Editor Profile - Denny K Miu was the Founder and former CEO of two companies, Gigamon Systems and Integrated Micromachines (now Touchdown Technologies). Denny has extensive experience in developing technology, products and business relationships. He has been a Professor, an engineer, an entrepreneur, a team leader as well as an individual contributor.
Denny is currently the Executive Editor of LoveMyTool.com, his third start-up. You can follow him on Google Buzz or subscribe to his RSS feed.
The most common question that aspiring entrepreneurs ask, especially during time of economic downturn, is the following.
"Is this a good time to start a company?"
My experience is that there is no good answer to this question. Anytime is a good time to start a company because paradoxically, for a struggling entrepreneur, anytime is a bad time.
When the economy is doing well, everyone is doing well and as a result, there are a lot more competitions for your customers' limited resources. Similarly, when the economy is doing badly, as it is now, few entrepreneurs could afford to start companies. That's the good news. The bad news is that customers are really struggling so you must have an exceptionally compelling solution that could save them money and help them survive before they would listen.
So essentially the World conspires against an entrepreneur irrespective of the economy. Yet it has never stopped anyone from trying.
So in a sense, it would be as if you were asking, "Is this a good time to fall in love?"
And that in a nutshell is my own experience in starting companies. As an entrepreneur, it is important that we focus on making money (make money, then make meaning). But on a personal level, it is really a love affair. If you are not married, then starting a company is like your first love. But if you are already married, as I am, then starting a company is like having an affair (while remaining completely faithful).
And the love that you seek is not just about your idea or your passion in making your idea a reality, but also in your relationship with your founding partners. It is obviously possible to start a company by yourself. But it is more typical to start with partners. My experience is that to be successful, you will need multiple co-founders because it does take two to sustain a fire (and often a third one to light it).
So if you are thinking about starting a company, then you need to start by looking for the right partner. That should be your first love.
Obviously you need to have a business idea as well. But the initial idea is more like an excuse to start a meaningful conversation. Once you find the right partner, your idea would evolve or you might find that your partner has a better idea. Or that it might happen that all of your collective initial ideas would turn out to be wrong. But you are successful anyway in spite of these setbacks because you have the right partner.
In summary, the process of finding the right co-founders and in struggling with them to formulate the initial business idea is very much like the dating rituals. The following are lessons that I have learned (some of which I actually learned from dating).
10. Stop Practicing Alone
One of my favorite scenes from my collection of Woody Allen movies is the one where after sex, his date compliments him on how great a lover he is. Allen smiled with confidence and uttered, "I practice a lot when I am alone."
Very often, as entrepreneurs, we prefer to practice alone. We will do everything and anything possible to avoid confronting our worst nightmares. Our excuse is that we are not ready. Our business plan is not ready. Our elevator pitch is not ready. Our prototype is not ready, etc.
To succeed, you need to learn to embrace rejections. Get in front of anybody and start talking. Listen while you talk so you can benefit from their reaction. This is true with finding a customer. And it is true with finding a partner. You don't need a working prototype to engage customers and you don't need a bullet-proof idea to start a company.
The only way to get a date is to ask. The only way to start a company is to act.
9. Diversify Your Gene Pool
You would never date your brother or sister. Why? Because incest is not only immoral, it is biologically suboptimal. So why would you start a company with your family? And by the same token, why would you start a company with your friends?
Starting a company together is the quickest way to destroy friendship. Starting a company with family (or hiring family into your company) is the surest way to alienate your business partners. So don't do it.
In fact, you need to take this one step further, which is to avoid partnering with people who are just like you. Find someone who has different skills and different temperament. If possible, find someone from different cultural background and ethnicity.
It turns out that diversity is really important for success. Ultimately, your co-founders are the ones who would protect your proverbial back and the more that they bring to the table (that are not already on the table), the better. Ironically, the converse is also true which is that the less that you have in common initially, the less baggage that you each would bring to the partnership.
8. Two Bagger is not an Option
A two bagger is someone who is so ugly that if you decide to sleep with them, you would have to put a bag over their head and a second one over yours in case theirs falls over.
This is not an option when you are looking for a business partner. There are no shortcuts in starting a company (i.e., no one night stand, no quick fixes). As an entrepreneur, you don't need to "like" someone to have a business relationship with them. It is not an ethical violation to pretend to like.
You just cannot pretend to "respect".
