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How Do I Cope With Startup Envy?

Dear Lucas…

My startup recently failed. I was the CEO, and it was in a super-hot space with three other competitors. Two of the competitors were acquired and the founders in both companies became super-wealthy. I checked out their LinkedIn profiles and for most of the founders, it was their first startup.

With only two startups left, our other competitor’s growth stalled while ours went through the roof. We were way in the lead until we tried to raise our next round of funding. The VCs did not want to invest any more money. We tried laying people off, but in our frenzy to grow quickly, we ran out of money and had to shut down.

Meanwhile, the stalled competitor had scaled down operations earlier than us, which naturally gave them more runway. They ended up pivoting into a tangential space where they (accidentally?) hit on a big new hot trend. Almost a year after they scaled back, they were now raised a round of funding at a huge valuation.

Should we have done something differently? How did I screw it up when I was ahead? I can’t get over the feeling like none of it is fair. I get the feeling that other people keep winning big all around me, except for me. Do you have any advice that can help me?

—Almost Famous


Hi Almost Famous,

Your story is so common that it has been told for thousands of years and countless ways. It is straight out of Taoist mythology. Here is how I usually modernize it.

A father has a son. Everyone congratulates him and says “What great news!”The father responds: “Maybe.” The son grows up and breaks his arm in baseball. Everyone says: “What bad news the broken arm is!” The father responds: “Maybe.” A war breaks out and the military rejects his son due to the arm injuries. Everyone says: “What good news the broken arm was!” The father responds: “Maybe.” The son goes off to war anyhow. Everyone says:“What bad news your son went off to war.” The father responds: “Maybe.” The son is part of the platoon that kills the dictator. Everyone says: “What good news your son went off to war.” The father responds: “Maybe.”

I think that I will use your version of the Taoist myth instead now, because it illustrates the same structure but using terms I love.

An entrepreneur starts a company and gets millions in venture capital. Everyone congratulates him and says “What great news about starting a company!” The entrepreneur responds: “Maybe.” The company’s growth stalls. Everyone says: “What bad news about your growth!” The entrepreneur responds: “Maybe.” A bunch of companies in the same space are acquired. Everyone says: “What good news about the acquisitions!” The entrepreneur responds: “Maybe.” The company lays everyone off to extend runway. Everyone says: “What bad news about layoffs.” The entrepreneur responds:“Maybe.” The company pivots and raises a mega-round of funding. Everyone says: “What good news about the funding!” The entrepreneur responds:“Maybe.” The company runs out of money and shuts down. Everyone says:“What bad news about starting that company!” The entrepreneur responds:“Maybe.”

“What could have been” haunts us only when we forget that “what will be” alone can illustrate the full depth and measure of “what is”.

Are you going to let yourself be defined by what could have been?

Or are you going to appreciate the here and now, and create what can be?

“Character consists of what you do on the third and fourth tries.” ― James A. Michener

I can hear your response already: “but so-and-so didn’t have to wait for their third and fourth tries.” Then so-and-so is the one you should pity, not yourself.

It is your turn to build character this time instead of hording money. Relish it. Treasure it. Learn to appreciate it and be grateful for this opportunity. Your failure is your accomplishment, wear it proudly. Your failures build character like tearing muscles builds scar tissue. It makes you fucking buff.

Nobody can build character for you. Think of your heroes. Are they people full of character? Guess how they got it. Was it by obsessing on what could have been? The experiences you are having right now are irreplaceable and precious and rare.

Fortunes come and go. Building startups is a long game. It is not long on money. You might win money in one startup, then invest it all and lose it the next startup. Startups are long on character. This is the dirty little secret nobody tells you up front: the spoils go to those left standing.

—Lucas


This is part of a weekly column by Lucas Carlson, founder and CEO of AppFog which raised $10M from Angels and VCs and was acquired by CenturyLink and became CIO. For bonus content, exclusive early access, and pre-releases of upcoming advice columns, subscribe at rufy.com.

If you have a startup question, reach out for some candid advice: lucas@rufy.comNo questions or answers will be posted here without your review and consent.

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[Vinod Khosla] said that most VCs “haven’t done shit” to know what to tell startups going through difficult times.

He said that founders should listen politely and just do what they want to do anyway.

He said of his approach toward helping entrepreneurs: “I give them advice, but I tell them what I’m uncertain about. I’m confident that I screwed up more often than most people in this room. Hopefully, I can advise entrepreneurs to avoid mistakes. But you can never be sure if you’re trying something new and unreasonable.”

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Of all the business books I have read, the most transformative book I have ever read was Getting to Yes.

Three years ago, I founded my first venture-backed company. In that time, I have read dozens of business books, many classics and many new books including Crossing the ChasmHow to Win Friends & Influence People, and many others.

All the books have been good, but “Getting to Yes” changed my life, not just my business negotiations. It changed the ways that I have thought about:

  • Business deals
  • M&A negotiation
  • Sales conversations
  • Hiring process
  • Buying cars/houses/anything
  • Negotiations with my wife
  • Interpersonal negotiations

And much more…

If there was only one book I could recommend to startup people, this is it.

