Polishing my mirror

reflecting the collaborative reality of our networked world

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Love Is NOT Enough: An Analysis of Failure To Launch.

This is a retrospective on my failed attempt to build a startup. I wanted to change the world of wealth management. I wanted to be the next John Bogle, and just as the founder of Vanguard, I wanted to move the needle on accessibility of wealth management to the consuming masses. As it is for many founders, my story was a passionate love affair with my business idea. For hours at a time, I contemplated the systemic problems with our pensions, 401k funds and my brilliant idea for restructuring the retirement savings industry.

My specific goal for that startup, other than to build an operating company, is not the focus of this story. What is relevant is that as happens to many first time founders, I run my startup for far too long, beyond a rational stoping point. I want to share my reflections on how that mistake happens and my take on how to avoid it.

Passion and love are great motivators. However, if you fall in love with your business idea, you are also likely to smother the very business you are trying to build, not to mention you are likely to devote too much time and energy to an increasingly losing bet.

In no particular order, the following problems may arise for you as they did for me:

Fear
I became afraid someone would steal my beloved and brilliant billion dollar idea. Trust me when I say that the fear I had was palpable. When I talk to first time entrepreneurs today, there is no mistaking the person who is talking in circles, carefully avoiding revealing any business details that would presumably allow someone to steal their precious idea. When pressed for detail, the founder will ask you to sign a NDA.

The unfortunate result of this fear based protectionism is that it takes you, as a founder, a lot more time to fully develop your idea. Serial entrepreneurs, as well as investors, know that the determination, dedication, and sacrifices it takes to actually build a business are not easily copied. As a founder you stand to gain far, far more from the feedback you get from others than any potential risk you face of someone running off with your idea. I regrettably wasted several months protecting my idea with an NDA. Just talk to everybody. Do it openly and listen.

Pride
Intuitively, as a founder you create an origin myth, the story you tell people of how you came up with the idea. As you continue telling this story, to you it becomes the story of a real company, regardless of reality. In reality at this stage we are talking purely about potential and not a business. For you, as the founder, however, the volume of visualizations you have had of your business plan renders your business idea a very vivid and very real thing. Let’s call it your alternate reality.

It does not matter if people love, understand, or even care about your idea. You yourself see the brilliance of your proposed solution. It makes sense to you. As you tell the story, you start wondering how come I am the only one seeing this outstanding solution!?! I must be brilliant!! Inside your alternate reality you are a proud founder, or worse, Mr. CEO. Don’t do this. Retain humility and ask for honest criticism. Pride in your idea is a road to a painful drawn-out failure. The idea might be in fact brilliant but not viable.

Pride locks you in on a trajectory. It may be counterintuitive, but the fact remains that the more time you spend on your idea in absence of finding a product-market fit without creating a functional feedback loop from your customers, the more proudly delusional you become about the beauty of your solution. Going out and testing your product keeps you sane and allows you to adjust your track. Go talk to people. Do it fearlessly and openly before you fall in love with your solution to the point that it narrows your peripheral vision.

Objective
Your objective should be to test your idea and start a viable business. It is not just the development of the business idea, but actually the execution: testing the concept and starting the business. In days past, VC’s used to invest in ideas. Over time investors realized that in the process of execution ideas always change. They realized the team that executes is far more important than the idea. Do not try to develop the idea or product over years and then try to build the team in a month or two.

Team
Chances are, if you operate out of fear and with pride, you will have a hard time attracting, building and retaining a functional team. I ended up with a super thought out business plan which I discussed to death, but no one to build a product and thus no product to test. If you shift your objective to test your business idea quickly, you will learn more and go further faster.

Build a team and fail quickly as many times as needed before you develop attachment to any solution. Listen to the team. Remember the objective is not to create the perfect idea, but to test your concept and build an operational company around it. That may take much iteration. It does not mean build another PowerPoint deck! Failing is not only ok, it is a valuable lesson.Your plan did not work. Great! You get to adjust your plan. Better to test and know that now than two years from now when you run out of money. Learn together as a team and let everyone involved evolve or move on.

