I am helping 3 companies with angle investment right now. Sometimes it is better to have a different voice:
As is only natural. Pseudo concerns about contracts end up in my corner. Something to do with being a former practicing lawyer I presume.
Forgive the rant below, this happens to be an issue that I’m passionate about and requires some explanation as to why the typical way of doing things is not good, right, effective, or appropriate.
Occasionally people ask about non-competes and non-disclosure agreements, usually before a 777 pitch.
Short Answer: No we will not allow and non-compete at an 8150 hosted event – ever.
1) NDAs are directly against our culture at 8150 which puts inclusiveness, collaboration, and community first;
2) Non-competes are almost completely unenforceable, by function of Colorado State Law, and even harder to enforce for someone who is not an executive member of an organization. In my experience 90% of non-competes are not valid contracts;
3) They stifle innovation (see Brad Feld’s Startup Communities somewhere in chapter 4);
4) There are integrity issues involved with seeing an idea and “stealing it.” The result would be social exclusion from our community. While this is not legal recourse, I’ve consistently been surprised by how effective the social structure of entrepreneurship works;
5) [Perceived] competitors are usually too busy to steal ideas and frequently want to work together. Both competitive startups and established businesses are usually doing everything they can to launch or fix their product and then gain clients based on what they are currently doing. It is unlikely they have the 1) assets, 2) resources, or 3) desire to expand in a new way (they need all three). I shit you not this happens way more than you would expect. (See: the book “Zero to One” – PayPal was created when Peter Theil and Elon Musk had lunch together even though they were both on the verge of launching essentially the same product);
6) Generally the best thing for a company is for the word to get out, even pre-launch when you are vulnerable, having a group free to discuss with their network is incredibly helpful;
7) If people sign enough NDAs they will be prevented from talking about anything. What if you pitch a social network for Rock Climbers idea to me and I sign an NDA before hand. Then in 18 months someone pitches a social network for Hummel Doll collectors to me. Am I prevented from talking about when I know about social networks to the Hummel Doll collectors because I have an NDA for social networking?
8) Entrepreneurial activities normally work too fast for NDAs to stay relevant. Your idea is as good as it is before it launches, that is when you get real market data and start making changes and pivots.
9) It is execution that is the differentiator, not the idea. If you can make it work then it doesn’t matter how hard someone tries to steal or replicate, you will simply crush them. If you can not then you will fail quickly.
I could go on. In the end it is your call.
But hey, what do I know?
The quote from the end of Startup Communities:
“My favorite thing about startups is that they don’t require anyone’s permission. Great entrepreneurs just start doing things. These are the same entrepreneurs who can be the leaders of their startup community. They just do things, like many of the people you’ve read about in this book.
Although it’s a long, challenging journey to create and maintain a startup community, no permission is needed. Startup communities exist all over the United States and the world. Some are already vibrant and durable; others are nascent.
Hopefully this book has given you lots of ideas and inspiration to help take your startup community to the next level. Remember, it’s a long-term journey, so be patient and persistent. As Yoda once told Luke, “Do or do not, there is no try.”
Feld, Brad (2012-09-06). Startup Communities: Building an Entrepreneurial Ecosystem in Your City (pp. 187-188). Wiley. Kindle Edition.
The Pareto principle is essentially the 80/20 rule. 80 percent of your X comes from 20% of your Y. Usually this is considered as 80% of your revenue comes from 20% of your clients. However, this principle works for a wider variety of issues.
Today at the co-working space one of the website designers was talked into firing a client. The crux of the issue was the amount of time and emotional energy spent. She was spending 80% of her time and emotional energy on one client. It almost does not matter how much difficult clients bring to the table, they almost always should be fired. Anyone who has managed a team knows the same holds true with employes.
With the free time and energy that you get from ridding yourself of this this client or employee you will replace them.
My personal experience with this came from the first employee that I straight-up fired. In my time with The Assist Group & at that time I had pretty much complete control over my team. Except I was not allowed to straight fire someone.
