August 9, 2018
Excerpts: Straight Talk for Startups: 100 Insider Rules for Beating the Odds—From Mastering the Fundamentals to Selecting Investors, Fundraising, Managing Boards, and Achieving Liquidity
"Breathless coverage [of entrepreneurship] abounds: sexy stories of the young and old who threw off the yoke and started their own businesses. It’s all goodbye cubicle—hello freedom, vitality, creativity.
Fed by media and online coverage of an idealized lifestyle, this 'entrepreneurship porn' presents an airbrushed reality in which all work is always meaningful and running your own business is a way to achieve better work/life harmony." —Morra Aarons-Mele, Harvard Business Review
The mythology of the wildly rich, famous, and deliriously happy entrepreneur is strong in our culture. And while it is true that the benefits of launching a successful startup can be profoundly life-changing, it is also true that not all of that change is positive. It is a challenging job with a demanding lifestyle, and those who journey down that path must be prepared. In Straight Talk for Startups: 100 Insider Rules for Beating the Odds--From Mastering the Fundamentals to Selecting Investors, Fundraising, Managing Boards, and Achieving Liquidity, Randy Komisar and Jantoon Reigersman offer a book-length "entrepreneurship FAQ" for those who dream big and are ready to work hard. After various chapters on dynamic markets, venture capital, white papers, and liquidity, the authors end with the most important question of all: Why are you doing this? Read more in this excerpt from the epilogue of Straight Talk for Startups.
THE CARDINAL RULE
There are plenty of reasons to love entrepreneurship. Entrepreneurs live the creative life. They pursue their passions and challenge the status quo. They invent the future, on their terms, and can amass wealth and power in the process. They don't live lives of quiet desperation working nine to five for “the man" in soulless, dreary mausoleums. They have a sense of independence. And with all the surrounding celebrity comes importance.
Stodgy old companies try the equivalent of donning skinny jeans and coloring their hair by offering open floor plans and foosball tables to attract talent, but many young people prefer to carry a business card proclaiming them the CEO and founder of a fledgling spark of an idea, even if it means sharing a tiny ten-foot-square cubicle with their three other co-founders in a building warehousing scores of similarly hopeful independent thinkers. And before there are free lunches, there are always energy bars or, even better, that tasty food substitute Soylent.
From the outside, starting a company looks easy. Just wake up with an idea, tell your friends, and convince one or two people to partner up; take your pick of top-tier venture capital investors, build a product, get swarmed by offers, and sell to the highest bidder.
But we know it isn’t really like that.
While wannabe entrepreneurs can quickly learn from a plethora of books, videos, podcasts, blogs, and tweets how to ideate, create a business plan, present, and hopefully raise some seed money, the rest is a bit more nuanced. How exactly do you execute on your plan? What is the best way to lead a team? How do you choose the right people? What distinguishes the best investors, and who are the right ones for me? How do you raise the proper amount of money to truly build a company? What is a board of directors, and why do I need one? How do you manage them? And then what about an exit? Is there a difference between an exit and liquidity, and which do I prefer? These vital questions are followed by a thousand more, about how to first take an idea and create a product, and then take a product and build a company, and then transform that company into a successful business.
You don’t just dream up a company; you sweat the details and manage operations. You watch every nickel and are strategic about whom you raise it from. You lead through good times and bad. You assemble trusted advisers, coaches, and boards to keep you on track. You don’t dream it; you work it—hard.
The headlong rush into the startup world can obscure the most important questions. Which brings us to our favorite rule. The one we love so much we buried it at the end, for all of you with enough commitment to entrepreneurship to arrive at this very spot.
THE CARDINAL RULE: ALWAYS ASK WHY?
Why this? Why you? Why now?
It’s remarkable how often these questions stump entrepreneurs. After a long pause, they may respond with their vision, or a recitation of their mission, or just a simple “Because it will make a lot of money.” But these aren’t the answers we are looking for.
We want to know what makes you tick. We want to know why you care, and hopefully why we should as well. And we want to know why, among all the other opportunities and challenges we face at this very moment, your opportunity is important and ripe for success.
Don’t prepare for these questions only because you suspect someone may surprise you with them; answer them because they are fundamental to your choice of the entrepreneurial life. With an ever-growing Mount Rushmore of billionaire prodigies, we need to be sure that “Why?” is answered clearly.
