Why Entrepreneurs Love Endurance Sports

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If you don’t have answers to your problems after a four-hour run, you ain’t getting them.
– Christopher McDougall (Born To Run)

As I prepared for my first marathon last year, people kept asking me why I was running the race. What compelled me to spend all my free time running (and at the time fundraising for CCFA). While there were personal reasons for this specific race, what was apparent is that a ton of my fellow entrepreneurs had done or were preparing to do some endurance activity themselves. From mountaineering to marathons to triathlons – it was clear that the entrepreneurially inclined also have a higher than normal participation rate in endurance sports.

What is it about pushing yourself to physical limits that appeals to us? Some say it’s the same drive and motivation to succeed that lead them to entrepreneurship in the first place. Honestly that’s just not it. Certainly the skills and character needed for professional success helps someone complete their chosen activity – but it’s not the “why”. After 6 months of reflection and a few more races, it’s become apparent that the thing I seek is myself. The voice in my head that becomes even more introspective, even more truthful. It’s a place to reconcile the decisions of my past and their results and think through the decisions I currently face in a physical and emotional place that has been stripped bare of its armor.

The startup environment is so emotionally and physically demanding that we develop protection, both from the outside world and from ourselves. There is something about bumping up against your physical limits that breaks down even the strongest armor.

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Not Everyone Needs To Take The Same Risks

When a person really desires something, all the universe conspires to help that person to realize his dream.
–Paulo Coelho (The Alchemist)

Last week I read a couple posts about hiring MBAs into startups by Ed Zimmerman and Phin Barnes. They took a thoughtful look at hiring and funding MBAs, with both largely ending up on the “it ultimately depends – but I’m usually extra cautious about it” answer. My view is a little more nuanced view, in that I think that most MBAs should ignore the startup hype and go after the big roles at corporates that they dream about. Much like a Rabbi telling the wannabe convert to get stuffed 3 times before welcoming  them into the fold, founders should push the limits of potential MBA candidates.

If they don’t do the startup thing, it’s totally ok! Other people do not need to define success, or their life, the way that a startup founder does. It makes me extremely upset when I see startups poopooing other people’s career goals as not valiant. It is perfectly acceptable, and more logical, to make a conscious effort to de-risk career choices. Hell, in the depths of the dark days there isn’t a single startup founder who makes it past the “just messing around stage” that doesn’t rethink their own huge risk taking. Over the past year I’ve had more than my share of dark days, many of which had me thinking how to seriously de-risk.

When an MBA decides to take on the extra risk, they can be a huge asset. Many MBAs have an element of unrestrained ambition that makes them a force when deployed in the right way. They will give up all other aspects of their life for professional success, throw personal relationships out the door and maybe even sacrifice their own health. They also usually have the intelligence and attitude to be a key contributor to the team. The problem, as both Phin and Ed point out, is that they are usually wired to take safe bets and seek out status, security and prestige. As a founder, you question their motives for wanting to be involved, worse you fear that they’ll jump ship when something shinier comes along.  If you can find one that truly wants to be involved, they usually have something to prove and that kind of fire translates into an employee that will be very hard to stop.

So when an MBA comes looking for startup opportunities as their modern “safety school” equivalent, they get shown the door.  If you put up every roadblock and they knock them down one by one and are relentless because either your idea or your team is something they need to be a part of, then open up and use their fire to your benefit.

Not Everyone Needs To Take The Same Risks

Who Makes The Money in 3D Printing

He who knows when he can fight and when he cannot will be victorious.

– Sun Tzu (Art of War)

In my vision of the future, the world of manufacturing is optimized for geography rather than labor cost. In addition to in-home systems, there will also be a network of local manufacturing facilities (think Kinkos) with high end machines and trained staff. Manufacturing is one of the world’s largest industries and this shift will be seismic, disrupting traditional supply chains and opening up new business opportunities.

The question for the entrepreneurs is what part of the industry to be in and which will take the lionshare of the profits. It’s a complex question which I’m still working out in my own head. Here are some of the different models and my thoughts on each:

