Startups are based in faith, and the ones that succeed have no fear.

This morning, I read three separate lists of the rules of successful startups. I contemplated creating my own list, but among those 30 items, there are definitely some gems, so I kept reading. Fred Wilson linked to an article about Rick Rubin. The quote in the article that really got my juices flowing was:

To the right of Barnett’s large desk, above the framed Johnny Cash portrait, is a sign that reads, “Your Faith Needs to Be Greater Than Your Fear.” “I have always believed that,” Barnett told me in mid-August, “but it seems particularly relevant at the moment.”

At this moment in the startup world, this seems as relevant as it does in the music business. There are hundreds of startups showing up daily. Most are “Web 2.0″ or “social networks” or “the new new…”

With the success of a few like Photobucket, Fotolog, FeedBurner, there is much talk about a Bubble 2.0. And certainly, as it seems to happen in every industry, there will be a few winners and a ton of losers.

So, what does it take to be a winner? More than anything the startups that I have been around that have been successful have all shared the same thing. Faith that far outstripped their fear.

The first startup I worked for was Kozmo.com. We raised more than $250 million dollars in financing, with $60 million coming from Amazon. It was started in 1998, and I joined the company in late 1999 as the marketing manager in San Diego. I was hired to develop local business relationships and drive local marketing. By mid 2000, the company was dying, and I bailed out and moved to MyPersonal.com (now Synacor after a merger) in the SF Bay Area. Talk about walking into a town just to watch everyone leave…FuckedCompany was the most read website (mostly to see if your company appeared on it.)

MyPersonal raised around $6 million, and by the end of 2001 was dying and so merged with another company that was stumbling in the dot com bust. Like two drunks stumbling out of a bar, MyPersonal and Chek became a marriage of convenience/necessity and became Synacor. (True story, when the merger was happening, there was a three day meeting about the new name, among the discarded names was Current Wisdom, which I bought the next day, and used as a consultant and later as my search engine marketing company.)

After MyPersonal, I consulted with a few startups, and after making the move to Colorado joined ServiceMagic. ServiceMagic raised around $35 million (Including Tango and Mobius Ventures, where I met Seth Levine organizing a search marketing conference for portfolio companies), and was acquired in September 2004 by InterActive Corp for an undisclosed amount (guessing it was around a couple hundred million.)

At ServiceMagic, I was responsible for the early development of their search engine marketing strategy, which has certainly served them well. I left ServiceMagic in mid 2004 to start Current Wisdom, a full service search engine marketing company, which I sold to the Indigio Group in early 2007, making the missing out on the ServiceMagic acquisition a bit easier to swallow.

Since then, I have advised several startups in multiple stages, and have begun to make small angel type investments in early stage companies trying to get a clear understanding of the difference between startup success and failure.

It was the quote from the Rick Rubin article that finally brought it all together for me. Looking at each of the startups that I have worked with for a period of time:

Kozmo

Faith: There was definitely a faith that no one could do what we did better. Joe Park was looked at as a someone who could take Kozmo to the promised land.

Fear: From the beginning, Kozmo feared everyone. First there was UrbanFetch, which was seen a serious competitor. For those that know the story, the rumor was that UrbanFetch was started by a couple of hedge fund guys that Joe pitched Kozmo, and launched as a high end competitor. Every marketing decision was based in the fear that someone would beat us to the punch; that if we didnt pay Starbucks $150 million to put drop boxes in their stores, we would lose. Once the market began to dip and layoffs started, everyone became fearful of their jobs. In the end, Kozmo was killed by a fear of being copied and done better, the faith in the idea had died.

MyPersonal

Faith: When I joined MyPersonal I knew it had a difficult road to climb. They were basically offering a MyYahoo experience for Colleges and University for Free. My faith was, and still is, in the MyPersonal management team (they have since left the company).

Fear: We feared everyone. zUniversity was a major competitor, there were university sports sites, the Internet Association Corporation and some of the alumni directories, such as Harris Publishing.

The interesting with the fear factor at MyPersonal, the employees began to not care about whether the company “made it” or not. In fact, we still busted our asses, just with a sense of impending doom, and given the market conditions, the longer we could hold onto our jobs the better. In the fourth round of layoffs, I was cut after being asked to sell a previously free product to our clients. Needless to say, it was not easy or very successful. No MyPersonal people are left, and the Emeryville office has been closed for quite awhile.

In a strange turn of events, Synacor recently filed for an IPO.