Here is the setup. I was 27 years old. The only one in the company who could do the work, talk to clients, and report to upper management. I was in control of a division that brought in 80% of the revenue. I had a team of about 12, and revenue of about $8mm/yr (growing at a 30-50% rate, which means you are always logistically behind).
I was probably the oldest person on my team. And there was only one other man on the team (lots of older as well as XY chromosome types in the company just not in my division).
There are a bunch of reasons for this, including my personal belief that for a job that required 100% on the job training, and was complicated and fast paced, you should be hiring young people with light behind their eyes. For whatever reasons usually people who came to the door were women.
Upper management made it clear to me that this ratio of a) young and b) women need to be changed. To this end, when the next employee was hired management literally forced me to choose my third choice, a 40 yr old women who had been ‘in the industry’ for 20 years.
(Tangent: ‘In the industry’ is a very bad hiring criteria that a new product can have, all too frequently they do not know how to change and are always struggling with the fast paced, no SOPs, and need to stay ahead of the mental curve while being behind on the ever increasing work load (see Harvard Business Review–How to spot talent (hint: Talent is overrated).
Being part of my nature, I gave her every benefit of the doubt. But I knew before day 30 that she was not a fit. I told upper management this, and they responded that I hadn’t given her enough time. I will not get into the issues with having people on a different floor (literally) and in a different department having control over hiring or firing.
Now comes a personal high point of my career. After about 6 weeks two of my employees set a meeting on the upstairs floor. Not a typical event for a meeting called by employees with no stated agenda. The two gals who called the meeting flat out told me that the elder (relatively) lady had to go. This was a personal victory because it meant that my team members were comfortable enough to call this kind of meeting. Whatever I did (good hiring, good management, not sparing the rod, or just luck…what do I know?) created a good team.
This meeting gave me the ammunition to actually fire the lady. I went to HR, I got her last paycheck, and just went into it. Honestly, it was hard to do. However, the moment she was gone there was a collective sigh of relief. The surprise benefit was that over the next 6 weeks my team grew closer together, more efficient, more work was done than normal and, by the time we found a replacement, we had lost almost nothing (admittedly this violates my tips on hiring post).
How does this related back to Pareto? Tangentially at best. Hopefully the ratio of pouring too much energy into the wrong place is more clear. The lesson, the amount of time and energy applied to this lady was closer to the 80% of my management effort, even though she was worth less than 20% of the work.
But hey, what do I know?
Forgive my lawyerly ways, but I think proper definitions put proper context on what we do.
My current chaffing comes from the differences in the words Disrupt, Innovate, Technology and Entrepreneurship.
I know a blog about definitions sounds incredibly boring, but try to take a step back after reading this and ask what your hopes, dreams, goals, and endeavors are trying to do. This is a fundamental in my step 2 rant about ONLY DOING THINGS THAT INCREASE YOUR LIKELIHOOD TO SUCCEED.
Disruptive Technologies, by definition takes a well established way of doing something, and completely changes it. For instance, when we had something to say we used to talk on the phone to one person and/or get a group of people together to listen in mass, now we talk in 140 character texts through Twitter. Creating a super cool new construction material is not disruptive.
The benefits of disruption are, if your way of disruption is the winner (not Myspace), literally billions of dollars (Microsoft). But it is also incredibly hard. First and foremost, convincing someone to switch is very hard. Rules of thumb are 1) Educating a market is the most expensive form of marketing and 2) you have to be perceived to be 10x better than the current method for second degree marketing efforts to become viable (Second degree is where people use your service though none of your marketing has ever reached them directly).
Usually disruption comes in the form of a big, simple idea. How we communicate (Twitter), how we do accounting (Medici’s), how we purchase household goods (Amazon Prime).
Innovation and Technology are actually synonymous, at least in definition. They both simply mean a new way of doing things. Tech-nology actually means “a new way” and has nothing to do with computers. An advanced technology simply means a new, more sophisticated, way of doing something. The benefits of this are that the market is already established and all you have to do is let the market know you exist and work to take market share.