So when you are looking for a co-founder, make sure you respect them. If you truly respect them, you can learn to like them.
Entrepreneurship is a learning experience. Through constant struggle, you will gradually broaden your horizon. You will learn to appreciate people with different skills and experience and people who react differently to the same situation. This is all part of the journey.
So try to read beyond the book cover and not to be too judgmental too soon. If you insist on partnering only with people whom you like initially, then you will deprive yourself the opportunity to learn from people who are different from you.
But respect is different.
If you don't respect someone, you can never work with them (at least not for long). Turning a blind eye (or putting a bag over your eyes) will not help you. On the other hand, over time you could still lose respect for someone whom you respect initially. But that's a different problem (like the song says, "Breaking up is hard to do").
7. Don't Complain About the Fleas
An old Chinese saying goes, "If you choose to sleep with the dogs, don't complain about the fleas".
We all have fleas. If we were perfect, we wouldn't need to be entrepreneurs.
My experience with forming a partnership is that your first meeting with your potential partner is your best. Look deep into their eyes. If you think the person is right for you, you go on. If you don't, you move on. It is just like dating. It is very instinctive and you need to learn to trust your instinct.
My own observation is that relationship never gets better after the first meeting. It only "feels" like it is getting better because you are more invested in the relationship and you have become more accommodating to each other.
In that sense, partnership is very much like marriage. It requires commitment. You need to invest and you need to constantly build values. When you stop building, you stop caring.
It helps if you put your company first. Separate your personal life from your business life and separate your personal needs from your business needs. When you are with your partners, focus your collective energy on how to build the company together. That way you don't go out of your way to look for imperfection and over time, the fleas (yours and theirs) will stop annoying you.
6. Be Sure to Protect Yourself
There is a difference between being protected and being paranoid. Having an adequate understanding of the law and the liabilities doesn't mean that you should surround yourself with legalese at all time. Not protecting yourself legally is obviously irresponsible but over-protecting yourself is counter-productive.
My best advise from a friend who is a successful entrepreneur is that "legal issues that are unimportant to you when you are successful are the same as those that are unimportant to you when you are unsuccessful."
In other words, when engaging a potential partner and when working with your co-founders through the initial process of formulating your company, you have to pay extra attention to how you are protecting each other legally, both in cases when you are successful and in cases when you are not.
But interestingly, there tends to be a symmetry.
For example, a minor difference in ownership would not matter that much materially if the ultimate return is on the order of millions. Obviously, it matters even less if the return is zero. So I tend not to spend too much time counting the last chickens as long as the division is fair enough for everyone.
However, ownership needs to be earned so it matters a great deal whether or not there is a vesting schedule for the Founders' stock and for how long. It matters a great deal how you can discharge a partner if they don't perform. This is true if the partnership is a success and interestingly even more true if the partnership is a failure (since you would need to restart the company with different partners).
In short, keeping a profolactic in your wallet is considered good planning but showing off that you have a month worth of supply would most likely be considered bad taste.
5. Stay Away from "Virgins"
The best time to date a virgin is when you are one. It is counter-intuitive but it turns out to be true for startups too.
The issue is one of expectation.
You would think that if two entrepreneurs goes into business and neither one has any startup experience, it would be a disaster. Well, on one level, it is since they would end up making plenty of mistakes together. But if they could grow together and get through the trials and tribulations together, it could work as long as they remain a good team. Silicon Valley has lots of such legends, Steve and Steve, David and Jerry, Larry and Sergey, etc. It is puppy love, it is glorious and it can work.
On the other hand, if an experienced entrepreneur were to partner with an inexperienced one, you would think that it is a match made in heaven, sort of like Lieutenant Dan looking after Forrest Gump, and vice versa. It turns out that it doesn't always work.
It is difficult to have a peer relationship when it is unequal (keep in mind that Lieutenant Dan had to lose his legs and Forrest had to become an accidental celebrity before they could become partners). I am not saying that it would never work. I am just saying that I have seen it work better in a mentoring relationship, or one where there is clearly a senior/junior power sharing arrangement.
Having been through the various stages of entrepreneurship, I would say that I am a much different person now than I was then. When I was young and inexperienced, I had nothing to lose and any success would have been a good success. I could take risks. Now I am much more reserved and calculating. It is not a bad thing. It is just that I have more to lose and I am looking for more. Simply repeating my last success is not going to be satisfying enough anymore.
