Raise Your Standards

I’ve got this route I run that is half woods and half roads.  I do not know exactly how far the route is.  I do not know if I am running it quickly or slowly.  I do not know who’s property I am passing through on the well-trodden path along the banks of the Charles river.  I do not know much about this route except that I track my time each time I run it.  And my sole goal each time is to improve my time.  I do not always improve my time, but usually I do.  I do not allow myself greater time this year because I am a year older than last year.  If anything, I am also a year wiser and by running this route often I should know where to push hard on the uphills and where to save energy on the downhills.  What is important to me is that I raise the standard by which I compete with myself.

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Fred Wilson’s “Resource Constraints”

As per the norm, a thought provoking piece by Fred Wilson of Union Square Ventures today.   Full text below.  It reminded me of a time when one of my companies, which was bootstrapped, was generating more than sufficient cash flow.  I started spending time looking at new, shiny businesses to start rather than focusing on executing at 100% and continuing to gain market share for the existing company.  In the end, the distraction of too much cash flow hurt the company.  I do not disavow cash flow, but need to be mindful that the cash flow from any business line is merely a scorecard of where you are to date; it is not an excuse to look around from your core mission and market.

Resource Constraints

Most of the companies I work with tell me that they are resource constrained and do not have enough capital and engineers to do everything they want to do.

I tell them that is a blessing not a curse.

They look at me like I am crazy and rationalize it as me being an investor and not an operator.

I will plead guilty to both (being crazy and being an investor) but I am extremely confident that being resource constrained is a blessing in the hands of a great operator.

I have seen companies do amazing things with no money and tiny teams.

I have seen companies do absolutely nothing with all the money in the world and hundreds of engineers.

This experience, built up over thirty plus years in tech and startups, has convinced me that resources are never the limiting factor to doing great things.

The limiting factors are;

  1. having great management that can make the right decisions and drive exection
  2. knowing what to do and what not to do
  3. playing your game and not someone else’s

Resources, measured in available capital and headcount, often make #2 and #3 more challenging.

Organizations start to feel that they can do more than they can and should.

They start looking around enviously and counting the size of the fundraises and engineering teams of their competitors.

They stop knowing who they are. And that is death.

I believe that excess capital makes companies weak and unfocused.

I believe limited capital makes companies strong and focused.

And I don’t believe capital has ever helped a company win a market. Many have tried that approach and it always ends badly.

So I encourage all of you entrepreneurs out there to embrace being resource constrained and learn to love operating with less.

It will serve you well.

Ari Gold on Elon Musk

Two of my favorite characters.  One is a fictional character, closely based on a small few of Hollywood’s elite agents (and played to perfection by Jeremy Pivens).  The other a brilliant entrepreneur and engineer rightly stepping into Steve job’s previous role as King of America’s Entrepreneurial Aspirations.

In the book written by the Ari Gold character, there is a great chapter named, “Your Most Important Product is Heat”.  An descriptive paragraph is below:

Heat is a kinetic, volatile, temporary bubble of energy that engulfs whatever it is you’re selling—be it a product, a client, even yourself—tipping the scales of attraction in your favor, allowing you to conjure outlandish, outrageous, inconceivable deals that would not be possible under more temperate weather conditions. Heat adds a layer of excitability to the demand side of the equation, triggering buyers to place a disproportionately high value on a product, giving you leverage to demand more . Why was Owen Wilson’s character in Zoolander the highest paid model in the world at the time? Because that Hansel… he’s so hot right now! Buzz. Momentum. Juice. It’s all the same. You’re catching lightning in a bottle and selling it before you hear the thunderclap. Remember, people may eat a steak for the taste, but they buy it for the sizzle. Heat makes people do crazy things. Four centuries ago, the whole country of Holland went completely batshit berserk for tulip bulbs. Yes, tulip bulbs. Tulipmania was the first time prices of a speculative asset, in this case—tulips—shot up through the stratosphere. Farms, homes, and families were lost, all because of a flower you send your girlfriend to apologize for sleeping with her sister. Heat is the ephemeral force that compels Midwestern morons to sink their life savings into Beanie Babies, that makes CPAs quit their jobs and spend six months building fallout shelters in their backyards before the Y2K apocalypse.

The best time to sell tickets to a volcano is just before it erupts.

I believe in Tesla, I believe in SpaceX, I saw the success of PayPal.  I believe Elon Musk is the real deal and an engineer with great aspirations and talent to match.  I also believe that Elon Musk knows how to generate Heat.  Half a million Model 3’s on order and production capabilities in doubt, losing increasing amounts of money each quarter yet can easily raise $1.5 Billion in debt?  That’s Heat.

Anyone selling anything is better served if they can create Heat.  Social media, personality, 10x performance, celebrity endorsements, an awesome give-away contest for clients…..whatever it is you need to do to create Heat, find a way to make it happen.