It was a great thrill to receive a letter in the mail last week informing me that I had been nominated for The Denver Business Journal’s Forty under 40 Award. This nomination recognizes “young, dynamic, up-and-coming business leaders” under the age of forty-years-old. This is the third time I have been nominated for this award in the four years I have been eligible. I am not sure from whom this nomination came, but thank you. It is an honor. The Denver Business Journal will run a full-page ad in their February 22nd issue congratulating all nominees. The awards dinner will be held on March 21st at the Hyatt Regency Convention Center in Denver. For more information on the event, please call Deborah Sadinsky at 303-803-9278.
Below is a video titled “The Strength of Weak Ties: Using Online Social Networking to Pocket Social Capital.” It is a video of a presentation I gave to a group of lawyers related to online social networking and accumulating social capital. While the presentation is addressed to attorneys, the themes, terminology, and instructions are applicable to almost any individual and business. The general theme of the presentation is that by expanding one’s social network, one can improve the quantity and quality of information that comes into that network. This new information can be extremely valuable to our businesses because it can generate new leads and new ideas – as well as keep us better informed as to what is new or emerging within our industries. Once we understand what social capital is and the role it can play in our businesses, we can formulate a strategy that takes advantage of online social networks as an additional way to accumulate social capital.
If you find the information within this video to be important and valuable, please share it with your friends and acquaintances via the social networking links below. Thanks!
During a recent conference for entrepreneurs, I attended a segment on work/life balance. I looked around the auditorium and realized that if at any moment, during any part of the day, the word “business” were to be replaced with the word “alcohol” no outsider would be able to tell that we weren’t all actually attending some Alcoholics Anonymous annual jamboree.
Business had made us drop out of school. Business had isolated us from our friends. Business had caused divorce, ruined our families, and put distance between ourselves and our kids. Business made it hard to sleep. Business made us unsure of who we really were. We spent all of our money on Business. We begged, stole, and borrowed for business. And every time we tried to get away from business, for some reason we just kept going back.
Business has become an addiction, an addiction most of us acknowledge started when we were very young. It is an addiction that most of us acknowledge has made us very sick. And even though some of us seem visibly to be doing better than others, few of us will ever be able to go without a taste.
So entrepreneurship is a disease. And like any good disease a counseling, consulting, and self-help industry has sprung up around it – CPA’s, consultants, creative accountants, researches, and authors. Even the government is stepping in with the SBA to “assist” those of us who are suffering. And for those hell bent on not getting better there are Angles and VCs around to meet us in dark alleys and give us what we need to get by for another couple of months.
And thank god for all of them. Without them no entrepreneur would be able to 7 or 10 step his or her way to anything. We would not know how to hold influence over anyone! We could not go from good to great. Can you even imagine a world where we would not be able to learn about that one thing that no other business owner knows about that will make our business totally successful from that one author who never owned a successful business and is actually willing to sell his or her secret to any buyer so that it actually creates no real competitive advantage? We would be totally fucked! Or would we?
During a break at the above mentioned conference I was in the bathroom when I overheard a panel member (a venture capitalist or ‘VC’) say to another panel member, “Do you know the one thing I really love about entrepreneurs? They’re just so optimistic. I just love their optimism.” In case you just smiled, patted yourself on the back, and said to yourself “Yes, aren’t I though”, let me just translate what he really meant when he said that. It goes like this, “I just love entrepreneurs. They are such suckers. They are willing to give up large stakes in their companies for relatively small amounts of money in the hope that their small percentage will be worth a lot of money someday. It is their optimism I just love because it keeps a pretty steady line of suckers at my door. Oh, and I don’t even have to come up with these super creative ideas all these entrepreneurs have. In fact, when we invest, we don’t even have to value the idea – it’s not part of the valuation process at all! Not one penny or 1 percent of investment is attributed to the value of the idea! It’s not part of any equation or line item. I get the ideas for free!”
