No Shortcuts - Make Failure Something Good

I have been saying a lot recently stuff like....

"I honestly don't care if this fails".

"I will take full responsibility of this fails".

"This test will have probably an 85% chance of failing".  

My earlier self back in high school, college and most of my working life would NEVER say that F word.  Failure was not ok.  You didn't even want the option to be in your head at all.  

Failure would mean I couldn't get into a good college.  It would mean a tough conversation with my parents.  It would mean I wouldn't be on par with my classmates.  It would mean that I could get fired from my job.  It would mean that my co-workers would think that I couldn't hang.  

Failure was BAD.  

My acceptance of failure has totally shifted as time has passed.  That has happened for a few reason. 

1) I've failed a lot over the years and experience has shown me that life will go on.  The failures have actually taught me a ton and been my biggest learning experiences in life.  For example, I was "failing" at my sales role and decided that sales wasn't for me.  I ended up shifting to go to business school, which was a very wise move.  Failure guided me to where I needed to go.  

2) If you never fail you probably aren't pushing yourself hard enough.  You aren't trying enough new things.  You are staying in your comfort zone and its hard to achieve greatness staying in your little cocoon.  I like the quote, "a ship is safe in harbor, but that is not what ships are built for".  Going to business school when I'm not really great at school.  Starting Sloane when I was already in pretty intense school debt.  Going to Cincinnati to work at P&G not knowing if I could hang.  Taking new roles that I wasn't sure I was ready for.  Recommending something I knew wouldn't be popular.  Risk of failure on all of those things were pretty high....and in the end they all made me better.  

3) The new digital world is changing really quickly.  You can start new businesses.  You can track so much now with the data available, which can lead to incredible learning.  People aren't watching much TV anymore, so you need to be aware of what they're paying attention to.  Trends are shifting faster than ever.  You need to be out experiencing these things or else the world will pass you by.  I see people who have stayed in their comfort zone and seen that their skillsets just aren't relevant anymore.  They would prefer to do it THEIR way forever, but that's not how the world works.  

When you are putting yourself out there you are getting better.  You know you are good.  You know you can make it.  That confidence builds and it actually makes you able to just have failures bounce off of you.  You aren't as sensitive and scared anymore.  You have experienced failure and made it, so what is there to be afraid of?  Nothing.  

Its a positive cycle.  The first step is the hardest because that is when your armor isn't strong and the failures will have their biggest impact.  You just have to believe in the journey and know you will pull yourself up every single time.  

Another quote I like is "steel sharpens steel".  Put yourself in the position where you are grinding against steel.  Not butter.  You will cut right through butter too easily.  Grinding against steel will make you strong and sharp.  Ready to destroy.  

 

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No Shortcuts - Will You Click "Buy"?

Starting your own company is a process.  You start from square one and then start slowly building and building and building.  There are gates along the way that show your commitment to the journey.  Coming up with the idea.  Buying the URL.  Investing in product development.  It goes on and on.  

At each gate you ask yourself, "Am I ready to take this next step"?  Each step requires an investment in either time or resources or cash.  As you move forward the investment gets higher and higher and higher.  Your commitment continually gets tested. 

As you move through this process you need to think long and hard.  You always have the opportunity to pump the breaks and stop.  Things change and you must always survey whether these changes lead to you really considering stopping or pivoting.  Maybe an investor backed out?  A co-founder is getting cold feet?  A competitor just came out with a new compelling product?  It could be ANYTHING. 

Jumping in too fast and too hard might blind you to some red flags around you.  That could work sometimes because the thinking could slow you down too much.  In many instances the red flags are helpful to see and think about. 

I am looking to launch a golf brand.  I have started the journey.  Got the LLC.  Got the URL.  Have the brand logos.  That has all costed me some time and money, but I have been excited.  My current next step is to buy the prototypes.  This is a decent size cash outlay that makes my stomach gurgle a bit.  Its a big step forward and a big commitment level. 