Entrepreneurship is a derivative of the verb ‘to enter.’ You need nothing new or original, other than you entering the market. Every single new restaurant is by definition entrepreneurial.
So what seems right to you? Where do you fit? If you cannot stand the way something is done to you want to be a little bit better, or do you want to completely change the way people go about doing something?
But hey, what do I know?
At the Thursday meeting last week, we discussed disruptive technologies and what we could do in the Vail Valley. We threw around a couple ideas, but really got stuck on the whole ski school thing. The bottom line is that, sometimes, the legal system will shut down new entrants into a market. In fact, the government is allowed to give out monopolies.
I’ll write more on that later but, as happens, I was driving with my friend Brent the other day discussing these things and he told me the following story about one of the more innovative but least disruptive ways of making money I’ve ever heard.
Brent told me a story about someone he knew back in college. This bloke whom I’ll call….Jake, was working on a masters degree and his thesis involved ravens (possibly crows). What Jake learned was that ravens were more clever as scavengers than he thought.
Here is what Jake did, he trained a raven from birth to pick up shinny round things and place them in a box, for the reward of a peanut. The result, the bird learned to pick up coins for food (also washers, and other round shinny things). Neat little trick, no?
But here is the real result. When Jake released this ONE BIRD into the wild, not only did it continue to forage for coins, but other birds saw the behavior and mimicked it!
For sum total of about $400 in change a week! (AKA, $20k/yr of non-taxable income).
Talk about MailBox Money.
(Mail Box money that comes to you with little or not extra work usually by maintaining ownership in a company or process that no longer requires personal effort this give you financial freedom to be creative in your endeavors).
So where is Brad’s little rant or lesson to share? This is a genuine combination play of two very old processes, picking up change & bird training, however it was the insight to combine the two that makes this new. It is NOT disruptive, it is innovative but more importantly it is valuable enough on its own to make it worth its time.
So as news organizations continue to love the concept and term ‘disruptive’ I suggest that we continue to work towards our goals, and that does not have to be disruptive at all.
But hey, what do I know?
Generally there are 4 types of intellectual property: patents, copyright, trademark, and trade-secrets. Each cover a different thing, happen in a different way, and last for a different period of time.
Patents: Cover inventions. The definition of invention is too much to explain here. You don’t have protection until the US patent office gives you a patent. There was a recent change in the laws, the result is that the first to file has rights to the invention.
Copyright: Covers art stuff. Pictures, sculptures, written works (including programming code), occurs when the thing is created. If it was created after 1978 it lasts for 75 years after the creators death (thank you Disney family lobbyists).
Trademark: Covers things like your company or product/service name. There are other things, like the color that Tiffany uses on all its boxes.
In the U.S., trademark rights arise from use, not registration. This means, that you can own non-registered “common law rights” without ever obtaining a registration. BUT, if you rely on federal application/registration, then that grants you presumptive nationwide rights (not just in the location where you use the mark).
For metaphorical types: I say trademark follows the orphans and widows test. Say I send my metaphorical grandma to the store to pick up an XYZ. She is at the shelf and sees XYZ and ABC and can’t tell which one is which. One of these is violating trademark.
Trade Secrets: Are simply too complicated for this article. If you wonder about these it’ll take an attorney and hour to explain. Some of you know I was involved in a major lawsuit in a company I have an equity stake in. Cost a ton in fees, but was ultimately – economically – worth it.
A little more discussion:
For those interested, there is a benefit to society if people can protect their hard work, and make money off it, without having to keep it secret. So we created a law that helps someone sell their work, without fear of losing to copycats. This was created way back in 1776 with our Constitution. Those founding father’s sure knew what was up!
In the fast paced world of entrepreneurship and the internet, spending time on these devices has somewhat gone out of fashion.
