In New York, there sits a sign. Corner to the largest park in the world, it sits across the street from the Plaza Hotel and in the same square as Cartier. To most it’s just a sign that represents a a store. A place you visit. A place you buy.

Positioned where the whole world passes by, it’s not sitting on the sidewalk. It’s not attached to a building. It’s not waiting for you to discover it.

Instead it floats 30 feet above the ground. It’s lit, in a glass box that says my shape is as strong as my courage. It’s purity is white and it’s symbol is clear; I stand for what I believe in. I stand against everyone that didn’t understand and for every reason I shouldn’t exist. I stand for courage and purpose that many will never relate to.

Set in the backdrop of where movies are shot and proposals are made, sits the Apple sign.

With the world traveling by, if you sit and realize what this sign represents it makes you cry. It brings emotion that you can’t explain. As if the tiredness within you surrenders, you can’t help but stop. Although It’s shape is familiar, it’s message is personal. The pursuit of creating history can take everything you have. The energy to move past ‘no’ is exhausting. The fortitude to carry on is unrelenting. The tenacity not to quit is only measured at the end.

It represents a vision. A man that believed, even after being fired, that anything was possible.

When you build a company everyone can justify why it won’t work. They will tell you how it’s just like this thing or similar to that. They will miss the opportunity by dismissing it as just another.

But to the minority, creating is our existence. It is our quest. It is our purpose.

To the wanderers, the creators, and the entrepreneurs…never give up on your dream. Never take doubt to mean impossible. Never take no to mean no.

“The two most important days in your life are the day you are born and the day you find out why.” ~ Mark Twain

Image Credit: Synthesis Studios via Creative Commons.

Panic of 1857

There has been a lot of discussion lately (here, here, here, and here) about extravagant startup burn rates.

I haven’t been through enough economic cycles to know if these men are just marketing themselves or if they truly see something that the rest of us are missing. But as a member of the class of 2008 I can tell you that when the next economic down turn does come, it will will leave a devastating impact on everyone

Four years into my first company at the time, the nightmare of 2008 has forever shaped the leader I will become. It has left a mark on my entrepreneurial journey that I can’t translate into words. Both grateful it happened and terrified of when it will happen again, the experience of 2008 is something I will never forget.

To all the entrepreneurs that haven’t been through this, I hope my story helps to prepare you.

October, 2008
It was 9 in the morning on a cool October day. I was siting in my office still staring at the same excel spreadsheet. Nervously drinking my coffee I kept hoping that I would find a mistake that would make this all go away. How could we be running out of money?!

As I heard Mike and Steve coming down the hallway I new this wasn’t just a bad dream. What was about to happen was very real.

There was hardly a good morning between us. Instead there was a nod and a separation. Steve was heading to one room while Mike and I were headed to the other. Having already split up the team, Mike and I were on our way to tell 1/3rd of the company that they no longer had a job.

That walk was the longest of all walks in my life. A simple right, left, and left it felt like an eternity. My hands sweating and my heart pounding, any attempt to practice what I was about to say was wasted. All I could really do was take one step in front of the other.

Sitting down with 7 people, I felt like a child among adults. It was as if they could see right through me as the CEO I wasn’t.

I proceeded to tell them that they no longer had a place at Contour. The shift in the economic climate meant that we couldn’t keep everyone, which meant that we had to cut the crew to save the ship.

One of them cried, one was very angry, and a few said they understood. But none of that changed how horrible I felt in the moment. Watching each of them pack their desk, it was as if time stood still. It was if I was there to forever internalize the impact of what I had done.

Even though I was making a leadership decision during one of the worst eonomic downturns in the history of our country, this felt very personal. I had asked these people to join us on a mission and here I was telling them that the vision I sold wasn’t real.

Unfortunately what I didn’t realize is that fateful day wasn’t even the bottom. It would get a lot worse before it ever came close to getting better.

Surviving
When we started Contour as twenty something year olds we didn’t have anything. The measly $1,500 per month we paid ourselves was than we made in college, but significantly less than what our friends made getting real jobs. It didn’t matter because we were happy. We were two kids in a warehouse with no heat and no expectations. There were no employees to worry about or investors to satisfy. It was just us.

By 2008 things were very different. Now we carried a team full of expectations. It made the pressure to perform infinitely more stressful. And yet their expectation heightened every primal instinct we had ever developed along the way. Having come from nothing, we now realized that everything was on the line.

The fateful day of cutting the team from 19 to 12 was just the first step. With retailers no longer calling and customers no longer purchasing we spent the next two months selling every camera we could to anyone who would buy it. Creating friends/family programs, consumer direct initiatives, and amazon deals we focused on bring cash in the door.

What made this even more challenging was the realization that we had a massive quality problem. Dealing with a 20% defective rate we were quickly running out of quality product that we could sell. With the economic world melting down around us we had one choice. Find a new supplier or die.

To this day I still can’t imagine a supplier taking on a nearly bankrupt customer at the height of an economic collapse. But that’s exactly what happened. Not only did we find a new partner, but we took a massive gamble in developing the first HD action camera, which had the risk of blowing our schedule and running out of money before the camera ever saw the light of day.

With each proceeding month, we continued to get more aggressive.

By January we started taking returns rom retailers who hadn’t sold their inventory and resold it to those who could move the product. We provided the returning retailers a credit towards the new camera we were making, while we asked the purchasing retailers to pre-pay so we could keep the lights on.

By February I was so used to vendors calling and asking for payment that I got numb to the fact that I was paying $100 a week on a multi thousand dollar bill. Not having money was the new norm and facing that head on was the only existence I could remember.

By March we had a few hundred dollars in our bank account. The only thing that prevented checks from bouncing was the fact that a few of us didn’t cash our checks. Asking my dad to help cover my mortgage was a humbling experience.

What I also learned in March is that during an economic collapse the IRS is hypersensitive to anyone who is late in paying their taxes. It turns out we were one of those companies. Barely able to make payroll we were neglecting the payment of our employment taxes, which is something the IRS doesn’t appreciate.

Receiving a knock on my door at 8am on a friday morning, the two women in front of me weren’t smiling. In their long trench coats they asked if this was Contour and if I was Marc. Not sure if I should lie, run, or say yes, I said yes to both questions. The following 90 minute meeting ended up becoming a six month ordeal as we begged the IRS not to shut us down while we got back on our feet.

The only thing that really saved us was the IRS’s requirement that everything be handled through the mail. So sending and receiving letters took weeks at a time, providing us the window we needed to keep surviving.

By April we asked the existing team to take a 33% pay cut. Even without being able to guarantee our survival, everyone agreed and no one quit.

By May we were on life support. Despite our situation we asked the sales team to do the unthinkable, to pre-sell our new camera, sight unseen. Our goal was to bring in $30K so we could make payroll for the month. Not only did they reach $30K, but they added another $120K on top of it. This still gives me goose bumps.

By June we shipped the world’s first HD action camera.

By July we were profitable again.

But it wasn’t until September that I realized we had made it.

Sitting in my office, nearly a year since we cut the company, I saw the bottle of champaign that I had been saving. Having received it some 18 months prior from one of our early board members I had never opened it. Although it was a gift to celebrate the launch of our market leading camera back in January of 2008, I had yet to believe I deserved to drink it. Until that day.

