Entrepreneur 2 be

…And How Much We Actually Don’t Get.

Cheesy movies like Legally Blonde is usually not my type, but I am in Costa Rica and since here you do all that you don’t do in NYC, I did see it. Around the happy end the “believe in yourself” cliché pops up. Normally if you are not wetting your eyes at such deep wisdom you would be laughing your ass off. I don’t know why but I did try to think about what that phrase really meant and why people say it.

We’ve all been told that if we believe in ourselves, all will be good and we’ll get what we are after. Thousand of times it has zoomed by my ears. And probably eactly for that reason I never thought about it and why (if it is true) it worked. I see the following logical explanation, but there might be plenty others: if you don’t think that you are good enough, you would be more willing to quit, so at the face of a tough moment when despair lures on you, actually not believing in yourself gets you to “I can’t make it anyway, why bother the suffering” as opposed to “I can do it, but I have to get through this crap first”. Thus, solely what you think of yourself may determine whether you are going to get through the Dip or not.

I have always known that, but I have never really reflected on it, so it has never had any meaning to me. Therefore it has never affected my life in any way (Well let’s see how that works now

A bigger question spins off from this matter: Are we so ignorant that we suck information without really thinking about it, as a result of which we don’t get to live life to its fullest?
I think the answer is yes. And that immediately gets us to the point that you have to constantly analyze anything that you might think is of any worth or interest to you. Try this one “A bird in the hand is worth two in the bush”. What associations does it evoke? What experiences tell you that it is true/wrong? Is it true after all? Why? What kind of mentality does it promote? Is this the mentality you are after?

I have been reading a very strange book that tells the story of the greatest merchant in the world. There are ten two-page chapters that you are supposed to read at wakup, at lunchtime and at bedtime for a month before moving to the next one. At first this seems retarded. It is in a sense brainwashing because you are repeated the same thing over and over until you believe it. I am sure people just breeze through them like a regular book but I tried this rereading thing. I did 10 days instead of a month. I also wasn’t just reading them - I read every word carefully and asked myself at every moment, “what was the author thinking when he was writing that sentence?” I was paying attention to what he MEANT to say, not only what was said. Those two unusal behaviors resulted in a very interesting phenomenon: because of what other things I have read during the day or the things I have experienced, every time I read the same chapter, I saw it in a different light. Every time I reread it I discovered new things in it, I unravelled it more and more and combined it with my personal experience and analysis. It was incredible to understand how much we actually miss by merely reading something and not taking time to understand what it is.

This is true of every kind of information that goes through us. There are plenty of success stories (Marc Cuban), how-to explanations (Paul Graham), data and interpretations (Marc Andreessen) and all kinds of advice out there. But unless you actually pause your life and think about them, they will not be of any value (and some of those can be truly life-changing).

Well, I want to start a startup, but anything you do is equally dependent on how much thought you put in it. Do I have to say what you should do now?

I have been thinking about procrastination lately. I have one specific task to complete and I have been reluctant to doing it. I have to call and beg the USPS office to give me money back for the lost package. Blah…

Among other things in Wikipedia.org I found, “It is often cited by psychologists as a mechanism for coping with the anxiety[that is not too far from fear] associated with starting or completing any task or decision”

Coping with anxiety is well said. It is exactly what we do, which is much different from coping with the problem. Since the problem stays intact, the anxiety we are “coping” with will not disappear. As a matter of fact it will grow and it will bother the hell out of us. Few nights ago we talked with Ilian about discounting. Just like discounting cash from future to present, when you are procrastinating you are discounting the future anxiety to today. In other words, you prefer to leave it for later at the price of increased anxiety (especially if you have a deadline). Quite an investment I would say.

Well, we kind of know that much. But here is a problem I want to point out and make very clear and visible. I will use Gantt Chart to illustrate it. This is how your normal week may look. You may have 1 or 2 tasks procrastinated but generally things get done:

I am going to hyperbolize [I love new words] this situation a bit but this could happen and does happen sometimes:

When you look at chart No.2 you obviously see that there are plenty tasks none of which are moving. From wiki, “For the person procrastinating this may result in stress, a sense of guilt, the loss of productivity, the creation of crisis, and the chagrin of others for not fulfilling one’s responsibilities or commitments.” The trouble here is that we have not one of those causes but MANY! Procrastinated tasks sit tightly in the person’s subconsciousness, socialize and drink beer steadily. As a result you start feeling unable to cope with life and you get a feeling of worthlessness. Add a pinch of girlfriend breakup, startup going slow, and toenail fungus in the equation and you get a genuine depression.

