you didnt just say that did you?
Actually, I did. And I hear it from entrepreneurs at least twice a week.
But its not true.
Over the past couple of weeks, along with reading two great articles on venture: Francisco Dao over on PandoDaily talking about the talent economy and Joe Stump’s great post on whether you should raise money or not, I have had no less than 6 conversations with various entrepreneurs whose companies are in the process of raising money.
Its easy to view VCs as opportunistic, money driven old white men who see the vast amount of product and company ideas coming out of the brains of nubile hackers and hustlers as fertile ground. They trade money for equity. As soon as the going gets tough, they focus on the companies in their portfolio that are doing well, they invest only in companies that are talked about on Techcrunch, blah blah blah.
Is that true? For some, yes. Does it make VCs dicks? no.
Its important that as an entrepreneur if you decide to raise money (and I counsel most founders to not raise money for as long as they can) that you understand the dynamic of how venture works. Francisco says it best:
In Silicon Valley, we take venture capital for granted but few people realize what a fundamental shift it represented in the relationship between capital and labor. Since the dawn of capitalism and the industrial revolution, the balance of power has overwhelmingly favored those who controlled the capital. Labor, and all talent associated with it, was beholden to those who owned the factories. The introduction of venture capital essentially reversed these roles with capital now chasing talent. It is difficult to understate what a dramatic change this was. Instead of capital (the means of production) acquiring talent, Silicon Valley runs on the basis of talent acquiring capital.
As the talent, you hold the power. Initially, the only power the VC wields is saving you from living in a box and stealing wifi from the Starbucks on the corner, and by selling a piece of your business to venture firm, you are required to do only one thing: build your business as fast and as big as you can, so that in some reasonable time frame (say, around 5 years), you can experience a liquidity event that makes the initial investment worthwhile for the VC.
And thats when the perception of the VC as a dick arises. Now, the VC’s job is to get you to not think small. To provide insight, connections, and even direction, to push you to grow your company fast. (This is sometimes the same deal with angels, but most often not).
Now, many VCs reading this post, will start disagreeing with that point, while many entrepreneurs will agree.
Its this fundamental disconnect in perception that is the primary reason for friction between VCs and entrepreneurs, even in a successful business.
Brad Feld, a VC, who’s method I believe in, was quoted in a Boston Globe article about Google Ventures:
“VCs love to talk about the ‘value they add’ while trying to exercise control over companies from the top down…’’
Do I believe that VCs are dicks? That their goals are not in-line with the goals of the founders?
I believe that its imperative for the entrepreneur to understand the dynamics of the VC/CEO relationship and define it early on in the lifecycle of the business. Its your business after all. You hire everyone — including your investors — so have the same high bar for everyone involved in the business.
For young entrepreneurs, there are three distinct moments of joy when starting a company: 1) getting other people to believe in your vision and come work with you; 2) getting people to give you money; 3) your first user.
In each case ill-defined communication interaction will make you believe this:
1) your employees are dicks;
2) your investors are dicks;
3) your users are dicks.
When, in truth, you are the dick.
Understand and own every stage of your business and the people the business engages. It may not guarantee success, but it will remove you as the reason for its failure.
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In startupland, which is full of Hackers and Hustlers, the Hacker spends their effort on excluding potential issues, features, product paths, partners, technologies, etc., while the Hustler focuses on including, well, everyone.
Its in the DNA of the Hustler to work towards getting a ‘yes.’ Its what drives them. Getting users, investors, partners and the like to say yes to their vision and passion is the penultimate effort for a Hustler.
For most, it creates the appearance of a lack of focus (for some) and a complete lack of focus (for others).
This is the primary rub between Hackers and Hustlers and the #1 reason that founders divorce. Hackers demand focus. Hustlers demand ‘yeses,’ which, by definition, require a high level of flexibility which leads to a lack of focus.
I am a Hustler. Yes, a Hustler with a capital H. And because of that, my #1 fault is my apparent inability to realize when I am being unfocused.
I love the word yes. Who doesnt?
Yes means work. Yes means shifting priorities. Yes means roadmap adjustments. Yes means late nights and frustration. Yes means a loss of faith.
I hate the word no. Passionately hate it. It doesn’t compute. How can we become a better company because people are saying no. When I raised my Series A, 37 potential investors said no.
That’s more than enough no to last me a lifetime.
About eight months ago, I realized this very dynamic. To help a Hacker be successful, they need the space to focus on problems and solutions, and to do that, everything that is not core to that mission has to be thrown away.
The Hustler has to learn to say no, and by doing that gives the Hacker the ability to build awesome things, because they arent spending time in meetings or thinking about how to “just make it work,” or make “that deal that is going to make the company” work.
