#93 Navigating Icebergs: Insights from Startup Experts Drs. Todd & Kim Saxton

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Hello, and welcome to a new
episode of the CTO show with

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Matt.
Matt, my name is Matt.

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And in each episode, I talk
about different topics from

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technology Trends,
entrepreneurship, startups, and

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different topics.
And some time I have with me,

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yes to our thought, leaders in
their industry.

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And today, for the first time,
I'm very happy to have someone

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from the Academia part I have
with me today.

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Today, Kim and Todd, please come
and talk.

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Can you introduce yourself?
And you know what you do, what

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you are up to and then we will
take the discussion from them

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sure.
Thanks good.

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Absolutely.
So we are business school

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professors at the Kelley School
of Business at Indiana

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University and we have been
working with and studying

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startups for the last 25 years.
We're actually in the middle of

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a research project right now.
Looking at high in Startup

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investing and how there might be
waves where certain industries

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are hot and what the
implications are for that.

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I'm a marketing.
Professor Todd, is a management.

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Professor, he teaches strategy
and Entrepreneurship.

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We also are pretty well-versed
in startups.

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We have co-founded a couple of
tech startups in the healthcare

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informatics space.
We are Angel Investors in more

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than a dozen startups, some
which have been awesome and some

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which has been not so great.
Great.

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That's great.
And we teach the concepts to our

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students and to other folks in
the entrepreneurial ecosystem.

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That's, that's very great to
have the people who usually,

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they teach the stuff.
I'm very happy to have you both

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with me today.
First, you know, like, maybe

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it's a traditional question but
because you been in the Academia

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and And also, you did it by
yourself and I'm sure like, you

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have advice and, you know,
invested in multiple startups

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across death, different
Industries, I won't because, you

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know, this is something that
also attracted me or, you know,

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the concept of the iceberg,
right?

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And the startup for Faith, the
iceberg, can you explain this

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and how, you know, these
startups, they overcome the

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iceberg.
Yeah, absolutely.

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So it may help to have a little
bit of our origin story.

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So shoot Titanic effect which
connects to the iceberg and is

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visually represented.
There is a book that Kim and I

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wrote with a co-author who is a
tech serial entrepreneur.

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And we went to a lot of talks in
the Venture Community here,

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where he would present about
technical debt and how to

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address technical debt and it's
all All about kind of the

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uncertain or the unknown, write
your, you make investments in

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your Tech stack not knowing
really where the firm might

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pivot, or what the customers
might find appealing.

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So you have to do that in a way
that is intentional to allow you

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to adapt.
And what Kim.

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And I observed came from, the
marketing perspective and

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looking at customers and
competition myself from the

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strategy and Entrepreneurship
side thinking about mistakes

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that, that firms making other.
It's around the team how you

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allocate Equity things like
that.

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And we kind of approached or
co-author Michael court and

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said, hey, you know, it's more
than just technical debt right

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there are all these buckets of
hidden debts if you will, and

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the visual that came to mind.
Was these decisions that were

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you only see above the surface?
But a lot of it is below the

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surface.
In terms of things, you need to

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be aware of.
It's hard for us to think about,

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at least here icebergs.
Without thinking about the

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Titanic when you think about
icebergs and and calamitous

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situations which led to my
coming up with the the title of

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a presentation.
We did now almost 10 years ago

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and I was like, I know we should
call it the Titanic effect, and

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and I'll let him take it from
here for the next part of the

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story.
You just can't make something up

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about the Titanic.
We have to go do some research

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and see if there's anything
going on.

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And what we discovered is that,
yes, the iceberg was the

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precipitating incident but the
reason The Titanic sunk wasn't

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just the iceberg.
It was choices about how they

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designed a two-story dining
room.

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Lowering the bulkheads, the
rivets that were used the number

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that the fact that they try to
meet the needs of three

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different Target segments in one
boat.

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The fact that because it was
such an engineering Marvel, it

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was, it was a new steam engine.
It was a big, big ship.

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And there were a lot of new
things going on that they didn't

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have.
Very many able-bodied seamen and

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so it's and we thought this is
very parallel for startups.

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A lot of people think there's
one thing a start-up.

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Does that kills them?
It isn't.

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It's one thing that is
interlinked with six to ten

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other things that the
combination is what kills them,

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not the one thing.
Okay.

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And I think, you know, yourself,
being with the background of

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marketing, I am sure that part
of that Do you know, is maybe

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people focus too much on the
technical side, right?

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And they forget, you know, the
other aspect.

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So we will talk to me in a
moment about that but, you know,

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like in general of course, after
this experience that you both

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have, there must be some common
mistakes that you see in the

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early stage startups, right?
And what are these common

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mistakes that you always see,
you know, specifically, if you

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can highlight that and usually
how they can, Avoid.

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Of course, there is no spell for
everything, right?

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So, but, of course, there's some
kind of a guide or you don't,

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like must have.
So, what you can share with us

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on this.
Sure.

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Well, first of all, there, we
found 32 mistakes that are

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commonly made that are in the
book.

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We had tell people how you can
avoid them.

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Not everybody makes all 32, but
it's pretty good background and

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we share it's by stage of the
startup.

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I'm how that will work, but we
do have a couple of favorites

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that we talked about a lot.
You want to start?