I have looked at the website where I need to make the prototype order for multiple nights in a row.  The product is in the cart and I am staring at the checkout.  I look at the cost....and it hurts.  I look at the product....and get excited.  I then look at the cost....and it still hurts.  I literally have filled out the credit card information, shipping info, etc....and have hovered over the "buy" button.  I just haven't been able to pull the trigger. 

Pulling the trigger escalates my commitment.  Its a pivotal moment.  I can still back out later, but the cash outlay is significant enough that I would be pissed if I just stopped a couple of weeks from now.  I will continue to think on this and decide what makes sense for me.....now. 

This is a very real feeling and its ok progressing....or stopping.  This is a personal decision and you need to get anyone else's judgement out of it.  This is about YOU.  YOU are the person who needs to lead this.  YOU need to have the passion.  YOU need to have the energy.  If you get to a gate and just aren't feeling it anymore, then really listen to that.  Talk to people.  Figure out why you are having the tension.  Is it a natural nervousness/excitement or is it something bigger? 

I want to share that its natural.  I was all in on this idea a few months ago and now I am seeing it a little different.  I am still excited, but have to recalibrate to ensure my soul is still into it. 

I will keep you all updated! 

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No Shortcuts - People are Everything

When you are starting something from scratch you are already fighting the odds.  You need to build something that solves for a consumer need, get word out about it and then have them pay their hard earned money for it.  That is a hard task in this day and age with so much vying for the consumers attention.  

In order to make it you need A LOT going for you.  One thing that can't be valued enough are the people on the journey with you.  Having the best people increases the likelihood that you can solve everything that needs to be solved and make it.  Having mediocre or bad people severely handicaps what you need to accomplish and can singlehandedly sink the ship. 

This isn't a new thing in the business world, but the more I see the more I appreciate how hard it is to find those amazing people you need.  When you look at a resume and see where people went to school and their experiences its just scratching the surface on whether they are who you really need.  Sometimes the people who have the best resumes are actually the worst people.  They are doing things to build THEIR resume and don't have the loyalty and work ethic for YOUR business. 

Below are some things that I see as critical to getting the right people.  This is also helpful if you want to be in a position to be one of those right people. 

EQ vs IQ:  I read Danny Meyer's great book 'Setting the Table'.  He likes to hire 51%ers.  People who have 51% EQ and 49% IQ.  So people who are kind, empathetic, self aware and overall great to work with.  He believes the technical skills (IQ) can be learned, but the high EQ people are the ones that are the ones that create the positive culture and have the soft skills to make work enjoyable.  Too many people who are all IQ can be cold, calculated and not bring enough emotion to the work.  When you're on the startup journey you need to be working overall with people who are enjoyable and you feel good going to war with. 

Work Ethic:  The odds are stacked against you.  You need to do everything in your power to claw your way to success.  You cannot do that working 9 to 5.  I read Sam Walton's book (Made in America) and that guy was tireless....and picked people who were tireless.  He had his staff meet EVERY Saturday morning to review the weeks results and figure out how they could do better.  He arrived at the meeting at 3am to start preparing for it.  EVERY Saturday.  That is intense....but that's what it takes.  You need people so loyal and devoted to the cause that they will stretch themselves.  Work late.  Think about solutions in their free time.  Someone just in it to get a name on a resume is not willing to push hard enough.  

Perseverance:  You will have more losses in this processes than wins.  Likely way more losses than wins.  That is how it works when you start.  Will your team roll over?  Will they be afraid of competition?  Will they buckle under pressure and bring down the team?  I like to tie perseverance and growth mindset together.  Someone who is seeking to grow and learn takes losses and learnings.  The losses sting, but the right people stop and want to figure out how they can adjust and get better.  People who don't have growth mindsets have excuses.  It was Steve's fault.  The agency we used was bad.  The product wasn't good enough.  Its the blame game and these people drag everyone down.  You spend too much energy dealing with them versus on solving the problem.  