They are just building.
Eight months ago, I started to force myself to say No multiple times per day. I started with my dogs. And, yes, those punks didnt listen, but at least I learned I could say the word and not feel bad.
Then I took our product roadmap, and every time an idea or potential deal was brought to the table, I weighed it against that roadmap, and as a default, I said No.
No. Not right now. And the quality of our product and the speed at which it was developed – and more importantly, the ease at which its selling – has accelerated.
The power of no.
Saying no for the Hustler is a learned skill. It seems like a simple thing, but its really the antithesis of a Hustler’s core value.
Does that mean a Hacker should learn to say yes?
Well that title removes any chance that Business Week, Inc, Forbes, etc will pick it up, and that other than Brad Feld and Mark Suster, no one will reblog/retweet/etc, so we can speak plainly.
(Just making sure…)
The past few weeks have been really interesting at Graphicly. We have achieved product/market fit, our new product launch has been overwhelming, and there is a clear direction and focus in the company. Revenue is doubling week over week, and our internal mantra has gotten equally clear.
“You are either building, selling or leaving.”
So much has be made of “vanity metrics” and our apparent love affair with them. As entrepreneurs, we are told by the media, investors, and other entrepreneurs that whats cool isn’t $1 million but $1 billion. That Instagram is AMAZING and their 15million plus users are the reason why.
How can we not buy into the importance of vanity metrics, when it seems that the ONLY THING THAT PEOPLE CARE ABOUT is vanity metrics?
For a company to be successful there are literally only two functions the company has to perfect. Building and Selling. Thats it. Metrics and analytics are only the score card, the reporting mechanism to determine if what you are building will sell, and what you are selling is worth building.
Last rant on this point: Find a metric that is truly indicative of what makes your business go. It may be a vanity metric like page views, or something more interesting like reads/user, photo filters per session, or times my mom shares my baby pictures on Facebook. Find it and love it. Throw out all other charts and graphs. Put ONE FUCKING SLIDE in your board deck/presentation and tell your shareholders if that number is going up or down and why. Any other metric just makes it easier for your investors and employees to tell their friends why the company they are a part of is cool in a dumbed down fashion so others can understand. But DONT CARE about those numbers.
Care ONLY about the metric that proves that you are building something worth selling, and selling something worth building.
Now, about sales.
Both Brad and Mark have written about Grinfucking. Its an epidemic. No one wants to be the bad guy. The working stiff dreams of being involved in that super cool startup with the sick lounge. When he gets pitched by that startup founder in the flannel shirt and Warby Parker glasses, Toms shoes and Charity:Water rubber bracelet on a cool new technology and he doesn’t understand it, then he is full of FEAR THAT HE IS AN IDIOT.
Which makes the awful, awful truth that the prospect will never say no.
Your goal as an untested, unknown founder, who has a product to sell that NO ONE CARES about is to find what about your product makes your users lives better. Read that again. Thats not a feature. Thats not a price. Thats a feeling. Better is a feeling. Sell the feeling.
For enterprise its 99% of the time that you are making your prospect look good to his/her boss. Thats it. Focus on that.
For consumer its 99% of the ego or time. People want to be part of something amazing, or want something to help them become amazing. At Graphicly, we consider our “Content Empowerment Platform” an easy button for authors and publishers. They want their stories seen. We make it so. Its amazing and it helps each one of them show the world how amazing they are. It makes their lives better. It makes them happy. (I hope.)
Instagram makes people happy. Its not the number of users, but the amount of engagement that is what makes them awesome.
Stop getting excited by the “maybes” and “lets have another meeting” responses you get to your product. IT MEANS YOUR PRODUCT SUCKS.
Budgets, approvals, etc are all excuses as to why they don’t want to buy, but don’t want to say no.
If it takes more than a simple presentation of your value to a prospect to get to a verbal yes, YOUR PRODUCT SUCKS. (Ok, maybe you SUCK as a salesperson. But sales isn’t hard if you are a founder. You are just making it hard.)
Get to an answer.
Build, Sell or Leave. It IS THAT EASY.
Finally, about revenue.
In todays funding climate, if you are not thinking about your business in terms of speed to self-sustaining revenue, you are a moron. Seed rounds are, and will continue to be, relatively easy to raise (sub $1mm). Series A investors are now looking for real businesses with real potential. Call it a crunch, call it Jennifer, doesn’t FUCKING MATTER if you don’t have a real business, because you will be called DEAD.
Have a real path to revenue. Test that path immediately. Ensure that its a real path, with the real ability to simplify sales, and go that way. You never want to get in the car, see the path you need to travel, press on the gas and find the tank empty without a gas station in sight.
Just Fucking sell. Your company depends on it.