Day 114 of Self Quarantine Covid 19 Deaths in U.S.: 132,000
Six years ago, I wrote a draft of a book that was a takeoff on Rilke’s Letters to a Young Poet. It was not well-received by my test audience. The most common critique was TL;DR. When I asked how to fix it, most test readers laughed and said “pay attention to your title. Turn your book into a series of emails that we can read in small bites.”
As I write the components of Know Now, I wanted to start the book with an overview story. Blackwell and Iny recommend that you give away a free eBook in order to attract people to high value online mastery courses. I did not look forward to having to write two books. I realized I already had a free book that provides a story and a context for Know Now.
Over the next couple of weeks, I will publish the free eBook as a series of blog posts. Along the way I will provide in PDF format the accumulated chapters of the book. After the last chapter I will provide in EPUB format the whole book.
My fondest hope is we can enter into a conversation about the topics in Emails to a Young Entrepreneur. You can email me using skip.walter in the usual Google email place.
While mentoring, coaching and teaching thousands of entrepreneurs and aspiring entrepreneurs over the last fifteen years, one thing is clear: entrepreneurs don’t understand the game they are playing or the “game board” on which they are playing. I am not surprised. I took forty years to understand the entrepreneurial game.
New entrepreneurs are so focused on their product and working IN their business, they forget to work ON their business. As a founder your “product” is the business.
Emails to a Young Entrepreneur is a journey of discovery to understand the new venture game and to develop and trust your inner guidance system.
The Emails provide relevant topics for the entire life cycle of a new venture. Most of us take several years to go from an idea to an exit. I suggest that no matter what stage you are in or whether you’ve been part of a new venture, read through the entire book as quickly as you can. Then figure out which chapters apply to where you are in your current venture. Re-read that Email and start working through the relevant exercises.
You will notice that only two of Mikhail’s Emails are captured in the book. The absence of the other emails is intentional. At the start of each Email, I summarize in a couple of sentences what was in Mikhail’s Email. The intent is for you to provide your experiences with your own venture as the substance of what Mikhail is writing about. Imagine what your life is like at each of the stages Mikhail is asking questions about. What questions do you have that you would like to bring to your understanding of a particular Email?
Mikhail is a fictional entrepreneur. However, he is a synthesis of three entrepreneurs from the United States and Russia with whom I worked intensely for two years.
To get the most value out of the book read it with the intention of understanding the new venture game you are a participant in and of discovering, developing and trusting your internal guidance system.
Use the Emails and exercises to find your deeper purpose (Why) and discover, develop and trust your North Star.
While the exercises are aimed at developing your inner guidance system, the results of the exercises are valuable for sharing with your founding team, lead customer and investors. Most learning is social so encouraging your stakeholders to engage with you in the exercises and share your insights accelerates your startup and company culture.
I look forward to exchanging Emails (use skip.walter at the google place) with you as you pursue your new venture.
Email from a Young Entrepreneur
From: Mikhail Rostov Friday, June 14, 2013 12:54 PM
As I was sitting in front of my locker staring at the detritus of my three year combined MBA and Master of Design program at the Institute of Design, I was deep in thought when Patrick Whitney stopped and asked me “what’s next for you, Mikhail?”
How did Patrick know that is exactly what was on my mind? For three years, I’ve worked towards the goal of graduating. What’s next? I want to do a startup that builds on the multiple disciplines that I’ve learned – business and human centered design. I even have an idea that I’ve worked on during many of the class projects – a visual interface for organizing work on the new portable tablets that are coming to market.
But I don’t know how to get started.
“Thanks for asking, Patrick,” I shared. “This is the question that’s been plaguing me for months now. I want to do a startup. And I’m going back to Moscow where there isn’t much of an infrastructure or ecosystem for supporting high tech startups. Who can help me when I’m thousands of miles away from all the resources here in the United States?”
Patrick smiled his Cheshire Cat knowing smile and offered “you should contact one of our favorite serial entrepreneurs, Skip Walter. He taught here for ten years commuting from Seattle once a week. He calls himself a pracademic (practitioner academic) and enjoys ‘paying it forward’ with young entrepreneurs.”