In Seattle there is a spot called Gas Works Park. It is one of the most memorable places to watch the sun fade away. With the old rusted pipes on my left, the emerald city resting on the water in front of me, and the golden sun peering through the Fremont bridge on my right, I proceeded to drink the bottle of champaign. Fighting to hold back the tears, I just sat there.

I can still feel the weight of that green glass bottle in my hand. With it’s rounded curves and distinct label I took every sip she had.

The Personal Struggle
2008 was the hardest year of my life. And in the end there were only two reasons that I survived.

The first was my Mom. Losing her to cancer that same year, was devastating. Despite watching her battle the disease for 15 years I still wasn’t prepared. At 5’2” and barely 100 lbs. I watched her stand in front of that the mirror every day and choose to fight. She never backed down. She never quit. Her fight for life put the importance of everything else into perspective. In the end, the only thing that really matters is who’s sitting around your bedside when you pass away.

The second was my wife. Call it ironic, but we met at my lowest point during that 12 month ordeal. Ignoring how hurt I was from my Mom passing and denying how tired I was from surviving, she just listened. What started through a friend’s introduction became my saving grace. Spending every day together she was the emotional outlet I never knew I needed. Her smile, care, and ability to listen saved my life. Without her, I would have run myself into a brick wall.

What I Learned.
I carry a lot with me from 2008. None more important than these three lessons.

1) Don’t Quit
It’s true, you will be tested the most when the deck is stacked against you. The risk of losing everything combined with the embarrassment of failing are two fears that will haunt your dreams. The struggle to survive an economic down turn will wear on you to the point that all you want to do is quit. But don’t.

There is a path out, just not always the path you want to take.

2) Be Real
Most entrepreneurs are optimists. But with optimism comes denial of the present. Hoping that the bleak numbers of today change into better numbers tomorrow is ripe for failure. Missing your plan doesn’t mean you can make it up down the road. Running out of cash isn’t a reason investors give you money. Keeping more people than you should because you are afraid of the cultural impact, doesn’t mean you are making the right decision.

Selling the vision is an important aspect of being a great leader. Just remember to make decisions based on the information you have today, not the information you hope you’ll have tomorrow.

3) If You Let It, Life Will Unfold In Unimaginable Ways
As entrepreneurs we like to control every aspect of our companies. But as people, this is a fast way to miss out on the most important moments in life. When my Mom passed, I didn’t let it happen. I didn’t talk to her about dying. I didn’t talk to her about her fears. I was so afraid that I never even said good bye.

Meeting my wife was the first time I let life unfold itself. Despite telling myself before we met that I wasn’t going to date anyone, the connection we shared was undeniable. Six years later and more in love than ever, she has taught me that the only way to live life is to let it happen.

I now believe that everything happens for a reason.

*Image Credit: “Run on the Seamen’s Savings’ Bank during the Panic of 1857” by Unknown – w:Harper’s Weekly available at Library of Congress. Licensed under Public domain via Wikimedia Commons –

Startups are the romantic fables of our time. They are filled with hope and despair, good and evil, hero and villain, success and failure. Insiders are fascinated with how they are created, how they work, and how to make them last. Outsiders hang onto their every peak and valley, creating their own stories for how they might succeed or fail.

At their core, building startups is about dreaming. It’s about creating something that didn’t exist before.

And yet as entrepreneurs, the minute we start building these companies, we forget what they are all about. We get enamored with the details that no one else cares about. We talk about how our features will win, or how our approach to the market is better, or how our competitors are doing it wrong. It’s as if building a successful company is about being logical.

It’s not.

The execution of the details matter. But even more important, is to never stop selling the dream, no matter how illogical it may seem.

Martin Luther King Jr literally told everyone his dream. “I have a dream that my four little children will one day live in a nation where they will not be judged by the color of their skin, but by the content of their character.”

Abraham Lincoln did the same. “My dream is of a place and time where America will once again be seen as the last best hope of earth.”

Elon Musk, Steve Jobs, and Richard Branson are examples of people who sell the dream over the details.

Learning to sell a dream takes a lot of practice. Especially when you are fighting fires on a daily basis, it can be challenging to sell a vision that seems incredibly far from today’s reality.

Everyone Wants To Fall In Love
Falling in love is a beautiful thing. It’s exciting. It’s consuming. It’s a fresh opportunity to begin a relationship the right way.

For investors, they are just waiting to be swept off their feet. Purposefully meeting with lots of companies, they are looking for the right combination of market, team, and product that make their heart skip a beat.

Customers are no different. New brands arrive without legacy or preconceived notions. They haven’t yet delivered a crappy product, deviated from their promise, or broken anyone’s heart. Customers get to believe in what you are saying without being blinded by past experiences.

Founders and early employees follow a similar pattern. Wanting to be part of the next success story they are looking for an opportunity where they can make a difference. Where their talents are valued, their minds are pushed the brink of exhaustion, and they can taste victory.

Constantly Enable Them
Falling in love takes time. It takes lots of dates, unforgettable adventures, and even a few hardships. In building deeper relationships you want to slowly unveil your hopes and dreams because part of falling in love is the mystery about the unknown. Growing, improving, and unveiling is an important element in enabling someone to fall in love.

More than anything, falling in love requires you to be naked in you vulnerability. You have to completely let down your guard. You have to sell the why before the what. You have to work harder than everyone else to deliver on the promise. You have to admit when you fuck up and do everything to fix it. Because sharing your beliefs is significantly more personal than sharing your ideas.

It’s easy to be vulnerable when things are going well. It’s mind numbingly terrifying to admit when you are struggling.

Never Stop
You may not yet realize it, but over the history of your company you will face this single question in millions of ways; Should you sell the dream or the details?

It shows itself in questions like this these:
* Should your advertisements inspire or talk about why you are better?
* Should the answer to an investor’s question be long or focused on memorable sound bites?
* Should the copy on your website start with what you do or why you do it?
* Should your monthly business updates begin with the numbers or first remind them about your purpose?

It’s easy to start with the details. It’s much harder to constantly sell the dream.

Elon Musk never stopped selling his dream to make mass market electric cars that people actually wanted to drive. Even in the face of financial ruin, he kept pushing.

Steve Jobs never stopped trying to create beautifully designed products. He wasn’t worried about defining himself as a hardware company or a software company. He didn’t create commercials that focused on the technical specs. Instead he captivated our imaginations with passion, emotion, and belief. He sold what he believed in and the rest of the world bought it.

A lot of founders forget that it’s easier to capture someone’s heart than it is their mind. Convincing someone is infinitely more difficult than captivating them.

*Image Credit: National Park Service Digital Image Archives via Creative Commons

In 1958, the storied Green Bay Packers went 1-10-1. The worst season in the history of the franchise, the entire organization was reeling. Despite having previously won six NFL championships, the team had lost its way. Until they hired a coach no one had heard of; Vince Lombardi.

Prior to Green Bay, Vince had never been a head coach in the NFL. Having been an assistant for the New York Giants and West Point Military Academy, his only head coaching experience was at St. Cecilia High School, which on paper makes him less qualified than the losing coach he just replaced.

In Vince’s first year the team went 7-5. In year two they were 8-4 and a goal line stance away from winning the NFL Championship. In year three they were 11-3 and NFL champions. They went on to win five championships and six conference titles in nine years.

So what changed from being the worst to the best team in the league?

It wasn’t the field. New in 1957, Lambeau Field was one of the nicest stadiums ever built.

