extremepreneur

A $700 Chair Rant

Recently I read ...

> And to everyone, do we truly think that a $700 chair per employee
> caused any company to go out of business?

I do. Seriously, I really do!

The lack of concern for expenses wasn't restricted to Aeron chairs ... but that established a culture of spending without constraint. If you want to make a profit, you really have to ask yourself..

"Do we need this? How does it help us make money?"

You know, I am sick of people calling themselves entrepreneurs just because they managed to BS some VC's into forking over a few $million$ so they could waste it on superfluous crap ... and then spend it without ever acheiving profitablity.

You look at REAL entrepreneurs ... the folks who bootstrapped companies into profitability and managable growth ... shared computers, folding chairs and card tables ... and those will be the companies left standing after all of these IPO/Flip-Plays go under. Heck I walk into $300m/year media companies that are highly profitable and I see PowerComputing PCs, Mac Quadras, and offices out of a 1950's movie.

A friend of mine interviewed at one of those 'cool' internet companies back in '99 and was told that he "just didn't get it" about the new economy. This is a 47 year old guy who's been running business ops for twenty years being lectured to by some hipster ... well, that company is going under ... so I guess my friend GOT IT. Nice.

Every time I read a press release that says "we went out of business because we couldn't raise more money" I WANT TO PUKE! You went out of business because you didn't have the operations ability of a 7 year old selling Lemonade.

PDQuick could have rationally expanded into the Internet for 1/10th the money they spent by starting slow and seeing what worked. Likewise Kosmo might have made money sticking to big urban areas.

But these companies were not run to make a profit. They were run to unload some illrational business on the IPO market and make $$$$ for the speculators who funded this garbage. Greed triumphant over common sense.

To all of you so called entrepreneurs who wasted all of that capital .... go away ... just go away ... and stop your whining.

Mr. Toad's Wild Ride

Originally written 7-16-2000, before I gave up on the idea of raising VC money. It's amazing HOW MUCH of my time was spent doing that.

Mr. Toad's Wild Ride - or - What's it really like to run a startup.

If you're into cycling, and you find yourself in Palm Springs California, then I highly recommend the ride from the town to the Tramway Station just north of the city. It's the sort of climb you won't forget. Just when you think the summit is around the corner, wham! the road gets even steeper. By the time you reach the top in a bit less than a hour you will find the steepest section is the last 100 yards. That's as close of an analogy I can come to running a startup in the post-tulip-mania era we now find ourselves in. (Note: it's recommended that you are in pretty decent shape before you attempt this, and I'm not just talking about the bike ride).

I've been involved, typically as the C.T.O. or some such, in startups on and off since 1982. I thought I knew what to expect. Long hours to get things to work, tough competition out to put you out of business, lack of funds, yada yada, but I was kidding myself. I never had a clue what the CEO had to deal with. I had it easy, all I had to do was build the tech. I have been amazed at just how much of a roller coaster this game can be. Here are some of the things I have experienced in my venture.

1. Competing in a business plan competition (iBreakfast.com) and winning by an overwhelming margin.

2. Having a customer whose last message (2 weeks ago) was "This is fine, Deal?" cancel the (5-figure) deal after we had spent the last month working on it.

3. Being told by a VC that we were UNDER-valuing the company.

4. Finding out that I wasn't going to get paid for that last consulting job.

All within 5 hours.

Every day is about as tumultuous. We get a new customer, we find a new competitor, we get a meeting scheduled with some VC's., we get told that our idea is great, but I still don't get it by another VC, a major customer says they are interested but they want to know how much funding we have (hey, just a sec., let me check my Visa balance) and that was last Friday.

Nothing could have prepared me for this turmoil. Would I have left my (very) well-paid job, if I knew just how crazy it would be? Uh, yes. It's just like the bike ride, all you have to do is keep turning the cranks and get through each day. You have to enjoy the good, and let the bad go by. There's learning and opportunity in every good and bad thing that happens. It's fun, terrible, terrifying, and terrific all at the same time.

Think of it as a grand strategic game. Is that new competitor really doing what you're doing? Could they become a partner? Can you make it without money for a month? How can you deal with customers issues on finances? Maybe they can become strategic investors.

Then there's the crazy stuff that you just have to accept as the way things are.

1. Getting a VC call on a piss-poor cell-phone connection where they tell you that they want to close financing by the end of the week ... and you don't get their number right and they don't get back to you for 3 weeks!

2. Having the customer of your dreams, one that will prove once and for all that the dogs will eat the dog food, a deal that will make funding a given, inform you that they need to see significant funding before they will do the deal.

3. Seeing a key hire get pulled away by some billion-dollar company offering more money that you could possibly pay, and a ton of stock options to boot.

It's like a Los Angeles traffic jam of the historic variety, the kind of traffic jam where you don't move for hours. You can yell, scream, and curse but the traffic isn't going to move. Sometimes there's nothing you can do about it.

Of course no decent article would be complete without a set of suggestions. Here they are.

1. Do everything you can to get your personal finances taken care of. Figure on a year before you can expect to get any real money out of the business.