My point here is that it is important to recognize when depression is caused by procrastination. All you have to do is man up a little, get your fuck*** ass [don't you love my censoring?] off the couch and work your tasks out one by one. You are going to have a lot of those moments with startups, so better learn to deal with it.

Investors seem to love to ask this one question, “How are you going to market your startup?” By now, I have a ready answer that I shoot right away. The concept is a little vague and difficult to get, but I will try to make that clear. The answer to life, the universe, and everything is:

If my product is really damn good, it will market itself. If it is not, I shouldn’t bother marketing it.

It sounds a little bit like ‘Build it and they will come‘ but it is NOT. Let me tell you why.

First let’s have a look at Coca Cola’s marketing strategy. Their drink is a product significantly different than your new, innovative (hopefully) idea for startup. Coke is an old product that we all know. It’s been around for years and there is nothing so cool about it. The ads you see around have one purpose - to make you drink Coke when you don’t really care what you drink. This is the type of thing in which you constantly need to be bombarded with messages that will layer up in your subconsciousness and will finally make you drink Coke. For that purpose, ads are targeted to everybody, all the time, and everywhere (even SecondLife! blah). Marketing of Coca Cola looks probably somewhat like that:

That is perfect and in time covers millions and billions of people. However, it only works if your budget is $2.5billion+. If you are like me, you probably don’t even have billionth of that.

So what can we do? Something smaller, like Google AdWords? Nah. AdWords is pretty much the Coke strategy on a much smaller scale:

What is happening there is targeting single users according to their searches. True, more efficient than other online advertising services, but still equivalent to buying your new users. You want better than that - you want them to not only join for free but cajole friends to join for free too!

At this point you should have already realized that you are just not able to spread the idea on your own. You want USERS to do it for you. The ominous word of mouth. This is the only way it could work, and since it is the only way, that should get you thinking, “How do I get my users to do that?” The answer is: You get them to work for you by creating the most amazing, best-out-there product, so that when people recommend it to their friends they feel proud of themselves. That is, it must be just really good - easy, cool, useful etc. In that case, the scenario of marketing will look like that:

Now this is a different story. All you did was sent an email to your best friends and relatives [red line], that might be interested in it, and the rest was done by them [blue dotted line] because by recommending that amazing ‘grade A’ product will make them look knowledgeable, generous, and cool (oh that coolness factor!)

If you really really want to spend money, here is where online advertising makes sense. At this point, when you have crowd working for you, you want to give them many initiation points at random places with random groups of people, in which case your marketing power can be multiplied many times:

If you can’t make other people talk of you, you got the wrong idea. Get a new one, improve your current concept, or just give up — you are wasting your time.

Do you agree with me now?
“If my product is really damn good, it will market itself. If it is not, I shouldn’t bother marketing it.”

My mom’s favorite joke goes somewhat like that:

Poor man prays to God, “Please God, let me win the lottery, let me become rich, please…”
Next day he goes on praying, “Please God, let me win only once the lottery, I only one 1 single million, not more…”
Next day again, “Let me win, I will be nice to people, I will do good …” It goes on for weeks and weeks. One day God’s mighty voice falls from the sky, “Bro, you have to fill in at least one ticket …”

Today also, I had the following situation. I found out that one of my $20’s had a ripped corner. The missing piece was not small enough so that it can go unnoticed, but it also wasn’t big enough to be completely unacceptable. So I was getting food at Chipotle (the best fast food you can get) and I faced the following dilemma — should I try to get away with my ripped 20 or should I gave them a regular one. I gave them 2 tens but before the cashier put them away, I pulled my ripped banknote and asked naively, “Would you ever take those ripped 20’s under some circumstances or should I not even try?”, the guy smiled at me, gave me back my tens, took the scarred 20 and joked, “I will get extra 15c for that missing part” I was left in amazement, I got away with it so easy!

So then I thought, why on Earth would people have that completely irrational fear to avoid chances that come with barely any risk? Why did I not give the banknote at first place? Was I afraid of being denied? [so what?] Was I afraid they are going to laugh at me? [so what, I am never going to see them] Was I just shy? [how does that make me a better person if I am shy?] There is nothing significant that I could possibly lose if I try. But I didn’t in the beginning, and a lot of people don’t at all.