It wasn’t the equipment. Wearing the same gear and using the same footballs, there was no technology advantage between losing and winning.

It wasn’t the players. Between 1961 (11-3) and 1958 (1-10-1) 14 of the starting 22 players were on both teams. Between the two seasons, three of the six best offensive players and 7 of the 10 best defensive players were the same. With five future hall of famers on the team in 1958, they didn’t lose because of a lack of talent.

It was their confidence.

First Vince redesigned the uniforms, giving the team a new look from the one that lost 10 games. Second, he simplified their system of play to a few plays that they practiced until perfection. Third he changed their preparation to be the hardest working team in the league. His hard working approach instilled preparation, giving the team confidence over every opponent they faced.

On his first day, Vince told his team, “I have never been on a losing team, gentlemen, and I do not intend to start now.”

Confidence is as important in an entrepreneur as it is in a star athlete. It’s one of the most genuine emotions you will encounter and yet it is incredibly difficult to maintain throughout the journey. Different than sports, the season doesn’t start over at the end of the year. Your company will be a continuous journey until you leave, sell it, or go bankrupt.

So as an entrepreneur how do you build and maintain confidence?

Recognize The Feeling
To understand how to manage your confidence it’s first important to recognize when you have it and when you don’t.

When you are confident there is no better feeling. It’s an energy that makes everything seem possible. Your decisions feel smarter, your response times are snappier, and your culture is filled with smiling faces. Starting in your chest and spreading to your head, confidence is the feeling you get on Friday night when you realize that you don’t have to worry this weekend.

When you lose it, you feel heavy. Hiding from the news you don’t want to hear, everything takes a lot more energy. In addition you feel the weight of worry as you second guess nearly every decision. It reminds you just how close failure is and how hard it is to build a successful company.

Take Tiger Woods for example. Once expected to smash every record in the history of golf, many wonder if he will ever win another major championship. Age does slow many golfers down, but not at the rate Tiger dropped. Butch Harmon, his former swing coach, recently said, “I think his nerves are bad, and he’s lost his confidence.”

What makes it so difficult to maintain your confidence, is that the feeling doesn’t gradually change. Because of the volatile nature of a startup, confidence can shift wildly in a matter of minutes. From feeling unstoppable to facing company peril, it becomes hard to remain consistent.

How Do You Gain It?
Successful experiences. Although learning from losing is important, a life without accomplishment doesn’t instill confidence.

Paul Graham talks about being a formidable founder. In his definition, a “formidable person is one who seems like they’ll get what they want, regardless of whatever obstacles are in the way. Formidable is close to confident, except that someone could be confident and mistaken. Formidable is roughly justifiably confident.”

Becoming formidable isn’t easy.

First it takes knowing what you want. As a first time founder I didn’t really know what I wanted until I was no longer at the company. I realized after the fact that I started the company without a clear purpose and therefore struggled to have a clear perspective about what I wanted. It lead to a disjointed culture that at times suffered from multiple personality disorder.

Developing your own perspective is no different than how your food palette develops over time. As a child you try whatever your parents throw on your tray, while as an adult you have a much clearer perspective about what foods you want at exact moments in time. The more you experience food (cooking, tasting, learning, etc) the more you appreciate the finer details of what you are eating.

Second it takes lots of practice. Once you know what you want, you can gain the experience that is required to go get it. Learning about markets, distribution paths, customer acquisition methods, capital raising, and organizational building to name a few, can be done if you’re willing not to give up along the way.

Gaining the depth you need won’t always come just from winning. Losing can be an equally important phase in developing your confidence. Lots of entrepreneurs, coaches, and players faced setback along the way. Bill Belichick was fired by the Cleveland Browns before coaching the Patriots. Pete Carroll was fired twice before turning the USC Trojans and Seattle Seahawks into championship teams. Michael Jordan became the star of his JV high-school team because he was too short for the varsity team. Mark Cuban, Steve Jobs, Walt Disney, Michael Bloomberg, and Oprah were all either fired or passed up along the way. Clearly everyone on this list gained something from an experience that would pushed a lot of people to quit.

Third, you need people who can teach you. The more talented your teachers are, the more confident you will become. Which is evident by the number of great leaders that have been spawned by other great leaders.

Bill Parcels coached Tom Coughlin (NY Giants), Sean Payton (Saints) , Bill Belichick (Patriots), Mike Zimmer (Vikings), and Eric Mangini (formerly at the Jets) to name a few. Legendary coach Red Holzman was the inspiration for Phil Jackson. Johan Cruyff, one of the 100 greatest soccer player of all time, was a philosopher about the game helping to spawn some of the worlds best coaches in Frank Rijkaard (Ajax + Barcelona), Josep Guardiola (Bayern Munich + Barcelona), and Arsène Wenger (Arsenal). Bill Campbell has helped many a CEO in Silicon Valley including Steve Jobs and Ben Horowitz.

Fourth, and most challenging of all, you have to make forward progress. Startups are expected to grow, especially if they raise investor capital. Gained by one small victory at a time, confidence only increases if you are achieving the results you set out to accomplish. Constantly being told no, not being chosen, and/or not accomplishing goals leads to a shrinking level of confidence. When you are losing it can become very hard to turn your fortunes around.

As Lombardi liked to say, “Confidence is contagious. So is lack of confidence.”

How Do Maintain It?
By making progress against a clear definition of success.

Vince Lombardi was clear in his definition of success, “There is no room for second place. There is only one place in my game and that is first place.”

This is your biggest challenge as a leader. If you raise capital and set out to build a company that returns capital, you have to win. Coming in second can be a nice company, but a very different result than what you first set out to accomplish. Unfortunately for entrepreneurs, the market doesn’t reset next season. The place you sit and the trajectory you are on, can be very, very difficult to change. Shifting expectations from winning to justifying your place in the market, rarely re-instills confidence.

Keep in mind, winning doesn’t have to be your only definition of success. Setting this definition with your founding team is a critical decision to ultimately become the company you want to be.

How Do You Get It Back?
Inevitably your confidence will be shaken along the way and rightfully so. It often takes setbacks to find the right path forward.

Some ways to regain your footing:

Take A Break
Vacation and weekends should be a normal part of your routine and if it’s not please start. Taking a break will help you step back and reconnect with your purpose, values, and bigger vision. You clearly started the company because of a few strong beliefs so reviewing those can help you get out of the rut you sit in. Thinking about the bigger picture never works when you are inches from the crisis.

Simplify
Vince Lombardi believed that every play they ran should result in a touchdown. If it didn’t then something went wrong. The only way to make every play a touchdown was to dramatically reduce the number of plays available until the team could execute each of them to near perfection. Vince was legendary about practicing the same plays over and over until exhaustion. Taking objectives off the board to focus on one at a time can help a team regain its confidence in executing.

Find A Niche
Without changing your purpose or values, finding a niche market you can lead can do wonders for your team’s confidence. Classic examples are Apple to Microsoft, Nike to Reebok, Pepsi to Coke, Avis to Hertz. Long term there is only one market leader, but constantly being second every place you turn can be a serious drain on confidence.

You Always Have A Move
It can’t be said better than Ben Horowitz puts it, “Startup CEOs should not play the odds. When you are building a company, you must believe there is an answer and you cannot pay attention to your odds of finding it. You just have to find it. It matters not whether your chances are nine in ten or one in a thousand; your task is the same.” Keep going until you find an answer.