Brand
If you are not open to the possibility of failing quickly, as you generate more and more powerpoint presentations, you may even end up imprinting in your head a very strong brand image of your business idea before you have any product or product-market fit. In that situation, you are done. Chances are your untested idea is not the solution everyone is looking for. However, by that time you may become afraid of adopting any new feedback or any brand change that you perceive might tarnish the pristine image of your imaginary brand. Yes, this may sound funny, but it is very real.

Ownership
As the proud founder/CEO with a very clear brand image even before the product is built, you identify some team members you think may be good enough to execute what you view as your brilliant, flawless, well developed idea. With high levels of fear that your idea will be stolen and tremendous pride in the thinking behind it, there is only one possible outcome. I overvalued my contribution to what it would take to execute my idea, and I undervalued the contribution of the people I tried to recruit. In that moment, as the founder, you just do not understand why the rest of the potential team do not want to be part of this immense brand and mega corp you have created!? It is quite clear in retrospect and it is rather painful when you see others sabotage themselves like that. I wish I had learned these lessons before and I wish I humbly sliced the equity more evenly among the founding team without fear, to energize all. You are splitting an imaginary pie and there is good material available on how to do this. The key take away here is that splitting equity is an emotional exercise, not an arithmetic spreadsheet exercise. Do not confuse that. Motivate all to grow the total pie, do not create competition for your share.

Experience
Since I closed my startup, Stocks You Love, I have also been involved in two other startups. This has given me ample time to observe other founders make the same mistakes I made. The biggest discovery for me was that first time founder lessons are unfortunately not transferable. It is like the first time you fall in love. Everybody needs to experience it for themselves.

In other words, starting a company is experiential learning more than intellectual. Even if you know the theory, took Steve Blank’s and Eric Ries’ classes and read their books and have the right information and advice, you have to go through the motions to sense what’s going on. Just as you cannot learn to play a sport by just reading about it, you cannot learn how to start a company without putting theory into applied practice. Those lessons have to be experienced.

Obviously, it is good to surround yourself with people who are not first time entrepreneurs, as experienced people will have a better feel for what traps to avoid. However, if you fall in love with your idea, there is no guarantee you will be taking any advice from anybody. Be humble and listen to everybody.

Advice
Solicit advice wherever you can and enjoy the learning process. After talking to number of experts in any field you will become expert yourself. You will learn more than you realize. After failing in my first startup that tried to reform retirement savings, by chance I ran into and had a few hour discussions with a senior World Bank pension expert. I was in heaven! I knew my stuff and it was a validation of my research and passion.

You certainly learn a lot. However, if you want to put your learning to use, drop the love, share the learning, share the equity, test the market, be pragmatic, fail quickly if needed and move on until you succeed. The company you end up starting might be different from your initial vision, but chances are it will also be much better. That would be my advice to my younger self.

The fact that you spent 12hrs a day on a project does not make it a business or your job. It could just be a hobby or worse, love mixed up with business. Although you will still learn a lot.

Iterations
Go do it, fail before you fall in love, and enjoy the process. Do not get discouraged. Just fail quickly and move on. Failing quickly may seem very counterintuitive. As a loving parent of your startup you want to give it time to grow-up and nurture it until it is sustainable. The problem is that most of us have limited resources and time, not to mention the pitfalls of misplaced love as described above. The fail quickly model is your friend as it avoids most of the love pitfalls and it allows you to iterate and learn from the process. The ideas may die, but the lessons you learn stay with you! That is a very positive thing and may be the difference that will make your startup a huge success!!!

Happily, I now get it and I’m looking for my next venture.

Best of luck with your startup!!!

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We are the new economy, we are building the new economical structures, and the we includes you!

Screaming fire in a crowded theater:

It appears that our economists, after their splendid failure in predicting our great recession, are trying to compensate for their failure by engaging in a scary competition among themselves to see who can predict the most gloomy future for us. I would characterize this as screaming “fire” in a crowded theater. Not cool! Particularly as there is no fire, other than the one they erroneously imagine in their heads.

What’s the fiery crisis du jour, you ask? Well, The robots are coming for our jobs!!! Or in the words of Jeffrey Sachs and Laurence Kotlikoff, the smart machines are coming for your children’s jobs and will bring long-term misery, I have not read such an upbeat white paper in ages.

Jeremy Rifkin is talking of a third industrial revolution where automation and robots take our jobs.