Patents take too long to get, usually the market/product that you are trying to protect has moved past your patent by the time it is filed and approved. They also cost a lot of money. Another reason they are going out of fashion in the entrepreneurial world is because the new ‘open source’ movement has moved from programming to physical items. This is partly lead by some friends of mine, Nathan and Alicia Seidle, who are known for starting Sparkfun Electronics.
Copyright can help with artwork and protect’s programming code. The problem is that using an alternative method to get to the same result is generally allowed. Say Rich Staats uses PHP to code an awesome website, and Doug Clayton uses dot-net to do essentially the same thing. As long as the code is different they can both do it.
Trademark still works pretty well, and comes into place for free, though, registration is cheap, easy, and helpful. If you are a huge company this is a big deal.
Anything further would extend past the quick overview look I’m trying to give in ‘Back to Basics’.
But hey, what do I know?
From Bickerton Blog:
Lately, I have found one of the reasons people hesitate to start a company is simply having to tackle the 101 steps to starting a company. One of the great things about working with entrepreneurs is that they have a get-it-done attitude. They may care about theory and strategy every once in a while, but their M.O. is – How? ok do it.
I think of this because I’ve been seeing more and more offerings on ‘How to Start a Business.’ These range from online courses, seminars, books, consultants etc. All helpful…if you’ve already jumped off the diving board into starting your own company. However, what about people like you with just an idea? Yesterday, my good friend who works as a mechanic and has all the skills to restore cars, shared with me that he doesn’t know how to file for a business license, open a business bank account or complete the other basic, basic, startup steps.
Below are simple, practical steps to get you started and a little experiment you can personally run:
Step 1: Pick a name;
Step 2: Register your name with the Colorado Secretary of State;
B) Under Programs and Services: Businesses, trademarks, trade names;
C) File A business Document;
D) File a form to create a NEW record;
E) You probably want a – Limited Liability Company (LLC) –
F) Follow the rest of the instructions;
Step 3: To get a tax ID number – follow instructions – click here – ;
Step 4: Go either to your local bank or a bank that has a local branch. Walk right in with your paperwork from above and a personal checkbook. Ask to talk to the small business banker;
Step 5: Open an account and write a check to the new company;
Step 6: Either get your debit card or checks for the new company;
Step 7: Buy something online- an ipod, an add for at home oil changes, whatever you are good at….;
Step 8: Sell your product/service;
Step 9: Do it again, or close the company and bank account.
Total time: +/- 2 hrs and your time to complete your transaction (buy/sell product/service). About $50-$80 in fees.
If you ever want to start a company, even if it is just something you just kinda want to do someday, go through this exercise. At least you’ll know how.
Next step is a ton of other product and process issues…a discussion for another day.
But hey, what do I know?
We finally got around to creating a newsletter archive. No one has had time, nor motivation, to manually place all the old newsletters into the website, but we will be placing them going forward.
This link can always be found under ‘tools’ but here it is for the super lazy: http://8150.co/index.php/newsletter-library/
The conclusion of the group was that in the early stages you must at least know how all the jobs are done. No matter if you hate accounting, or website design, or package delivery or whatever other tasks that need to be done, which you JUST DO NOT WANT TO DO, the entrepreneur needs to at least learn how they work, and more importantly how they don’t work, for your company, product, and personal needs.
There is a heavy cost if you delegate too early, or without understanding. Specifically your efficiency will decrease dramatically, you will find that outsourcing the first iteration of any part of your projects is GUARANTEED to cost more money and time, and MOST LIKELY to be inferior and/or not what you are looking for.
The result of this delay, more asset expenditure than necessary, and a reduction in your likelihood of success (see #1 & #2).
But there is hope in the fact that you never need to reinvent the wheel. There are an amazing set of resources out there to teach you how things work.
Here is a brief list of places to get better at whatever it is you want to do:
Lynda.com – a pay for educational website with 1,000s of educational programs for $25/mo.
