Unleash Your Inner Company

Use Passion and Perseverance to Build Your Ideal Business

John Chisholm

• Publisher: Greenleaf Book Group Press
• Year: 2015
• Print ISBN: 9781626342118
• eBook ISBN: 9781626342132
• Topic: Business
• Subtopic: Entrepreneurship
• Index: Business

Unleash Your Inner Company distills John Chisholm'sfour decades of successful entrepreneurship in Silicon Valleyinto ten steps to discover, launch, and scale the idealbusiness for you. You will learn how to:

• Mobilize your passions and perseverance to reinforceeach other and achieve your goals

•Discover unsatisfied human and customer needs in thoseareas where you have natural advantages

• Match those needs with your resources and strengths(your "STARS") to assess which needs fit you best

•Improve those fits by acquiring and developing theright resources and strengths; differentiate yourself bybeing not better, but different, from competitors, evenwell-established ones

• Innovate by combining things you already know innovel ways

•Partner with firms and individuals so you and your businesscan focus on what you do best

• Evaluate your options and choose the best one for you

•Launch and scale up your successful business, uniquelytailored to you and your strengths.

Along the way, you will discover:

• That you have many more resources and advantages forsuccess than you realize

• How and when to choose a co-founder and team members

• How to avoid competitors, and thus gain time and spaceto get established

•How to find, nurture, and ride positive feedback loopswithin yourself, with your team members, and amongyour customers

•How to build and maintain your self-confidence despitesetbacks

• If, when, and how to raise money

• How to evolve and scale your business, no matter howmodest, into a large enterprise, if you so desire

• When to comply with, or circumvent, or oppose regulationsthat impede the formation or growth of yourbusiness

• What you can learn from Apple, Google, Facebook, and Uber.

You will learn from the author's mistakes—as many as hewas able to squeeze into the 400 pages of this book—soyou don't make the same ones.

Regardless of your background, location, interests, andpassions, the timeless and universal insights, principles, anecdotes, and exercises of Unleash Your Inner Company will inspire and guide you from your first steps, throughevery kind of obstacle, to the ultimate success of your venture.

1

PASSION AND PERSEVERANCE (STEP I):

A POSITIVE FEEDBACK LOOP

It doesn’t get easier. You get stronger.

—Anonymous

In the first half of 2001, the Silicon Valley dot-com bust, I would often wake up around 2 a.m. in sweat-soaked sheets sticking to my skin. CustomerSat’s second round of financing, long planned for that January, had refused to come together despite a flurry of meetings as we ran out of cash. Those nights I would get up, shower off the sweat, and try to get back to sleep. When my executive team and I finally grasped that our Series B round was not going to close, we huddled to decide what to do. First, we cut our salaries, then several weeks later those of all our employees, by 10 percent; I cut my own salary and that of my CFO by 50 percent. Debating and agonizing over every individual, we laid off 40 percent of our workforce—40 percent of the company I had spent the last four years of my life building. In our all-hands meeting immediately after, as I explained to our remaining employees that this was the only way we could keep together and stay afloat, my composure collapsed and I broke down sobbing. Our employees stood stunned, sympathetic, and embarrassed.

After many consecutive quarters of profit and growth, our recurring revenues had dropped that first quarter of 2001 by a whopping 20 percent.¹ Our first customers to stop paying were themselves dot-com companies, like highflier Webvan, who would file for bankruptcy in July 2001 just sixteen months after their initial public offering (IPO). Later, even Fortune 500 companies discontinued our online survey services or simply stopped paying. To help us get through, one of our Series A investors lent me $300,000—for but not to the company—meaning that I, the CEO and founder, would be personally liable for repaying the loan. The cash would last us ninety days. Later I would pay back the investor—to whom, despite the arrangement, I was deeply grateful—by mortgaging my townhouse in Menlo Park, California.

The next quarter our revenues fell again. To make payroll this time, we factored receivables, a costly maneuver, and cut salaries by an additional 10 percent. I reduced my salary to minimum wage, the legal limit. Our company moved into the second floor of our building and rented out the more attractive ground floor to another start-up. That company quit paying us rent after three months, came in late one weekend night, cleaned out their offices, and vanished without notice. The nightmare would not end.