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Yeah, sure.
So in the beginning and and I

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know your audience is a
combination of people who maybe

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ctOS for scalable tech companies
but also solopreneurs or people

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who were, you know, kind of
part-time ctOS for an or for a

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number of firms.
So I know you have some

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diversity in your group but
hopefully these ideas are

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helpful to all of your audience
because they're going to be

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working with tech companies that
think of themselves as tech

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companies.
Not not as Ventures, that have

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multiple dimensions.
And, and one of the earliest

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ones that we often see you, you
envision the two or three,

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founders kind of sitting around
the table, having a beer, or

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whatever.
And, you know, talking about

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their startup idea and they
split the equity, we call it the

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curse of thirds ease and then,
you know, six months later, only

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one person is really kind of
driving the bus so to speak.

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It's really hard to anticipate
at the origin of Aventure who's

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actually going to All the
Venture along and do most of the

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heavy lifting.
So we call it the the debt Berg

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of inequitable equity that you
allocate Equity to early without

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really having a sense of who's
contributing.

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So how do you avoid that?
Or at least to some degree

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address that problem?
You make sure your vesting the

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equity over time that you have
to earn that Equity over a three

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to five-year period as the
Venture launches and starts to.

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I grow.
So what we try to do is not just

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identify the deck bird but also
what might be some of the

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solutions to to at least avoid
sinking, I hate even if you hit

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the debt.
Very so two big ones that we see

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in the marketing area is first
of all people are love to be

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disruptive.
Oh well we're going to do is so

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unique.
Nobody's ever done it.

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We ran a category all by
ourselves.

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That's a terrible place to be
because nobody knows how to

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evaluate it.
Your customers need to

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understand what you're going to
do.

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So what you really want to do is
be in something that's well

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known and differentiate yourself
from everybody else.

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And that differentiation can't
just end in ER, like better

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faster, whatever.
It's got to be something

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quantifiable, it's 20% better.
It reduces costs by 30% it

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reduces headaches by fifty
percent.

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You know, we need not just ER,
but something really tangibly

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better and so That usually
requires a good deal of customer

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Discovery people like to keep
doing the same things that

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they're doing and so I call it
the mistake I call it as the

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customer value void which is you
don't really know what customers

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need and want the Technical
Solutions are usually an

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innovator came up with something
and maybe it is amazing, but you

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really have to do the hard work,
the uncomfortable work, the

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makes us feel very awkward work.
I'm going out and finding out,

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what are people doing?
What are their pain points?

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What would they pay for?
How much better does it have to

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be to pay that, you know,
there's a lot of disconnects.

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We see where a new technical
solution is only available at X

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price, but customers don't want
to pay for that problem with

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that price, they want to pay
less.

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So doing that kind of early
work, talking to people, not

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trying to sell them, but to
understand what they need is

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really, really critical.
This resonated a lot because I

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used to be in my last job, a
account executive for a tech

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company.
And, you know, like the last 10

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years I was in the Consulting,
you know, pleases Consulting

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technical Consulting and this
is, you know, something, I see

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it in common.
Sometimes you see in the market

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new joiners that they think, you
know, they are disrupting and

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industry, but at the end up by
no one, Want to buy it, right?

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Just because now this just out
of mind, I would say question,

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how important is the timing in
the success of these startups?

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Yeah, that's a tough one there.
Definitely are times where you

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can be too early.
And then there are times when

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you can be too late and really
trying to understand where you

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fit.
I can see many if you look

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through startup Graves yards,
there are some great ideas in

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there.
They were just too early the

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market wasn't ready.
I'm so, you know, part of what

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you can, how you can assess.
This is product Market fit.

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So if you're too early in the
market, when you're talking,

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people are not really nodding
their heads.

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They're not raising their hands,
the marketing is tough, the

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sales is tough.
The sales team feels kind of

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beat upon when you are in the
right timing and you've got the

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right message and the right
value proposition marketing gets

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a lot easier.
You cast things out there and a

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bunch of people raise their
hands and the conversations get

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easier and easier.
And so that's kind of when you

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know and it's tough as a
business.

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We watched a tech startup that
was on the early side and while

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we were working with them over a
two year period, it moved into

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the majority and they got bought
I mean the timing can be really

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important.
Yeah.

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Now you talk a little bit about
the technical depth, right?

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So just for the sake of, you
know, audiences Who are

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interested to understand more
about, you know, this technique

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that what could be the cause of
having a technical depth, how it

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can be approached and how to
come out of the technical depth.

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Sure.
So, the one of the deputies that

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we talked about is kind of the
overdue and overspend and that's

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where before, you've really done
the customer discovery that can

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was talking about you invest
tens, even hundreds of thousands

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of dollars to build a platform
and then he go out and find that

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your customers aren't using it
in the way you thought at all.

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So that dead is you've invested
in something without

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understanding the problem that
you're actually solving and how

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customers are going to use it.
But then you're stuck with this

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core platform technology, that
you don't want to scrap the

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whole thing, right?
You want to be able to kind of

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redesign but that's hard and as
a CTO and someone in the space,

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you you know, a way better than
we do how hard and perhaps

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expensive that can be.
So again, it's making those

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decisions under uncertainty in,
what you build and how you build

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it on the technology side.
And then as the firm changes

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changes, Chin, you're stuck with
those decisions and that can

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include hiring decisions as
well.

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Write technical debt, isn't just
the tech stack itself, you think

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that what you need is a
programmer?

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Who can do a certain kind of
software and that's what you

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hire.
And then, it turns out that

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actually is a platform.
Involves you need somebody who's

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much better at user interface,
for example, and the person, you

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hired really isn't that great.
So we see this both in marketing

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technology but also oh, in
software development that

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there's increasing kind of
specialization of a lot of

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different roles and it's really
hard to get that one person who

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can can wear all those hats and
do it well, and we get it, you

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know, you know, it's easier.
It's easier to sit and program

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and build Tech, then go out and
talk to people and find out what

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they need for some people for
some people.

