Friday, May 11, 2012

Entrepreneurs, The Clock is Ticking on Your Career

"You have less time than you think," I tell entrepreneurs.

From the time I was a kid, I've been obsessed with age and mortality. Unlike most of my peers, I was convinced that childhood was going to be the best, most carefree years of my life, and I remember thinking at age 11, "Well, at least I had a good run."

I've had some pretty good years since then, but my obsession with time remains, which means I've thought pretty carefully about the entrepreneurial career.

You see, most of us think something along these lines:

"Retirement is a joke, and Social Security is a punchline that will never come. Forget 65, I'll probably still be working at 75."

As a result, we view our careers as starting in our 20s, growing in our 30s and 40s, peaking in our 50s, and slowing winding down after that. This might be true of traditional careers, but it isn't true for entrepreneurs.

The scary thing is, if you're an entrepreneur, your days of starting companies from scratch are probably over by age 45.

I'm not happy about this; in fact, that particular deadline will loom in my career all too soon. But it's based on a realistic assessment of the Silicon Valley ecosystem.

Like it or not, the startup world is full of a pervasive and unacknowledged ageism. I'll spend more time on that topic in a later post, but I'll provide three telling data points:

1) At my recent Reverse Demo Day, one of the entrepreneurs in the audience asked the question, "How do you feel about older entrepreneurs?" The answer he got from an angel was, "We love older entrepreneurs. Some of our best entrepreneurs are in their 30s." And he wasn't kidding.

2) A recent article about Splunk's IPO focused on the extreme age of its venerable CEO, Godfrey Sullivan. "Splunk CEO Twice Zuckerberg’s Age," the headline screams. The entire focus of the article is on his anomalous age...58. One of his (younger) friends comments, "“You’d think he was 35, taking his company public. He is so energetic after all he’s done in his career.” In other words, we should be shocked that he's vibrant rather than doddering.

3) In this great post from Adioso founder Tom Howard, he writes: "It was now my 34th birthday. I was already on the old side for a startup founder. Wait till 37 or 38 then start something new? That was no age to be starting again."

One some level, I always knew this. I'd worked with a number of CEOs in their 50s during my career, and almost all of them saw the gig as their last before retirement. But what ratcheted up my fear to the next level was this realization:

If you wait until your mid-50s to make the transition to venture capitalist, you're probably too late.

Like many entrepreneurs, I always viewed venture capital as the appropriate retirement plan. It's prestigious, reasonably lucrative, and most importantly, fun. The problem is, if you want to join a VC fund as a General Partner, you need to convince your fellow partners (and even more importantly, LPs) that you'll be going strong for the entire 10+ year life of the fund. Not many folks are willing to take a chance on newly minting a GP at age 55.

Sure, we're surrounded by VC legends who are well past that age (think Don Valentine, Dick Kramlich, and Bill Draper, among others), but none of them started after the age of 55.

Unless you've hit a home run with one of your startups (which, incidentally, eliminates the need to worry about money again), you'd better start that VC transition before you turn 50.

And that means that you'd better not start a company (which is generally at least a 5-year commitment) after you turn 45.

Scary? Yes. Discouraging? Yes. But not as discouraging as discovering too late that you've missed your chance.

Samuel Johnson was reported to have said, "Depend upon it, sir, when a man knows he is to be hanged in a fortnight, it concentrates his mind wonderfully."

I've told you when your career will hang. It's probably sooner than you thought. Concentrate your mind, and make the most of the time you have left.

Thursday, May 10, 2012

The Farther You Go, The Tougher It Gets

Something many entrepreneurs don't realize is that the farther you go with your startup, the tougher it gets.

When you start with an idea, it's easy to be excited. Since it only exists in your head, it morphs every day, possibly even with every conversation. And because it hasn't reached the market yet, your mind fills with best-case scenarios.

Once you start working on your product, things get harder. Stubborn bugs pop up. Usability tests don't go so well. But the good news is, you're still in control. You squash the bugs and redesign the interface. And all along, you're eagerly anticipating the launch.

Then you launch your product. If you're lucky, it strikes a nerve, and people start adopting your product like crazy. You pop the cork on your champagne bottle and celebrate...until the servers go down. And the bug reports start rolling in. And the angry Tweets start. But hey, these are high quality problems, right?

If your luck holds up, you eventually become established. You have thousands of customers or millions of users. People come to depend on you. And that's when things really get tough. You have to worry about supporting an endless array of web browsers and smartphone OS variations. You can't stop supporting any of your existing features because Important Customer X or Prominent Blogger Y insists on their importance. And anyone who has paid you money or uploaded a bunch of content believes they have the right to bawl you out at any time. Even Mark Zuckerberg (in between sessions of swimming in a pool of 24-carat gold coins a la Uncle Scrooge McDuck) has to deal with the Internet lynch mob that forms every time he makes the smallest of changes to the Facebook UI.

