Christian Renaud's Blog

The Drake equation for Startups

I have alluded to this concept or flat out stated it in prior blogposts, but I want to consolidate this piece of advice I give entrepreneurs daily (literally, I say the following paragraphs nearly verbatim at least once a day).

Astronomy: The Drake Equation roughly states that (the average rate of star formation per year in our galaxy) x (the fraction of those stars that have planets) x (the fraction of those planets that can support life) x (the fraction that will go on to support life) x (the fraction that will develop into intelligent life) x (the fraction of civilizations that will develop a technology that releases detectable signs of their existence into space) x (the length of time for which such civilizations release detectable signals into space) = the number of civilizations in our galaxy with which communication may be possible (life on other planets).

Summed up: We are dealing with such large numbers of the first variable (stars) that you could take a fraction of a fraction of a fraction of them and you'd still have intelligent communicative life on some other planets in our galaxy.

Startups: You have an idea.  Out of the 7 billion people on Earth, you cannot rationally statistically assume that you are the only person with the idea, and that co-invention (especially in information technology) is happening at multiple other locations around the world.  Some fraction of those co-inventors have the wherewithal to develop the idea.  Some fraction of those are working on it full time.  Some fraction of those have funding sufficient to make it successful.  Some fraction of those have a veteran staff of raw red meat eaters that have done this before.

Therefore, it doesn't matter how much time, money or experience you have in developing your idea.  Someone(s) out there among the seven billion is preparing to take that idea and make it very large.  How much time or money you choose to, or are able to, dedicate to growing the business is relevant only to you.  The market, and those co-inventors, do not care one bit for your (often self-imposed) limitations.

Summed up: Just because you can only moonlight on your startup doesn't guarantee you any presence in the market.  If you can only train 15 minutes a day for the marathon, and someone else is running a 10k a day, guess who is going to prevail.  Yep.

Social Accountability: Present.io

Accountability.  Usually that's a euphemism for 'blame' or 'Whose ass do we kick?'.  It also ultimately points out a culture's way of trying to avoid being the person taking the brunt of the responsibility for a bad project or decision that they didn't have complete control of.

But in the case of startups, you do have complete control (yay!) of all of the moving parts, and  you get all of the kudos and accolades when it is successful.  Conversely, should the startup come on hard times and fail, you also get all of the blame and criticism that comes with having been in control.   With Startups, you can control every factor of the company, and it's like a drug, a wonderful wonderful drug.

With Present.io, I interviewed customers for months during development to find out key features and use cases. We lined up early-field-trial (EFT) customers before the product was complete so we'd have real feedback from real-world environments.  We reached out to peers and analysts.  We added and changed features based on early field trials.  We had demo units out at most of the local major companies.  We did insane amounts of competitive intelligence analysis. I did face-to-face or web demos of the product to over 100 different people in the course of a year.

Meanwhile, I was also working with others to launch StartupCity, StartupIowa, Plains Angels, and what feels like a hundred other things. In hindsight, in that flurry of activity,  I somehow switched from building something awesome with Present.io to "avoid failure mode".  Erin Rollenhagen coined this term in her blogpost "Can't Get No Satisfaction" this weekend:

"When we were building TableNabbr, in the beginning it was all creativity and ideas and trying to build something awesome. Then we launched, and as happens with a new product, issues arose. We were stretched pretty thin trying to keep Entrepreneurial Technologies (the consulting business) clients happy as well as continue to build TableNabbr, and very quickly TN shifted to Avoid Failure Mode. Avoid Failure Mode can appear to be very productive for a period of time. It causes people to work long hours and expend a lot of energy. But the energy is all being directed at patching holes rather than creating something beautiful. There is no joy in perfectionism. Eventually, the enthusiasm you had for the beauty of the original plan is lost in the struggle."

And by unconciously switching to Avoid Failure Mode, Present.io, and I, failed.  I wasn't patching holes as Erin was with TN above, but I wasn't able to convert the eval units and demos to paying orders.  We were spending money each month on hosting  (the developers had agreed to work 100% for equity, which I feel remarkably guilty for in retrospect), and had no revenue to offset.  All of our many conversations with hardware designers (to build more customized and cost-reduced hardware) were gated by the lack of real-world customer feedback.  I agonized for months about how to create some sort of entrepreneurial defibrillator to shock Present.io back into life, and relevance. 

Stall.  

I could easily have left it as a stalled startup, just parked like so many startups we see every day just sitting inert.  This would have been incredibly easy for me to do other than justifying to Janene how I was spending the money each month with no revenue.  