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So that's kind of why that
happens.

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We've also seen the opposite
version which is people here.

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Minimally, viable product and
they just minimal, you know?

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They Get the viable part.
You know, the best way to do a

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minimally viable product is to
think about, where do you want

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to end up and work backwards to
what is the least amount of tech

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I have to do now?
And what sometimes people do is

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they say, what's the least I
have to do now, not really

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thinking about where it's headed
and then you can't V things onto

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it.
So really thinking forward about

250
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what you ultimately want to
deliver.

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Because you know what, customers
value?

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And then, Breaking it down to
what is the least I have to do

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to start is really important.
That's the brings me to, you

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know, a very exciting discussion
that I like myself about MVPs

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00:14:52,500 --> 00:14:56,700
because I'm trying to figure out
my way also with the with the

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startup world because you know,
I have ideas, I know the

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concepts, but the world viable
because you mentioned the word

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viable.
Like of course there's some

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stages where founder they need
to Talk to a lot of people they

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need to do a lot of research but
do they need, you know, to have

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the full vision from day one?
Or is this something that can

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change over time?
Like of course the founders

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maybe one or more they will have
a, you know, idea or multiple

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ideas they come up with the
product but do they need really

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to have, you know, this 5-10
years vision from day one or is

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this something that can evolve
with time?

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00:15:37,600 --> 00:15:41,500
I would I would say you should
have kind of I would call it

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plan a right?
How you think or Envision the

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platform unfolding over time and
the big problem, the big dent

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you're going to make in the
universe and if you're thinking

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about that that's going to make
you a better listener.

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As you see where the startup
kind of starts to deviate from

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that and be able now does that
mean you have to have the five

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to 10 year Grand Vision?
Absolutely not.

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Not and especially yes Kim says
that that roadmap.

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We actually don't like the
metaphor of a roadmap at all for

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strategy, especially for a
start-up because there are

278
00:16:17,300 --> 00:16:21,400
simply too many uncertainties
and you have to be able to

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00:16:21,700 --> 00:16:25,000
navigate by making changes as
you go at the same time.

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00:16:25,000 --> 00:16:27,800
So we like the metaphor of
sailing instructions better,

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00:16:28,600 --> 00:16:31,600
which kind of accounts for the
more iterative nature.

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And the fact that the crew is
always involved in monitoring

283
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for storms Changes in wind and
and currents etcetera.

284
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But the crew doesn't get
inspired by saying, hey we're

285
00:16:43,100 --> 00:16:45,400
going to get on a boat and just
go figure it out.

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00:16:45,500 --> 00:16:48,000
They get inspired by saying
here's the Paradise Island that

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00:16:48,000 --> 00:16:51,200
we're trying to get to.
And once we do that that's

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that's our cause, right?
That's the why and I think it's

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00:16:55,800 --> 00:16:59,900
important to have some of that
Vision early to be able to

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00:16:59,900 --> 00:17:03,400
communicate the why and that
generates enthusiasm not just

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00:17:03,400 --> 00:17:07,300
from your own employees but from
it Hester's from from customers

292
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and others.
Yeah.

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00:17:09,700 --> 00:17:12,599
If you just only think about the
next year are you could be

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making mistakes that would cause
you to throw everything away.

295
00:17:15,200 --> 00:17:17,800
So you need a longer time
Horizon than a year.

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I know it has to be 10 years but
some notion of where you think

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you want to end up and that
could be adjusted as you go.

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00:17:25,300 --> 00:17:29,900
But a fairly robust idea of what
all skills, I was just talking

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00:17:29,900 --> 00:17:33,300
to a tech entrepreneur yesterday
and they were like, oh, we're

300
00:17:33,300 --> 00:17:35,600
going to start with this AI
programmer.

301
00:17:35,700 --> 00:17:38,200
Who's going to build our
back-end and I'm like, all

302
00:17:38,200 --> 00:17:43,500
right, but do you need an AI
programmer to start, you know?

303
00:17:43,500 --> 00:17:48,800
Like that's expensive.
So how could you create this?

304
00:17:48,800 --> 00:17:52,400
So that the a I can plug and
play and maybe you don't have it

305
00:17:52,400 --> 00:17:56,900
at the launch but then once you
have some data then you have ai

306
00:17:56,900 --> 00:17:58,400
that can come in and work with
it.

307
00:17:58,400 --> 00:18:01,300
I mean, this gets back to what a
customers really want.

308
00:18:01,700 --> 00:18:05,100
Yeah.
Now, sometimes and this is also

309
00:18:05,100 --> 00:18:09,700
out of of things that I followed
and seeing different tech

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00:18:09,700 --> 00:18:12,900
companies.
So sometimes you have the, what

311
00:18:12,900 --> 00:18:20,200
we call the product Market fit
but the business model is not

312
00:18:20,200 --> 00:18:24,000
like so good, right?
So how it's important, you know,

313
00:18:24,000 --> 00:18:29,000
for having alternative for the
business model in order really,

314
00:18:29,000 --> 00:18:32,900
for the startup to, you know, to
reach to the next phase.

315
00:18:34,700 --> 00:18:37,800
Yeah, we suggest that you
consider everything in the first

316
00:18:37,800 --> 00:18:41,400
phases, as a hypothesis, the
Target, customers a hypothesis.

317
00:18:41,600 --> 00:18:43,700
The value proposition is a
hypothesis.

318
00:18:43,700 --> 00:18:47,600
How we're going to make money is
also a hypothesis and you need

319
00:18:47,600 --> 00:18:50,700
to have alternative hypothesis
in all those Dimensions.