How Do You Share It?
Being the leader of a team, your confidence isn’t held in a vacuum. Instead it permeates every corner of the company. Even if you are melting down inside, the external consistency you show goes a long way in how the rest of your organization will respond. Enabling confidence is one of your most important jobs as a leader.

There are few ways I have found to help replicate confidence.

Maintain Your Own Confidence
As the leader your team will analyze the actions you take, the words you share, and the demeanor you express. Especially during challenging times, people will over emphasize the moves you make to reflect the status of the organization. Being confident doesn’t mean you have to be cold. Showing your vulnerability will give your team more confidence in the sincerity of the messages you are delivering.

Build Trust Among The Team
Although you may be hesitant to waste working hours, real trust building doesn’t happen in the office. It happens when you put down your laptop and genuinely get to know people. Team cooked meals, off-site adventures, and sharing stories is how connections are built. Sharing life experiences together makes the relationships within a group significantly stronger.

George Washington almost got fired as commander in chief. In his military time he lost more battles to the British than he won. Despite his record, his greatest strength was maintaing trust within the ranks. An unamed French officer pointed out, “I cannot insist too strongly how I was surprised by the American Army. It is truly incredible that troops almost naked, poorly paid, and composed of old men and children and Negroes should behave so well on the march and under fire.”

Empower People To Make Decisions
By enabling your individual team members to gain confidence in their own abilities, you make the collective group stronger. As Ben Horowitz points out, “In good organizations, people can focus on their work and have confidence that if they get their work done, good things will happen for both the company and them personally.”

Enabling this is very hard for most entrepreneurs because early on they are used to controlling everything. The secret to this problem, is recognizing that you don’t have to have all the answers. You may think people are judging you based on the decisions you make, but really they are just looking for your confidence in the decisions they are making. Transitioning from doing to leading is critical if you want to move from being a founder to a CEO.

Constantly Provide Feedback
This isn’t just a top down function or an annual review process. Direct and timely feedback is a cultural necessity and something you should instill early in the company’s life cycle. This level of feedback is easy if you have built trust among the team because people will hear the feedback and not look for a hidden message behind it.

“Good teams become great ones when members trust each other enough to surrender the “me” for the “we”. ~ Phil Jackson

Time is not free. It may feel like time is the cheapest currency you have, but the reality is the opposite. As a founder you only have a handful of opportunities in your life to build companies, which means the opportunity cost is higher for a founder than anyone else involved in the startup ecosystem.

Founders often don’t start a company based on ROI (Return On Investment) analysis. They start them because they believe in something. Even without building a financial model they start iterating on a product, often for months at a time, until it gains customer traction. Starting with a blank piece of paper the only guarantee is that a new company will cost the founder money.

The alternative to starting companies is getting a job. Whether you join an established startup or work for a large company the choice to join versus start has a significantly different financial picture. Founders have the opportunity to become super rich at the risk of being broke. Employees have lower upside in exchange for predictable cash flow.

Working backwards, here is how founders should think about their time.

Calculating A Founder’s ROI
Thinking about the first 35 years of your career, I built a spreadsheet to help understand the cash you will have at the end of the journey. Granted, people work well past 57 years of age (assuming you graduate college at 22), but high growth startups take so much energy I assume you are done starting companies after 5 meaningful attempts. The goal of this spreadsheet is to serve as a template and you are welcome to download a copy of the excel doc here so you can edit it to your own situation.

Before calculating the ROI for a founder lets look at the assumptions in getting a job versus starting companies.

Getting A Job

• I assume your start at $75K per year with an annual increase of 6%. Generally technical roles pay more and non-technical roles pay less, but lets assume you are a hard charging employee that climbs the corporate ladder.
• You save 6% of your income on annual basis.
• You work for a well established company that has a 3% matching program for your 401K
• You invest your money and get an 6% annual return
• You work harder than most at 50 hours per week.

Starting Companies

• On average, each company takes 7 years from inception to completion. Some ventures will take longer and some will end in less time, but lets not underestimate how long it takes to build a sustainable company.
• Salary is highly variant, but lets assume the first year you spend on the business comes with zero income. Assuming you are a successful entrepreneur your starting salary the second year is higher with each business you build being better than the last.
• Assuming your companies actually grow, your salary should increase with the growth of the business. This average growth is for modeling purposes only as the real scenario is highly unpredictable. To have consistent cash flow you’ll need to build revenue generating companies or be able to consistently raise investor capital.
• Even though entrepreneurs generally do a poor job of managing their personal finances I assume you buck the trend and save 6% of your income, earning 6% on an annual basis
• Exits are highly volatile and very hard to predict. Because you start a company doesn’t mean you should assume you have a cash positive liquidity event. I built a $30M revenue company that produced $0 in founder and investor liquidity.

Assuming you have zero exits over your career here are the results:

Exits Matter
The first thing that jumps out, is that exits matter. They matter for your personal return and the likely hood of people supporting you. The more companies you build that don’t return capital, the lower the probability of people supporting your next venture.

Liquidity events early in your entrepreneurial career can make a huge difference. Even an exit/sale of $250K in your first company can have a compounding affect over years. As they say, a dollar today is worth more than a dollar tomorrow.

Comparing $250K in Company 1 versus $500K in Company 3 versus $1M in Company 5.

Keep in mind, the chance of an exit is incredibly small. Even if founders believe their chances are better with their own hands on the steering wheel, the probability of success is in the single digits. If Y Combinator companies are expected to fail over 90% of the time, what does that say for everyone else?

The collective ego may push you to put all of your chips in the center of the table with each company you build, but when the music stops, the amount you have in your bank account will influence your next move.

Compensation Adds Up
The second driver for an ROI is your salary. Highly unpredictable it’s rare to take a meaningful salary in the early years. In order to do so, you need to build companies that either cash flow in the first year or are consistently successful at raising investor capital.

Assuming your company is successful, it is easy to put everyone else first. Hiring another person versus raising salaries seems like a no brainer until your company fails and you realize you don’t have enough money to start a new venture. Giving your team raises and ignoring yourself is always justifiable at the time, just recognize the potential outcome.

One last point, not all founders should be compensated the same amount. Creating a compensation plan early in the company’s history is important, especially as founders take different roles within the company. Your compensation should match the role you have in the company.

Start Your Next Idea Before You Quit
Every time you start over, your salary goes back to zero. Even without successful exits you want consistent cash flow, which means moonlighting is a great way to give you a running head start.

Creating new companies takes time, in particular you spend countless hours iterating on an initial product that may or may not gain traction. Rushing the creation process because you are running out of personal cash can result in a wasted opportunity. The more cash you have saved the more time you can take between ideas.

Be Careful Investing Your Own Cash
Founders already invest a lot up front. Even though people don’t translate sweat equity into cash value, the time founders are spending without a salary is costing them. To invest their own cash on top of their time, is a risky place to be.

If you do invest cash, treat it like any other investor’s money. Create a standard seed round and value the cash you put into the business. It will be a stark reminder about the real cost of the opportunity: Salary missed + cash invested.

The spreadsheet I built assumes you don’t spend your own money. If you do, your potential savings at the end of 35 years may be even lower as the probability of getting a return on your money is extremely low.

Not All Income is Equal
The income from a job versus starting a company is NOT equal. The work required to drive a dollar in savings while running a company is infinitely harder. Not only are you working a lot more hours as a founder, but you are carrying the expectations of everyone involved.