It would also have been a lie.

It would have been a lie to myself, my wife and kids, and the Iowa startup community I have spent the last four years trying to help build.  If it's failure, you face the failure, and you learn from it.  That's how you learn, by trying and failing.  Ask Edison. After 60+ products in my 25+ years in this industry, this is by no means my first failure, just my most personal and visible one.

And like any good entrepreneur, I will get back up, rub some dirt on it, and get back in the game.

To make sure that this effort wasn't entirely in vain, I am planning on hosting a Startup wake at StartupCity on Friday at 3pm to walk through what worked and what didn't work in the hopes that any of that experience can be of use to people developing their companies right now.  I hope you can join us if you are in the area.  I will do my best to not be defensive, but I'll need your help to set the right tone for this first wake, so we can hopefully face our failures, and learn from our failures, as a startup community moving forward.

Champions

Yesterday afternoon I was suprised by a congratulatory tweet from Lynn Hicks at the Des Moines Register letting me know that I had been nominatated for a Silicon Prairie Community Champion award at the inaugural Silicon Prairie Awards late this month.  I am humbled to be nominated for the award and included in such a group with Joni, Thad and Dusty.

As usual, I have mixed feelings.  I think the rapid progress across the Prairie is the result of not one, or four, or forty individuals, but the entire community rowing in the same direction.  Publications such as Silicon Prairie News, the Des Moines Business Record, and the Des Moines Register continually highlight the multiple accomplishments across the region by entrepreneurs of every species.  It is the aggregate of all of these  accomplishments that deserve 99.999% of the credit for the renaissance in entrepreneurialism we are experiencing.

That said, I cannot emphasize enough the outstanding accomplishments of my co-nominees.  I met Dusty two years ago at my first BigOmaha and he has been relentless in his regional collaboration and open-door attitude so seldom found in traditional economic development organizations.  He is cut from a different cloth, and I use him often as an example to his Iowa peers as the personification of a 'abundance, not scarcity' mindset that is going to get us from where we are to where we need to go.

Joni and I met at this last BigOmaha via an introduction by the indefatigable Bart Dillashaw.  She immediately impressed me by having a fiercely entrepreneur-centric compass by which she steers Pipeline, an excellent program for mid-stage startup CEOs to work with one another to share learnings and collaborate.  She showed more of this same zeal at a recent three-state collaboration event hosted by Gallup in Omaha that we attended where she brought in CEOs from Kansas City and Omaha and discussed cross-border ecosystem building.

Thad was also at the Gallup event and immediately distinguished himself to the group by having the pragmatic, no-nonsense attitude of a serial entrepreneur.  I had not met Thad prior to the event, but was quick to grab his business card as it is obvious that he is going to go through the (somewhat labrinthine by Iowa standards) Kansas City entreprenurial ecosystem like a tornado through a trailer park.

Finally, Iowa.  The considerable progress we've had in Iowa has been the direct result of the entire tribe leaning in and taking an ownership role in the future of the community.  StartupCity would not exist without Tej Dhawan shouldering an ever-increasing amount of weight.  The guy puts circus strongmen to shame.  Ditto for Mike Colwell at the BIZ who has 4-5 meetings per day with wantrepreneurs across the entire spectrum of ideas, and who created (the desperately-needed) Plains Angels out of thin air in June.  The entrepreneurs and mentors of StartupCity, like Brian Hemesath (who is both a mentor and entrepreneur), who selflessly give their time and energy to help one another along the bumpy entrepreneural journey.  StartupIowa missionaries like Amanda Styron of SeedHere,  Joel Bennett of Veel Hoeden, Josh Cramer of CramerDev, Ben Milne of Dwolla, John Schnipkoweit, Levi Rosol, Andrew Kirpilani, Tom Chapman (who is selflessly advancing the Iowa cause from Nebraska regularly), Dan Shipton,  Andy Stoll, Alexander Grgurich, and about a million more that I will kick myself repeatedly in the ass today for not including in this short pre-caffeine list. All of these people deserve an award for their constant exertions to make Iowa a better place for startups and entrepreneurship in general.

Collectively, everyone above, and everyone they work with and everyone THEY work with (and so on, ad infinitum) deserve the real credit for being the champions of the Prairie.  Don't vote for me.

What I learned in Boulder

This week Tej Dhawan, Andy Stoll, Amanda Styron, and I trekked to Boulder Colorado for the StartupAmerica Partnership Regional Leaders Summit to represent StartupIowa.  Over the two days, the SUAP team and our peer regions (states) were relentless in sharing best practices and programs that they have developed to build their entrepreneurial ecosystems. 