Those of you that have read any of my previous posts know that I preach that ‘the only person you should be working is yourself’, so here it comes:

I said last time how luck and risk are almost irrelevant, but Illian and I calculated chance of not succeeding in any of the ten startups you began under the assumption that on average 1/10 startups succeed: (1-1/10)^10 = 34.9% That pretty much means that from pure statistical calculations in 2/3’s of the scenarios you will make at least 1 startup successful, and as Marc Cuban wrote long time ago - “you only need to be right once”. It is very important to note that this simple statistical measure does not include any of the most important characteristics of startups which include but are not limited to: 1) you gain a lot of experience after each failure, which considerably increases your chances of success 2) you make connections on the way 3) you learn to be critical and firm minded, able to analyze and process information very efficiently [these are things about UNSUCCESSFUL startups, imagine about even half-successful ones] After considering all of those qualities of entrepreneurial thinking, I think chances of not getting where you are going are almost invisible. Assuming that, and the high rewards of success, I wonder again, why would people not start startups? No risk, huge rewards. Nobody wants it!?

Illian tried to explain it through an interesting psychological observation of fear and happiness. People seem to be happy when they win something, but if they lose this same object, their happiness decreases twice as much. Naturally, a fear evolves from this, that drives our lives and makes us extremely risk averse. So risk averse that we probably won’t take a free ticket to the lottery simply because chances of winning are too small, in which risk of losing is practically zero, therefore the fear is completely irrational!

Same goes on for funding. Paul Graham says its a good idea to calculate your pluses and minuses before you do a major move. Why would you not ask your connections to invest in you if all you lose is a rejection, which is equivalent to not asking at all anyway, and what you win (in our case) is to keep the project on track? Just 2 days ago we managed to overcome the fear of asking people to invest in us. The result? Noah pitched to one person and he agreed to spit 5, 10g on the basis of friendship with no official paperwork. A whole new discussion follows on now: ’should we take that offer and how should we present the official request’

Fear is powerful…

I recently read an article about a study that some professor did, but unfortunately I don’t remember his name. The basic idea is the following:

About 1500 people are split in 2 groups, group A (we will call it so) has very simple task - listen to a bunch of indie songs and rate them accordingly. The more curious and exciting group we will call B, which has a similarly simple task - listen to a bunch of songs and rate them, the one difference is that B has access to B’s ratings and people see the top list of best rated songs before they choose what to listen and how to rate.

The obvious result is that ratings among A of songs are not much different from each other. That means that rating of the first song is just a little bit higher than the second top rated song, which is just a little bit higher than the third rated song and etc. Group B’s rating however looked different. Song number 1 was far far better rated than song number two and song number three was significantly worse than two etc. From this we can conclude that the exponential results are due to what Alek calls “herd behavior”.

So far, so good.

Now comes the real deal. Group B was divided in 8 sections. All of them listened to the same songs, but each group had their own individual rating lists. The result was very very curious - each had a different top 15 list. In each section, different songs became the most listened. The article reasoned that small differences of luck, or unaccounted factors in the beginning can mean a lot for the success of a song. This way a song that got lucky to be played in the beginning becomes big hit for example, although there are plenty of other songs that technically are not worse in musical terms. If you try to give an analogue of real life, the star Madonna is now, could have been someone completely else due to random small occurrences of luck.

Now that sounds horrible, unfair, and nasty for the people that do believe they have qualities but didn’t make it only because of this luck part of the deal.

I think we can put a different spin on failure however. If there is about 10 songs, and you think you have the skills to make in in top 3, but you were unlucky up to know, I can tell you one thing: doing it over and over again will statistically force the bad luck to ‘run out’ and you will marry success. Same for startups.

I have never thought of it like that, but this is a big part of what people call perseverance.