When comparing a job to starting a company, the difference in your hourly rate isn’t what really matters. Instead look at the savings per hour, which is the ultimate metric of your personal purchasing power.

Assuming you don’t have any exits and you work 65 hours a week while running a company (compared to 50 hours per week with a regular job), you can see that the savings per hour can be a lot lower than you realize.

What founders often forget….

• The stress of building a company is significant. The larger it gets and the more money you raise the greater the responsibility. The pressure to win doesn’t go away at night, over the weekend, or while on vacation. Never knowing the final outcome of the company you are building, you are constantly concerned.
• You have to work a lot harder. Even though you are running a marathon, the entire journey requires you to hustle for every square inch of progress. Nothing comes easy in a startup.
• It’s all your money. Not able to liquidate your equity, all of your investment is tied up in the company, so its results dramatically impact your financial well being.
• You can’t just walk away. If a founder quits and takes with them a large chunk of equity it puts everyone else in a difficult position. Having to explain these circumstances can taint the company for future buyers/investors.

There Is Nothing Wrong With Going Big
There are plenty of entrepreneurs that swing for the fences every time they step up to the plate. That level of determination takes even more energy, personal commitment, and capital, which means you will only have a handful of swings.

Building billion dollar companies is infinitely more difficult. As recent Billionaire David Frieberg points out, “There’s a 0.00006% chance of building a company that will grow to be worth more than a billion dollars. Even if you do raise money and sell a company or take it public, your median time to doing that is probably 49 months. Assuming there are three founders, your median expected payoff would be $300,000 each — that’s the equivalent of $73,000 a year. And the probability of making nothing is 67%. So if your motivation for doing a startup is financial reward, you’re better off going to Google, a hedge fund, choosing a career with stable income potential.”

Just remember to collect cash along the way or you risk walking away with nothing or worse, a financial disaster on your hands.

You Can’t Calculate Reputation
Numbers on a spreadsheet are helpful, but they are irrelevant when thinking about the most important startup currency you have: your reputation.

Even if the companies you build don’t create liquidity events, it’s critical to leave a positive impact on everyone involved. Being self reflective helps in applying what you learned in the past to the companies you build in the future. But in the end, how you treat people is all that matters.

Conclusion
Startup success is not predictable. Being able to successfully create new companies takes a collection of forces, including luck.

But if you plan to build multiple companies it’s important to recognize that your time is not free. Being incredibly thoughtful about which companies you start is critical. Because the choice to invest your time, energy, reputation, capital, and personal relationships is one of the biggest decisions you can make.

DOWNLOAD a copy of the excel document.

*Thank you Dan Shapiro for helping to make this post better.

*Image Credit: Remi P via Creative Commons.

“I want to start a company, but I haven’t found a great idea.”

I hear this a lot. Even among entrepreneurs who have started companies, many of them focus on the novelty of the idea. Which is understandable, especially within the 140 character attention span we now live in.

Able to be summarized into elevator sized pitches, the misplaced emphasis on the idea results in entrepreneurs spending too many hours rewriting a handful of words, hoping people will ‘get it.’ Wanting the listener to acknowledge the huge potential, its easy to get paralyzed trying to justify why their idea is smarter than the next.

This is the wrong way to think about it.

The reality is that initial ideas are often irrelevant. Like clay being sculpted on a spinning wheel, it takes a lot of trying, learning, and adjusting to turn initial instincts into a masterpiece. It can even require starting over along the way, until you really understand the potential of what you are building.

As @benhorowitz reminds us, “the trouble with innovation is that truly innovative ideas often look like bad ideas at the time.“

So how do you generate an ‘idea’ that is strong enough to start a company?

Forget About Your Idea
The hardest part is to begin with an unbiased opinion. Starting this process with a pre determined idea shuts out your ability to really understand the essence of the problem. It becomes so personal that you can’t separate the true opportunity from your own desire to be right.

Being stuck to an idea results in mistakes like these…

• Your customer research is tainted with questions like, “would you use a service that does blah.” A yes makes you feel good, but doesn’t actually help you understand the customer’s problem.

• Your pricing is based on asking people if they would pay X for your imaginary product. A question that doesn’t truly gets answered until people pay you money.

• You raise too much money before your product sticks. Investor interest doesn’t necessarily mean customers will love what you build.

• You brand your company ‘the product’, wanting to make no mistake that people will know what your service does. Except when you have to change your product you then realize the name you spent months driving awareness for now has nothing to do with the final direction of the company.

Start With The Problem
Ultimately you want to understand the problem better than anyone else. Having a distinct advantage in customer understanding, enables you to deliver a solution that no one else would conclude. Peter Thiel calls this developing a secret.

There are a variety of ways to discover an interesting problem. Personally I first list what I’m passionate about and second explore problems within these passions. Starting with a pen and paper, I start building lists.

1.What Are You Passionate About?
These can be activities (i.e. being active), experiences (i.e. listening to music), tools (i.e. cameras), efficiencies (i.e. ways to save time). utilities (i.e. clothing), interactions (i.e. meeting new people), or even consumables (i.e. food). I find there are about 5-6 areas everyone is super passionate about and if they pick a problem to solve in one of these arenas they will be significantly more motivated.

The last list I personally built…
* enabling people to start their own business
* music
* staying active
* photography
* traveling
* local food experiences

Moment began from my passion for taking pictures.

2.A Day In The Life
A second way is to walking through your day, listing out all the things you do, where you do them, and what tools you use. If you want to solve a problem that every one has, likely the problem will be associated with one of these key parts of your life. As you build a list you can start brainstorming things that frustrate you, that you find broken, or that you would love to make better within each of these areas.

Map The Customer Journey
Picking one item from the list, you can start to explore the problems through the entire journey. Thinking about what happens before, during, and after you begin to identify interesting problems to solve.

As an example, my wife and I are passionate about traveling. We have found that discovering new places brings us closer together. Always trying to find local, off the beaten path locations, we have spent a lot of time in other countries.

Mapping out our typical travel experience, I list out the interactions before we travel, while we travel, and what happens afterwards. Starting with a longer list I’d reduce our travel routine down…
* Discover: finding new, inspiring places to visit.
* Travel: from coordinating to experiencing adventures.
* Remember: enabling us and loved ones to remember the trip.

Starting with ‘how’ we accomplish these tasks today, I can begin to find dozens of interesting problems to solve. Thinking about what is broken, frustrating, or a poor experience, I start sketching out potential solutions. This cycle can continue for weeks until I have a concentric circle that represents what I would build before, during, and after. And within that framework will be an initial problem that I believe I can solve better than anyone.

If I was to build a startup in the travel space it would probably be around enabling travelers with better tools to discover local, authentic experiences. Getting people excited about the vision of ‘enabling’, is a much easier than trying to convince everyone why my travel idea and its key features, are genius enough to join.

Frequency vs Pain
If you are building consumer based products I use a matrix that compares the frequency people have this problem (daily to never) against the type of pain (physical to emotional) that customers feel. The more frequent the problem occurs, the more important your product will become.

Here is how I break down the quadrants:
* Upper Left: a physical pain that doesn’t happen very often – i.e. a heart attack.
* Upper Right: a physical pain that happens daily – i.e. taking insulin.
* Lower Left: an emotional pain that doesn’t happen often – i.e. buying a car.
* Lower Right: an emotional pain that happens often – i.e. too many emails.