Patrick was kind enough to give me your contact information. Skip, I’ve got this great idea for a new productivity tool to help knowledge workers visualize the project workspaces they are collaborating on.
I’ve just finished the three-year combined MBA and MDES program and I am ready to start my own business. Patrick wanted to make sure that I let you know that I am Russian and am headed back to Moscow. He thought maybe this would be something that would catch your interest. He also thought that you would be intrigued by the challenge of working with me remotely. I would be delighted to help you learn about the Russian entrepreneur ecosystem.
Attached to this email are some of the key artifacts from my final project. These artifacts include the design of the tool and a business plan to start the company. I would really appreciate your taking a look at these documents and offering your thoughts and comments on whether there is a viable product here.
Unfortunately, I am leaving for Moscow tonight, so I won’t be able to come to Seattle and meet you in person.
Let me know what you think of my ideas and prototypes and whether you would be interested in helping me bring this prototype to market.
Mikhail Genrich Rostov
June 14, 2013
“You are looking outwards, and of all things that is what you must now not do. Nobody can advise and help you, nobody. There is only one single means. Go inside yourself. Discover the motive that bids you write; examine whether it sends its roots down to the deepest places of your heart, confess to yourself whether you would have to die if writing were denied you. This before all: ask yourself in the quietest hour of your night: must I write? Dig down into yourself for a deep answer. And if this should be in the affirmative, if you may meet this solemn question with a strong and simple ‘I must’, then build your life according to this necessity; your life must, right to its most unimportant and insignificant hour, become a token and a witness of this impulse.”
Rilke, Rainer Maria. Letters to a Young Poet (Kindle Locations 167-172). Start Publishing LLC.
Seattle, WA USA, June 20, 2013
Thank you for your kind Email seeking my thoughts on the quality of your ideas. With great fondness, I remember the joy of immersing myself in the Institute of Design and the wonders of late-night conversations with Patrick about the history and evolution of human centered design. Patrick is the pied piper of the design world wandering through Global 1000 corporations sharing his message of the power of design to make a real difference in the business world.
Before I share my entrepreneurial experiences, a reflection is appropriate. I’ve found the regular reading of the entrepreneur’s serenity prayer to be a good practice (the use of God, Lord and other spiritual terms in these emails are in the sense of the Alcoholics Anonymous higher power or power greater than ourselves):
God grant me the serenity to accept my team, my customers, my investors and my suppliers as bringers of opportunity;
The courage to change my understanding of what the customer truly needs; and
The wisdom to know the difference between what is right and what the investors, the board and the bankers want.
I am not sure I have anything of specific value to you in your journey. Most entrepreneurs ask me very detailed questions like you did in your letter. On my good days, I make sure not to answer those questions. Each startup is its own journey. What I’ve done or observed in the past may or may not have anything to do with the journey that you are on. Mikhail, only you can know what is right for your new venture.
After forty years of entrepreneuring and intrapreneuring, I realize that for most of my professional life I did not understand the game of business I was playing. I had the core processes backward. I learned that I needed to flip my perspective.
Shortly after we sold Attenex to FTI Consulting two concept shattering events occurred. The first event was sponsored by the Northwest Angel Capital Association and featured Basil Peters sharing his process for Early Exits. As he described all the best practices that you should do as part of planning the venture exit process (getting acquired), I put my head down on the table and damn near cried.
Where was Basil’s book, counsel and valuable resources when we were exiting? I quickly understood that Attenex was the poster child of what NOT to do when being acquired. His best practices illustrated why we lost $35M in value from the initial FTI Consulting offer to our closing valuation six months later.
The second event was a surprise announcement from FTI Consulting, that based on the $91M acquisition of Attenex, they were launching an IPO of the division that acquired us to raise >$1B by selling 40% of the division. The FTI founders designed a way to turn a $91M acquisition expense into raising $1B of new capital. I was stunned at the innovative creativeness. We did not see it coming. Yet, upon reflection, if I had truly understood my Valuation Capture framework (described in the Exiting Email), the prediction of such a strategic move was embedded in the framework.
I am getting ahead of myself. I wanted to share with you that becoming an entrepreneur is a lifelong learning process. It never stops. The world of commerce is constantly changing. As a young entrepreneur, you need to learn just as fast. What worked yesterday has no guarantee of working tomorrow.