320
00:18:51,600 --> 00:18:54,000
I we sometimes run a workshop on
business bottles.

321
00:18:54,000 --> 00:18:56,800
I mean, people don't seem to
realize there's like 20 or 30

322
00:18:56,800 --> 00:19:00,600
different business models.
And so I we like to have people

323
00:19:00,600 --> 00:19:04,300
brainstorm and I could generate
Revenue this way or that way.

324
00:19:04,500 --> 00:19:08,100
Or the third way because you are
going to have to flex.

325
00:19:08,100 --> 00:19:10,100
You don't really know what
people are going to be willing

326
00:19:10,100 --> 00:19:12,400
to pay.
You don't know if they want to

327
00:19:12,408 --> 00:19:14,600
pay upfront or they want to pay
along the way.

328
00:19:14,800 --> 00:19:18,400
You don't know if they want a
transaction or a subscription,

329
00:19:18,700 --> 00:19:20,400
you know, you have to kind of
sort through all of those

330
00:19:20,400 --> 00:19:25,300
details, as you are interacting
with them, this is particularly

331
00:19:25,300 --> 00:19:26,400
true.
We do a lot of work in

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00:19:26,400 --> 00:19:30,300
healthcare with life, science
startups and and other

333
00:19:30,400 --> 00:19:33,500
Innovative efforts, in that
space and very hard in

334
00:19:33,500 --> 00:19:36,100
healthcare.
Where the primary beneficiary,

335
00:19:36,200 --> 00:19:39,900
the person who makes the choice,
in many cases, the care provider

336
00:19:39,900 --> 00:19:45,400
or the clinician, and the person
who pays in the insurer, as the

337
00:19:45,400 --> 00:19:48,800
payer are very different
entities and have very different

338
00:19:48,800 --> 00:19:52,100
motives, right?
So understanding not just,

339
00:19:52,100 --> 00:19:54,600
what's the problem?
We're helping solve and for whom

340
00:19:54,800 --> 00:19:58,000
but who pays for it and will
they pay as Kim?

341
00:19:58,000 --> 00:20:01,400
Suggested how much of an
improvement do you need for

342
00:20:01,400 --> 00:20:04,300
people to actually get out there
their checkbook and write that?

343
00:20:04,500 --> 00:20:08,300
Check and that like
product-market fit is something

344
00:20:08,300 --> 00:20:13,700
that you can test empirically
and we do know and see startups

345
00:20:13,700 --> 00:20:16,500
that have a really nice solution
to a problem.

346
00:20:16,500 --> 00:20:19,200
That's very compelling and
they're serving an underserved

347
00:20:19,200 --> 00:20:23,200
Market that that simply can't
afford to pay for that solution.

348
00:20:23,600 --> 00:20:26,700
So then you have to look for
other models as ways to fund a

349
00:20:26,700 --> 00:20:31,300
venture like that, great idea
because this was my next

350
00:20:31,300 --> 00:20:35,200
question.
Funding is the Biggest, you

351
00:20:35,200 --> 00:20:37,600
know, I would say top of mind
for any founder.

352
00:20:38,800 --> 00:20:42,100
I have my own view on this.
Although like, you know, I'm I'm

353
00:20:42,100 --> 00:20:45,800
bootstrapping I can say, my own
business and the way I'm doing

354
00:20:45,800 --> 00:20:50,600
this, but I can understand also
at some stage, you know, there's

355
00:20:50,600 --> 00:20:53,200
need for money, right?
You need to get things up.

356
00:20:53,400 --> 00:20:58,200
So what do you think is, you
know, the the point where really

357
00:20:59,100 --> 00:21:03,300
You know, the founders would say
okay guys it's time to go to an

358
00:21:03,300 --> 00:21:06,000
angel investor.
It's time to go for a bigger

359
00:21:06,000 --> 00:21:08,900
round.
Maybe so what are you know the

360
00:21:08,900 --> 00:21:12,900
characteristics or that's
outside the guides that will

361
00:21:12,900 --> 00:21:15,600
tell the founders.
Okay, now it's the time.

362
00:21:17,400 --> 00:21:22,300
Well, the I think a question
that precedes that should be

363
00:21:22,300 --> 00:21:25,800
what first of all, we believe in
the right funding model for for

364
00:21:25,800 --> 00:21:28,500
the Venture and there isn't one
right model.

365
00:21:30,600 --> 00:21:33,000
We see at least too many
particularly Tech,

366
00:21:33,000 --> 00:21:36,000
entrepreneurs, that who feel
like to be successful.

367
00:21:36,000 --> 00:21:38,700
They've got to go out and raise
a bunch of money and get to

368
00:21:38,700 --> 00:21:42,000
venture capital when that's what
a successful entrepreneur kind

369
00:21:42,000 --> 00:21:47,100
of looks like and we don't
believe that we Think being a

370
00:21:47,100 --> 00:21:52,900
solopreneur having a side gig or
just being self-employed can be

371
00:21:52,900 --> 00:21:56,600
very rewarding and we would
discourage people from falling

372
00:21:56,600 --> 00:21:59,100
into the Trap of saying, you
know, at some point I've got a

373
00:21:59,100 --> 00:22:02,800
raise a lot of money to be a
successful entrepreneur because

374
00:22:02,800 --> 00:22:06,700
there are other models, there
are models where instead of

375
00:22:06,700 --> 00:22:09,900
raising money from investors,
you simply sell customers,

376
00:22:09,900 --> 00:22:11,300
right?
And especially in a service

377
00:22:11,300 --> 00:22:15,000
model, that might be a better
way to go, getting involved in

378
00:22:15,000 --> 00:22:19,500
the fundraising Use is very
demanding both in terms of time

379
00:22:19,500 --> 00:22:24,000
and energy on the founder or the
founding team.