2. Tell the truth about the company. Really. I once saw a little white lie cost someone over one million $$$ (Mr. X, is this the only lie in your life?). Don't hide the fact that you're a struggling little pipsqueak of a company. Turn it into a feature.

3. Take the good and the bad with the same sense of "all in good time." This "Internet Time" nonsense is just that nonsense.

4. Embrace fear and failure. Your idea may be a bust. You may fail. Try to figure out where they aren't. When I started my company I discovered that our competition was a company that had almost $100m of funding and was running Super Bowl Ad's and a little outfit out of Redmond Washington called Microsoft. It took me months of absolute rejection before I figured out where I needed to go with this company, but I finally found a place on the playing field with very few players.

5. Have a life. Everything is easier when you have people who care about you, and stuff you enjoy that's NOT work.

Handling Rejection, Defeat, and Victory

Your Business Plan Stinks and Your Momma Wears Combat Boots 

A Guide For Handling Rejection, Defeat, and Victory 

(orginally written August 16, 2000)

I managed to travel in time yesterday. It all started with a bizarre email that said:

"Bill, Great job on the NPR piece."

What NPR (National Public Radio) piece? I don't remember being interviewed by NPR? First thought: Oh my god, someone out there has the same company name or something.  Get to the NPR site and check out what's happening. Turns out that the show 'Marketplace' ran a show yesterday on the June 8th iBreakfast in Los Angeles.

June 8th, iBreakfast (2000), wow it seems like a year ago that I did that. I entered this business competition where you submit a brief one-paragraph summary of your business concept. The iBreakast folks pick 4 or 5 folks (out of almost 50 applications) to do a five minute presentation to a panel of VC's and industry folks (and a audience of about 100 people). The winner gets a T-shirt and a chance to pitch their concept (in private) to angel investment groups.

So I managed to find some streaming audio of the radio show ( AUDIO ). What a weird feeling to hear myself, the audience, and the VC's. and remember the ABSOLUTE CERTANTY that if I was to win this, my company would be on its way. Well, I did win that. No, we didn't get our 'instant funding' but we are on our way.

I listen to that fellow with the upbeat tone and the sound of victory in his voice and I wonder "who is that guy>?" what would he have thought if he knew then what the next two months were going to be like? Would I have been as confident?

What happened? Well, we did enter serious negotiations with one investor from that event. After almost a month I decided that the terms were getting a bit too bizarre (property liens, debt loans with free equity, etc) and I decided to tough it out till I could sell some stock (locked up) in August. I believe that was quite possibly the smartest thing I could have done. Time will tell if I was right or wrong.

Since then we've had presentations with two major investment groups. In both cases the answer has been 'no.' Each time I try very hard to listen for the 'why.' This is not an easy thing to do. Particularly when you've had several "really positive" meetings with these folks. It's important to listen and listen hard. In some cases the objections are legit. In others it's a case of them wanting you to build toward a IPO as opposed to building a profitable business from the get-go.

What's worse is that you look at VentureWire and you can't imagine the silly stuff that gets funded. I mean high priced content plays and B2C's that have no hope of profitability. All I can imagine is this sort of conversation between two guys in funny clothes somewhere around the 16th green.

"Say Thad, I was thinking of starting up a dot-com to sell Bonsai Trees on the net, I'm calling it Smalltree.com [note: the name is taken]. Want to kick in a million or so to get this started?"

"Sure Bob, would two million be enough?"

Well, the "silly stuff" may be happening, but that doesn't change the fact that you (and I) haven't been funded yet.

I've decided that the smartest thing to do is to look at each rejection as an educational experience. Get what you can out of it and move on.

The key to moving on is to run the business. Focusing on sales and building the company (technology and people) is a great way to get your mind off of the funding merry-go-round. Selling VC's on your company is no harder than selling a customer on what you're doing. Only with customers you get something called revenue, in case you forgot. I've said it before and it bears repeating:

"Run the company like you'll never ever get any funding"

You've got to do whatever it takes to get things off the ground. If that means selling off the stock you were going to retire on, then so be it. If you don't believe in yourself and your idea ' why should some stranger fork over a few million bucks? Build stuff, make sales ' whatever.

So, if I really could travel in time and talk to Mr. Optimism what would I say? I'd say 'enjoy this ' you'll need to remember just how good it was when things aren't so great.' I also think Mr. Pessimism needs to remember that the good stuff is possible. I think that little trip in time was just what he needed.

I'll leave you with this quote:

"A positive attitude may not solve all your problems, but it will annoy enough people to make it worth the effort."

- Albright, Herm

About The Extremepreneur

This is a forum for the discussion of "Extreme Enterpreneurship".

Extremepreneur is dedicated to the people running startups without the benefit of massive amounts of VC funding.

Entrepreneurship is more than selling a business plan to VC's, burning up a bunch of cash ... and then whining about not getting that next round of funding.

Real entrepreneurs are the folks who risk it all to bootstrap business into being ... not the folks who took no personal or finanical risks to start some silly dot-bomb that just happened to miss the tulip-bulb craze of worthless internet IPO's.

People who bootstrap their businesses are more than just plain enterpreneurs, They are EXTREMEpreneurs!

This site is for you.