The above is a way of saying I am not qualified to pass judgment on your ideas or business plan or prototypes. Only you can do that. It is your idea and hopefully your passion.
A year ago, my daughter and her husband conceived their first child whom we know as Alice. The biological process of conception, birth, infancy, and parenting is close to this conceiving of an idea for a startup and bringing it into existence. Either by intention or serendipity you conceive of the idea for your new venture. As the idea matures in the womb of your mind, your life changes day by day. Your energies are focused on that idea and you start nurturing it and protecting it. And just as a mother’s pregnancy process becomes visible to everyone she encounters, your enthusiasm for your idea will be increasingly visible to those you encounter through your excitement and passionate energy.
In the ideal state, you have a life partner (co-founder) to join you in the nurturing of your idea. With design or luck, you’ve gotten to know your co-conceiver through your working relationships. Now you prepare for the birthing of your idea. Many budding entrepreneurs take birthing classes (like Steve Blank’s Launchpad classes) or find a wise mid-wife for a mentor. This pregnancy time is one of finding the professionals that can help you with the birthing of your conception. You need to find your lawyer, banker, and accountant who will take care of the administrative parts of the birth process.
You start seeking out other entrepreneurs either through your classes or Meetups. Peer learning is so valuable at this point with entrepreneurs who are in the same trimesters of pre-birthing.
The birthing day arrives on its own schedule. This day you formally start your new venture life. And like human births, where because of the size of the head, a baby is born about three months before it is really ready, you will quickly realize that you have jumped into something you weren’t prepared for. That’s OK. We all have to start somewhere.
Many first time parents ride an emotional roller coaster in those early months caring for their infant. Their lament is “nobody gave me a manual for what a parent is supposed to do!” Where is the manual for a startup mother? While there are thousands of books and an unlimited amount of expert advice, prior to your baby venture arriving in the world you can’t understand a word of it. Now the reality is right in front of you crying constantly – for food, for poopy diapers, for discomfort, for who knows why.
For the terminal analytics among us, the second lament is “this is not going according to my plan.” During the idea pregnancy, you made lots of plans. New venture babies are not like established companies. They require a different way of thinking.
Saras Sarasvathy calls this type of thinking effectual:
“The word ‘effectual’ is the inverse of ‘causal’. In general, in MBA programs across the world, students are taught causal or predictive reasoning – in every functional area of business. Causal rationality begins with a pre-determined goal and a given set of means, and seeks to identify the optimal – fastest, cheapest, most efficient, etc. – alternative to achieve the given goal. The make-vs.-buy decision in production, or choosing the target market with the highest potential return in marketing, or picking a portfolio with the lowest risk in finance, or even hiring the best person for the job in human resources management, are all examples of problems of causal reasoning. A more interesting variation of causal reasoning involves the creation of additional alternatives to achieve the given goal. This form of creative causal reasoning is often used in strategic thinking.
“Effectual reasoning, however, does not begin with a specific goal. Instead, it begins with a given set of means and allows goals to emerge contingently over time from the varied imagination and diverse aspirations of the founders and the people they interact with. While causal thinkers are like great generals seeking to conquer fertile lands (Genghis Khan conquering two thirds of the known world), effectual thinkers are like explorers setting out on voyages into uncharted waters (Columbus discovering the new world). It is important to point out though that the same person can use both causal and effectual reasoning at different times depending on what the circumstances call for. In fact, the best entrepreneurs are capable of both and do use both modes well. But they prefer effectual reasoning over causal reasoning in the early stages of a new venture, and arguably, most entrepreneurs do not transition well into latter stages requiring more causal reasoning. Figure 1 graphically depicts the different forms of reasoning discussed above.”
From “What Makes Entrepreneurs Entrepreneurial?” by Saras Sarasvathy of the Darden Graduate School of Business Administration, University of Virginia.
For many entrepreneurs, the strange word “effectual” is a road block to understanding. David Robinson in his “artist way” translated this for himself:
- Causal thinking – Ready. Aim. Fire.
- Effectual thinking – Fire. Aim. Ready.
