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There Are No Rules. You Are Alone

“There are no rules. Don’t let anyone tell you any different.” 
Jim Everingham

Perhaps the biggest lesson I learned––though I struggle with it still––from my first startup experience was:

YOU ARE ALONE. You are Cortez at the shores of Veracruz.  There are no rules. There are no answers outside of those that you create for yourself. The King will not save you.

Accepting this fact was hard for me. I never fully embraced it until the end, when it was too late. The sooner you accept this truth, the better you will be.

What am I talking about? In my first startup, we had an all star cast of brand name advisors, lawyers and investors. I relied on them for answers to questions they did not and could not understand:

  • How do I get customers to buy our product?
  • How do I make something that people want?
  • Should we take new investment that’s painless to get even if the valuation sucks?
  • What should I do about my co-founder troubles?
  • How do I get acquirers interested in buying my broken, dying company?

These were hard questions with no obvious answers. Like many startup CEO’s, I was scared and unsure about what to do. The stakes were high, the money low and the path unclear.

In these moments, I would often pick up the phone and dial my CEO coach or corporate attorney (we were friends, she had lax billing standards). We would talk for 45 minutes or so and he/she would make a suggestion on how to handle the particular quandry. These calls left me feeling relieved, like I was back in control and doing the right thing.

This was a mistake.

In retrospect, I view this pattern as a bad habit, as an easy escape from the reality of the hard decisions I had to make as a CEO. No expert, no outsider could know what I knew. The only complete data set was in my head. I was truly free to decide and truly responsible for my decisions. The lack of structure, the uncertainty of it all was terrifying.

It’s one thing to climb up a big mountain and struggle on your way to the top. It’s another to not even be sure if you should be going up or down, or even if you’re really on a mountain at all instead of at the bottom of a pit. Oh, and your food supply is limited. When it runs out, you die. Also, your crew is on the cusp of mutiny.

In situations like this, it’s easy to seek an out. Mine was “expert” advice.

But the thing is: My most creative work, most insightful decisions were never the result of someone else’s advice. My best work happened when no one would pick up the phone, when I had no guidance, no options to choose from, no structure to follow. My best work happened when I was on the brink, when I was desperate enough to rely on my own wits, when I had no one to turn to but myself.

Example: In March 2011, SpeakerText was dead in the water. Our acquisition efforts to date had failed. Our largest investor had suggested we simply “die gracefully.” With the standard playbook of “warm intros” failing me, I threw out the standard playbook and started making up the rules. Instead of playing coy (as had been suggested by various industry veterans), I mass emailed every investor, advisor, CEO, and CEO list in my address book on behalf of an imaginary “friend”:

From: Matt Mireles
Date: Mon, Mar 26, 2012 at 5:16 PM
Subject: For Sale: Ruby on Rails Dev Team
To: XYZ@BlueShirtCapital.com
Hi [Investor/CEO X],

Need a badass Ruby on Rails team?

A friend of mine recently put his 6-person startup up for sale, and their engineering team is awesome. Two of the guys are Carnegie Mellon grads, another started programming professionally for IBM in high school.

So far, they’ve had a couple unexciting offers, and while the team is super-technical, he’s not particularly well-connected within the startup world. He asked me for some help meeting potential acquirers…

Interested in a lil’ M&A? Ping me and I can intro.

Cheers!
-Matt

The response was overwhelming. I got four (!) dozen of leads from established companies and startups alike, three of which led to verbal offers and one of which led to an actual term sheet from a company you’ve heard of (more lessons here, to be blogged later). This for a broken, dysfunctional startup that, I was told, had no hope of being sold.

Lesson: Being an entrepreneur is lonely. Being alone is hard. There are no rules. Embrace this reality. Act accordingly. 

Like this post? Discuss & vote for it on Hacker News.

Interested in startups? SWIG! is hiring engineers and designers.

Naked in the Mirror

“You are already naked. There is no reason not to follow your heart.”

-Steve Jobs

It’s easy to forget that lesson sometimes.

How Are You Going to Win?

How are you going to win?  It’s not going to come from blog posts or angel money – it’s going to come from having a great product and lots of customers who want to buy it.  That’s what we should be focusing on.  What is it going to take to make that happen?

“I keep saying how brutally hard this is.  Each time you crest the rise in front of you, it just makes it clear the size of the even larger hill that looms beyond it. It goes on for a long time. I pissed blood for years keeping Netflix alive while we figured that shit out – as did every other successful entrepreneur in the valley.