After those fitful nights and drastic actions of the first half of 2001, we could finally see profitability ahead in the third quarter. Then, on September 11, terrorists viciously attacked US targets including the World Trade Center. Enveloped in smoke, dust, and debris, the twin 110-floor towers crumpled and collapsed. With much of the US northeast communications grid down, just accounting for all our employees took hours of emailing, phone calling, and pleading to know who had heard from whom. Our VP Sales Russ Haswell was marooned in London, unable to get back to the United States; our client invited him to stay at their home. The next day I was finally able to broadcast the message, “All CustomerSat team members are safe.” The US West Coast escaped the full brunt of the horror, but even in Silicon Valley, every company I knew had customers or suppliers who lost employees or family members in the attacks. Our client Akamai Technologies lost its brilliant cofounder Danny Lewin on American Airlines flight 11. Our salespeople were calling insurance and other firms in the World Trade Center; tragically, their phones just rang and rang. After the dot-com bust, September 11 was the final blow for many start-ups.

We broke even in the third quarter, a milestone and quiet relief. A very small profit followed in the fourth. The going stayed tough through all of 2002 and the first half of 2003, during which time we didn’t hire a single new employee. But we made it through. CustomerSat stayed profitable and grew nearly every quarter until the company was acquired in March 2008. Only a fraction of Internet companies survived; even fewer went on to successful exits. Why did CustomerSat do so when others did not?

Unleash Your Inner Company distills four decades of real-world lessons I have learned about entrepreneurship. During that time I have founded, grown, and sold two online software companies; cofounded a third; invested in dozens of privately held companies, several of which have had successful initial public offerings (IPOs—also known as “going public”); started and run consultancies in strategic marketing and entrepreneurship; and mentored thousands of entrepreneurs on six continents. My mission today and for the past ten years is to help aspiring entrepreneurs achieve the freedom, independence, and ability to do what they love through entrepreneurship. This book is part of that mission.

Unleash Your Inner Company offers unique guidance and perspective for anyone who wants to start and grow a business:

•Entrepreneurs are not interchangeable like batteries or light bulbs; the best opportunity for you is unique to you and must be discovered by you.

•You have many more resources than you likely realize to start a company and make it successful.

•Positive feedback loops pervade multiple aspects of your start-up and life; find, nurture, and ride them.

•Psychology is an essential part of strategy.

•Any business, no matter how modest, can be evolved and scaled into a large business, if desired.

This book provides a proven, step-by-step process:

(1)Identify/develop your areas of passion and perseverance

(2)Discover and refine unsatisfied customer needs in those areas

(3)Generate and refine possible solutions to those needs

(4)Inventory all of your resources (your “STARS”) and (4a) Discover additional needs suggested by those resources

(5)Match each need & solution with your resources & passions; assess each fit

(6)Acquire/develop additional resources to strengthen the best fits

(7)Identify your competitors; determine/develop your advantages for each need

(8)Match needs & solutions with your advantages to assess your best fit overall

(9)Build, customer test, and launch your Minimum Viable Solution (MVS)

(10)Scale up the uniquely differentiated business you have created.

This 10-step process, illustrated opposite the inside back cover, in figure 2.4, and by the flowchart of figure 2.5, guides you in finding and creating the best start-up for you, whether in agriculture, AI, apparel, computing, construction, consulting, cosmetology, electronics, entertainment, home furnishings, mobile apps, publishing, telecommunications, transportation, or any other field. It is best not to be wedded to a particular product, service, or technology at the outset; here, we start with customer needs which will determine your product or service and which technologies you apply. By following the steps in this book, you will far raise the likelihood of your and your company’s success.

Why did CustomerSat survive and thrive while others did not? More generally, why do a few companies do so while many others do not? I surely do not believe that we were smarter than other companies’ execs. We absolutely did not have more in the way of resources than other companies had. We did act very quickly to minimize damage to our company. But if I had to narrow it down to just two factors, I would say it was these. First, I believe we cared more deeply about our business than other management teams did: about every customer, about the coolness of our products and technology, about each of our employees, and about each other. Second, we stuck with it longer than other management teams did. As I mentioned, it was another seven years before the company was acquired. Many other teams just gave up before then. Among our team members who went through the dot-com meltdown together, there was very little turnover, very strong employee loyalty, for many years. In my view, it was this combination of passion and perseverance that got us through—the same combination that you can summon for your business.