380
00:22:24,500 --> 00:22:27,300
So, you want to make sure that
you're committed to the

381
00:22:27,300 --> 00:22:29,700
obligations or hidden debts that
go along with that.

382
00:22:29,700 --> 00:22:33,200
Because in once you take that
invest those investor dollars,

383
00:22:33,900 --> 00:22:37,300
you are now locked into a cycle
of how much growth are expecting

384
00:22:38,200 --> 00:22:39,800
to be able to get to the next
round.

385
00:22:39,800 --> 00:22:44,300
So I would start with that.
Yeah, I think it's hard because

386
00:22:44,300 --> 00:22:45,900
there are a couple things that
might drive.

387
00:22:46,000 --> 00:22:48,900
You towards getting funding.
For example, I mean sometimes to

388
00:22:48,900 --> 00:22:50,700
develop the product is
expensive.

389
00:22:50,700 --> 00:22:54,000
If you're thinking about
launching a medical device or a

390
00:22:54,600 --> 00:22:59,600
drug, you're talking about tens
hundreds of millions of dollars,

391
00:22:59,600 --> 00:23:02,900
most of us can't get that out of
our pocket or from our friends

392
00:23:02,900 --> 00:23:07,500
and family and also if you want
to do a direct to Consumer model

393
00:23:07,500 --> 00:23:10,700
with the tech, you know, it's
hard to get all the money you

394
00:23:10,700 --> 00:23:15,100
need from customers directly to
advertise effectively.

395
00:23:15,400 --> 00:23:19,200
So when My lack of money is
going to prevent you from making

396
00:23:19,200 --> 00:23:22,700
product in roads, or a lack of
money is going to prevent you

397
00:23:22,700 --> 00:23:25,900
from make creating awareness
with customers and connecting

398
00:23:25,900 --> 00:23:28,600
with customers.
Then it is in the best interest

399
00:23:28,600 --> 00:23:31,200
of the organization for you to
go out and find some money.

400
00:23:31,700 --> 00:23:35,500
But as a CEO, you know, that's a
full-time job.

401
00:23:35,600 --> 00:23:38,200
So if that's what you're doing,
then you have to make sure, you

402
00:23:38,200 --> 00:23:41,300
know what, the rest of the
organization is doing to meet

403
00:23:41,300 --> 00:23:44,300
those needs.
I mean, it takes Okay.

404
00:23:44,300 --> 00:23:49,200
Year a full year of working with
the marketplace.

405
00:23:49,600 --> 00:23:54,900
Doing a lot of talks is going to
places entering competitions,

406
00:23:54,900 --> 00:23:58,800
maybe being an accelerator it
takes a lot to get to the place

407
00:23:58,800 --> 00:24:00,500
of having the kind of money that
you want.

408
00:24:00,500 --> 00:24:03,600
It's not just like I'll do two
presentations and a million

409
00:24:03,600 --> 00:24:05,200
dollars are going to drop into
my lap.

410
00:24:05,200 --> 00:24:09,300
That does not happen.
Yeah, of course, that's not

411
00:24:09,300 --> 00:24:13,100
possible.
I want to go back to the, you

412
00:24:13,100 --> 00:24:19,400
know, Previous to 22 funding
part about, you know, starting

413
00:24:19,400 --> 00:24:22,000
the business itself and how to
grow it.

414
00:24:22,300 --> 00:24:25,700
And one of the things and one of
the books that I read many times

415
00:24:25,700 --> 00:24:27,800
actually, I, there are two
theories, right?

416
00:24:27,800 --> 00:24:31,600
So you have the lean approach
and then you have the zero to

417
00:24:31,600 --> 00:24:36,300
one approach, right?
I want to hear your opinion

418
00:24:36,400 --> 00:24:42,300
about what fit, whoo.
And is it like one thing for

419
00:24:42,300 --> 00:24:46,400
everyone or How do you see, you
know, between these two schools?

420
00:24:46,400 --> 00:24:52,900
I would say well, I would start
by saying one of the reasons we

421
00:24:53,100 --> 00:24:56,700
wrote the Titanic effect and
take the approach we do is that

422
00:24:56,800 --> 00:25:02,600
when really either of those but
particularly The Lean Startup is

423
00:25:02,600 --> 00:25:06,200
used in excess.
It can actually be lead to what

424
00:25:06,200 --> 00:25:07,500
we call the pinball
entrepreneur.

425
00:25:07,500 --> 00:25:10,500
They're constantly pivoting and
bouncing around without any kind

426
00:25:10,500 --> 00:25:13,300
of sense or conviction about
where they're heading.

427
00:25:14,000 --> 00:25:19,800
So this idea of the pivot, Was
one of the core things that led

428
00:25:19,800 --> 00:25:22,100
us to see.
Yeah, you do need to be prepared

429
00:25:22,100 --> 00:25:25,200
to Pivot but every time you
pivot, you are creating

430
00:25:25,200 --> 00:25:27,800
additional hidden debt with your
customers, right?

431
00:25:27,800 --> 00:25:29,900
You pivot a new Direction, all
of a sudden, your product has

432
00:25:29,900 --> 00:25:31,800
different features or different
benefits.

433
00:25:32,300 --> 00:25:35,100
You have to go back and
essentially re-educate your

434
00:25:35,100 --> 00:25:38,200
existing customers, as well as
come up with a new brand and

435
00:25:38,200 --> 00:25:41,700
approach to Market, similarly,
because of technical debt.