YouTube – Seriously, here is an example of what you can learn about time management with nearly 2,000,000 views: Randy Pausch Lecture: Time Management
Podcasts: Seth Godin Startup School
Books: The 4-hour work week by Tim Ferris (see also blog about many topics: http://fourhourworkweek.com/blog/)
8150.co Tools – specifically the newsletter & archive for more (archiving is still a work in process as of May, 2015).
About a year ago we started a society for entrepreneurs up here in the high mountains. The response has been incredible. I feel honored (and maybe a little stunned) that so many people have read our newsletter, blog posts, articles, resources suggestions and engaged in one way or another.
The most common questions I get surrounding our group are: “what does 8150 – High Altitude Entrepreneurs do” and “how can I get involved?”
Let’s get started!
First, 8150 – high altitude entrepreneurs is a collaborative group of people who simply feel they have an entrepreneur’s heart. There is no barrier to entry outside of self-identifying as an entrepreneur or someone who simply has ideas for ‘cool stuff’ and is willing to make an effort to do more than chatter.
What do we do? We follow the maxim that when entrepreneurial minds come together THINGS HAPPEN. Same as putting a painter in a room with canvas, brushes, and paint, no one is surprised that a painting comes out of that.
Our weekly Thursday afternoon meetings (usually at 5:30) have consistently been overflowing the VLI-BaseCamp’s conference room. We are also starting to have greater attendance, as well as website subscribership, from Summit County. Hence the name “8150 – High Altitude Entrepreneurs” and not Vail, or Vail Valley, or Eagle County. The whole philosophy is about breaking down barriers by sharing resources and ideas. The age range has engaged people from 17 yrs old to over 70.
In the last year we have seen over 100 subscribers to the weekly newsletters, and over a 60% read rate (a 33% read rate would be considered a success). Dozens of people have attended meetings, some attend every single week others as time and needs suit their lives. We have also had dozens of people pitch through 777×2, as well as dozens of practical, executable, educational units from how to build a website to how angel investment works.
Many people have ideas for companies, products, books or other things, that either need feedback or need an opportunity to practice their pitch. 777×2 is a way to force yourself to sit down and make 7 simple slides on and idea you have. Then you can get constructive feedback and possibly a partner, client, or subscriber. The “x2” is when you come back 3-5 weeks later and re-present based on the group’s feedback.
The idea could be, starting a new product line for your business that has been established for 30 years, or it could be ‘kitten mittens’ which you thought up while skiing one day. Any idea at any stage is welcome. As one person said the reason to do it is “because I need feedback.”
What will happen next with 8150 will be up to the members.
How do I get involved?
Here are some first, baby steps, to engaging with the fun and exciting world of entrepreneurship up here in the high mountains:
Sign up at 8150.CO (not .com);
Come to an 8150 meeting;
Start or lead a a no-agenda meeting or meetup;
Attend a 777×2;
Send a ‘you know what would be cool’ idea to an 8150.co member Help 8150 logistics for 1 hour (e.g. work on the website, pick up stickers…whatever).
So come on out of the woodwork!
8150.co – High Altitude Entrepreneurs’ mission is to bring together the entrepreneurs in the mountain communities. This was written by Brad Bickerton a business consultant and recovering attorney who works in Minturn. This was edited by Fritz and all spelling, grammar or other errors are not Bickerton’s fault or responsibility.
I would highly recommend everyone listen to Seth Godin’s Startup School Podcast.
Personally, I’ve always respected, but never really been a fan of Seth Godin until Doug put me on to this 15 part series.
There are a ton of good nuggets for anyone who has never started their own business. If you are not actively educating yourself using podcasts like this your only hope is to learn from the school of hard knocks. I highly recommend this option.
This is a good article found by Bryan Wachs:
I knew there was an increasing problem with the culture in the design/startup community when individuals started introducing their products by talking about how quickly they’ve built them, rather than how efficiently and the quality of it after doing so.
Don’t mistake speed for precocity: the world doesn’t need wrong answers in record time. –Cennydd Bowles
In this industry, we’re continually surrounded by the words: Shipping and MVP (Minimum Viable Product). But thing is, the coined terms have been tainted. I remember when the MVP acronym really picked up and everyone was tossing it around any chance they could.