Tough? Maybe. But it's a sign of progress, and ultimately success. I compare it to dieting.

It feels good to dream big about the new product you're planning, just like it feels good to eat a big sundae with whipped cream. But even though dealing with the growing pains of success can seem like eating broccoli, rest assured, that is the feeling of you getting fitter.

Too many entrepreneurs think of raising money or launching the product as the end. Those aren't the end, or even the beginning of the end. But to paraphrase Churchill, they just might be the end of the beginning. And it's what you do afterwards that distinguishes successful entrepreneurs from wannabes.

Tuesday, May 08, 2012

Paul Graham's Office Hours Questions

I love this HackerNews item on the key questions you'd use when programming a Paul Graham bot to dispense startup advice. Here are the questions/phrases:

"Who needs it?"
"Who uses it?"
"Who *really* needs it?"
"What problem does this solve?"
"Does that problem *really* need to be solved?"
"What is the worst problem in your life?"
"In any given day, how many people use it? Do they return?"
"What do you do for them once they get to your site?"
"Why do they need you? What's special about you?"
"Beat a chicken and egg problem with a tiny subset of the market that's small but *driven*."
"No, who *needs* it?"
"I worry... I worry..."

I love the fact that of the 11 true questions, seven are about the user, three are about the problem, and one is about the market. You can't go wrong when you ask yourself, "Who *really* needs it?"...or for that matter, if you say to yourself, "I worry... I worry..."

Monday, May 07, 2012

An Entrepreneurial Success Story

I had lunch today with two entrepreneurs. I had been an advisor to their previous company, a promising startup that, due to some external personnel issues, had been forced to close down despite some early traction in the marketplace.

I met these entrepreneurs when they cold-called me based on my LinkedIn profile. And while they didn't fit the central casting profile for Silicon Valley entrepreneurs (while they were young, they weren't technical, hadn't got to a prestigious university, and didn't have any track record or contacts in the industry), they impressed me with their persistence and appetite for hard work.

I started off by providing informal advice, then eventually agreed to become a formal advisor, and hooked them up with the folks at Orrick to clean up their legal situation (like many first-time entrepreneurs, there was a lot of legal cleanup that needed to happen).

As I mentioned, around the time we began the fundraising process for a seed round, some external issues forced the company to shut down. The founders stayed in the general space, accepting positions with another startup.

Fastforward to today. We had lunch to catch up, and so the entrepreneurs could tell me that they had found a buyer for the assets of the company. One of the other advisors, after the shut-down, had gone to one of the company's primary competitors and told them what they were doing wrong, and how our company had planned to fix the issues. In response, the competitor made the advisor their CEO!

That advisor then turned around and bought the assets of our company. (Note that I don't see anything wrong with this; while there is a clear conflict of interest, it ended up helping all parties concerned) The purchase price wasn't great, but it would cover all the outstanding debts and obligations of the company.

Meanwhile, the entrepreneurs were very excited about their new company, and shared some of their war stories. As it turns out, they might meet with another company I'm advising to explore mutually beneficial collaborations.

While their company failed, and I didn't make a dime from the acquisition, I view the entire episode as an entrepreneurial success story. When I talk with entrepreneurs, I often paraphrase the old saying, "Any landing you can walk away from is a good one." Any exit is a good exit, especially early in your career.

At the end of the day, everyone benefited. I got a chance to learn more about an industry I didn't have a lot of experience with, and I met and built a relationship with two smart and hard-working entrepreneurs. The entrepreneurs learned a lot about building a business, and their progress impressed a hot startup enough to hire them into positions of real authority and opportunity. Even their investors and creditors got their money back. Heck, even Orrick came out ahead--the entrepreneurs brought Orrick on board as the law firm for the company they joined.

Most important of all, society now has two more entrepreneurs who might make an impact somewhere down the line, perhaps with their second company. Or their third. Or their fourth....

Back when I was in business school, I had a lot of classmates who defined success in terms of power, wealth, and fame. If you didn't run a major corporation or make $100 million, the thinking went, you were a failure. (In their defense, this was a time when you could go public on quarterly sales of $165,000)

This definition of entrepreneurial success is far too narrow and limiting. The odds are against any particular startup, and even against any particular entrepreneur's career. Otherwise we'd retire and live like kings in Patagonia.

If you learned important lessons, met interesting people, developed meaningful relationships, and walked away without losing your shirt, you're an entrepreneurial success. 99% of people will never get that far, and your life will be far richer for it.

Besides, there's always next time.