NOTE: This is a long post. I think it’s interesting, but I may be wrong. Feel free to quit it at any time.
Who to take advice from
I’m a big believer in the idea that you shouldn’t listen to someone unless they have both succeeded AND failed at what they are giving you advice about. Why both? It’s obvious why you should not take advice from someone who has only failed at something–what the hell do they know about doing it right? But it’s not obvious why you should not take advice from someone who has only succeeded.
I didn’t understand this until I read an interview by Paul Graham (it might have been Kamal Ravikant who told me this) where he said one of the best variables that predicts the success of a start-up is one of the founders having a previous failed start-up. He explained that if someone has only succeeded and never failed, they probably don’t really know what they’re doing, they only know how to keep repeating what they’ve been doing. Nothing crystallizes and teaches like failure; it forces you to face the consequences of your decisions and learn from them. Beyond that, if someone has failed, but got up and tried again, you know they are resilient, and resilience + willingness to learn from and correct mistakes is how one gets real wisdom and knowledge.
I started thinking about this in the context of my life, and it made perfect sense; this is why almost every good manager/coach of sports teams were very mediocre players. They HAD to understand everything about the sport to eek out every advantage just to compete with the great athletes. And it made sense in social terms; this is why so many people who are super popular in high school never progress beyond that in life. They just kept repeating what made them popular in high school, but the real world doesn’t reward those behaviors, and they don’t know what else to do because they never learned how to adapt and learn from failure.
Why am I bringing this up?
It occurred to me that since I’m now going to write consistently about start-up investing, and have dozens of articles about why I invested in certain companies coming, I might want to publicly talk about my experiences in this area. This is a fantastic (and funny) flow chart that shows how to decide if you should take start-up advice from someone, and I actually fit both criteria she lists, but many people may not know this.
Please be clear: I am not writing this to convince anyone that I am some amazing start-up entrepreneur, or to go into business with me, or fund the companies I start (we’re not even taking outside money), or sell you any idea about me. I am just telling you what I’ve done, in the most honest way possible, so you can have the factual information necessary to give my advice the degree of weight you think it deserves, given this experience.
My start-up experience covers four companies; three I founded, and one I joined after an acquisition:
First Company: Rudius Media
Role: Founder, CEO
Product: Books, movies, web sites and content
Best Gross Sales Year: Honestly not sure, but under 100k
Best Net Profit Year: Same
Number of employees: 5
Result: Failure, company shut down in 2009
Commentary: This was my first attempt at a company, and it was a fucking mess, almost exclusively because of me and my mistakes. I pretty much did everything wrong that is possible to do wrong with a start-up, other than criminal shit like stealing company money to buy hookers and coke or something like that.
What Did I Learn?: Mostly, I learned how little I knew about business, management, money, and how the real world works. Here is a SHORT list of some of the things I know I did wrong:
-I had a poor understanding of the space I was competing in (media & publishing)
-I picked a business model that had virtually no chance of succeeding
-I didn’t focus enough actually making money
-I spent money much faster that I was making it
-I put too much of my own money into projects that made no financial sense
-I spent too much time in big picture thinking (and most of that was me fantasizing about my future success)
-I spent too little time in actual business details
-I picked the wrong people to work with
-I was too enamored with my own ideas, and not willing to listen to people or learn from them, even when they had much more experience
-I had too much emotionally invested in my specific vision and a specific outcome, and it prevented me from making the changes and decisions I had to in order for this company to work
That’s just the business part. My management skills were a total mess too. I probably hired the wrong people, but I DEFINITELY made those people worse employees by being a terrible boss. Some more things I did wrong:
-I didn’t communicate enough with my employees
-I didn’t set the proper goals and outcomes for them
-I didn’t give them enough guidance on what I asked them to do, and then get pissed when they didn’t do what I wanted
-I yelled when shit didn’t go my way
-I expected my employees to do things I wasn’t willing to do (note: this is one of the two hallmarks of bad leadership)
-And perhaps worst of all: I put myself and my selfish interests in front of the company AND it’s employees. (note: this is the other hallmark of bad leadership)
This list could probably be way longer, but you get the point. This company had no fucking shot, mainly because of my flaws, as an entrepreneur, a businessman and a manager of people. I wasn’t ready to run something, and it showed.