The field of Communication Richness. The 101 version of communication richness is is the study for how much communication is lost every time you go down the ladder from Face-to-Face –> Video Chat –> Phone –> Personal letter –> Email –> Text.
Something that has come up recently was how to create a network for both vendors and customers. The first was from an old graduate class mate Ben Buie, who is starting his own web-design/consulting firm. Ben and I rekindled our friendship down at a really cool alumni event back in January. At the time he was debating staying with his current firm, or going out on his own. Two months later he dropped the W2 in favor of a 1099 and called me asking some very specific questions on how to get clients.
I mentioned something that I learned in practice a long time ago, and learned in academics in graduate school. PICK UP THE PHONE, or even better MEET PEOPLE FACE TO FACE. The results are significantly higher than any form of SEO, E-mail, or newsletters.
How much communication is lost every time you go down the ladder from Face-to-Face –> Video Chat –> Phone –> Personal letter –> Email –> Text. The loss is simply astronomical. Call it at least 50% every time you go down the run. Which means that email is 12.5% as effective as face-to-face. It also means that phone is 2x as effective as email.
Now my numbers are madeup but the reality is that if you are looking to gain a network you have to have 6x as many emails as you do face to face meetings. (Reality is considerably more).
My personal method is to find opportunities for face-to-face meetings, with a followup email about what was discussed, and a ‘no-agenda-meeting’ as the follow up. This puts two face-to-face meetings on the books, and a collection of written memories out of the table. That person will not forget who you are.
The second time the thought of communication richness came up when Rich Staats presented his Zero-to-One Zero to One – Rich Staats on Signature Colorado last week. His #1 point was that relationships are Built years in advance. I highlight built because that is what is happening in the world of entrepreneurship and small business. You can not build a platform with massive one to many campaigns that are interesting and frequent enough to drive traffic to your website.
The third time the benefit of rich communication came up was when a good friend David Walder, who does almost the same thing I do up here in the Valley, called me.
Reconnecting with him and talking about issues like exposure to investable opportunities – his specialty is helping broker those who need growth capital with those who invest growth capital – and thinking about how valuable it would be for him to be connected in some fashion to our co-working space. The value for David is exposure to ideas and the society of people looking for capital.
Going back to rich sources of communication. The natural pushback I receive, especially for those who are uncomfortable with crowds, networking, and selling themselves is to know this is necessary but never do it.
The analogy that I use to combat this surrounds a common precept of courtroom attorneys. Over time the best courtroom attorneys are those who start out the slowest. The smart, very introverted, attorneys that have a dedicated mindset to becoming better, in small increments, eventually surpass those with natural talent. The meek become strong.
But hey, what do I know?
Again following my rule of 3s philosophy. The concept of 1% better has come up unconnected recently. 1) Doug’s Motivation Newsletter #3, 2) Listening to Rich Staats and his progress over ten years becoming an entrepreneur in the Vail Valley, and 3) Inside of this Tim Ferris podcast (#18) – Guest James Altucher talks about it too.
The start of this concept is the quote attributed to Albert Einstein “Compound interest is the most powerful force in the universe.” Following the Rule of 72. It takes some multiple of 72 periods to double the original amount. 1% interest/month on $200 takes 72 months to become $400. 10% takes 7.2 periods…and so on.
The second step in this process is realizing that you are swimming forward or drowning & treading water is the slow form of drowning. As Doug would say ‘constant forward progress.’ This does not imply major events need to happen, just that you can not rest on your laurels.
At 1.34% it takes 52 periods to double. Also known as a year. So I am committing to getting 1.34%/week better at 7 things this year. Not only to getting 1.34%/week better, but also to ONLY get 1.34% better.
One of the great benefits of this that the process begins with goal setting. What is my definition of success in each of these 7 things, what 1.34% activities do I need to undertake to increase my likelihood to succeed.