  1. Equipment manufacturers – How do the patent portfolios of the established players inhibit the market for new entrants? Are there new technologies that emerge that surpass the capabilities of patented technologies?
  2. Raw material suppliers – How will demand for new raw materials shift the market and distribution for commodities. Will it create new commodities?
  3. Equipment repair services – Service contracts for independent manufacturing facilities and home systems. This would likely look a lot like the classic service contracts that GE Aviation and Energy sell as add-ons to their systems. GE Energy and Aviation built their businesses by selling the machines at cost and profiting on long-term service contracts and financing deals. Will today’s equipment manufacturers monopolize this market or will there be space for 3rd parties to provide services?
  4. Equipment financiers – Will the current manufacturers offer in-house financing or be content letting a 3rd party lender (or many lenders) into the space. Personally I think they’ll create preferential partners in order to remain focused on their core competency in a fast moving space.
  5. Outsourced manufacturers (distributed versions of Foxconn) – Margins are razor thin for contract manufacturers already, will that change in the 3D printed era? If this is a game of sheer volume and efficiency you’ll need to get into the game before an Amazon (Shapeways?) monopolizes it and their efficiencies of scale are insurmountable.
  6. Real estate holdings – Will there be a resurgence in prices for industrial zoned property?
  7. Workflow software – Software packages that run the manufacturing facilities workflow that is optimized for large runs of unique products going to unique places.
  8. Glue – There will be a software layer that sits between product companies and makers and the facilities that produce their items. There is no use in a digital supply chain if the communication process is still manual!

With the market in its infancy and growing 12x over the next decade, it’s the right time to entrepreneur’s to be thinking about these different models. Some of these businesses aren’t executable until the market is more developed, so the real question is how do you build something now that is profitable and be in the right place to profit as the market evolves. Feel free to reach out to me if you have some thoughts or want to talk about these ideas.

Who Makes The Money in 3D Printing

Signing a Deal is Like Dating & Other Startup Metaphors

Drop it like it’s hot

-Lil Wayne

I’m a huge fan of metaphors. In fact, they are so prevalent within Card Gnome and the wider startup scene that it’s easy to forget that you are even using them. Has anyone else caught themselves projecting a metaphor onto reality? Literally imagining “getting up to bat” before a presentation?

In any case, it seemed fitting to write a post about a few of the ones that fit startups well:

Startups are like rock bands: Much like a new company, a new band needs to find its product market fit, communicate with fans and find repeatable ways to build their base. If they want to make their band something more than a “lifestyle” enhancer, they must be able to scale it.

Entrepreneurs are like surfers: Each wave is an opportunity. You need to learn how to pick your waves and be comfortable that even if you do everything perfectly you still may get absolutely pummeled by it. You can’t ride every wave and once you’ve committed it’s not easy to bail without some pain.

Signing a deal is like dating: There is a highly choreographed dance that happens with each potential deal. When do you call? What do you say? How should you say it? Who initiates what? Just like dating the girl/guy of your dreams, all of these things are extremely important to how things work out and how power is eventually leveraged in the resulting relationship.

I know there are a ton more, drop them like they’re hot in the comments.

Signing a Deal is Like Dating & Other Startup Metaphors

Distribution is the only obstacle

Hi, my name is, my name is
(What? Who?)
My name is Slim Shady

Ahem, excuse me
Can I have the attention of the class
For one second?

– Eminem “My name is”

Distribution is the ability to get a product in front of its target audience. Hopefully most of the people in it. This is the hardest obstacles for startups, and plenty of companies build amazing products but fail because they lack distribution.

We don’t need to reinvent the wheel to do it successfully. There are plenty of examples that entrepreneurs can adopt and tweak to their own unique needs. Over the past year we’ve seen a lot of strategies, but most of them fall into a few high-level categories:

The PR machine – Constant attention from traditional and non-traditional media. Constant new “events”, “deals”, “scandals” keep the companies name in popular discourse and bring in a steady stream of new users.

The Social Virus – A product that by its very nature, or through added game mechanics, incentivizes you to share it with your friends. Twitter, Facebook, Quora, Groupon and Zynga have exploded into public consciousness through intelligent use of this strategy. You’ll find some of the top minds in the tech startup world, from Dave Morin to Tom Higley amongst many others, are working on mastering this new strategy.

We’re Mad Men – You can pay someone else to give you millions of target market eyeballs on your product. Its expensive, but if you can successfully acquire customers for less than you make from them in the lifetime that they are a user, then keep spending money.

The Partner – The idea here is to find a partner that has the right eyeballs, but wants additional ways to monetize them. The startup offers the company a cut of its profits in exchange for help getting them to adopt the new product.This is one of the most popular strategies, because it normally requires less up-front costs and improves a new company’s brand.

Word of Mouf – It needs to be included, because nearly all new companies think that if they build a cool product people will instantly get the word out. The truth is that most startups take time to get product/market fit during which time their product isn’t something groundbreaking. Its an avenue for growth, but companies will normally run out of money before it gets them enough traction.

At the end of the day, the right distribution method will likely be a combination of a few of these strategies. Have you used any of these strategies? Have any pros and cons you can share? We’d love to hear what you (our awesome readers) think.