Over the years I’ve found that managers in large corporations and academics do not see the distinction between causal and effectual thinking. They see both as being goal directed and miss the fundamental process of the entrepreneur. Another way to see how an entrepreneur thinks is in Figure 2. Through observations in the world or the emergence of an idea for a product and company, the entrepreneur has their great idea. They start looking at the world as a range of Spaces of Possibility. As they identify potential customers in these spaces of possibility, they look around for what resources they have in their own skills and in their network of relationships. Through several iterations of convergence and divergence, the entrepreneur begins to focus on how their idea can come into being for their discovered target customers. There is no goal for the entrepreneur at the beginning. Rather there is this to and fro between possibilities and resources.
Just as one’s predisposed plans for what being a mother with a new infant will be like are thrown out the window at the first bout of unstoppable crying, any plan for a new venture rarely survives the first contact with a prospective customer or investor.
You are still at the beginning of your journey. Now is a good time to step back for reflection and revisit your intentions. I recommend starting by watching the TED Video “How Great Leaders Inspire Action” from Simon Sinek:
Sinek points out that great leaders start with their personal “why” and their company’s “why.” Sinek flips the perspective of most executives and marketing professionals who proclaim the “how” and “what” of their products. He concludes his video by pointing out that Martin Luther King’s most famous speech didn’t start with “I have a plan,” rather it started with “I have a dream!” Sinek writes:
“There are leaders and there are those who lead. With only 6 percent market share in the United States and about 3 percent worldwide, Apple is not a leading manufacturer of home computers. Yet the company leads the computer industry and is now a leader in other industries as well. Martin Luther King’s experiences were not unique, yet he inspired a nation to change. The Wright brothers were not the strongest contenders in the race to take the first manned, powered flight, but they led us into a new era of aviation and, in doing so, completely changed the world we live in.
“Their goals were not different than anyone else’s, and their systems and processes were easily replicated. Yet the Wright brothers, Apple and Martin Luther King stand out among their peers. They stand apart from the norm and their impact is not easily copied. They are members of a very select group of leaders who do something very, very special. They inspire us.
“Just about every person or organization needs to motivate others to act for some reason or another. Some want to motivate a purchase decision. Others are looking for support or a vote. Still others are keen to motivate the people around them to work harder or smarter or just follow the rules. The ability to motivate people is not, in itself, difficult. It is usually tied to some external factor. Tempting incentives or the threat of punishment will often elicit the behavior we desire. General Motors, for example, so successfully motivated people to buy their products that they sold more cars than any other automaker in the world for over seventy-seven years. Though they were leaders in their industry, they did not lead.
“Great leaders, in contrast, are able to inspire people to act. Those who are able to inspire give people a sense of purpose or belonging that has little to do with any external incentive or benefit to be gained. Those who truly lead are able to create a following of people who act not because they were swayed, but because they were inspired. For those who are inspired, the motivation to act is deeply personal. They are less likely to be swayed by incentives. Those who are inspired are willing to pay a premium or endure inconvenience, even personal suffering. Those who are able to inspire will create a following of people— supporters, voters, customers, workers— who act for the good of the whole not because they have to, but because they want to…
“What if we could all learn to think, act and communicate like those who inspire? I imagine a world in which the ability to inspire is practiced not just by a chosen few, but by the majority. Studies show that over 80 percent of Americans do not have their dream job. If more knew how to build organizations that inspire, we could live in a world in which that statistic was the reverse— a world in which over 80 percent of people loved their jobs. People who love going to work are more productive and more creative. They go home happier and have happier families. They treat their colleagues and clients and customers better. Inspired employees make for stronger companies and stronger economies. That is why I wrote this book. I hope to inspire others to do the things that inspire them so that together we may build the companies, the economy and a world in which trust and loyalty are the norm and not the exception.”
Sinek, Simon (2009-09-23). Start with Why: How Great Leaders Inspire Everyone to Take Action (Kindle Locations 177-183). Penguin Group US. Kindle Edition.
Get in touch with your essential why and your dream. And in true effectual fashion, the essential why is likely to evolve as you proceed along your effectual learning path. Put on your calendar to revisit your why and your dream at least once a month during the infancy of your conception.