It’s hard for me to go back and think about that company, not because it failed, but because I was such a fucking dipshit in how I ran it and the way I thought. It’s embarrassing to think about now, to be honest. If failure teaches, and bigger failures teach more, than I learned A LOT.
The one good thing is that we did get some things done, even in spite of my bullshit. We developed a fledgling content network, that, with a smarter and more savvy leader (NOT me at the time), could have worked. And we did make a real Hollywood movie out of this company that went to theaters. It did poorly at the box office, but has done great in DVD and in the secondary markets. The problem wasn’t the creative effort or ability of me or my team; the problem was me, and that was hard for me to face for many years.
Second Company: Tropaion Publishing
Role: Founder, CEO
Best Gross Sales Year: 2012, 2mm
Best Net Profit Year: 2012, 1.4mm
Number of employees: 1
Result: Sold to Lioncrest Publishing in 2012
Commentary: It took me a LONG time to face the music from my first company and learn from my mistakes, but I eventually did it, and by doing that I was able to correct them.
What Did I Learn?: I learned so much, it’s hard to write it all down; you could almost reverse the list above, and that could be the list of what I learned. This company was extremely successful by any measure for a start-up. In our first year we were not only profitable, we made over a million dollars, and we did it with effectively two full time employees (me and Ian Claudius).
I think the key thing that I finally started to understand was not just business, but how the world actually worked. I stopped getting pissed and railing at people or systems that I thought were unfair, and instead focused on doing the job at hand. I think the big shift for me emotionally was asking myself the question, “Do you want to be angry at the injustice and fail because of that, or do you want to go around their bullshit, be effective at what matters, and succeed?”
Be clear: It wasn’t that I had to compromise my ethics or do things I thought were wrong. It was more about realizing that bitching about how unfair and bankrupt the entertainment and publishing businesses were wasn’t getting me anywhere but pissed off. So my options were to either get in the ring and do something about it, or stand on the sidelines and ineffectually bitch. I got in the ring.
This is abstract, but you can read about precisely what Tropaion did in this piece. It was pretty genius, and the only way I could have pulled this off would be if I stopped trying to fight an unfair system, and instead worked to outsmart it. That’s partly being smart and experienced enough, but it’s mainly about being able to emotionally let go of anger or a defined course, and instead being willing to see other ways.
Third Company: Lioncrest Publishing
Product: Books, conferences, editing services, instructional materials and courses
Best Gross Sales Year: 2012, 5mm (?, I think, it maybe more)
Best Net Profit Year: 2012, (not sure of the amount actually, but it had good margins)
Number of employees: 6
Result: Dissolution and reverse acquisition in 2013 (it’s complicated)
Commentary: This is a long, complicated story, but basically what happened is that I realized that Tropaion Publishing had the potential to be very successful, but it was going to take a lot of grunt work that I didn’t want to do. I didn’t want to be a “real” CEO, and do the things needed to take the company from 2m to 20m and then exit. So I found a company who I thought could do that work and wanted to do it: Idea Incubator.
It’s owned by Ryan Deiss and Perry Belcher, and they loved my business model and what I’d done, and they had the desire and resources to so take my start, add it to another similar business that they had started, and scale it up to 20 million quickly (they then planned to exit it to a private equity firm for a healthy 4-6x earnings multiple). So they acquired Tropaion, and I agreed to stay on with Lioncrest Publishing as a partner and help them scale the business, and I’d get a nice piece of the eventual exit.
This acquisition happened right before I did the TechCruch interview with Andrew Keen and wrote the piece for Huffington Post about my publishing company, so that’s why I talk about Lioncrest in those interviews instead of Tropaion. That was actually part of the deal, Ryan & Perry wanted me to get press for Lioncrest, which was easy because I hadn’t talked about any of the things I did with Tropaion in the press or even on my blog, so I started talking about them and attributed them to Lioncrest, since that’s what the company was called when I did the press. At that point, everything was going great.