Distribution is the only obstacle

Why we’re workaholics

The key to this joint, the key to staying on top of things
is treat everything like it’s your first project, know what I’m saying?
Like it’s your first day like back when you was an intern…just stay hungry

– Notorious B.I.G

From the second we start a new business, we all believe that there will be a pay-off. In our minds, its a specific time or event somewhere in the unknown future when we’ll be able to sit back and reap the rewards of our success. We are constantly working because theoretically its bringing the eventual success closer to fruition.

Most of us put up with the daily fear of financial ruin by working harder and longer trying with all our might to bring that payoff to fruition faster. The result is that while we have fun at work, we feel guilty when we are not working. Every hour not worked is slowing down our payday.

When Natty brought up this concept last week, it was an extremely powerful realization. My distinct preference for delayed gratification and ambitious achievements plays a large part in my love affair with entrepreneurship and the startup lifestyle. Upon reflection I notice that many of my startup founders also enjoy the same high-risk/high-intensity/high-reward personal activities. Mountaineering, backcountry trips, endurance races and 3rd world travel. No wonder so many of us call Boulder home.

Why we’re workaholics

I’m an Entrepreneur (just don’t call me a startup)

This is a guest post by Patrick Stinus, a co-founder of Seventh Element , a management consulting firm that provides “Fortune 100 tools to small businesses” to help them grow and increase profitability.

I was recently on the phone catching up with Joel and it dawned on me that while we’re both entrepreneurs, we operate in completely different worlds. If you were to ask, 99.9% of people they would see very little differences in our stories. We both worked in the GE “fast track” program which promised us lives of success and the “the American Dream”. We both left it behind to start our own businesses, take a shot at changing the world and do work that makes us truly happy. The difference is that I’m not trying to launch a startup, I’m starting an agency.

Start”ups”, especially ones that focus on technology, are what most people envision when they think about when you quit your job to “follow your dreams.” They’re typified by years of living on Ramen noodles, working 70 hour weeks, bootstrapping and sometimes pimping yourself to private money. They are designed to cheaply and quickly create a completely new (or incredibly better) product or service. It takes time without revenue to develop new products.

Agencies are businesses whose core value proposition is the skill set of its employees. I co-founded Seventh Element to bring the business management tools we perfected at GE to small businesses. We skipped the long, costly, and iterative product development phase and went straight to clocking billable hours to our clients. We can leverage our corporate pedigree to potential clients and make money within the first month of existence.

If you graph the profits of successful startups, they follow an exponential curve, where they bumble along for a long time making very little money and then get traction and “pop.” Since these businesses have such high-profit margins, which aren’t tied to hours available to bill, they have the potential to create hugely scaleable businesses which can be sold for hundreds of millions of dollars. The agency model theoretically starts with respectable profits on day one and grows in a modest, linear, path as it bill more hours and hires more talent that can be billed. An agency is far less risky, but is much less scaleable.

I am not trying to oversimplify the challenges our agency has faced, or imply that leaving a steady job for an agency is more (or less) respectable than a startup. The fact is that agencies have a good chance of making reasonable money, and startups have a low chance of making stupid money. If you do the rough math, the upside is similar. Owning a business is a personal decision, and the money is just one piece of the puzzle. Their isn’t a right or wrong way to do things, but keep this comparison in mind if you are deciding on starting your own business.

I’m an Entrepreneur (just don’t call me a startup)

5 lessons before launching your startup

“Nine to five is how to survive – I ain’t trying to survive… I’m trying to live it to the limit and love it a lot”

-Jay-Z

Last week I had a discussion with someone considering leaving their job to launch a startup.  They wanted some honest feedback on their business model. It occurred to me that objectively evaluating a startup idea is a skill that can only be learned through experience and that I finally felt marginally comfortable giving advice on the topic. After 8 months of making mistakes, listening to great mentors and thinking through many ideas it felt great to give back. For those of you I haven’t spoken with, I wanted to jot down some of the key lessons I’ve picked up along the way.

1 – Understand your goals – You need to be honest with yourself about whether you want a massive business or a lifestyle supporting income source.  All your thoughts about the startup must flow through the answer to this question.

2 – Passion – If you are creating the next big thing, realize you’ll need to have the passion to devote 70+ hours a week for 3-5 years to make it a success. Is this an industry and product you will stay excited about? Note that I’m not saying the product has to be sexy, plenty of people make huge profits on products others didn’t even consider working on.

3 – Test instead of talk – Try to test your idea without spending money and time on development. If your core-product is a consumer website, there are ways to test your prototype extremely cheaply. Once its built, give it to customers and ask them if they are willing to pay for it. Try to avoid the echo chamber of your friends and family. Their support will carry you through the tough times, but they are terrible judges of what constitutes a great business idea.