436
00:25:41,700 --> 00:25:44,600
Every time you pivot, you could
be stuck with outdated

437
00:25:44,600 --> 00:25:49,000
technology, that no longer kind
of serves us a Base for growth.

438
00:25:49,000 --> 00:25:54,300
So, I think it's much more of a
contingent model, kind of.

439
00:25:54,300 --> 00:25:56,600
The, it depends.
Then there's there's one way

440
00:25:56,600 --> 00:26:00,500
that every, every startup needs
to approach the market and grow,

441
00:26:00,600 --> 00:26:02,400
and it's really about
trade-offs, right?

442
00:26:02,400 --> 00:26:07,500
Which every model has some
trade-offs associated with it

443
00:26:07,500 --> 00:26:10,700
and understanding those is, we
would suggest.

444
00:26:10,700 --> 00:26:14,800
As most important, it also
depends on what the startup is

445
00:26:14,800 --> 00:26:16,000
doing.
You know, I think that's the

446
00:26:16,100 --> 00:26:18,400
Lean Startup works really well.
When you have Incremental

447
00:26:18,400 --> 00:26:24,000
improvements, right?
So it's not a 2x or 3x, it's a

448
00:26:24,000 --> 00:26:27,100
50% better, right?
So then I don't need to invest

449
00:26:27,100 --> 00:26:31,300
huge amounts I can ride on what
has already been done and just

450
00:26:31,300 --> 00:26:35,000
demonstrate how I'm better when
you have something that really

451
00:26:35,100 --> 00:26:37,900
offers.
A truly unique Improvement,

452
00:26:38,000 --> 00:26:41,400
that's where the 0 to 100 model
really comes in, then, and I

453
00:26:41,400 --> 00:26:45,000
kind of Demands that not all
startups are going to have that

454
00:26:45,000 --> 00:26:48,900
10x Improvement.
If you have a 10x and It really?

455
00:26:49,300 --> 00:26:53,200
You should go and go hard.
Yes.

456
00:26:53,200 --> 00:26:57,700
Even worse needs you, right?
That's not to say incremental is

457
00:26:57,700 --> 00:27:00,100
bad.
I mean, it all improvements are

458
00:27:00,100 --> 00:27:02,800
good, right?
It's just that what it takes

459
00:27:02,800 --> 00:27:05,300
when you only have an
incremental Improvement is very

460
00:27:05,300 --> 00:27:08,300
different from when you have
something revolutionary and new.

461
00:27:08,500 --> 00:27:11,200
I think about Airbnb is think is
a great example.

462
00:27:11,200 --> 00:27:14,500
You know we people were renting
houses from property managers

463
00:27:14,900 --> 00:27:18,600
and you know, VRBO and some
other folks Before are being

464
00:27:18,600 --> 00:27:21,300
became into play.
But to actually think about, I

465
00:27:21,300 --> 00:27:23,500
just have to.
I could sell, I can mark it, my

466
00:27:23,500 --> 00:27:27,400
room, my bed, my, you know,
garage, right.

467
00:27:27,700 --> 00:27:31,800
That was a huge, do rethinking
of travel.

468
00:27:31,800 --> 00:27:34,200
That has had pretty broad
ramifications.

469
00:27:34,200 --> 00:27:38,200
So they did need to go hard and
they did and and now they've

470
00:27:38,200 --> 00:27:42,900
actually caused VRBO to create a
verb.

471
00:27:43,200 --> 00:27:48,300
I'll verbo it.
Yeah we're saying I want it

472
00:27:48,300 --> 00:27:49,800
done.
If people haven't said, you

473
00:27:49,808 --> 00:27:54,700
know, I'm going to Airbnb it.
You know, I have to agree with

474
00:27:54,700 --> 00:27:59,400
you on this because I talk a lot
with a lot of, you know, he lets

475
00:27:59,400 --> 00:28:03,800
a hot startup scene in Dubai
and, you know, I see these guys

476
00:28:03,800 --> 00:28:06,900
that come with the ideas and,
you know, yeah, we got, I tell

477
00:28:06,900 --> 00:28:10,100
them guys, there's nothing wrong
of starting something small, you

478
00:28:10,100 --> 00:28:12,500
know?
Like, as you said the 2x 3x and

479
00:28:12,500 --> 00:28:14,900
then you're gonna go to the 10x
100x if you want.

480
00:28:15,100 --> 00:28:17,300
And this is what I'm doing.
Currently, I'm trying to see

481
00:28:17,300 --> 00:28:20,300
where I can.
Because I know with the power

482
00:28:20,300 --> 00:28:23,600
and the resources that I have,
I'm not in position to have this

483
00:28:23,600 --> 00:28:27,800
10x maybe one day but for now
there's nothing wrong because

484
00:28:27,800 --> 00:28:30,900
anytime you can exit the
business and then you go to your

485
00:28:30,900 --> 00:28:33,600
next venture, right?
So there's nothing wrong.

486
00:28:34,300 --> 00:28:38,400
I have two questions left.
One is how important to have

487
00:28:38,400 --> 00:28:41,900
mentors and surround yourself
with people that always you do

488
00:28:41,900 --> 00:28:45,100
like hey wake up, you're going
to the wrong direction.

489
00:28:46,400 --> 00:28:48,700
Extremely.
Yeah, when I was going to say,

490
00:28:48,700 --> 00:28:51,800
is one of the things that you
don't see in the background is

491
00:28:51,800 --> 00:28:54,700
that many of those people who
have those ten acts those 100x

492
00:28:54,700 --> 00:28:57,100
ideas.
This is not their first rodeo,

493
00:28:57,100 --> 00:29:00,400
so to speak.
That's an American Idiot idiom.