I would make a horrifying partner for my younger self.
4. Forget About Your Ex's
Most of us are not virgins for the same reason that most of us have fleas.
We have history. We are who we are because of our own experience in terms of successes and failures.
We are a victim of our own experience. We don't have a choice.
On the other hand, one of the reasons why we need partners is because we want to benefit from their past experience but at the same time, we also don't want to be a victim to THEIR experience.
This is a tough balancing act and it is one where we could really learn from our dating experience.
As usual, when the situation presents itself, we should feel free to talk about our past and what we have learned because it is a way to share and to be open with a potential partner. But we shouldn't become over-obsessive with our demons because it is a real turn-off.
Everything I know about entrepreneurship I learned from my dad who taught me how to ride a bicycle. Just because we fell once already doesn't mean that we wouldn't fall again. Similarly just because we fell on the left once doesn't mean that we will fall on the left again. The past might be prologue but it is still the past. Life is constantly changing, especially for a startup.
In short, it is best that we keep an open mind ... don't explain, don't complain ... and focus our eyes on the road ahead and the possibility we could build together.
3. Don't Sleep with Strangers
There are no more "perfect" strangers, especially not in our professional life. Through Internet, our life is an open book. We could always find somebody who knows somebody. With Facebook and Linkedin, everyone can create a profile and a collection of friends and colleagues who can vouch for our integrity, experience and performance.
But as House M.D. often says, "Everybody lies".
Everybody lies not in the sense that they propagate untruths, but that it is human nature and it is much more convenient to communicate the positives. Having been a Professor for nine years, I know exactly how unreliable recommendation letters are and how grades are inflated in exchange for a matching rise in student evaluation.
Everybody lies.
This level of convenient truth might be adequate if you are recruiting an employee for an established company. For startups, you need to do more.
The most important skill in a startup is the ability to listen and it is surprising how poorly people could listen, especially among those who know how to talk (i.e., salesmen or CEO's).
Often I tell the ancient story of old man Chu who was ordered by his young King to persuade a neighboring King to allow them safe passage, without which their retreating army would surely die. Through an intermediary, Chu was granted a brief meeting the next morning. To everyone's surprise, Chu went to sleep early in the evening.
By midnight, the King woke him up to ask him what he had planned to say that would convince the other King. Chu said he planned to say nothing. All he needed to do was to show up and listen. Chu was convinced that the other King would be up all night deliberating with his court on what he would want in return for such favor.
And this is the case with startups, ability to listen is very important when we are talking to potential customers, potential investors, potential employees, etc.
Over the years, I have picked up a few techniques that have served me well in punching through the veneers of most potential partner candidates, to be sure that they have the necessary listening skills.
One technique is when I meet with potential partners, I would often stay uncharacteristically silent in the middle of a conversation.
For those who likes to talk but unable to listen, this would drive them crazy. The more I stay silent, they more that they want to fill in the gap.
Another technique is to stop someone abruptly in mid-sentence and start talking. Those who can listen would stop immediately and those who can't would insist on finishing.
As House M.D. also says, "The eyes can mislead, the smile can lie, but the shoes always tell the truth ... "
In summary, it is very important that you refine your own techniques to discover the attributes that you think are important. Spend enough time to dig deep and to understand your potential partners before committing to each other (because again, "Breaking up is hard to do").
2. Try Different Positions
The early stage of a startup is akin to a hunting party. There are no permanent positions. Everyone does what they are good at and what they are best equipped to contribute. Everyday there is a new challenge and everyday a new posse is formed to slay the beast. Mistakes are made and lessons are learned.
Be flexible and try out different positions. It is part of the fun (in sex or in startups).
1. Finally, Stop Focusing on the "Orgasm"
The days when you can flip a company in a matter of months are long gone and even if our financial systems are to recover, those days would not return.
Therefore when you start a company, you need to be prepared to be in it for the long haul, building it from scratch and if you are lucky, eventually growing it to be a sustainable company. What this means is that the quality and integrity of your partners and the love and respect that you have for each other are that much more important.
"Is this a good time to start a company?"
Not really, the next decade will be brutal. But it has never stopped anyone in the past. All it takes is to jump in with both feet.
See you on the other side. Good luck everyone.
--Denny--
Click here to read other chapters of Denny's 2nd Book ยป