Most of the products that startups build fall into the bottom half of this quadrant. These solutions provide emotional and/or mental benefit to the customers.

Personal travel would fall in the lower left quadrant. Although personal traveling makes people happy, it happens so infrequently that its hard to build a sustainable business. Unless you focus on business travelers, the average person is lucky to take a handful of trips in a year.

Find A Passionate Niche
I’m a big believer in finding a passionate niche that you can own. Even though investors will want to know when your idea is mass market, it’s important to build creditability with an avid user base. Creating 1,000 true fans is really hard and if you try to move past this group too early, your company has the risk of becoming irrelevant.

Just look at…
* Apple with creatives.
* Sportscenter with tis 24 hour sports fans.
* GrabCad with engineers.
* Firefox with the open source community.
* Twitter with the tech community.
* Instagram with photographers.

These companies anchored their brand and initial products within a passionate group of users, which were obsessed with using their product on a daily basis.

Look For A Wave
How big can this be, is the first question that investors will ask you. Even more important than team, hitting a market with avid customers at the right time is critical.

As Marc Andreesen says, “You can obviously screw up a great market — and that has been done, and not infrequently — but assuming the team is baseline competent and the product is fundamentally acceptable, a great market will tend to equal success and a poor market will tend to equal failure. Market matters most.”

But trying to predict how big your company is going to be, especially early on, is a self actualizing process. Searching google for random market numbers doesn’t actually give you confidence that you have hit the opportunity at the right time. Instead I believe what Chris Dixon wrote a few years ago about sizing the market based on a narrative.

Being in front of a rising wave is the right place to be.

The action camera market is a great example. When Contour and GoPro started there was no wave behind action video. Myspace was just beginning, YouTube didn’t exists, and consumers weren’t carrying computers in their pockets. The initial market was reserved for adrenaline junkies who were willing to strap a lens on their helmet and spend countless hours downloading their footage on expensive computers.

All of that changed with the arrival of social media. The need to prove status, likes, and audience size created a tidal wave of demand for designated cameras that could capture the most amazing adventures. The more interesting the content, the more popular the users could become. Without social, it’s questionable if GoPro would be the $B company that it is today.

Examples of other waves…
* Stance Socks: differentiating ourselves continues to drive shopping decisions.
* Beats by Dre: the continued growth in mobile music and the subsequent need for better consumption tools.
* Box: the once in a lifetime shift in how people work.
* Instagram: the 1.2B consumers with cameras in their pockets need a place to share their pictures.

Start With Projects
It’s very hard to sit down and come up with a world changing, job quitting idea. The journey to what you ultimately build is an organic path that shapes over time. Even the tools to understand the customer, their needs, and the right market are merely guides. Ultimately you learn the most when you put a product in someone’s hands.

If you have a day job, start working on side projects with people you like. And if you don’t have friends who want to work on side projects, attend a Startup Weekend and meet dozens of people that share your same passion to build.

At some point this journey will lead you to an interesting problem that aligns your passion with a need that millions of people share. Focus on the problem, not the idea.

*Image Credit: Ramunas Geciauskas via Creative Commons.

“What happens if we can’t raise the money?”

I didn’t even want to ask the question. Because I was the leader I was afraid to show any doubt to the people around me. Despite my own fears, I felt I had no choice but to be optimistic. The company needed to raise this money and if it didn’t, it wouldn’t exist.

Fast forward to two years later. I can still remember how horrible I felt. I was uncertain of our future and I felt this incredible uneasiness in my stomach, as if the food I ate was constantly making me sick. My nights were sleepless and my energy slowly began to diminish. Each morning I woke up more tired than the last.

This is what entrepreneurs go through. Even though we choose to start companies because immense challenge is what makes us happy, we spend most of the time worrying.

What happens if no one buys our product? What happens if competitors copy us? What happens if mega-sized corporations enter our space? What happens if we don’t accept the terms on the table? What happens if we can’t deliver on our promise? What happens if we lose people’s money? What happens if we aren’t perfect? What happens if we fail?

The further you push your company to the brink of existence the more stressful these questions become. The more people you have on board the train, the more spectacular the head-on collision will be. The more promises you make and the higher you raise the expectations, the harder the fall will be.

These concerns never stop. Even for the most experienced entrepreneurs, these questions arise without clear answers, and they present unpredictable challenges that will ultimately define your journey.

So, if we know all of this, even before we start a company, why do we still worry?

Where It Comes From
Worry sits between fear and anxiety.

Being afraid is often an intense, short-term reaction to the perception of a threat. Your response to fear can be violent (fight or flight), dramatic (throwing up), or even paralyzing. And for an entrepreneur, the most terrifying outcome of all is failure. Putting people out of work, not delivering on your promise, and losing people’s money are hard enough to deal with. But worst of all is the unknown impact that failure will have on your most important currency: your reputation.

Anxiety, on the other hand, is a response to cope with future, potentially negative events. Often accompanied with nervous behavior, it can leave you restless, tired, and tense. The questions you wrestle with may not kill the company tomorrow, but their weight can add incredible strain.

I like to think of worry as the tension between fear (impacts today) and anxiety (impacts tomorrow). When you are constantly wrestling with a wide variety of unknown questions worry becomes the continuous state that you live in. It’s a feeling that doesn’t go away when you shut your laptop at night, and it doesn’t subside when you are on vacation. It’s a feeling that @bhorowitz so eloquently refers to as The Struggle.

What Not To Do
Ignore it.

Anxiety and fear are natural responses. They are an important part of developing the gut instinct that drives the key decisions that you make. But, at the same time, the intensity of these emotions can be dangerous. As you try to forget your worry, you focus on anything that is positive. Perhaps it’s a single metric that’s actually working, an aspect of the business that is safe, or the part of your role that you are most passionate about.

This is the wrong way to handle the situation. But it’s a pattern that is really hard to break, especially when it begins in the most innocent of ways. For example:

• You are slow to respond to negative emails and fast to respond to positive ones.
• You obsessively check metrics when they are increasing and ignore them when they are sliding.
• You only send updates with super positive news.
• When your significant other asks what’s wrong, you lie and say nothing.
• You don’t tell anyone your fears because you are afraid to look weak.

By not tackling these emotions from the beginning, they escalate in size. The long term results can be fatigue, tension, disturbed sleep, headaches, and even panic attacks. This burden will drain you both physically and emotionally, leaving you less able to make the best decisions for the company.

What makes this especially hard to confront is that most entrepreneurs are optimists. They see the world half full, so living in a reality where the very glass they hold may be crushed by the forces around them, is exhausting. The days of the work involving just a few people in a room without a worry in the world, are long gone, replaced with a whole army of people counting on your success.

Ways To Manage It
In small steps.

Everyone has their own process for dealing with the burden they carry, but here are some things that have worked for me.