494
00:29:00,400 --> 00:29:05,900
But they have actually tried and
failed, or tried and bend small.

495
00:29:06,100 --> 00:29:09,100
And it was the series of small
things that led them to the

496
00:29:09,100 --> 00:29:11,600
brilliant idea of that 10x
thing.

497
00:29:11,900 --> 00:29:15,200
So, even don't think it has to
happen this first time if you

498
00:29:15,200 --> 00:29:17,900
even look at like, Works.
Most people do not have best

499
00:29:17,900 --> 00:29:22,000
sellers on their first book, you
have to learn and that's

500
00:29:22,700 --> 00:29:26,200
mentoring comes in and we
actually published a paper last

501
00:29:26,200 --> 00:29:29,400
year that suggests that the best
people that you want to get

502
00:29:29,400 --> 00:29:32,600
mentored from our people who are
already entrepreneurs and who

503
00:29:32,600 --> 00:29:38,100
invest in startups because they
have the skills of both the

504
00:29:38,100 --> 00:29:42,200
investor and the entrepreneur.
And so they're going to give you

505
00:29:42,200 --> 00:29:46,800
the best, most robust coaching
That will help you.

506
00:29:46,800 --> 00:29:50,700
So it's okay, ask people, you
know, you did this before.

507
00:29:50,800 --> 00:29:52,500
Can you help me Envision?
How to do this?

508
00:29:52,900 --> 00:29:58,400
Most successful entrepreneurs
are happy to help businesses

509
00:29:58,400 --> 00:30:03,600
that they can get behind?
But you also, it is an

510
00:30:03,600 --> 00:30:07,000
investment.
It's as much of an investment as

511
00:30:07,000 --> 00:30:09,800
building the product or doing
customer Discovery.

512
00:30:10,400 --> 00:30:13,500
We think of it as kind of
advisor, Discovery, right or

513
00:30:13,500 --> 00:30:17,100
Mentor Discovery.
It might take more Fifty coffees

514
00:30:17,100 --> 00:30:20,100
lunches etc.
You're going to have so much

515
00:30:20,100 --> 00:30:22,500
caffeine by the time you get
through this, it's going to be

516
00:30:22,500 --> 00:30:26,300
amazing, but but you need to
find the right ones, right?

517
00:30:26,300 --> 00:30:30,000
You have a lot of people who
tell you what you should do, but

518
00:30:30,000 --> 00:30:33,800
it will be a select few that
actually listen to you that have

519
00:30:33,800 --> 00:30:38,400
good ideas and that are kind of
in sync with with your vision of

520
00:30:38,400 --> 00:30:40,600
where you want to go and what
you want to accomplish.

521
00:30:40,800 --> 00:30:46,700
So those 40 or 50 meetings might
result in a small group of 325

522
00:30:46,700 --> 00:30:50,200
that that are really your go-to
advisors, they actually respond

523
00:30:50,200 --> 00:30:53,200
to your text, so your emails or
Whatsapp, or whatever you're

524
00:30:53,200 --> 00:30:58,800
using, and they also are
coaching you in a way that you

525
00:30:58,800 --> 00:31:01,300
can move to that next inflection
point.

526
00:31:02,000 --> 00:31:05,500
So, in short, it's extremely
important.

527
00:31:05,500 --> 00:31:09,400
You raise something that I think
is, is really critical and at

528
00:31:09,400 --> 00:31:12,400
least some tech entrepreneurs,
have a tendency to be a little

529
00:31:12,400 --> 00:31:15,100
more introverted, a little more
kind of a shot myself in my

530
00:31:15,100 --> 00:31:18,100
garage or my door.
Rumor, whatever and just Hammer

531
00:31:18,100 --> 00:31:22,800
through this problem and and
getting that advice can really

532
00:31:22,800 --> 00:31:27,600
help you accelerate your
development as a venture and,

533
00:31:27,600 --> 00:31:30,700
and get to that.
Next point, we have Kim

534
00:31:30,700 --> 00:31:34,200
mentioned, one of the papers but
Upstream on what we call Venture

535
00:31:34,200 --> 00:31:37,600
Advocate behaviors and they're
the things that the community

536
00:31:37,600 --> 00:31:40,400
can do to help you move forward
that don't involve actually

537
00:31:40,400 --> 00:31:44,200
writing a check and a lot of the
things that happen early in the

538
00:31:44,400 --> 00:31:47,600
entrepreneur.
Open Oriole Journey for Founders

539
00:31:48,100 --> 00:31:51,000
are the things that set them up
for success, to raise money to

540
00:31:51,000 --> 00:31:53,400
sell a product.
And that's about getting the

541
00:31:53,400 --> 00:31:56,200
right advisors or mentors
getting their feedback.

542
00:31:56,300 --> 00:31:59,500
So that you can be smarter and
more efficient, and how you move

543
00:31:59,500 --> 00:32:01,900
forward, two words of advice
about this.

544
00:32:01,900 --> 00:32:04,100
First of all Mentor should not
be paid.

545
00:32:04,500 --> 00:32:07,000
So, anybody who says all Mentor
you, if you pay me, give me a

546
00:32:07,008 --> 00:32:09,800
percent, that should be a red
flag.