4 – Financial resources – You need to eat, you need a roof and you need to provide for your family. If you can’t do this while devoting the time and effort for a startup, then its not for you. Getting funding is a long and arduous process and will likely require that you’ve already gotten traction with your product.

5 –  Product-Resource Fit (Viability) – What resources do you need to make your company successful? Do you have, or can you acquire, the skills, money and other resources needed to implement your idea? Be optimistic but honest. In order to make your dream a reality you will need to fully believe you can do it.

A lot of you are founders of companies, use that comment box to talk about your own lessons or expand on mine.

5 lessons before launching your startup

What kind of company culture are we building?

Over the past few weeks Chad and I have been recruiting engineers to join our Card Gnome team. It has forced us to be introspective and verbalize our company culture to prospects. It has been illuminating to look at how our personal belief systems have manifested themselves into an operating entity. It comes down to 4 core tenants:

Passion/Motivation: Life is short so we believe it should be spent doing things we are passionate about. We truly believe that intrinsic motivation produces the best long term value and we foster that in ourselves and others. Money by itself is not a motivator, only an indicator that your business has added value. We are trying to build an amazing organization of passionate individuals, therefore acceptance of mediocrity is unacceptable.

Independent Debate: Chad and I are both fiercely independent thinkers with nearly opposite personalities and core skillsets. Our debates are epic but always respectful. We put all the details on the table and force each other to justify our thinking. It has given us a deep appreciation for how the other person thinks, which only serves to make the debates more honest. At the end of each debate though we come to a conclusion and agree on a path forward. I cannot, at this moment, think of a situation in which we were not in complete agreement on the correct decision. There is very little grey area, we both agree that a decision is the correct course or we keep talking. Compromise has its place, but it generally doesn’t build a compelling product.

Experimentation: We  are wiling to implement our ideas purely to learn what will happen. In fact, adding printed cards was originally one of these ideas. A few people had asked whether we could print our eCards for them and so we decided to give it a try. A week later, after receiving amazing feedback from consumers and artists, we decided to change our core business. Other trials have been failures, but the freedom to try something new is what makes us entrepreneurs, and heck its fun.

Respect for others: Our company is not just about profits, its also about meaningfully improving the lives of our customers, employees, partners and ourselves. When we make decisions we think deeply about how the decision will effect our stakeholders.  Making them happy and treating them fairly is the only way to build a great company.

We haven’t written a formal values statement yet, and there are certainly things I’ve left out, but this post is a good start. Use the comments below to let us know what you think about it.

What kind of company culture are we building?

Timing is what makes us different

Almost anything you build on the web has already been tried in one form or another. This should not deter you.

-Chris Dixon on “Timing your startup

We are asked a lot of questions about CardGnome everyday. My favorite is “how are you different.” To which the answer is not a litany of product features or marketing strategy, although both do differentiate us, but rather a conversation about the timing of the market. We’re not the first to try “we mail it for you” greeting cards, but unlike the previous companies, the printing technology is finally good enough that we can print one-off cards as cheaply as large companies can print in large runs.

Current print-on-demand presses, like the one we use, can print thousands of unique cards in a single run and can be programmed to work alongside other machines to automatically stuff the envelopes and stamp them. Its cheap. This is how Barack Obama printed personalized appeals to you for money and votes during the election. The systems have improved so much in the last few years that the cost compared to factory presses is comparable. Previous companies could only feasibly offer bulk customized cards at a reasonable rate, so they weren’t able to do the mailing of just one card for you.

So why doesn’t a large company switch to our model? To be successful in the greeting card market today means being great at choosing the right mix of cards to offer. Stores have about 250ft of card space to offer you cards for hundreds of occasions and personal tastes. Psychologists, market researchers and retailers work together to maximize the space with the cards that will sell.  They leave money on the table because some customers will not like the options offered or didn’t go to the store because it was a big pain in the butt. eCommerce sites like ours solve this problem by offering hundreds of thousands of cards and the tools to quickly find the ones that fit what the customer needs exactly. On top of that our site can schedule cards to be sent at a later date and set to remind you of important dates in time to send the card.

Can our established competitors learn to operate in this new model? Probably, but changing the company culture from large scale printing of a few hundred cards to the lean print-on-demand model demanded by an eCommerce distribution model will not be easy. In my experience, old-school factory managers don’t readily give up their budget or adopt new methodologies. It will take them some time just like it did with Blockbuster. In the meantime we’ll build our content library and customer list.

Timing is what makes us different