The Summit has had me thinking deeply about where we are in the gestation of StartupIowa and the overall ecosystem within the state.  Iowa has had a long history of innovation and entrepreneurialism, and we are in the middle of a transition from the prior model of economic-development-driven scarcity-silos to one of open-innovation, regional sharing and the recognition that abundance comes from collaboration and not the zero-sum-game of competition.

From the beginning of this journey, I’ve considered it a multi-phase process to fully develop a culture of big risks, continual innovation, and the resultant successes that are the hallmark of any thriving entrepreneurial hub.  I will call Phase One our ‘Enlightenment’ phase, and is/was as simple as getting the tribe together, meeting each other, networking, and building a sense of self as a community.  The community moves from one of isolated individuals to a sense of pride of being part of the startup tribe.

We are here.

Hunters and Farmers revisited

If you've been reading my blog for a while, a recurring metaphor you'll see that I come back to over and over again is that of Hunters vs. Farmers.  'Hunters' in this case are the innovators and entrepreneurs that start a company and create the vision.  'Farmers', by contrast, are the individuals who go execute on that vision and, more often than not, scale the initial vision far beyond the Hunters who created it.

Both are necessary, and there needs to be a balance of the two of them in any organization in order for it to succeed.  When I see companies that are too heavy in either Hunters or Farmers, it's often a source of trouble as there is either a deficiency of focus and execution (too little Farming), or a deficiency of vision (too little Hunting).

Don't get me wrong, everyone should be executing relentlessly in a startup, not just a chosen few, however both roles require dedicated attention and finesse.  I have seen more than a few startups that were created by Farmers who had a small spark of vision, only to have them obsess on the execution to the exclusion of everything else.  This is often fatal, as 'vision and strategy creation' is not a discrete event that happens at an annual 'Strategic Offsite', then put on a shelf next to all the other folders of years past.  It is a constantly evolving and adaptive strategy that best reflects the continually-changing world and marketplace we live in. 

Contain the Crazy

Last week's festivities and this week's already-harried activities have really driven home a point for me when it comes to being an entrepreneur: You have to 'contain the crazy'. 

One of my favorite quotes is that "all people are crazy, but that we gradually learn how to behave sane in public".  Entrepreneurs constantly walk that line between crazy and genius, and sometimes the crazy squeaks out a little too much and alienates potential investors or customers.

By crazy, I don't necessarily mean mental-instability, although the startup community is rife with that issue as well, but more the million different balls up in the air for most startups.  If you are running a company, you know what I mean.  Any given day is a melee of activity, and when you are consumed with it, it's hard not to speak on that level in every conversation you have with people. People who, most probably, confuse your ability to multitask with borderline insanity.

One positive example to use as an archetype for this is a gourmet restaurant.  If you've ever worked in food service, you can attest that the experience on the kitchen side of the door and the customer side of the door are polar opposites.

Consider the finest restaurant in the United States, The French Laundry, in Yountville California.  They have a lovely garden that you can retreat to between the multitude of delicious courses that affords you a glimpse of these poles in stark contrast. 

Through the window on your left is the dining room, a haven of zen-like calmness and simple elegance where the waitstaff are omnipresent yet unobtrusive.  You dine in serene simplicity that amplifies the amazing dishes being placed in front of you.

Through the window on your right is the kitchen which is akin to watching a well-choreographed fight sequence from an epic war movie. People and implements are flying around, seemingly at random, but actually in a symphony of movement with complex logic and synchrony behind every motion. 

Never once does the constrained-chaos of the kitchen bleed into the haven of the dining room.  Not once.  As far as you know, these delicacies sprung forth fully-formed from Chef Thomas Keller's toque like Athena from Zeus' forehead, and not from a legion of perfectionist culinary ninjas.  They keep that complexity obscured so as not to draw the focus away from their product, their message, their experience.

As entrepreneurs, we need to do the same with customers and investors.  We need to make their experience with us a zen-like interaction with our brands, products and services, never aware of the complexity just on the other side of the door.  It's not going to add to their experience to know that you had to pull an all-nighter to fix the bugs, it's going to raise concern about product stability.  You don't want to lay bare all the nuances of your business to a prospective investor until they have expressed determined interest in investing and you have shifted to due diligence. 

It's up to you to behave in public, on the dining room side of the door, and contain the crazy.  That's yours alone to savor.