A key part of your intention is making explicit the values that are important to you and your fledgling venture. As individuals we want to stand for something. This exercise is to clarify what are the most important values for you and your new venture’s success. The exercise is taken from Managing by Values by Ken Blanchard and Michael O’Connor.
The most important thing in life is to decide what is most important.
“What should I stand for? What should be the values by which I operate? Look over the list of values below. Circle any values that ‘jump out’ because of their importance to you. Then write your top three values, in order of importance, below the list. Feel free to add values if needed.”
After selecting the three top values to focus on, we need to bring the values into daily life. Brainstorm ways in which you already bring these values into action or ways in which you would desire to bring these values into action. Sketch an image for each of your selected three values as well as an integrated image that illustrates how you would bring the values into action.
One of the most elegant statements for a partial answer to an essential why and values is taken from DuPont’s published corporate vision:
“Our principles are sacred. We will respect nature and living things, work safely, be gracious to one another and our partners, and each day we will leave for home with consciences clear and spirits soaring.”
Just as conceiving a child and going through the journey to birthing and parenting is sacred and a soaring experience beyond all others, conceiving a new company is a sacred responsibility. As you invite others to share in your journey and bring your opportunity to customers and investors, they are expecting you to honor your commitments. As Simon Sinek further elaborates in “Leadership is not a rank, it’s a decision,” the role of the parent and leader is to create a safe environment for the “baby” to grow and develop in order that she may soar on her own.
Michael Gerber observes many myths surrounding entrepreneurs and the conceiving of their new ventures:
“There is a myth in this country—I call it the E-Myth—which says that small businesses are started by entrepreneurs risking capital to make a profit. This is simply not so. The real reasons people start businesses have little to do with entrepreneurship. In fact, this belief in the Entrepreneurial Myth is the most important factor in the devastating rate of small business failure today. Understanding the E-Myth, and applying that understanding to the creation and development of a small business, can be the secret to any business’s success…
“Then, one day, for no apparent reason, something happened. It might have been the weather, a birthday, or your child’s graduation from high school. It might have been the paycheck you received on a Friday afternoon, or a sideways glance from the boss that just didn’t sit right. It might have been a feeling that your boss didn’t really appreciate your contribution to the success of his business. It could have been anything; it doesn’t matter what. But one day, for apparently no reason, you were suddenly stricken with an Entrepreneurial Seizure. And from that day on your life was never to be the same.”
Gerber, Michael E. (2009-03-17). The E-Myth Revisited (pp. 11-12). Harper Collins, Inc.. Kindle Edition.
The way to raise the success of a new venture in Gerber’s experience is for the entrepreneur to spend as much or more time working ON the business versus working IN the business on the product. The conceiving of the new venture is more than just the product or service the entrepreneur creates. Conceiving is a commitment. The commitment is to yourself, to investors, to customers, and to the talent you recruit. As the urgent overwhelms the entrepreneur, it is critical to focus on the commitment to bringing a successful business into the world.
Scott Peck in A Different Drum relates a story he calls “The Rabbi’s Gift” that gets at the heart of the extraordinary respect that must be a part of all of our sacred commitments and valued relationships, including our relationship with self.
“There is a story, perhaps a myth. Typical of mythic stories, it has many versions. Also typical, the source of the version I am about to tell is obscure. I cannot remember whether I heard or read it, or where or when. Furthermore, I do not even know the distortions I myself have made in it. All I know for certain is that this version came to me with a title. It is called ‘The Rabbi’s Gift.’
“The story concerns a monastery that had fallen upon hard times. Once a great order, as a result of waves of anti-monastic persecution in the seventeenth and eighteenth centuries and the rise of secularism in the nineteenth, all its branch houses were lost and it had become decimated to the extent that there were only five monks left in the decaying mother house: the abbot and four others, all over seventy in age. Clearly it was a dying order.
“In the deep woods surrounding the monastery there was a little hut that a rabbi from a nearby town occasionally used for a hermitage. Through their many years of prayer and contemplation the old monks had become a bit psychic, so they could always sense when the rabbi was in his hermitage. “The rabbi is in the woods, the rabbi is in the woods again,” they would whisper to each other. As he agonized over the imminent death of his order, it occurred to the abbot at one such time to visit the hermitage and ask the rabbi if by some possible chance he could offer any advice that might save the monastery.