“Ultimately, your reputation in the tech community is going to hinge on your ability to deliver this company to success.  That’s the real – and only – responsibility of a CEO.”

-Marc Randolph, Founder/CEO, Netflix

Co-Founders

Matt Mireles, Matt Swanson and Tyler Kieft inside the SpeakerCave, 2010
Tomorrow is one of my old co-founder‘s birthday. My phone reminded me. Unfortunately, we no longer speak. The end of SpeakerText was neither fun nor pretty. We fought over the scraps, echoing that old adage about academia:

Academic politics is the most vicious and bitter form of politics, because the stakes are so low.

Yes indeed, we tore each other to shreds. It was awful, particularly because we had been so close. We had been best friends. We lived together, travelled together, been through good times and bad. Observers affectionately called us “the twin sisters.”

Goddamnit, losing that relationship sucked…

Swig! started off as a solo project. I just  couldn’t bear the idea of jumping into a new co-founder relationship. The sting of the past was just too great.

Now I’m a few months in. The pain of the past has faded and the reality of building something alone has sunk in. Truth be told, I am not alone. I am working with people, but it’s not quite the same. I am “all-in”; they have jobs. It feels different. On one level, it’s great. I actually know wtf I’m doing, I control the product. On another, I miss that camaraderie, that closeness, that support in the face of failure.

Co-founders, man. They’re a wonderful, dangerous thing. Indulge at your own risk.

Like this post? Discuss on Hacker News: http://news.ycombinator.com/item?id=4884875

The Founders of SpeakerText

The Minimum Viable Startup

The Swig! Logo
I am the founder of a beer & booze delivery service called Swig! We partner with licensed brick & mortar retailers to sell their booze online in the Swig! marketplace. It’s my first attempt at running a truly “lean” startup.

When we built Humanoid in 2011, we burned through ~$400,000+ just to get the product shipped. We were building technology, damnit! And technology––real, serious technology––does not come cheap.

Unfortunately, while Humanoid’s technology worked according to spec, our customers were not so cooperative. In fact, the customers we wanted to go after found the product both unusable and inapplicable to their needs. Our assumptions around the market were, well, dead wrong. That stung.

(We ended up selling SpeakerText/Humanoid to a competitor over the summer.)

Shortly thereafter, I became a disciple of the lean startup movement. The idea, oft misunderstood, is that entrepreneurship is best thought of as a branch of experimental economics. Products are experiments that test the creator’s hypothesis about the market. The goal of any new product is to prove or disprove some underlying hypothesis about market behavior under conditions where the new product exists––and to do so as cheaply as possible using a “minimum viable product.”

At first, my idea was to build a full-blown Swig! iOS app, but that was going to take months for me to code (I’m a crappy coder and would need to learn a whole new language). Frustrated, I called my friend Andrew Cove to see if he’d be interested in building Swig! with me. Already immersed in his own startup, but he had some canny advice: Do less. Build the minimum, no more.

And so instead of a beautifully polished iPhone app, Swig! became a quick hack. Call it “The Minimum Viable Startup” using:

  • Bootstrap (Free) to build a good looking, mobile-friendly landing page.
  • Wufoo ($15/mo) for ordering & order notifications.
  • Stripe for payments (already integrated w/ Wufoo).
  • Google Apps (Free) for email.
  • My own car and this $200 viking suit for delivery.
  • Facebook (Free) & Instagram (Free) for distribution.
  • Twitter (Free) for customer support.
  • Voxer (Free) for delivery coordination.

The one thing I didn’t want to hack was the regulatory system (penalty for unlicensed alcohol sales: jail), so we ended up dropping a few thousand bucks on a top-tier alcohol licensing attorney––an expense well worth it.

I launched Swig! three weeks ago to my friends on Facebook. We got just a handful of orders (delivered them all myself) at first, but I quickly saw flaws in the system design re: retailer handoff and payment processing (we switched from Square to Stripe). We’ve already altered the pricing model several times and expanded the menu of beers.

Thing is, we’re still tiny, we’re not of TechCrunch, but I’m closer to our customers and the product than I’ve ever been. I’m learning from the market and tuning the product at light speed, sans distraction.

It feels awesome.

Need a drink? Swig! delivers beer & booze in San Francisco until 2am.

Outsiders, Insiders & Disruptive Technology

I spent Sunday at the first-ever NYC video hack day. It was awesome. So many startups. So much energy.