So what are the 7 things? No idea yet. As I’ve been pondering this over the last week I’ve started to take pleasure in the thought. What do I want to be better at? Blogging, cleaning my car/house/office, nutrition, healthy, sleep, Bickerton Executive Consulting, Legal Practice…Time will tell.
I’d be happy for ideas or, if you want to take the challenge, your list.
But hey, what do I know?
What is a 777 Pitch??
8150 loves to hear all the new ideas for products and apps, as well as thoughts, musings, and updates from any and all dues paying members (dues = $0).
We follow a simple 777 x 2 format:
7 – slides
7 – minutes of presentation
7 – minutes of feedback (you can request the feedback to be between fluffy bunnies and shark tank)
What is the x2 all about? You have to (should) pitch your idea, even if it is terrible, TWICE. Usually there is 4-6 weeks between the first pitch and the second.
The idea is this, how do we keep ourselves entrepreneurs that are action orientated? If you stand up for 14 minutes then walk away…what really has happened beyond a fun afternoon activity? If you are willing to put together 7 slides, put yourselves up in front of group to discuss an idea, then you are probably willing to take any feedback that you get and refine the idea. (Refine could also be, I realized this idea was totally lame/bad/unfeasible we want to hear that and your reasons too).
Should I worry about people ‘taking’ my ideas?
Many people keep their really awesome, cool, neato ideas to themselves because they have been convinced that by sharing an idea that idea is being exposed to being stolen. There is no guarantee that your idea will not be taken, but the likelihood of someone listening to a 777×2 pitch and liking it so much that they take it, go to their garage/office and make one, create a company and a management team, and seek funding is very low. Even lower when you consider they could just join your team first.
There is much more to say about protecting intellectual property generally. We will make sure to have a better explanation more better laterer.
See what Brad Feld has said about this.
Some of the 777 pitches heard so far:
- New Winter Glove Idea;
- New Child’s Toy;
- New vacation/vocation idea;
- New ski and social-media smartphone app;
- Better way to taxi in the Vail Valley;
- Augmented reality app for car engines.
Rich Staats, our perennial startup/website guru here at BaseCamp gave a presentation on how he came up with this latest company/product idea. How he thought about the go/no-go decision making. And what has happened to date with Signature Colorado. He followed a Zero to One thesis a reference to the book by Peter Thiel & Blake Masters.
See his slides Zero to One – Rich Staats.
The concept of Sunk Costs came up the other day when we decided the Startup Weekend needed to be postponed.
For those of you who do not know, sunk costs is a way of looking at a project and deciding whether to go forward or not. The classic example is if you spent $1b inventing a new drug and are only $10mm away from launching, should you launch.
Emotionally we believe that yes, if we put $1b and countless hours and years creating this new drug then we owe it to ourselves to put it out on the market. However, the economic term of sunk costs means that you completely forget about how much time or effort put in to date, and you focus solely on what is going to happen in the future.
Is the best decision, today, to go forward with the product launch, or to put your resources elsewhere.
With Startup Weekend we had identified goals we wanted to achieve by March 1st. 25 Participants, $7000 in sponsorship, 10 pitch day tickets, and kick-ass speakers and judges. These goals were to achieve a simple result. To have a world caliber Startup Weekend here in Vail.
As of March 1st, we had 7 participants, $2,000 in sponsorship, 2 pitch day tickets, and we achieved kick-ass speakers.
The question is, after all this work by VVP, Town of Avon, 8150, VLI, and multiple other volunteers, should we move forward with Startup Weekend. My initial thought was yes, hell yes, we are so close and typically Startup Weekends have most of their participants sign up in the class 5-10 days. I thought that if we did an all hands on deck effort we could reach our goals.
However, Justin and Doug brought up a compelling reason to delay until the summer. Our goals is a world class event, not another regional event (nothing wrong with regional events, Breckenridge’s in August was phenomenal). Could we achieve THAT goal regardless of how much time and effort was put in. The simple answer was no.