ServiceMagic

Faith: The was the first time that I saw faith overcome fear. We had faith in our management team. Co-CEOs, Michael Beaudion and Rodney Rice are two of the most intelligent, savvy, ruthless driven people I have ever met. Founded in 1998, I joined in 2002, after ServiceMagic had weathered the dot com storm. The feeling among those that were still there, that the experience made them stronger, more resolute and laser sighted on the future. When I was there, we launched real estate and lending lead generation services, and a few months after I left, the sale to IAC was complete. There was never a doubt that a liquidity event would occur.

Even, when I put on the day long seminar for Mobius portfolio companies, ServiceMagic was looked at as a clear winner. We had become the beast everyone feared.

Fear: The fear that had crippled both Kozmo and MyPersonal did not exist at ServiceMagic. The only real fear I felt was a clear understanding that as soon as I stopped showing value, I would be fired. For me, it was the best kind of fear to have. For many others, it was seen as draconian.

Here’s an example. When I started at ServiceMagic, there was a sales rep class of thirty every week. I would do part of the training every Thursday. For eight potential sales reps.

It has changed drastically since then, but the concept of value hasnt.

The startups that I speak to now have a mixture of faith and fear. Since many are early in their life cycle, fear dominates. The couple that have really impressed me have ultimate faith in themselves and their idea. They are easy to spot. There is little talk of their competitors; they dont talk about creating a market, or operating in a niche; they are the first or second comment on TechCrunch when they or a competitor are mentioned.

Mostly, they are calm and operate as if there is urgency without emergency. These are the hallmarks of a successful startup, where their faith is greater than their fear.

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I have a little ritual each morning, my dogs get me out of bed around 5:30am, so I take them outside, then feed the animals (Billie, Taylor [dogs] and Winston, Calin and Max [cats] - Im trying on the crazy old guy hat early, I know). At that point, I usually make my breakfast (which lately has been non-fat Greek Yogurt and some fruit), brew a cup of coffee, and turn on the Mac Pro.

Normally I scan my email for fires (which there arent usually any, since I have just read my email before bed at 1am/2am the night before). Then get into reading the 350+ blogs that I monitor daily. I dont read every post on every blog every day, often just zooming through headlines to find the interesting tidbits.This morning, I decided that I would start with my “Venture Capital” section of blogs. I checked to see if any of the Foundry guys posted. Nothing. Fred Wilson always has interesting things to read, but recently, the posts have been more personal. But, this morning he posted about the music business and specifically, Rick Rubin.

Now, the first album I ever bought was Radio by LL Cool J in 1985. (By bought I mean with my money, not my parents.) I followed that up with License to Ill by the Beastie Boys in 1986. I became a huge Rick Rubin fan at that time. Over the years, Rick has continued to be an amazing producer (imagine the power house of the promotional wizardry of Russell Simmons coupled with Rick Rubin - the complete lack of fear must have been palatable.)

In reading this article, while it was interesting to read about Rick and his “wacky” style, plus his take on how to save the music industry (Fred does a much better job of that), two sentences in the 10 page article really hit me.

To the right of Barnett’s large desk, above the framed Johnny Cash portrait, is a sign that reads, “Your Faith Needs to Be Greater Than Your Fear.” “I have always believed that,” Barnett told me in mid-August, “but it seems particularly relevant at the moment.”

I wish I knew where that statement came from. Perhaps its a lyric? But the concept, the sentiment really blew me away.

There are so many contexts where this rings true. When people refer to me as a risk taker, I always reply, “Im not a risk taker; I just have ultimate faith in myself.” In the business world, I have built a decent reputation as a search engine marketer / business development guy through the luck of being part of a growing industry (which has been grown into a monster in many ways), and coupled with having some early success. In some ways that faith in myself has extended itself to others; and they have given me the gift of faith in me.

But, I am relatively socially inept. In a social context, my fear is greater than my faith. I have no faith that my contribution is welcome or additive. With many business related things, I feel that people leave the conversation with something helpful. I am not sure how helpful I am socially. My Fear is Greater Than My Faith.

So, thats my challenge. I need my faith to be greater than my fear in everything. How does one do that? Well, the major difference between faith and science is the acceptance of the unknown outcome.

The science side of my brain knows that if I can control each step of a process, then the outcome can be controlled as well. The faith side knows not what the outcome will be; but that I will be strong enough to handle it, and that, most likely, it would be a positive outcome.

In the business world, my faith is intertwined with science. I can control most of the process, and I know it will probably end well. In the social world, I have no control. Maybe thats it? The acceptance of no control.

My dad always tells me that its easier to do what you do well, than try something new (gotta love the Michigan wisdom). Knowing the easy path isnt always the best path (how I learned that is a post for another day), so I am going to start having faith in my social interactions. And, in the hope that I will learn to have my faith be greater than my fear, I am asking my friends to give me feedback.