We hear much more today about passion, which sounds easy and fun, than perseverance, which sounds hard. Your passions are what you care most deeply about, have the highest expectations for, have powerful and compelling feelings about, or that give your life meaning. They may include your job, team, company, family, sports, school, hobbies, communities, faith, travel, investing, gaming, gadgets, or virtually any other subject or activity. Perseverance is persistence in purpose, ideas, or tasks in the face of obstacles or discouragement. Passion (an attitude) and persistence (a behavior) usually go together. But you can have one without the other: passion can be fleeting; perseverance can be uninspired. Without passion, perseverance is drudgery; with it, working long hours becomes effortless. Successful founders and teams have both. Various terms have been applied to the combination of passion and perseverance: flourishing, grit, and the term that to me best captures how time flies and organizations click when the two qualities come together—flow.² Figure 1.1 illustrates perseverance, passion, and flow.

Figure 1.1 Perseverance, passion, and flow.

You and your start-up need passion and perseverance for several reasons. With passion and perseverance, the following are true:

•You are more likely to be first to reach or discover the limits of what is currently possible or convenient in your chosen field. This means you can recognize customer needs before others do. Passion and perseverance thus help you get your new venture off the ground.

•You’re able to break through or find ways around obstacles. Layoffs, salary reductions, factoring receivables, and moving to downsized, more modest offices are hard and humbling actions to take. Passion and perseverance empower you to do whatever it takes for your venture to survive and grow.

•You’re in it for the long haul and don’t plan to quit. Ventures usually take longer than expected to reach their goals; the short term can turn into the long term very quickly. I ended up running CustomerSat for over a decade. Perseverance keeps you going for as long as it takes; passion makes the journey as important to you as the destination.

•You stay motivated. Perseverance and passion are contagious and motivate those around you, including coworkers, customers, suppliers, and partners.

•Your strengths and advantages are amplified.

CREATING POSITIVE FEEDBACK LOOPS

Passion and perseverance reinforce each other. Practicing the piano, designing cir...

Table of contents

• Cover
• Title
• Copyright
• Dedication
• Contents
• 1. Passion and Perseverance (Step 1): A Positive Feedback Loop
• 2. All You Need Is a Need and Advantage: Roadmap to Creating Your Business
• 3. Let a Thousand Needs Bloom (Steps 2 and 3)
• 4. Don’t Listen to Your Customers; Discover Their Goals
• 5. Think Big; Start Focused
• 6. The Future Is in Your STARS (Step 4): Skills, Technologies, Assets & Accomplishments, Relationships & Reputation, (Inner) Strengths
• 7. Growing Your Mind from the Inside Out
• 8. You’re a Technologist. Know It
• 9. Different Is Better than Better
• 10. Listen to Your Resources (Step 4a): What Additional Needs Do They Suggest?
• 11. Look, Mom . . . I’m Inventing! Mixing and Matching Technologies
• 12. 1 + 1 = 3: Choosing a Cofounder and Team Members
• 13. Matching Needs to Your Resources and Passions (Step 5)
• 14. The Freedom of Frugality
• 15. Mind the Gaps (Step 6): Ten Ways to Develop and Acquire Resources
• 16. Avoiding Competitors (Step 7)
• 17. Where Do Your STARS Shine Brightest? Recognizing Your Advantages
• 18. Partnering, Rightsizing, and Upsizing
• 19. Creating Positive Feedback Loops among Customers (Network Effects)
• 20. Choose Your Best Opportunity (Step 8)
• 21. Five Pricing Principles
• 22. Designing, Customer Testing, and Launching Your Minimum Viable Solution (Step 9)
• 23. Don’t Waste Time Raising Money
• 24. Scaling Your Business (Step 10)
• 25. Regulations: The Hidden Roadblocks to Your Success
• 26. The Ethics of Entrepreneurship: Making the World More Positive-Sum and Abundant
• Acknowledgments
• A. Unleash Your Inner Company: The Process
• B. Visualizing Numbers of Combinations
• C. Creating Financial Models of Your Business: Projecting Income, Cash Flow, and Balance Sheet
• D. Unleash Your Inner Company and the Business Model Canvas
• E. Making the Modern Regulatory State More Resilient, Humane, and Friendly to Start-Ups and Innovation
• Notes
• About the Author
• Index