UPDATE: [ Here is what Marc Andreessen wrote about luck ]

Few days ago I was discussing with my partner Noah how the website is coming. I mentioned in a previous post that he is not what you can call a hacker or a very computer savvy person. So while talking about our idea again, he surprised me with a very good question: “So what prevents other people from doing what we are doing, and why should WE be the ones to succeed?” I totally did not expect such a good question from him so it took me a few seconds to run scenarios through my head. Eventually I mumbled something very reasonable that sounded like that: “Well, to our knowledge, we are the first to be doing such a weird and useful idea, so we have the advantage of time. The other thing that plays only after we launch this product is that sometimes some site become very popular and its difficult to take them over because they have solid amount of dedicated users (or maybe not). It’s a little bit like being youtube - nothing technologically very challenging that can’t be done, and also they weren’t the first ones to come up with this either. But they had a lot of users, and even Google couldn’t compete, so they bought them”Once I said that, something very interesting formed in my mind. I saw the online business from a totally different perspective. There are two reasons for acquisitions usually: great technology that takes time to be developed and a great user base. What I never realized is that they bought have the same purpose and it is to own people, pieces of their attention. Internet is like a second world, that has no rules yet and is free for grabs. This is the beauty of it. NO RULES. So the game is the following - you hook up people on your service and you are their owner. You can now be considered landlord. What you can do is use those people (their attention) to make money or capture more free users that have no roots to anything yet. Who is really damn good at this game? Yes, the googles. They hooked up people on their search, made billions, hooked up people on the maps, will make more billions, and what do they do with this money? They buy people that they use to make more money and buy more people… I am saying this because most of the websites can be replicated by Google for a maximum of few weeks. So essentially what happens when there is an acquisition is that G doesn’t really buy a company or technology, they buy YOU, they buy ME and my mom (well, my mom got bought by Ebay when they acquired Skype). But who gets the money? It’s not the end users.

The bright side: there’s still plenty for everyone. There are plenty of freely roaming browsing users that either don’t know about G or are interested in things that G doesn’t provide yet. So do go and capture land. After all its free - all you have to do is go and claim it.

I am always into trying to come up with something entrepreneurial rather than settling down with a 9 to 5 job. An interesting side effect is that people around me feel like they have to share their own inventions and ideas. It’s all good with me. I have trained myself over time to breakdown an idea into components, analyze them and figure out if its doable. The problem is that once I do that, the results I spit back so quickly are usually bad, and people hate it. They like to think they came up with something incredible. Usually I am right for one of the following reason:

1. These are most often either my brothers, my friends from neighborhood, or college friends. What they all have in common is that they are new to entrepreneurial thinking. I mean, I am new myself, and it’s already been 4 years now solid brainstorming. They don’t know that they are walking in my first steps: they are naive and their ideas are unrealistic.

2. The second big problem is that their attention span is too short. They share, get encouragement and/or criticism and that’s where it ends. They don’t do anything about it, they just move to another, ‘better idea’…

3 . Most of them tend to think that getting a product out on the market is easy and can be done on the side of jobs, partying, traveling, and oh yeah, lots of drinking. You can’t start a business and expect to lift it off the ground if you have a full time job. You learn those things when you get to the “doing it” part… which brings us to the most import point:

4. The difference between IDEA and BUSINESS. One thing is to get idea. Everybody has them. Everybody gets brilliant ideas. However, no one does anything about them. Brainstorming is easy. It’s fun but it also tricks you into thinking that once you make a couple steps, you are close to finishing a 30-mile marathon. Big big difference. Marathon is not something you achieve with 1,2, or 3 tries. You have to run hundreds of times distances much shorter. You have to fail many times before you reach your goal. Only it so happens that sometimes you are in the middle of it and you have  to change direction for something else…

It really is funny. People come, share their ideas and when I tell them why they will not work, they get mad at me. They often call me Mr Critical or say I am pessimist and nothing will work out for me. Its great - I love hearing that. Call me whatever you want but until someone makes even a super small business out of their idea I am always going to be right…

I am one of those people that can starve for a long time if no food that I am in the mood for is around. However, for the last 6 months probably I have been starving for another reason - I am too busy or too tired to get food. The result is that I have long term problems with stomach and need serious treatment. Unfortunately, stomach pains are not the only problems. All kinds of health issues are emerging now (a lot of them probably caused by lack of good nutrition).

So now I am sitting all in pain and worn out, “Health can definitely be a measure of your ambition and obsession!” Yup. I figured that out. But then if you really want to be successful, you have to take care of yourself too, which means that to maintain GOOD health is an even higher level of ambition and dedication. This doesn’t meant you have to get through the ’sick’ phase so you can reach the top. On the contrary - you can easily avoid it, which is why I am writing that post: spend extra energy and money to eat good quality food and to eat it regularly. Believe me it’s worth it in the long term.

