uptown, it became less real, less yours and less somehow immediate.
In the years following, when I worked in LA, I tried mostly in vain at my companies to make the day mean something. Invariably it always fizzled. It meant as little to many on the west coast as to many people I work with today in their 20′s. They aren’t insensitive, but, to them, it’s a historical event, not an experience that shaped any part of who they are. That distance is the difference.
I’m not a romantic about this. And I didn’t lose any friends or family. And while sensitive and a downtowner, I don’t gush over this often or have loose emotional ends.
But it’s important, because if I don’t make it so, it will indeed go away. If the only reminder is of the skyline view in pre-9/11 movies or photos with the towers in them, this is indeed a waste.
When I posted something about this on Facebook yesterday, a friend responded that the 9/11 light sculpture that they erect every year is her favorite.
The light sculpture is indeed amazing but it’s more art than memorial to most unless we personalize it.
The connection between the fact that crazies who truly hated us navigated hijacked planes using Broadway as their map to the towers, is somehow below the surface. The family from New Jersey who I met in Union Square that brought their then young children into town to experience the community side of this nightmare, is absent somehow in those beams of light till I talk about them.
This post is my nudge to myself to spend a few moments thinking about it. Connecting the dots so that they stay real.
I’m all about moving on. I’m a hardass generally. For this particular memory, making my own little memorial of it on my blog seems like the right thing to do.
I’m on the opposite side of common knowledge on this topic.
The argument for raising the least amount of capital needed is the gist of the lean funding paradigm.
It keeps the entrepreneur focused, instills creativity and grass roots street smarts. It forces iteration as the backbone of both market discovery and product development. Less is more is the net of it.
It also let’s the funder stay close to their investment, managing it by objectives in a sense, creating a perpetual funding cycle. You fund what the entrepreneur needs to get to the next stage of product or market proof.
It also means that the entrepreneur is always raising funds, always on a tight leash from the sources of capital, always on the stressful watch of cash flow.
The upside of this is the lean startup concept in a nutshell.
A brilliant mashup of ideas that the best startups use to harness the market itself as a catapult not as a chasm to cross.
It works well as an operational principal, but jumps the shark as a funding paradigm in most all instances.
My counter argument to why raising more, not less is often the smart move:
1. There has never been a plan or a budget that didn’t prove absolutely essential and invariably incorrect.
If you raise to a plan you will come up short. Plan for a smoother runway into what neither neither you nor anyone can imagine in detail.
2. Being cash poor drives poor decisions, keeps you in blinders to objectives and invariably stifles openness to market opportunities.
Focus is essential but having the creative freedom to consider change and opportunities is where great things happen.
3. Lean funding by definition puts the directional control in the hands of the funders not the entrepreneur.
It is equally incorrect to assume that the funder is always the source of wisdom and guidance and that entrepreneurs are children who will put their hands in the cookie jar and glut out if left to their own devices.
I believe that the best chances for success come from raising capital in a partnership paradigm. From people who are in it for the long haul and where a small group of them can provide guidance and operational expertise.
I also believe that winning happens because the entrepreneur just nails it.
When a leap into the void, often counter intuitive happens. When you push everything off the table, and rethink market connections in bold new strokes.
To do that you need a runway. You can’t be backed into the disrupting cycle of always raising funds and always heads down to a plan.
If you have to give away a bit more of the company to create that security, so be it.
You need guidance and oversight but as much, you need the freedom to move and follow you gut.
Cashflow is king. Make sure you have it.
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.
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.