August 26, 2003 - The Start Up Process,
Part I
by
Bill Snow
Are you a wannabe or early stage
entrepreneur? Print this column and post it on your fridge.
The process began with a
phone call. “You should talk with this guy, I think he has a good idea,” the
caller told me. “Actually, I may join the company.”
Since the caller was a
well-known figure in entrepreneurial Chicago, and a good friend of mine, I
naturally met with the entrepreneur. Turns out he’s a bright guy with a boat
load of industry experience. He’s got an interesting idea. Not so long story
short, I’m on board as CFO.
For this column’s first 2
months of life, I have talked about other companies and other entrepreneurs. I
thought it might be a fun idea and turn the spotlight on your (not so) humble
scribe and talk about the experiences and observations – good and bad -- that
have brought me to this point.
Pay your dues – experience life
(Warning, spoilers herein)
Over the years I have
communicated with many early stage entrepreneurs who are incredibly misguided
about venture capital, entrepreneurship, starting businesses, and what it takes
to grow a business. I look back at my early years with horror as I realize that
I once held many inane beliefs. It is frustrating when I communicate with
someone whom I know is incredibly misguided, but doesn’t yet know it. I guess
you can only learn things from experience, and to that end, it probably makes
sense for would be entrepreneurs to make their mistakes and learn. Here’s a
short list of what I’ve learned:
-
When I was a child, I
learned about myths: Santa Claus, the Tooth Fairy, and the Easter Bunny do not
exist. “S***,” I thought to myself as I caught my parents setting up toys
that Santa purportedly left for my sister and me.
-
When I was a teenager, I
learned about misconceptions: In the mid 1970’s, my grade school teachers told
me, with absolute righteous authority, that the world was entering a period of
global cooling(!) that would ruin the planet, and we would run out of gas by
1980. “Oops,” I thought to myself when I got my driver’s license in 1983 and
filled up the family truckster with gas that cost less than it did in 1979.
-
When I was in my twenties,
I learned about dashed hopes and bitter reality: I am a Cubs fan, need I say
more?
-
When I was in my thirties,
I learned about venture capital. Let’s see, what is that little ort of wisdom
I learned about venture capital? Oh, yeah! VCs do not invest in early stage
companies. More so, VCs can sniff inexperience, ignorance, and plain
stupidity from a mile away.
With the exception of my
column, entrepreneurs can’t gain experience by merely reading about things --
they need to go out and experience life’s little crushing defeats. I guess it’s
the only way to determine if someone has the hide of a rhino or the constitution
of a kitten. If someone is head long on running full blast into a wall, the
best advice I can give is “get out of the way.” If they get up and try again,
they might eventually figure out they can get much farther by walking in a
different direction.
Never stop learning
You want to be an
entrepreneur? Go work for one. Find a job with a start up. Work for free if
you have to, but get out there and start learning though experiences. Similar
to a shark that must continually move (or else it will die), entrepreneurs need
to constantly learn new skills. I’ve found the best way to learn is to do.
While some people can learn all they need to know by reading a book, I think
most of us have to get out there and get out hands around something. I think of
accounting when I talk about this. I needed to get into a business where my
money was at stake before all the accounting principles and concepts I was taught
in college really sunk in.
Strengths and weaknesses
Do some serious thinking
about your strengths and weaknesses, and be willing to take a “dumb job” in
order build experiences. I wanted more managerial and operational experience,
so I spent a couple years in the mid 90’s working for a video retailer. I
managed in excess of a dozen video retail locations in rural Georgia, opened
over 20 new stores, and integrated another dozen or so into the company fold.
The pay wasn’t great, the hours were long, I drove 40 thousand miles in one
year, I lost 35 pounds (dropping my 6-4 frame down to a 32 inch waist), and
developed an intense hatred of pagers (like Pavlov’s dog, I quickly became
conditioned to pager beeping = huge mess that I have to clean up).
But I managed 120 people and
17 stores that grossed about $5 million per year. I hired and fired hundreds of
people, had guns pointed at me (avoid Monroe GA at all costs), made deposits at
the bank, made sure payroll was met, dealt with shady contractors, and found
ways to motivate people who previously thought they had a dead end job. I had
former employees call me awful names (former girlfriends are not the only ones
to do this), I got my hands dirty, plunged toilets, soothed ruffled feathers,
and in one freak out moment, dealt with a 3 am phone call from an absolutely
hysterical manager who was convinced her store was haunted with ghosts. I still
get chills thinking about that one.
I learned more about
operations, management, people, psychology, and motivation than anyone working a
consulting gig. That, I can guarantee.
Deal with ambiguity
Entrepreneurs must have an
ability to deal with the unknown. I was having a bad week when I told a former
boss that it felt like “I was staring into the abyss.” His reply, “It’s only a
problem if the abyss stares back.” In other words, deal with it. It can always
get worse.
A few years back, I started a
new job with a start up. After my second day, I joined a bunch of other
employees for cocktails at a nearby bar. As we sat at the table, I mentioned
that it was great to be with a group of entrepreneurs, people who understand
what ambiguity is, and how to deal with it. Instead of getting the knowing nods
that I expected, I was greeted with a chorus of rolled eyes that essentially
said, “Ambiguity? What ambiguity? We’re funded, there’s money, there’s no
uncertainty.”
A mere two months later,
after our IT development firm dropped the ball on the website (and the only way
to produce revenue), these same “entrepreneurs” who scoffed at notions of
ambiguity, quit. To a man, instead of tightening the belt and redoubling
efforts, they quit.
From this experience, I
coined the term “expense check entrepreneur.” An expense check entrepreneur is
someone who enjoys the panache of calling himself an entrepreneur only when
things are good and those twenty thousand dollar per month expense checks are
cut on a regular basis. When it comes time to produce and be accountable, they
demonstrate their kitten-like intestinal fortitude and flee.
Next week
I’m running out of space for
this week’s column. Next week I’ll wrap up by covering the art of war,
embracing your inner stupidity, how and when to approach investors, and a few
other interesting observations and experiences from my past.
Has your company been profiled by Bill Snow? Send
an email to introduce your company:
bill@billsnow.com
About the author
Bill Snow runs this site. If you haven't figured that out yet, I can't
help you. |