547
00:32:10,300 --> 00:32:12,900
Now, I'm not saying that if
someone offered a lot of help

548
00:32:12,900 --> 00:32:15,900
over time that you don't decide
to give them some Equity, but

549
00:32:16,100 --> 00:32:19,200
Should be your choice because of
the value that they created and

550
00:32:19,200 --> 00:32:22,700
we have a couple of enters where
we have been given Equity simply

551
00:32:22,700 --> 00:32:26,500
from advisory and bringing ideas
to them over time and find,

552
00:32:26,500 --> 00:32:28,800
they're like, oh my gosh, we've
been making money on your idea

553
00:32:28,800 --> 00:32:31,900
so we want to reward you that's
the way that payment should be

554
00:32:31,900 --> 00:32:35,900
able to happen and the second
thing is, don't forget to tell

555
00:32:35,900 --> 00:32:38,700
the mentors what you did with
their advice.

556
00:32:38,700 --> 00:32:41,000
You can't believe how many
people we give advice to, and

557
00:32:41,000 --> 00:32:42,700
they go away and we have no
idea.

558
00:32:43,100 --> 00:32:45,600
And so you remember the ones who
come back and you say, you know,

559
00:32:45,800 --> 00:32:47,200
you Told me to do this.
I did it.

560
00:32:47,200 --> 00:32:49,600
And here's what happened.
Whether it's good or bad, just

561
00:32:49,600 --> 00:32:51,800
because they had bad advice or
didn't work.

562
00:32:51,800 --> 00:32:54,600
This time doesn't mean that
don't want to know that, right?

563
00:32:54,600 --> 00:32:59,900
They want to be good mentors to
so keeping the dialogue flowing.

564
00:32:59,900 --> 00:33:03,000
Don't just go away and do your
own thing and never let anyone

565
00:33:03,000 --> 00:33:05,000
know what they did.
That was useful.

566
00:33:06,800 --> 00:33:12,000
Yeah, final question to you
both, where do you see the

567
00:33:12,000 --> 00:33:16,900
startup?
Seen going to because recently,

568
00:33:17,300 --> 00:33:20,000
you know, a lot of people going
with the solopreneur ship

569
00:33:20,000 --> 00:33:23,000
approached one-man business
approach.

570
00:33:23,000 --> 00:33:25,900
So how do you see things going
on?

571
00:33:26,300 --> 00:33:29,900
Of course, we got to still see
normal startups, but I want to

572
00:33:29,900 --> 00:33:33,100
understand from your point of
view, especially you do a lot of

573
00:33:33,100 --> 00:33:34,800
research.
She talked to a lot of people

574
00:33:35,000 --> 00:33:39,600
where you are seeing things
heading I'll take your first

575
00:33:39,600 --> 00:33:43,100
shot at that.
I think the nature of work is

576
00:33:43,100 --> 00:33:45,400
changing fundamentally and
covid-19.

577
00:34:06,900 --> 00:34:10,100
And, you know, some might be
your main game that you do two

578
00:34:10,100 --> 00:34:13,600
or three days a week.
And I think employers need to be

579
00:34:14,199 --> 00:34:17,400
kind of sensitive to that change
in and enabling it.

580
00:34:18,199 --> 00:34:22,300
So that's, that's a first shot.
Yeah, I think that as he said,

581
00:34:22,300 --> 00:34:24,699
the portfolio is talking to
someone just yesterday, who, you

582
00:34:24,699 --> 00:34:27,900
know, was a solopreneur and then
her husband was a solopreneur

583
00:34:27,900 --> 00:34:31,400
and then they combined their,
their efforts, and they created

584
00:34:31,400 --> 00:34:34,500
a company that was a lifestyle
business and by doing that

585
00:34:34,500 --> 00:34:36,800
lifestyle business, they got the
vision for us.

586
00:34:37,000 --> 00:34:40,000
Jailable tech company.
So I think you're going to see

587
00:34:40,000 --> 00:34:42,600
that Evolution and people over
their life.

588
00:34:42,800 --> 00:34:47,800
Spans are going to also have
times where they need and want

589
00:34:47,800 --> 00:34:51,300
the stability of an employer
with a side gig for you know fun

590
00:34:51,800 --> 00:34:54,800
or they're going to go out on
their own and then you know

591
00:34:54,800 --> 00:34:57,100
maybe that gets bought so
they're back to an employer.

592
00:34:57,100 --> 00:35:01,000
You're just going to see this
this these waves of it's not

593
00:35:01,000 --> 00:35:03,000
going to be one thing over your
lifetime.

594
00:35:03,000 --> 00:35:05,100
It's not going to be one thing
for everybody.

595
00:35:05,100 --> 00:35:10,800
It's going to be a mixed bag for
Or people that's great.

596
00:35:10,800 --> 00:35:15,300
Insights from you both thank you
very much for you know the time

597
00:35:15,300 --> 00:35:20,500
today on the show and of course
I would be sharing you know a

598
00:35:20,500 --> 00:35:27,200
link to to your both websites if
anyone is interested to get like

599
00:35:27,200 --> 00:35:31,100
more advice from you.
Yeah, thank you very much for

600
00:35:31,100 --> 00:35:33,500
being here.
And as usual this is for my

601
00:35:33,500 --> 00:35:36,100
audience.
If you have any feedback any

602
00:35:36,100 --> 00:35:39,000
comments about Out this episode
or on the show in general you

603
00:35:39,000 --> 00:35:41,900
can reach out to me either by
email, LinkedIn or Twitter.

604
00:35:42,300 --> 00:35:44,500
If you are watching this on
YouTube, don't forget to

605
00:35:44,500 --> 00:35:47,000
subscribe to the channel if you
are listening on your favorite

606
00:35:47,000 --> 00:35:50,400
podcast platform also don't
forget to subscribe thank you

607
00:35:50,400 --> 00:35:54,700
very much and until we meet next
episode Thank you so much.

608
00:35:53,700 --> 00:35:54,700
Thank you so much.