• Imagine The Worst Case: working backwards from the end, what is the worst thing that could happen? You get fired, shut your company down, or have to start over. I’ve done two of the three and even though they were painful in the short term, in the long term they were important milestones in my journey. At the time I was afraid that the failure of my company would prevent me from building again. It turns out that if you are honest, reflective, and caring, people will follow you again. If you can deal with this reality, most of the worry subsides.
• It’s Just Money: there was a time period when you lived at your parents’ house happily eating peanut butter and jelly sandwiches. And although you may have a more expensive lifestyle now, it doesn’t mean you can’t be happy again with a simple life. Just because money is the metric by which most of the world judges its happiness, doesn’t mean it’s true. Having purpose, people who love you, and being healthy are all that really matter.
• Breathe: into the emotion that you feel. When you worry, feel anger, or get anxious your breath shortens and your body tightens. Instead of trying to deny these feelings, sit without distraction and take deep breaths. Starting from your head, through your shoulders, into your heart, and ending in your stomach. As you breathe, really try to understand the intensity of the emotion and why it’s there. This will take a bit of practice but soon you will be able to pass the tension from your body and move on to tackling the important subjects at hand.
• Prioritize Hard: don’t move your fears down your to-do list. Instead, move the hardest tasks to the top of the list and tackle them first. Reply to the emails you’re dreading, pick up the phone to deal with conflict, and be honest with your team about the realities the company faces today. The more practice you have at doing the hard things first, the easier it gets.
• Remember It’s A Choice: that you make every day to run a company. No one is forcing you to be there, which means you should enjoy the journey. There is no magic finish line or point where life becomes predictable. Don’t push off weekend adventures, family time, or vacations because there is never a better time than right now.

Startups aren’t predictable and if they were you probably wouldn’t be interested. And although their constantly evolving challenges are what drive your quest for perfection, don’t underestimate the personal burden they take. The pressure to succeed is something you can’t ignore because building companies will challenge your body, mind, and soul.

*Image Credit: Tom Coates via Creative Commons

Anger is one of the most paralyzing emotions. It has the ability to stop us in our tracks. Even when we attempt to cover it up, it’s obvious when anger strikes.

In a work environment there is no outlet for anger. It’s not like sports where you can take the aggression out through force. Instead, anger is boxed into a room like smoke, with no windows for it to escape. It engulfs you. And when it has nowhere to go it begins to feed on you.

Often referred to as ‘frustration,’ anger is prevalent in startups. It may not always be obvious, but the combination of passion, desire, and expectation creates an environment ripe for disappointment.

Looking back, I didn’t realize my own anger until I got fired from Contour. During my time off, anger was the emotion that took me the longest to understand. It was a feeling that I could dismiss on the surface, but deep down it was destroying me.

It wasn’t until my wife suggested meditation that I began to understand. All I knew at the time was that I couldn’t sleep, sit still, or fully enjoy the food I was eating. Even though we were traveling to some of the most amazing places, I wasn’t totally present.

Fast forward to last week when I got a cold taste of reality. I received a letter from a credit card company, claiming that I was personally responsible for the debt that my previous company racked up. Despite being absolved from the company months before it folded, I was pulled back in like a bad dream.

Even though 18 months have passed I instantly felt my body shut down. My ability to create vanished, my communication became short. I wanted to scream at the faceless representative of a company that only wanted to know how quickly I could pay the $50K bill.

My natural instinct was to ignore the feeling. I put my head down and just started working, hoping that would bury reality.

It didn’t work.

But what it did do, was to remind me that you can’t hide from anger. It can dramatically change who you are and how you treat people.

I have experienced various forms of anger as an entrepreneur. Frustration, disappointment, and even expletive-filled, all-engulfing rage. Setbacks can be so paralyzing that all you want to do is scream.

The Feeling
For me, anger shows up in two places: My head and my chest.

In my head, anger turns a crank that fuels the fire to keep thinking about the issue at hand. Whatever unexpected event sparked the flood of emotion, it gets my mind obsessing about the issues and every aspect of what happened. It shuts out everything else as I replay how this occurred, and try to translate what it means. Depending on the level of anger, this process can carry on for minutes, hours, or even days.

Eventually my mind gets tired and replaces the intense thinking with incessant worry. The more uncertain or detrimental the outcome seems, the more anxious I get.

In my chest, anger pushes everything out. At first it provides an incredible jolt of energy geared toward action. I want to scream, punch, run, or do anything that can express what I am feeling. It’s extremely difficult to sit calmly or speak softly.

The sensation of anger in my chest is obvious when it first shows up, but it becomes insidious over time. The initial energy turns to a dull feeling that dampens everything. Over time, if unaddressed, it can solidify into a heavy brick that sits right in the middle of my chest.

Dealing With It
In the past, I used to ignore any feelings of anger. I would keep working, sticking my head in the sand as if nothing had happened. My attempt to bury the emotion left me exhausted at the end of the day, which only led to sleepless nights as my mind kept turning on the problem.

Everyone has their own form of dealing with anger. Here are some ways I address it.

Space Out Your Schedule
Most entrepreneurs’ schedules look like a mangled mess of meetings. Trying to maximize every minute of the day, they only leave a few minutes between each discussion to take a breath. And most of the interactions cover such a wide array of subjects that it is extremely difficult to really dive in.

When anger strikes, it comes quick. There isn’t time to anticipate the feeling, it just happens. Whether it’s a missed expectation, a change in circumstances, or an unforeseen action by someone else, your mood quickly changes.

Most entrepreneurs try to continue on with their busy schedule; they try to ignore it. They put on their best face for the remainder of the day, but the emotion continues to stir under the surface until late in the evening when they are finally alone. This resolution process doesn’t work. It leads to stress, sleepless nights, and personal struggle.

Doing less, especially meetings, gives you time to step outside and deal with the emotion at hand, which is critical when you understand that your energy is a major part of the culture. Telling yourself that you can pretend nothing is wrong, is a lie.

Meditate
About a year ago I started using (http://www.meditationoasis.com/podcast/listen-to-podcast/). Meditation comes in many different forms, but I found voice-based meditation helped me to stay focused during the entire 15-20 minute session.

When I started, it took several weeks to feel the subtlety of different emotions, but by practicing a few minutes everyday I began to understand what anger felt like and how to remove it. As it lodged in my chest I was able to breathe into the heavy block and let it pass through my body.

Once I stopped ignoring the anger and started embracing its energy, I was able to recover much quicker.

I understand that meditation sounds like a waste of time, but it’s not. By meditating, you are taking the best action you can to contribute to your longevity as a leader. Don’t ignore your emotions because you think you are too tough to be bothered.

Don’t Be Passive-Aggressive
You know when something isn’t right. And you know when you miss the opportunity to address it.

Ben Horowitz’s recent book, The Hard Thing About Hard Things, is filled with story after story about making the hard decision. His journey is a terrifying reminder that to be successful as a leader you have to hit conflict straight on with clear, timely, and concise communication.

Passive-aggressive communication allows anger to linger. Especially among a group of highly motivated people. It’s important to address issues as they happen instead of allowing the frustration to build. Even the smallest signs of anger can multiply into a cultural divide.

I was terrible at direct communication as a first-time entrepreneur. It took a lot of practice to get to the point where I felt adequate at handling conflict. Although it’s not yet my strength, I push myself to address the emotions as they happen.

Anger sucks, but if you are leading people it’s a critical emotion to embrace. It can motivate an entire company or tear it apart, one conflict at a time.

*Image Credit: Deiby via Creative Commons

My entrepreneurial journey is now a decade old.

What started as an undergraduate business plan competition became a path I never could have expected. Although I originally studied accounting, entrepreneurship taught me that creating the rules is a lot more interesting than following them.

Here are the most important lessons I have learned.

1. Be Vulnerable
When was the last time you had your heart broken?

I mean, really broken. When you lost something that was so fundamental to who you are that it still makes you sick to your stomach. Your chest still tightens up. Even the hair on your arms stands up.