Paul Krugman is building on those fears and beyond by saying that this generation who started graduating into the great recession in ’08 and thereafter will never ever catch up with their earnings. Game over, lost generation.

The Economist is jumping on this gloom and doom band wagon as well with their Robocollegue article saying with a smile that because of automation there is going to be a lot more unskilled low pay dead end jobs filled with university graduates who implicitly defaulted on their student loans.

Most of the above economists draw very logical conclusions about need for change of our social systems which is right regardless. However, my simple point is that I am not quite ready to start worrying nor should you be worrying, just yet!! We must realize that it is the same old economists now screaming fire who failed to predict the great recession. Thus, we, the creative educated masses, should continue working on our startups and re-imagining the world and writing software that eats this world, and building our new economy.

 

The world it is changing:

We would be excused for thinking that all the economists got hold of the same make and model of disaster colored gloom and doom glasses. That’s not far from the truth. Their economic models which illuminate their view of reality are grounded in established yesterdays structures. Unfortunately, for the brilliantly structured economic minds, we are changing the structure of the world they are modeling, right now, in real time. We are reshaping our world.

First, their discussion was framed in terms of recovery timeframe with the predominant question being when do we get back to normal? The answer is never ever never.

Spain having financed the anglo-spanish wars with silver from Latin American colonies has forgone the emergent banking innovation happening in Antwerp and the Spanish crown ended up defaulting on its debt at least fourteen times between 1557 and 1696. Spain has never ever returned back to that normal.

London had a thriving bond market by the mid 18th century. France had no such thing as a bond market. If not for the British Empire’s ability to raise enormous debt Napoleon might not have been defeated. Thus, we speak English.

After the crisis of the US revolutionary war, cotton production moved to India. That move out of US was permanent, it never ever came back.

The economic crisis brought by the world wars in Europe eliminated the live in servant culture. That world is not coming back.

We just cannot expect things to get back to normal after our current crisis. And we don’t just have an economic crisis. We have a structural revolution.

The question is not if things will change but when will the changes go mainstream?

LinkedIn is having recruiting conferences for people who are the back bone of their revenue model!

E-bay has conferences for the people making money selling things on e-bay.

Amazon, as far as I know, has no conferences for the people they enable as sellers, but they have conferences for the masses of entrepreneurs who use the Amazon Web Services as a software platform.

Etsy is starting to have conferences discussing small business and sustainability ideas.

On a smaller scale, Estimize does not have any conferences yet for analysts estimating stock performances but they provide an incredible disruptive platform for stock analysis. I totally see a conference for all the analysts in their future!

Those are, present tense existing things, foundations of a massive new global economy.

To assume that the changes will take generations and old world economic models will persist is simply looking into slightly dated forecasting models.

 

RareBridge as a solution:

Collaborative cross community communication is the new paradigm! Just look at your own Facebook friends, where they come from, where they live.

All this is becoming an integral part of this new entrepreneurial culture. I am not sure when RareBridge will be hosting an entrepreneurial conference or what will be the specific themes, if you have an idea for a innovative entrepreneurial theme, let me know. But for now we have built the infrastructure to help accelerate the global emergence of startup culture. Come join us!  

We are working on this project from London, San Francisco and Bogotá, and one of our advisers lives and works in Lagos. We are united by our passion and believe that this stands in direct opposition to the latest wave of our economist gloom and doom forecasts. We have a vision and drive to support the self-starters and the self-employed of our era. Come join the movement!

Running a startup is a team building exercise, so why not share the joy and learn from each other.

The illusion:

Comfort and luxury are not drivers of innovation. How do I know you ask? Well, I feel as if all three of us here at RareBridge are running around seeking solutions as if our heads were on fire and we were looking for water! Comfort or luxury would not describe our circumstance, though at least judging by my two coworkers innovation is a necessity. Ignorant illusion at times creeps into our subconscious that if we only had more resources we could be more innovative and productive. Well, the past week I was dissuaded of that false illusion!!!

 

The contacts:

Working on a startup and being broke, one cannot afford many luxurious vacations. However we do have friends at global mega corporations with very deep pockets. One such friend informed me that they were planning a major corporate off-site to work on their corporate communication issues, a team building if you will. I laughed thinking of our great team of three, we could only dream of having communications issues. Though when I learned that my friends off-site was going to be held in Medellín in a posh hotel and I was welcome to crush for free, I knew my world was looking up.