Tags: book
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Some fantastic advise about pitching VCs from someone who has raised tens of millions of dollars from them over his career.

Tags: pitching
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I Am Terrible at Communicating

I have a secret and embarrassing confession to make to you. I am horrible at communicating.

Here is what happens whenever I try to communicate an idea.

Original Idea 
    → Form Words
        → Speak or Write
            → Hear or Read
                → Interpret Words
                   → Final Idea

Humans are terrible at every one of these steps.

  • When forming or interpreting sentences, we taint our ideas with
    • our mood - (eg. I am angry/bored/excited/tired)
    • our relationship - (eg. oh mom)
    • the situational context - (eg. pretty girl walking by)
    • the environmental context - (eg. man it is hot)
    • the cultural context - (eg. he didn’t say thank you)
    • much more - (eg. I can’t remember that word)
  • When speaking, we may not speak loudly enough, or too loudly, or not enunciate
  • When hearing, our ears fail us, and our brains play tricks on us
  • When reading we skim

If you imagine communication like a shopping cart, every stage has a huge drop-off rate. When you combine drop-off rates, any success seems amazing!

In fact, there is actually an academic “law” for this called Wiio’s law:

All communication fails by default, successful communication is an accident

Wow. Sucks to be a CEO.

A startup CEO has three primary jobs:

  1. Lead a team
  2. Fundraise
  3. Manage the board

Great communication is essential for success for all three jobs.

So what is a startup founder to do? Try telling stories.

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Let me tell you a story.

Three years ago, I was just a programmer. A pretty good one, because I had been doing it for 20 years. But I had never professionally been anything but a programmer. Usually, I would work alone or in small teams.

Then I started a company and became a startup CEO. I tried to treat every CEO problem like a programming problem. I thought that if I just said the right words in the right order in an investor meeting, I would get a big check.

I was very wrong.

Investors are not compilers looking for perfect code without syntax errors. They are people, who invest in people. They want to get to know you, build trust with you, understand what makes you tick. 

So I started telling my story of how I had been a programmer for 20 years and that my new company was changing how a new generation of programmers wrote code. And I showed data that kept backing up my story. And I showed passion for what I was doing.

Sometimes I realized that my story wasn’t ambitious enough to be investable, and I made corrections, and my ambitions grew. And the data to back my ambitions grew too. Pretty soon I had $10M in venture capital and a team of 40.

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Stop. Did you see what I did there?

Stories are the best form of communication we have.

  • To navigate the Pacific Oceans, the Polynesians used stories and songs to remember important facts and stars
  • The new testament of the Bible wasn’t written until 100+ years after Jesus died. That was over 100 years of oral story telling keeping it alive. 
  • Homer’s epic poems, the Iliad and Odyssey were passed down orally in their entirety long before they were ever written down.

There is even speculation that our brains become more active when we hear and tell stories.

A startup CEO has three primary jobs:

  1. Lead a team
  2. Fundraise
  3. Manage the board

Great communication is essential for success for all three jobs.

So what is a startup founder to do? Try telling stories. Need help? Read a book.

P.S. Repetition doesn’t hurt either.

P.P.S. Here is one of my better VC story-based pitches that has been recorded. I had recently gotten into story telling as a communication method here. I attribute this very pitch as a formative moment for landing my $8M Series B investment since it was the first time my Series B investor had seen me. He was sitting in the audience.

PHP Fog Presents at Under the Radar

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Lennart Green is a master of card magic

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Nothing Exists In A Vacuum

What time is it right now? 

Go ahead, look at your watch. Tell me.

What time is it on the moon? 

Time feels so concrete to us. I look out the window and I know it is the afternoon. There is no question in my mind how absolute this fact is. But what is afternoon? How concrete is it? Is it afternoon in Africa right now?

What does your app do without a computer?

Your app only exists in a larger context.

Your startup only exists in the context of your competition, you need them and they need you. Neither of you exist without the other, your biggest competition is your best business ally. Thank them for doing a great job, their death is your death. Your death is their death. Treat them with utmost respect. Remember that often you are among your own biggest competitors.

We live and breathe on the shoulders of giants and we often forget that. It is interesting to step back and remember those who have come before us. Those whom have succeeded and those that have failed. To read about their experiences first or second hand. What worked? What didn’t work?

Spend some quiet time thinking about the bigger context of where your startup sits in history. What came before it? What might come after it? 

Might people use your technology to do things you never expected? What would Thomas Edison think about the new LED lightbulbs? What is the LED version of your startup?

What does your app do on the moon?

Tags: philosophy
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Sit Down And Be Quiet

Sometimes we all need a gentle reminder to slow down.

You are drunk and this is the edge of the roof.

-Rumi

Shut up, shut up, I’m busy!

-Titanic’s Captain while being told about the iceberg

(One hour before the crash)

We are distracted from distraction by distraction.

-T.S. Eliot

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Best VC Pitch Template