As part of UC Santa Barbara's Distinguished Lecture Series, serial entrepreneur and noted venture capitalist Mark Suster recently shared his advice with a large crowd of emerging entrepreneurs. Mark is a Partner at GRP Partners and authors one of the most widely read startup blogs, BothSidesOfTheTable.
Mark framed his comments around the major mistakes he made during his early ventures. By focusing on what he would do differently now, he was able to humbly convey a number of impactful lessons to a captivated audience of budding entrepreneurs.
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You can watch a nine-minute excerpt from Mark's talk below or view it directly on YouTube here: http://youtu.be/hyb8lUqCjc4 Note that many of the quotes below are from the full version of Mark's talk and not necessarily from the highlights included in the video below.
1. Start – It's The Only Way You Will Know
In Youthful Discretion, I list a number of entrepreneurial advantages young people have over their more aged brethren. Mark reinforced this message by telling the students, "I didn't start young enough. I started at 31. The first thing you do is not likely to succeed. But the second thing…is also not likely to succeed. The reality is, most startups do not work. The younger you are in learning the (startup) skills, the better."
Despite the fact that the UC Santa Barbara audience was primarily comprised of undergraduate students between 20 and 22 years old, Mark told them, "To some extent, you guys are already too old. In the last six weeks, I have been pitched by five entrepreneurs under 20. The youngest was 15. He's pretty talented. He has four Co-founders… two of his Co-founders are MIT dropouts, both of them are under 15."
Mark notes that most people are Wantrepreneurs, stating that, "98 percent of people who tell me they want to do startups are not entrepreneurs, they are wantrepreneurs. Because they want to do it, but they don't. The difference between a wantrepreneur and an entrepreneur is that an entrepreneur starts."
Mark's comments make it clear that if you are an entrepreneur, Now Is Never Too Early.
2. Find A Concept You Are Passionate About
Mark admitted that one of the mistakes he made early in his career was pursuing a business concept about which he was not passionate. "I got talked into working on something because it was a big opportunity. I chose to work in the construction industry because every venture capitalist told me, 'Look, that's 13% of GDP. It's a very big industry and its behind on IT.' It's pretty terrible to have to go to conferences… with people who are talking about… stuff that not only do I know nothing about, but I could give two $hits about."
3. Start Lean
The next mistake Mark articulated from his past was raising too much money. "If you raise too much money, you tend to spend a lot of money. There is a weird Apollo 13… thing about not having enough resources and everybody having to sit around… and figure out how we're gonna make this thing work that produces great innovation."
Mark went on to say that he also had too many Co-founders in his first venture. "I like to call it the 'Co-Founder mythology,' that having Co-founders is a must. I started with three. Make sure it is somebody you know really well. If you found something together, you are sort of stuck with that team. There is nothing wrong with researching an idea yourself, getting it started yourself, validating the idea yourself and then asking people to join you."
4. Take Risks, Be Bold, Make A Difference Or Go Home
Mark encourages emerging entrepreneurs to be bold, yet he admits that with his first startup, he boldly pushed PR before the product was ready. "I ended up on the front page of the Business Section of the Financial Times. But our product wasn't ready for primetime. We didn't even think about how we were going to answer calls… or how we were going to respond to everybody. We just knew that we were onto an idea that no one had thought of and we had better be in the press first because, of course, there is a first-mover advantage. Literally, (we received) hundreds and hundreds of in-bound inquiries, with no idea how we were going to talk to these people."
Clearly, the right time to trumpet your product is when it can live up to the media hype. "Build something, test something, (you) don't have to tell lots of people about it. Put it out on the Net, see what the reactions are…If you build something that starts to resonate, then you can start to… get into tech blogs and talk to the press and tell everybody what you are doing."
5. Flip Burgers
Mark implores the students to seek startup opportunities which allow them to develop what he believes to be the two most important startup skills, programming and selling. "Working in a startup… you will be paid less than market rate, but… I would advise you to take the two skills that nobody wants, which happen to be the two most valuable skills you can develop in your youth.
Number one is sales. Life is sales. Raising money. Sales. Hiring employees. Sales. Business development is sales. Winning customers is sales. Getting press is sales. (Selling is) literally the most valuable skill you can have."
At his first venture, Mark hired too many people, many of whom were too senior. According to Mark, "I wasn't effectively leading my sales organization. I wasn't attending enough sales meetings, I wasn't looking customers in the eye and seeing their reaction. I lost a degree of feeling for what really was happening in the company."
The company's overwrought organizational structure resulted in Mark being too far removed from the core aspects of his business, making it difficult to appropriately lead his team. Mark encourages young entrepreneurs to avoid making a similar mistake, saying, "Whatever you do, whether you are four people or forty people, answer customer support calls yourself, even if you're the Founding CEO. Do product meetings yourself. Go see customers yourself. Talk to journalists yourself. I am not saying do every job and don't delegate. But you need a piece and a feeling of every single part of your business, so that later, when you grow, you can hire and lead people with competence."
6. Don't Be A Ho
Mark's initial venture had a large marketing budget, which allowed him to attend conferences all over the world. In retrospect, he now realizes that such time spent away from his company's headquarters was not time well spent. "Conference Ho's are people who spend all their time going to conferences. You go to a conference and there are important people at conferences. Often they will hang out and have drinks…and you get to meet lots of cool people. I am not saying 'zero conferences'… but at some point, attending conferences, as the founding team, ends up being self-serving and narcissistic. There is somebody back at your office having to make the trains run on time. In your absence, people aren't making decisions."You can check out Mark's blog entry on the dangers of becoming a Conference Ho HERE.
In addition to becoming a Conference Ho, Mark and his first startup team also became Revenue Hos. "I became a prostitute for money. We had a strategy when we started. We were idealistic, (but our ideals) met (the) reality of investors saying, 'I want to see you, every quarter, put the right numbers on the board.' As a result…I landed clients who would pay me tons of money, but I had to develop my software to do what they wanted to do, rather than my idealistic vision. I believe I would have been better off… (if I had) stuck more to my core vision."
7. Focus On Customers – Nothing Else Matters
One result of raising too much money was that Mark's first venture launched too many products, all of which were over-spec'd by the time they were launched. "In the old days, when we designed products, we would lock ourselves in an Ivory Tower, we'd pay someone to do some market research, we'd would decide what… customer requirements were. We'd build this product and nine months later we would ship it. It was kind of like producing a film in Hollywood. You had no idea if you had Waterworld or Titanic."
Excess money also drove Mark's first venture to internationalize their distribution too early. "The scarcest resource at any startup…(is) management bandwidth. You are not going to join a startup and do strategy. You spend all your time doing one thing, which is making decisions." By prematurely expanding distribution globally, you risk defocusing your team and potentially losing your domestic market to a more disciplined competitor.
Mark's Do Over
Mark closes his talk by reinforcing the importance of entrepreneurs beginning their startup career early. "You only have your youth once. It's an order of magnitude harder to do a business when you have kids and a mortgage, and a wife or husband… and college savings to think about and all that other baggage. The one thing I would do differently, if I had a do-over… I would have started much younger."
"Starting" does mean you must risk it all. In many cases, you can gain meaningful insights and validate your potential opportunity while working on it part-time. The key takeaway from Mark's talk for emerging entrepreneurs is clear – "start now."