 

The disillusion:

Little did I realize the mega corporate team building retreat is going to help me realize how lucky our startup is in terms of our scale and limited resources. The mega corp with their huge cash flows has many layers across all the continents, for them communication is not just something they do to get things done, it is an department in the organization. Learning and innovation as it turns out has to take a second seed to a lot of other organizational issues. For the team-building event they hired a professional facilitator with fancy degrees to help them figure our how to communicate. At our small startup we can only dream of access to the resources they have, but we have absolutely no problem communicating. You could say running the startup is a team building exercise, a perpetual off-site.

 

The pitch:

For us, the young entrepreneurs, resources of a mega corporation should not be an allure as that is a false image of prosperity. We are the foundation of the new economy. What we need the most is access to nimble starved creative open-minded over educated entrepreneurs like ourselves. Our conversations our collaboration and our ideas will help all of us succeed and come to market with the success that we are. At RareBridge we are creating a platform to make that communication and collaboration happen for all of us. Come check us out.

Problem with silos or why we should seek out opportunities to work across many communities

In the beginning:

Growing up in Poland I was aware of the existence of other countries, but because I was living in a national silo, I just did not have much interaction with them.

When I began studying finance at an US university, my school administrator was perplexed by my odd requests for permissions to take classes in other silos of the university, like mathematics, philosophy or music. Why, she asked? It is not required.

Later, I joined a global company in their finance organizational silo. My coworkers in the finance silo and I laughed at the crazy marketing people, who within their silo had no concept of the industry. We laughed at the entitled front line employees, because only we in the finance silo knew what was really going on. But even within the finance silo there were even smaller choice constraining silos. The Newly minted MBAs joining my team were complaining that we are not giving them enough work that fits into the MBA work type silo. Many were making themselves unhappy because of that silo mindset.

We all were growing up and being indoctrinated into a silo world without even realizing it. That, however, will not be the world of our kids. We are experiencing a massive structural change in our social and economic structures. And this will change everything.

Paradigm shift to networked world:

This evolution in psychology and cultural behavior of the society is not a random move but a point on a long continuum. With the onset of the scientific revolution towards the end of the Renaissance, we have systematically started discovering and classifying the world. It has benefited us greatly. By the time I was born in the 70’s, almost everything was squarely organized by the society into its proper boxes stacked up in silos. These technologies and innovations brought about change in sentiment and after the summer of love and Woodstock in the 60‘s, the social changes reverberated on into the early 1970s. However, the idea and movement of the Age of Aquarius and the associated change in values and structures was sadly premature for the world was not yet ready. That revolution is only happening now with social media and 24/7 collaborative connectivity at the forefront, blurring the lines of the tired old silos.

During my years in the university setting, I started realizing that I do not fit into the silo world. I loved architecture and finance equally but there was no choice to study both simultaneously. “You have to pick one. Why?”, I asked. I picked finance. Later at work I was advised against moving out of finance to different silos. In order not to go crazy in my silo, I channeled my creativity to studying world history and arts, traveling around the world visiting museums in my spare time.

During my MBA, I discovered that I am not the only crazy one, that there are accomplished professors who also see the silos as a problem. I will never forget when Prof. Jeffrey Sachs came to the Business school to introduce his earth institute project.

As it turns out, our world of silos is a major obstacle to problem solving. When we need to solve worlds big problems or when we need to get small companies off the ground, we need to reach out to other communities and find a way to work together. Professor Sachs was explaining that even within the same university it is a massive challenge for the business, engineering and say health sciences to find a common language to communicate across their self-contained specialized silo nomenclature. Just the communication is a challenge. That is why profesor Sachs created the earth institute.

How we are helping:

At RareBridge we agree with Professor Sachs. Collaboration across various communities of interests and specializations is what’s needed to create the innovation to solve our world’s problems. It is also needed to get many small companies off the ground. We believe that it is not only fun to go across the lines, it is the fundamental driver of innovation. That is why we are creating a platform where a cross community of enterprising experts can find a way to collaborate and find each other to solve the little and the big problems. Come check us out.