After the masses demo’d at General Assembly, an old friend approached me: “Dude, so do you miss it? Do you miss New York?”

I thought for a second, then looked him in the eye: “Not at all.”

“Really?” he asked, a bit surprised.

“Yeah man, as a city, I love New York, but there’s no place like the Valley. My only regret is that I didn’t leave sooner.”

His brow furrowed. He shot me a dubious look, then the moment passed. We clanked beers and moved on.

I’ve been thinking about this exchange all day. What is it about the Valley that’s so special? New York is awesome––the bars are better, the city is cleaner, the women are hotter––but there’s something in the air that doesn’t jibe with me. And that’s when it came to me…

New York is for insiders. San Francisco is for outsiders.

Think about it. The New York tech scene derives its competitive advantage by being close to other industries: Fashion. Media. Finance. Art. Advertising. The list goes on.

As a general rule, successful New York startups have:

    -Created technologies that sustain and grow other industries
    -Focused on customers first, technology second

Example #1: Art.sy. They work with super high-end art galleries to put their inventory online, make it discoverable and drive business to their established money-making schemes. Art.sy is NOT disrupting the art world. Quite the opposite.

Example #2: Tumblr. Big brands love Tumblr. Even creaky ole’ Newsweek has a Tumblr. (I have a Tumblr too!) Tumblr is servicing and partnering with the established order, not telling it to fuck off. And that’s the right move. Those guys are smart.

Example #3: DoubleClick. Ad tech for Madison Avenue. Also a multi-billion dollar company! Not too shabby.

If I’m right, the implication is that, in the long term, the winning companies in New York will be led primarily by insiders with relevant professional experience. Or, barring that, by people who are really good at networking with the old guard and schmoozing with insiders.

That was never me.

Silicon Valley, for better or worse, is the opposite: Fuck the status quo. Fuck the old guard. Disrupt! Disrupt! Technology first, customers second.

I like this paradigm. It fits me well.

Facebook & the Future

Facebook is not a “social networking” company; Facebook is an identity company. Your data is their castle; your friend network is their moat.

Today, Facebook positions themselves as a mere advertising company. This will change soon.

Within 5 years, Facebook will enter the payments game. Real payments––for real stuff, not just virtual goods. At first, they will compete with PayPal for your web payments. Ultimately, however, they willll compete with Visa for your offline payments.

When the latter hapens, Facebook’s market cap will exceed $500B.

As a result of these moves, Facebook will come under increasing government scrutiny. They are a natural monopoly, after all. Identity is a public utility. Like past utility networks, they will either be regulated, nationalized or broken up.

Unfortunately, the government to do this regulation doesn’t exist yet. The same was true in the 19th century too.

For a time, Facebook will actually be more powerful than many national governments. And Facebook will fight regulation with every ounce of strength they can muster. This is smart. The railroad barons did the same thing. But it won’t last forever. The state, unlike Facebook, has guns.

In the meantime, Facebook will soon earn its place as one of the most valuable companies in the world.

Disclaimer: I write this as an entrepreneur who thinks a lot about the internet and a man who studies history. I have no actual inside information or sources.

*My guess is that Zuck sees the whole payments thing as clear as day––it’s obvious, right?––yet remains blind to the possibility that Facebook could ever become a regulated government utility. To be fair, I don’t think Edison saw it coming either.

Becoming a CEO. Yeah, I Suck.

There’s a lot I suck at. I’m bad at financial calculations. My Excel proficiency is amateur, at best. I don’t know what EBITDA means. I’m still learning how to hire business people (kinda tough since this is my first office job). I can be a bit disorganized. I often interrupt productively engaged engineers with questions about some flash of an idea (genius or otherwise), demanding instant feedback and disrupting their precious concentration in the process.

No company in its right mind would hire me as a “professional CEO.”

Oftentimes, I wonder whether I’m cut out for the job. The people around me seem so much more competent. They’re awesome at what they do––that’s why we hired them, right? They’ll explain a project and midway through the explanation I’ll silently start to gawk in awe and think to myself: “If only I had his level of mastery…”

Recently, a Founder/CEO friend of mine got fired. On the eve of a new round of funding, the board––in particular the investors on the board––made their move. He got booted and now seems to spend his days wandering aimlessly as a figurehead inside the very company he founded. (At least he got to keep a title!) He is bitter.

But the thing is, I saw it coming. I don’t know what it was precisely, but I knew: “This guy is gonna get fired by the VCs. Next time he raises money, he’s out.” Quietly, I predicted it months in advance. I was right.