You can see that its hard to see these traits on a resume.  That is why its important to get to know people.  Ask them deeper questions.  Understand the core of who they are.  Bringing on people too quickly without getting deep can result in a total mess.  And the journey becomes more of a complete pain in the ass versus a fun journey with comrades.  

Do not underestimate people.  It is done too easily now and people are just seen as replaceable.  Value them and bring in the RIGHT people.  

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No Shortcuts - Financial Risk

Starting your own company is tough.  One of the toughest things, in my opinion, is getting the money you need to get it up and going.  EVERY option has major pros and cons.  Depending on your risk tolerance and your comfort level with family, friends and investors.....each option looks different.  

Friends & Family:  This is how Jeff Bezos raised his initial seed to start Amazon.  He had a lot of great connections from his previous work in finance and his parents could actually chip in a nice chunk.  He was honest with people and said that he thinks the venture had a 20% chance of success.  They believed in him and that investment paid off nicely for them.  That is the absolute best case scenario....maybe ever.  If the 80% happened, then there could be hurt feelings, disappointment and even anger from the investors.  Thanksgiving just got a lot more awkward!  

Angel Investors:  These are likely professional investors that are aware of the risks.  There won't be awkward Thanksgiving if things go south with their money, but they will want to know what's going on with the company.  That means regular (often monthly or quarterly) connects with them to report out how the company is going.  If things aren't going well, then they will let you know about it and give ideas on how to turn things around.  Those ideas might be different than what you think, but you have lost leverage since what you initially told them is not transpiring in the market.  Given the ups and downs of entrepreneurship you are most likely going to hit some rough patches. 

Personal Investment:  This gives you the most autonomy.  You answer to yourself.  This also has the most personal hit since you are pulling from your own bank account.  Are you taking away from your retirement?  Your kids education account?  From a potential down payment on a house?  Is your partner supportive of this?  Are you not able to go on vacation this year because the company needed some more money?  The autonomy is balanced out here with personal financial sacrifice....and the even whether you have the personal finances to support the needs of the business. 

Bank Loans:  This is a nice option, but the bank usually needs to see a track record of success to even loan you any money.  That means you will likely have needed to get money from somewhere else to get the business to the point where it is revenue producing and profitable.  Banks are wanting to bet on more secure businesses versus taking flyers on entrepreneurs. 

Professional VC Investment:  This route is highly publicized but is a tiny fraction of total investments in businesses.  To get into the offices of someone like Andreeson Horowitz means you are in some rarified air already.  You have connections.  You might have a track record already.  VC investments range from something as small as $50K at the very beginning to tens of millions of dollars.  The VCs are for profit companies, so will want equity with their investments and don't play around.  They are shrewd and are looking for 10X (or more) return on their investments.  Patience is not their game.  If you are not going on the trajectory they are seeing they will push you.  And push you.  They likely have connections for you since they are professional investors, but the expectations are very high on you making the business big. 

Sloane has done a mix of personal investment and bank loans.  I am personally uncomfortable taking money from family and friends.  The likelihood that the investment will be lost in this game is high and I just don't want to be on the hook for it.  I did take a $50K loan from a good friend to help with inventory and took 2X to 3X longer than expected to pay that off when the inventory didn't sell through like I thought it would. 

My friend was really cool about it, but I personally felt awful.  I didn't have the money to pay him off and it kept me up at night.  I do not want to go through that again. 

Since our personal investments and a nice boost from Kickstarter helped us get on our feet we were able to approach banks for a traditional loan.  This has been great for us and for what we want the company to be in the near term.  If we were trying to grow at 10X, then the bank loan would not be enough.  We would need to get money from somewhere willing to take a risk on us. 

Every company and individual is different.  Think through the ramifications of the choice long and hard before making it.  Money is a very serious thing.  The euphoria of starting your own thing and the confidence (potentially overconfidence) you feel at the beginning will be tested in the months and years ahead.      

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