It could have been a loved one, a friend, or a relationship.

Since we never prepare to lose that relationship, we put everything we have into it. We let our walls down. We let people in. We open our soul to be consumed. And at the time it feels amazing. Before the pain, there is joy. There are unforgettable adventures, laughs, and nights we’ll never forget.

Building a company is no different. To create, you have to be incredibly vulnerable. You’re forced to put yourself out there, sharing what you believe within a society where the norm isn’t to create. Instead, the norm is to get a job, to have security, and to be predictable.

But you can’t change the world by following the norm. To be a great entrepreneur you have no choice but to put yourself out there. It’s a terrifying realization.

What happens if it fails? What happens if people don’t like your idea? And what happens if people reject what you believe in?

If you remember all the times when your heart has been broken, would you have done anything differently?

I know I would have.

I may not have committed more time, but I would have valued it. I would have been present. I would have been more thoughtful about the time I spent and the quality of the experiences I shared. I would have asked the questions I was too afraid to ask and expressed the feelings I was too nervous to admit.

Most importantly I would have been more vulnerable, not less.

2. Empathize
Many people think that to be successful as an entrepreneur you have to be tenacious. It’s true. Success has a lot to do with not giving up.

But being tenacious doesn’t mean you have to be selfish.

At first there are only a few people on your team, which means that everyone involved is doing a large amount of work. And early success is often tied to just how much this small group can get done.

But, if you are successful, the company grows. And as it does you feel this incredible amount pressure to do more of what you were already doing. You pull the train with everyone on board, and you continue to work more and more hours. Life as an entrepreneur becomes stressful.

Along with the work, you realize that as the founder you are the face of the company. You are the leadership force behind it. You are the reason people joined the team. And your temperament is the nonverbal gauge for how well the company is doing.

This expectation can take an incredible toll on your personal state. But guess what? It’s not about you.

The minute you ask someone to join you on this journey, it’s about them. Whether it’s an employee, a customer, a partner, or an investor, it’s about making them successful. Your job is to enable them to maximize their involvement with your company.

The only way to do this is to empathize. Being successful requires that you listen, and that you understand their needs and put them first.

As soon as you learn to do this, an incredible amount of pressure is lifted off your shoulders. Because instead of doing everything yourself, you begin helping others to learn how to do things too.

3. Self Reflection
As an entrepreneur, you never know the answer.

It’s like solving an ever-evolving Rubik’s cube in which the rules and circumstances constantly change. It’s a battle to align the colored squares in the short term without misguiding the company over the long term.

To do this, you end up making a series of decisions that you won’t even know are right until you make another series of decisions that hopefully shed some light on your original choice.

The only way to get better at this is to accept you don’t know the answer. Once you become comfortable with uncertainty you begin looking at your business from an entirely new perspective.

You stop expecting and starting learning. You stop guaranteeing and starting making the best choice based on the information you have at hand. You stop pointing fingers and starting solving problems.

Even more importantly, you realize that to be successful in an environment where they only thing you can expect is the unexpected, you have to constantly re-evaluate.

Being a great entrepreneur is like any craft: It takes time. It takes a lot of mistakes and a lot of luck. And being self reflective is the only way to learn from all of those mistakes.

Tsunamis are fascinating. Often caused by tectonic plates shifting under the ocean floor, they can reach upwards of 120 miles in length while traveling at over 500 mph. What makes them so interesting, is that despite their massive size they are nearly undetectable at sea. Taking up to 30 minutes to pass a tsunami can often be mistaken for a large tide change. At least until it crashes on to shore with such devastating force it wipes out entire towns.

Startup success follows a similar, ambiguous path. Despite the vast amounts of research, it is hard to predict the forces that will enable a team turn their idea into a world changing movement. Even experience and unlimited capital is no guarantee of success. There are plenty of overly funded startups that have failed (i.e. Color) and plenty of unpredictable, rags to riches tales (i.e. Snapchat).

The only thing we really understand is that to build a successful startup, you need an incredible amount of momentum. The only metric that really matters, momentum haunts our dreams. It is the driver of the gears in our head that never stop turning and the catalyst that has us constantly asking…how do we go faster?

Even if you try to fake it, artificial momentum can’t be sustained. Which is why most startup success stories are not overnight. They are gradual movements, created one step at a time.

The Perception of Momentum
Momentum is often misunderstood, especially by first time founders. They falsely assume that actions such as reaching new milestones, adding more people, increasing product features, raising more money, or opening additional markets will create positive momentum.

They get stuck in a cycle of slapping on more and more, even without understanding the fragile foundation by which they stand upon. The result is the need for more money and more people to satisfy and increasing number of expectations.

We used to do this at Contour. We didn’t actually understand what was driving our momentum, so we kept adding. We mistook our growing list of work for positive momentum.

What Actually Drives Momentum
Creativity.

Building an increasing level of interest doesn’t require you to add more work, but it does require you to constantly have a fresh approach.

We watched this first hand with GoPro. They executed the same elements over and over, each time with a new perspective. Mounting their cameras on everyone and everything their creativity was a devastating force. Even with less people early on, their efforts resulted in faster growth, a cash rich business model, and market leadership.

Now as we build Moment, we are trying to execute a few things really well. Using our small team as a constraint we end up spending a lot of time talking about what we aren’t going to do. It’s a level of discipline that we never established at Contour and something we know will be hard to maintain. There is already a growing list of ideas we want to pursue.

Why Is Momentum Hard?
Momentum can make you famous or it can crush you.

On one hand, you can add so many ideas that you burden the team. Your list of key objectives becomes so long that you need bullet points to keep them organized.

On the other hand, if you don’t create enough momentum, then nobody cares. The press won’t write about you, your sales won’t grow, great employees won’t join, and investors won’t fund.

To make matters worse, you don’t know when good news will arrive, so you are quick to overhype success, while going silent during setbacks. You end up turning a gradual process into a roller coaster of big highs and the perception of big lows.

How Do You Manage It?
Momentum has a lot to do with how you control the message. It’s easy to recognize success. It’s even easier to ignore failure. And it becomes paralyzing trying to figure out how to message everything else.

It turns out that almost everything you do in a startup is down the middle. It’s really not a huge win or a massive loss. It fits in this gray area that ‘just is.’

So what do you do?

Be consistent.
Pick a cadence by which you update people (investors, customers, board members, etc) and deliver news at the same time regardless of its contents. Don’t over message big wins and ignore information that is negative. Just tell the truth.

Have Depth.
When you are dating, you don’t blurt out your feelings the first time you meet. You share just enough, but not too much. You want to keep people interested without sharing all of your creative ideas up front. Sustaining momentum has a lot to do with slowly unveiling your direction.

Subtract What Isn’t Working.
This is easier said than done. In a startup you are going to try a lot of random ideas, but just because add something, doesn’t mean you have to keep it. Building momentum requires continuous trial and error until you get the mixture of culture, creative, and communication correct. Taking away can be even more important than adding.

Be Patient.
Impacting millions of people takes time. Each person you reach is one more addition to the foundation that you are building. Don’t be surprised if it takes a long time until you fully understand the movement you are creating.

Not Every Startup Will Be A Tsunami
It’s important to recognize that not every company should become a tsunami. Some startups are meant to be small and that is okay. Size is not the ultimate metric of success, so don’t get caught up believing that you have to create a massive company. Building an organization that takes care of its people, has happy customers, and makes the world a better place…is success.