I promise you that at some point, someone who wants to talk to you about investing in your company will ask you, “What would you rather have? A big piece of a small pie or a small piece of an enormous pie?” The person who first asked me this question was a venture capitalist himself, and since then I have heard it asked many times over. In the mind of the person who first asked me this question, my obvious answer should have been that I would rather have a small piece of an enormous pie. My “optimism” should have lead me straight to this conclusion because my “optimism” should have provided me no doubt that all my ventures will be wildly successful – and that the size of my ownership stake will have no bearing on that fact. However, having now heard this question posed over and over, the analogy has started to cause in me the same reaction I used to have while encountering rattlesnakes as I walked along the banks of the Snake River: 1.) Stop 2.) Listen intently to where the rattle is coming from, and 3.) Slowly start walking backward and in the opposite direction of the sound. This reaction comes from realizing the fact that the person asking this question has given up on the fact (or never recognized it at all) that ideas are the most valuable pieces of the pie. If investors think money makes pies grow bigger, they are wrong.
I will admit that at one or two points in my life I have explored the possibility of outside investment in my companies. I clearly understand that money is a “lubricant” that can get things moving faster, and that has been my primary motivation for seeking investment. But I always back away because I have been unable to find a relationship between value and money that exceeds the value I can gain from my own ideas and my own consistent, exhaustive, physical labor. Cash alone cannot create real, significant value in a company. Therefore, giving up a significant portion of your company for cash will do nothing to increase the value of your company. Only great ideas and physical labor can. Thus, the idea that those who inject a business with money deserve, in the end, a bigger portion of the “pie” is a fallacy. Money does nothing. You do. As entrepreneurs in need of “lubricant”, we should start asking for more and giving up less. We should never put ourselves in a position where knowing who owns the pie becomes confusing. It should always be your pie to share, not your pie tin to clean up once the eating is done.
There is a quote I once read (I believe in a Jim Collins book) that says “If you want to double your successes, you need to triple your failures.” What I understand this to mean is that if you want to have success in your life you have to at least try; and try again; and try again. It is one thing to sit and ponder possibilities. It is quite another thing to give them a shot.
There are a lot of business books out there that suggest the true path to entrepreneurial greatness is to do what you love. These books sell a lot of copies because the paths to success proposed within them are “easy” – much like diet books that tell you you don’t have to exercise, you just have to stop eating bread seem to fly off bookstore shelves. But I believe the likelihood of a person actually being financially successful as a result of doing what they love is on par with the likelihood that someone who loves to play baseball will become a professional athlete. The chances are slim to none – but that doesn’t stop us from embracing Hank Arron’s story as if it were a real possibility for ourselves.
What I have learned over the course of trying and trying and trying is that being a successful entrepreneur is about finding the right combination of two things: 1.) A great idea, and 2.) A great opportunity. Great ideas will only be successful when they are accompanied by a great opportunity to deliver them. The matching of the two is not a perfect science. And the only way to find out if you’re on to something important is to create a plan and execute it. If the above mentioned quote holds any statistical merit, you’re likely to burn two or three businesses to the ground before you stumble upon something that just might work.
FAIL EARLY | FAIL OFTEN
So if you can embrace the fact that most of your ventures will fail you can embrace the fact that some will succeed. But as entrepreneurs what we really want to know is when is it a good time to call a venture dead so that we can move on to the next failure? To do that we need a conceptual framework for quickly identifying failure. We want to fail early and fail often so that we can get going on the next venture that may pose an opportunity for success. So my question to you is “What are some variables that we can assign to a venture to quickly measure for failure?” Could these variables be time invested, money invested, sales figures? As entrepreneurs we should try and flush out as many variables as we can. Once we have established these variables we can start to work to identify indicators across them (or correlations i.e. when sales fail to reach x and investment exceeds y) that can serve as triggers to indicate failure and allow us to responsibly shut a failing venture down as quickly as possible. Discuss…
For a long time now I have been putting most of my efforts into the development of LawFather.com. I had a few spare minutes so I have begun construction of a new website for Luther Media. In the event that someone outside of the legal industry is interested in our search engine optimization services, I wanted it to be clear that they are available to almost anyone in almost any industry. You can learn more by visiting the new Luther Media website. Feel free to email or call with any questions or suggestions.