“The rabbi welcomed the abbot at his hut. But when the abbot explained the purpose of his visit, the rabbi could only commiserate with him. “I know how it is,” he exclaimed. “The spirit has gone out of the people. It is the same in my town. Almost no one comes to the synagogue anymore.” So the old abbot and the old rabbi wept together. Then they read parts of the Torah and quietly spoke of deep things. The time came when the abbot had to leave. They embraced each other. “It has been a wonderful thing that we should meet after all these years,” the abbot said, “but I have still failed in my purpose for coming here. Is there nothing you can tell me, no piece of advice you can give me that would help me save my dying order?”
“No, I am sorry,” the rabbi responded. “I have no advice to give. The only thing I can tell you is that the Messiah is one of you.”
“When the abbot returned to the monastery his fellow monks gathered around him to ask, “Well, what did the rabbi say?”
“He couldn’t help,” the abbot answered. “We just wept and read the Torah together. The only thing he did say, just as I was leaving — it was something cryptic — was that the Messiah is one of us. I don’t know what he meant.”
“In the days and weeks and months that followed, the old monks pondered this and wondered whether there was any possible significance to the rabbi’s words. The Messiah is one of us? Could he possibly have meant one of us monks here at the monastery? If that’s the case, which one? Do you suppose he meant the abbot? Yes, if he meant anyone he probably meant Father Abbot. He has been our leader for more than a generation. On the other hand, he might have meant Brother Thomas. Certainly Brother Thomas is a holy man. Everyone knows that Thomas is a man of light. Certainly he could not have meant Brother Elred! Elred gets crotchety at times. But come to think of it, even though he is a thorn in people’s sides, when you look back on it, Elred is virtually always right. Often very right. Maybe the rabbi did mean Brother Elred. But surely not Brother Phillip. Phillip is so passive, a real nobody. But then, almost mysteriously, he has a gift for somehow always being there when you need him. He just magically appears by your side. Maybe Phillip is the Messiah. Of course the rabbi didn’t mean me. He couldn’t possibly have meant me. I’m just an ordinary person. Yet supposing he did? Suppose I am the Messiah? O God, not me. I couldn’t be that much for You, could I?
“As they contemplated in this manner, the old monks began to treat each other with extraordinary respect on the off chance that one among them might be the Messiah. And on the off, off chance that each monk himself might be the Messiah, they began to treat themselves with extraordinary respect.
“Because the forest in which it was situated was beautiful, it so happened that people still occasionally came to visit the monastery to picnic on its tiny lawn, to wander along some of its paths, even now and then to go into the dilapidated chapel to meditate. As they did so, without even being conscious of it, they sensed this aura of extraordinary respect that now began to surround the five old monks and seemed to radiate out from them and permeate the atmosphere of the place. There was something strangely attractive, even compelling, about it. Hardly knowing why, they began to come back to the monastery more frequently to picnic, to play, to pray. They began to bring their friends to show them this special place. And their friends brought their friends.
“Then it happened that some of the younger men who came to visit the monastery started to talk more and more with the old monks. After a while one asked if he could join them. Then another. And another. So within a few years the monastery had once again become a thriving order and, thanks to the rabbi’s gift, a vibrant center of light and spirituality in the realm.”
I unconditionally accept where you are, but respect you enough to help you strive for your ideal.
Mikhail, I started this Email about “Conceiving” with a quote from Rainer Maria Rilke to a young poet about deciding whether he must write. To paraphrase Rilke:
“This before all: ask yourself in the quietest hour of your night: must I start a company? Dig down into yourself for a deep answer. And if this should be in the affirmative, if you may meet this solemn question with a strong and simple ‘I must’, then build your life according to this necessity…”
Mikhail, thank you again for reaching out to me and trusting me with your sacred commitment of conceiving your new venture. Asking for help is an ongoing commitment to your growth and development. Receiving, synthesizing and integrating received wisdom is core to discovering, developing and trusting your guiding North Star.
Yours in entrepreneuring,