How does this related to Sunk Costs. First, Sunk Costs is not a quantifiable economics term, it falls under the roof of behavioral economics. The distinguishing notion between quantitative and behavioral economics, in my humble opinion, is the inclusion of psychology. Psychologically speaking people (read: Brad) want to hold on to what they know, and do not want to give up or give in, even if that result is irrational.
I believe that one of the fundamental characteristics of the entrepreneur is to take the cold hard facts, on the ground as they say, and determine what the best course of forward motion is, even if that means shutting down something you have worked over and over at doing. The faster you fail the less resources you spend, allowing greater freedom to begin a new project.
So while I am not an advocate for giving up or giving in, I am an advocate of having the vision and fortitude to look at yourself, your team, your product and market and determine when it is time to let it go.
But hey, what do I know?
For the first time in at least 2 years on Saturday I took a day off!!!!
No, I do not mean a day where I did not work. I do that all the time, sometimes actively other times because my brain ceases to function. I mean a day off.
The first time I ever heard the phrase “work-life balance” was at a Silicon Flatirons – Entrepreneurs Unplugged event in 2008 where Brad Feld was discussing how he managed to achieve this feat. He has written considerably about his personal journey. I recommend looking up his blog www.feld.com.
I told him about what I called the Brad File. When I worked at The Assist Group, before graduate school, I was in charge of a product line. I had also been the first full time employee so I remained that jack-of-all-trades type. Whenever I tried to take a vacation (I never took more than 2 weekdays off in a row over the 3 years I was there), I would farm out all of my responsibilities to people who could more than handle them. Then I would come back and, low and behold, all of the work I had farmed out had been magically pushed aside and left undone. I called that pile of undone work the ‘Brad File” as in someone asking “what should we do about X? Brad is working on that put it in his file.”
I brought this little story to Brad Feld after his work-life balance talk and he chuckled and said that I needed to learn to enjoy getting through the back log caused by being gone.
So, as I knew the story thus far: There will always be more work to do, and to create life balance you need to learn to detach yourself from the sum total of work that needs to be done and be willing to accept the work that you are going to do.
I am not sure how it happened, hence why it is remarkable enough to write about, but this past Thursday I found myself catching up on a host of outstanding issues. Then on Friday I was able to get a head on some issues. Leaving Saturday simply open. There was no compelling drive to complete something that I had been trying to artfully detach from. There were no future events that required that extra once over. Now I’m sure this was not entirely true but when I woke up on Saturday, for the first time in recent memory, all I had to do was…be.
To finish up on a truly meandering rant without a gratifying conclusion for the reader. We need to find, and if necessary create, true opportunities to unplug.
The first result was a hike with the dog that resulted in a little Facebook post/rant:
My eyes crack open this morning with the predawn light, and I make my first mistake of the day. A mistake I’ve made a 1000 times before, I rolled over just enough that Major-Major knew I was awake. He puts his head next to my hand, making sure his wagging tail hits against the bed. Thump thump thump. I say “Major-Major today is your 8th birthday what do you want to do?” He replies “Why are you still in bed?”
So I get out of bed, and he starts jumping up-and-down because “It’s morning! It’s morning” then I repeat, “what do you want to do today?” “I’d love to go on a hike” he communicates with all seriousness. “What a novel idea” I reply. So I strap my snowshoes to my boots and my skis to my backpack and we hike up Meadow Mountain.
“Major you are 56 years old now you don’t have to run and jump-around on the entire hike.” “But if I don’t run around the corner and see what’s there, how will I ever know? Let me go and find out for you. Oh it turns out there’s more trail, just like last time! And some more crusty snow for me to roll in, and I think – is that? yes it is! There’s a stick that just as big as me. What a great day!”
We arrive home at 8:30. Major promptly goes to his bed to take his midmorning nap. You know the nap where you keep one eye open just in case some action happens. After all, the day has just begun.
Today as we remember all of our companions and all of those we love, just remember that we are loved to. And we are thankful for both.
What is that? Oh Major-Major would like to say “something good is about to happen.”