Just be yourself

I listened to a pitch the other day, by a PhD who had invented/designed a new type of chip and was looking for funding to take it to market. As we got about half way through, I noticed he kept saying “In this business you have to…” and “You should know, we are not here to do R and D…”, and “You have to understand that Customers care about results…..” – now, I don’t necessarily disagree with any of these statements, but considering the guy making them has never worked outside a University, I must question what qualifies him to make any of them.

As a former professor (hard to believe I know), albeit for a short time, I know we tend to pontificate, but its silly to try and be something you are not--worse, per Abraham Lincoln’s theory, please don’t open your mouth and confirm the fact.

When novice marketers, or engineers try to sound knowledgeable they say really dumb things and lose their credibility. In contrast, when an engineer says, “I don’t know anything about marketing, but its seems to me that customers wont care much about technology…..” there is a great ring of truth to it. VCs want to know that they can work with entrepreneurs--if you try to sound like an expert in something you are not, you will first make them think you are not an expert in anything (including the field you probably are an expert in), and second, scare them off the idea of trying to mentor you if they make the investment.

Another secret that some VCs and most really good sales people use is the Enneagram--it’s a personality typing methodology developed by the Jesuits several hundred years back to help them convert people to Catholicism. It's like x-ray glasses to read people’s personality and thereby manage them more effectively. A good sales person can rapidly asses whether you are a big picture dreamer, or a detailed oriented slow decision maker--or whatever. If you are a dreamer, the sales person will simply drop by your company and let you paint a grand picture of life with his product; if detailed oriented, he’ll write a formal proposal outlining the detailed benefits of his product and probably throw in analytics to boot--just dropping in and waffling would irritate the detail oriented person. So, what’s the point? Well, while the Enneagram is hard to use, spotting someone who is trying to be something they are not is very, very easy--so don’t do it.

Another pet peeve of mine is the prelude--“well, to be completely honest …” or, “to tell you the truth ...” – so you’ve been lying to me up to this point, right?

Now, it seems a number of readers prefer email to posting--so here are answers to their questions:

Larry what are your startup CEO Tips?
Always take the money, when they pass the hors d'oeuvres take two
Forget about dilution, focus on value creation and leverage
Never lead with price, lead with quality and value and charge a premium
Choose your investors like your wife, with luck they’ll last as long, or longer ;-)
Until the company has more than 100 people, interview every hire yourself – for the first 20 interview them first: You are creating a DNA, you have to nurture it
Feed your sales people, starve your engineers--use cash to reward sales, equity for engineering--use both for marketing
CEO job #1 is never run out of money
There is no EGO in CEO--when the company wins, credit the team, when it loses take it on the chin yourself
Be honest and open with customers, investors, and employees--if you always tell them the bad news, I guarantee it will be better than what they were thinking and you’ll focus them
Spend your dollars on what matters--investors and good customers look at furniture the opposite way lawyers do
Invest in and understand marketing--most people confuse marketing with marcom, and sales with marketing. Understand the difference--the right marketing VP combined with the right sales VP can make your company; the wrong one WILL break it, and you can rarely tell until its almost too late

How do you decide which technology to use to reach a goal?
In the laser market there’s an old adage, mine actually, that says if you can do it any other way without using a laser, then that will be successful. Example: Iridex made lasers work in ophthalmic because it’s the ONLY way to get inside the eye non invasively, so it worked well, otherwise simpler technologies will always win. So my answer is pick the simplest, that you can get to market fastest that gives the best result in the application--i.e., use just enough technology to make it work well not more and ensure its well protected

Should you be an earlier adopter of new technology or wait until things are proven?
Early adopters take the most risk, therefore get the best reward when they win, and suffer badly when they lose. Customers have the benefit of being able to back two or three startups to hedge their bets. If you want to be average, you will lose. Early adopters usually win.

How do you determine the outcome of applying technology in a new way?
You don’t, the market does it for you ;-)

Are their secrets to financing a digital business that are different to other forms of business?
Its cheaper to fail than ever before, so VCs are funding many more deals with smaller raises. Competition is fierce, try to pick someone who really understands your specific vertical, not just digital, but preferably someone who has built a company in the exact space (or invested in a few) who can really help you win. Probability of success is lower in digital than traditional, and sticky funding is as hard to get as sticky customers ..