Everybody knows that if you really, really want something you will find a way to get it. Sure, I believe you. As a matter of fact, I am experiencing it now: I want my project to be done so I am more concentrated on it, leaving out other time-consuming tasks I don’t need. I feel like a shuttle that is exiting the Earth orbit and loses the burden of the empty tanks because it has one purpose - to get where its supposed to. Over the last 3,4 years I have observed this phenomenon. In the beginning things can take months to change, but as you grow more obsessed with your ambitions, habits can change overnight. I haven’t missed a bedtime in weeks and breakfast, like never before, is now a firm rule. So yes, if you really want something you will find ways to squeeze more time or get more efficient.

But now let me ask something, How exactly do we get into that vortex that pulls us to our dreams and feeds us with energy for more? Why are some people just not interested in doing anything? Why do people just never even start pursuing something they will like? There seems to be a threshold that needs to be crossed, and unless you do it, career can have a totally different shape. I’ve heard in US a lot of preaching on the topic: “You have to study what you enjoy” and just now I see what they mean. I live the true meaning of words because I teach myself what I want and then I apply it to my work. The problem here is that this piece of advice won’t get in your brain unless you have crossed that threshold and have had a taste of your dreamjob that fills you up with desire and ambition to continue.

So lets say Mr X likes architecture. His parents support him in studying what he likes. So Mr X majors in it, and works as an architect for 10 years. But he, just like most people, never really got in the vortex. He sits in an office, drafts buildings, then goes out and finds something he likes doing to make up for the annoying time he had in the office. He is now wondering, “What happened to my passion for architecture, why did it get dulled over time? Maybe I should have become a photographer since I like taking pictures so much these days…” What happened is that there was no force to draw him more into it so that he gets excitement and fun out of it that will empower him to think of forming a company, hire drafters, and take on bigger, more exciting and cool projects.

I crossed that threshold, but I still don’t get how I did it. So what I am looking for is, “How do you find that exact thing you will enjoy, cross the border and get pulled like gravity in it?”

…all I have for now is ‘try it’…

This is not really a theory but its an analogy I like to make between the life of an entrepreneur and an amusement park. I will explain it in the framework of my first successfully completed project - the Planner Project.The so called “Planner Project” was simple - I wanted everybody in my high school to have daily planners for homeworks and to-do lists. ACS did not have that, so Svilen and I had to raise a couple thousand dollars, make the design, create the press files, print it and distribute it. Hardest part was raising money. We had to cold call various companies, meet with people, pitch the idea and hope that they will want to pay money to advertise in our planner for high school students.

I don’t know how many days I have spent with Svilen running around the city with my legendary Fiat Panda to random companies to “beg” for money. It was tiring, annoying, sometimes humiliating. We would get “No! Not interested” and it would seem that the world is collapsing. If they didn’t want it, no one would want to advertise with us. No money, no planners, and days and days of work lost. Also, it got pretty tought at some point, because we had decent money from the second national TV and GlaxoSmithKline and couldn’t make it. How do we go back to those big guys, “Sorry we couldn’t do it, we apologize for all the husstle, here is your money back…” But other times a random person would come up and give us a great idea, “Hey your mom told me about the planner, why don’t you check Rossignol, they might want to do it, and you’e kind’a friends with them too” and then we would picture again the project successfully completed.

It was ups and downs. So many and so extreme. But I look back, it was all worth it. It was definitely amazing to complete such a cool project. It was also very rewarding to feel and taste (i have to be honest, you can’t understand what I am talking until you try it) what it is to create your own projects, and nurture them for months until they are done. From total despair to full hope and ecstatic joy in 5 minutes. Some of those moods lasted for days, some for minutes. So if you ever get a chance to do projects on your own - go for it. Don’t get scared, just do it.

Now the theory. So you already see what I wanted to say - life is like an amusement park. Every project is a ride. Crazy big important projects that might bring a lot of rewards are the crazy big scary rides. You go up, you go up big time in the air. Make millions. You go down, you go down big time. Your dreams of millions just shattered. If you are just working for a company for hour by hour, you are probably riding a Marry-Go-Round.

Moral: Choose your rides wisely. If you go big, expect more than just bumper-car experience.