Financial success brings power, and power begets either privilege or responsibility. You choose. The world does not need more privileged entrepreneurs, or venture capitalists for that matter. We believe that if there is any meaning in success, it is about fulfilling your responsibility to others. To make a difference, not just a dollar.
Know why this venture is important to you. Why it should be important to others. And, given the low probability of success for any venture, why it is nevertheless worth failing at. Of course you don’t want to fail; success is always preferable to failure. But if you fail, will you feel you wasted your time, or that you fought the good fight?
A great entrepreneur needs to be bright. And tenacious. And passionate. But great entrepreneurs must also have something to prove. Something to rebel against. Some greater calling to fulfill.
We hope this book expands your appreciation for what it takes to be truly successful. And if we did our job, these rules will accelerate and amplify your chances of beating the odds. Then you can create new rules to add to these first one hundred, and share them freely with others, as Tom Perkins did with us and with a generation of earlier entrepreneurs.
But most of all, we hope that our readers will use their success to create value, not just valuations. It’s easy to lose your humanity if your success makes you feel superior to everyone else.
There is joy in mastery and pride in excellence. There is satisfaction in success. But there is true meaning and fulfillment in creating value for others and helping them reach their potential. In the end, successful entrepreneurship is the triumph of human potential.
A sage friend of mine who was a billionaire for a week or so during the 1990s tech bubble once told me that if you can have anything you want, then nothing has value. You don’t have to make any choices. And if nothing has value, then neither do you.
We hope that these rules will help you to make a difference. In your business, in your community, and in your life. If you have the entrepreneurial gift, the gift of creation, then use it to make things better for everyone. And pay it forward by helping the next person fully achieve their potential and share the spoils with the world.
Keep yourself grounded and your wits about you by frequently asking yourself, Why? Entrepreneurship is important because it has the power to make the world better. That is why it is worth all the blood, sweat, and tears.
From the book Straight Talk for Startups: 100 Insider Rules for Beating the Odds—From Mastering the Fundamentals to Selecting Investors, Fundraising, Managing Boards, and Achieving Liquidity by Randy Komisar and Jantoon Reigersman. Copyright © 2018 by Randy Komisar and Jantoon Reigersman. Published on June 5, 2018 by Harper Business, an imprint of HarperCollins Publishers. Reprinted by permission.
ABOUT THE AUTHORS
Randy Komisar is the co-author of Straight Talk for Startups (HarperBusiness; June 2018). He is a venture capitalist with decades of experience with startups. He is the author of the best-selling book The Monk and the Riddle, about the heart and soul of entrepreneurship, as well as numerous articles on leadership and startups. He is also the co-author of Getting to Plan B, on managing innovation, and I F**king Love that Company, on building consumer brands. He taught entrepreneurship at Stanford University and is a frequent lecturer at universities, as well as a regular keynote speaker on entrepreneurship, innovation and leadership. He joined Kleiner Perkins Caufield & Byers in 2005 to focus on early stage ventures. Prior to that he created the role of “Virtual CEO” to partner with entrepreneurs to help them and their businesses achieve their potential, serving as Virtual CEO for such startups as WebTV and GlobalGiving. He was a co-founder of Claris Corp., and served as CEO for LucasArts Entertainment and Crystal Dynamics. Randy was a founding director of TiVo and Nest. He served as CFO of GO Corp. and as senior counsel for Apple, following a private practice in technology law. He has also served on dozens of private and public company boards and advises such organizations as Road Trip Nation and the Orrick Women’s Leadership Board.
Jantoon Reigersman is the co-author of Straight Talk for Startups (HarperBusiness; June 2018). He’s a seasoned financial operator with extensive experience in startups and growth companies. He serves as Chief Financial Officer of publicly traded Leaf Group (NYSE: LFGR), a diversified consumer internet company. Earlier in his career, he served as CFO of Ogin Inc., investor and member of Goldman Sachs’ European Special Situations Group and investment banker at Morgan Stanley in their mergers and acquisitions team. He also initiated and led the 9000METER expedition, the first expedition to attempt 9000 vertical meters on human power by diving over 152 meters below sea level and by climbing the summit of Mount Everest at 8848 meters. He is a Fellow of the inaugural class of the Finance Leaders Fellowship and a member of the Aspen Global Leadership Network.
For more information, please visit straighttalkforstartups.com