He’s a good dude. He poured his heart and soul into his company. And now it’s been taken from him.

I don’t want to end up like that guy.

I mean, on the surface, there’s plenty of reasons why I’m a prime candidate for replacement: Experience, or lack thereof, for one. Secondly, I’m a bit of a loose canon. I start fights on the internet with impressive (if I do say so myself) regularity––often with people who “matter.” I curse like a sailor, often in public venues and sometimes during press interviews.

But honestly, I don’t think that’s why Founders get fired. I have my own theory and it goes like this…

The key to this job, so much as I can tell, is not so much about having a particular skill set as it is about having self-awareness. The problem with the guys who get fired isn’t that they suck so much as it is that they don’t realize they suck. And if/when they do realize it, they don’t do anything about it. They’re too afraid to admit it to themselves and the people around them. They fear fessing up to weakness. They think it will bring them down.

And because they do not own up to their own failings as a CEO––their own weaknesses––they do not compensate for them.

That’s the suicide move. That’s why the board fires you. I think.

If I’m right, that’s good news!

Because I’m perfectly willing to admit to and aggressively compensate for the things I suck at. It doesn’t diminish my ego to hire people smarter than me to do the work I either clearly suck at or can only produce mediocre results. At first––and actually, for quite some time––I too was afraid of owning up to the lopsidedness of my own skill set. I told myself that hiring someone else to do “my job” was negligent and not befitting a CEO.

Things that needed to get done didn’t get done because I wasn’t good at doing them. SpeakerText suffered foy it.

And then one day I got this note (which I refer to often) from my mentor, Marc Randolph:

***

“How are you going to win?  It’s not going to come from blog posts or angel money – it’s going to come from having a great product and lots of customers who want to buy it.  That’s what we should be focusing on.  What is it going to take to make that happen?

“I keep saying how brutally hard this is.  Each time you crest the rise in front of you, it just makes it clear the size of the even larger hill that looms beyond it. It goes on for a long time. I pissed blood for years keeping Netflix alive while we figured that shit out – as did every other successful entrepreneur in the valley.

“Ultimately, your reputation in the tech community is going to hinge on your ability to deliver this company to success.  That’s the real – and only – responsibility of a CEO.”

***

It’s not about control. It’s not about what I do with my time on a daily basis. It’s not about me. It’s about what the company does, how we perform as a group. My job is to create an organization that is better than me. My job is to hire world-class people to do all the stuff I’m not world-class at. And to make sure that they make this company kick ass and take names.

(Oh yeah, all that and to make sure we always have enough cash in the bank.)

I can’t guarantee that it’ll be smooth or always pretty along the way. But it’s my––and the company’s––only hope.

Shit Happening is Predictable, So Stop Dicking Around and Close (Part II)

I originally posted this and the preceding post, Stop Dicking Around and Close: Lessons from the $24M Fundraising #Fail, on the 500 Startups email list (which is awesome). The origin of the discussion is Misadventures in VC Funding: The $24 Million Moz Almost Raised, by Rand Fishkin (great guy). Needless to say, I got some shit for what I wrote. This is my response.

Am I a dick who stirs up shit by intentionally and knowingly saying things that others are too polite to even mention? Yes.

Is SEOMoz a great business that makes real money? Yes.

Did they have 2 funding rounds implode? Yes.

Should we feel sorry for Rand et al. as fellow entrepreneurs and human beings? Sure.

But those are not the real questions that matter to you and me, my fellow founders who struggle to stay alive and run highly-speculative, (mostly) wildly unprofitable companies that cannot afford to have entire $24M funding rounds implode.

The real question is: What’s our take away?

Our take away is and should be: Shit happens. Shit happening is predictable. Be cynical. Stop dicking around and just fucking close. Your startup’s life depends on it.

Moreover, here’s what our takeaway should NOT be:

“Man, VC’s are dicks. There’s nothing we can do to save ourselves from their whimsical, fickle nature!”

…which is what I heard a lot of yesterday.

***

Response from 500 Startups partner and fellow shit talker Dave McClure:

>>”takeaway should NOT be: Man, VC’s are dicks. There’s nothing we can do to save ourselves from their whimsical, fickle nature”

actually I think you were right the first time… we ARE dicks. (*cough*). and we are whimsical.

and especially because we are these things, you need to CLOSE motherfucker, CLOSE!

signed,

your fickle fucking dick VC 😉