But as happens sometimes, they had a different vision for what they wanted to do with the company than I wanted and was willing to back. We decided to part ways in mid 2013. As part of the deal, I actually got the Lioncrest Publishing name, and they took most of the assets and re-branded them under a different company (which is doing great, btw, I think they have a book with William Shatner coming out next year). It was very amicable, and I still respect those dudes and work with them on specific projects.
The funny thing was, I wasn’t even sure what I was going to do with the Lioncrest Pubilshing name at that point, but since I had been the face of it on all the media that we’d done, they were super cool and gave it to me. So there I was, with a company name, but no employees or real services.
What I Learned: I actually learned a ton from those guys in the year or so I knew them and we worked together. Ryan and Perry are amazing at sales and conversion (they run the Traffic & Conversion Summit), and they have an incredible ability to make money out of almost anything. It’s kind of incredible how creative they are when it comes to selling or marketing things; I’d give you specific examples, but I doubt they want me talking about the genius things they do that no one else does. I was basically introduced to the world of direct sales through them, and it is a field that I learned a lot from.
Also, they were the ones that really showed me how valuable all my marketing and media skills were to business. I knew my skills were valuable in the entertainment business, but I had no idea how truly bad almost all businesses are in every aspect of outward facing creativity, marketing, etc, and how much I already knew about “normal” business, without even really realizing it. It was crazy how well all the skills I developed at TuckerMax.com translated to “normal” business marketing and sales.
They also really drilled some basic business skills into me that I was lacking. I mean, of course I cared about money, but I was always so focused on the product or the writing that I never really spent much time on the specifics of converting that product into sales, and how to think about that systematically, especially how to monetize an audience you have earned. They are really good at that–at turning content into a sellable asset–and I learned a ton watching and listening to them.
As great as they are at certain those skills, they have their flaws (like we all do), and I learned quite a bit from those as well. Their flaws are things you could say about almost any direct marketer: They’re amazing at sales, but pay very little attention to design or aesthetics, and I saw the impact that can have. They tend to think very short term in regards to making money, and though it works for them in a way, I also saw how they missed bigger opportunities later on by taking the easy money now. And of course, they don’t put enough focus on having a great product, but instead focus on how to sell the product. They’re not scammy shitheads like a lot of direct marketers, but they definitely don’t care about quality the way that I think a business should (incidentally, this is where we diverged in future plans).
I learned more about my flaws too. I was still too emotionally invested in results, I was still too much of a yeller and not enough of a listener, and I still had issues with control, and with managing people. And I still don’t quite know how to operate in a corporate environment (though I wonder if that’s a flaw not with me, but with all corporate environments).
Fourth Company: Story Ark
Started: 2013 (August 1st, actually)
Role: Co-founder & Partner (but not CEO)
Sector: Marketing & Digital Media
Product: Marketing and Business Consulting; Information Publishing
Best Gross Sales Year: n/a
Best Net Profit Year: n/a
Result: Ongoing (I will say that we’re already profitable, less than 4 months into our existence)
Commentary/What I’m Learning: This company has been a test for me on how much I actually learned from my previous mistakes. And so far, I think I’m doing OK.
The first thing I did right was partner with people who are more talented than me in most ways; Ryan Holiday and Nils Parker. The three of us are equal co-founders of the company (we combined Lioncrest Publishing, Brass Check Book Marketing, and Command+Z Content). I am not trying to do this by myself or be the hero; I have people around me who are just as talented or more talented as I am.
The second thing I am doing right is internalizing that it’s not about me; it’s about us. I know this may sound like stupid new-age bullshit, but it’s not. I’m not even the CEO of this company, which makes this the first thing I’ve done in ten years where I’m not in charge. It’s us, not me, and though that was a little frightening at first, it’s helping me to be so much more effective. I can lean on others, delegate, and learn from their abilities. And most importantly, I am listening to them, recognizing when their advice is good, and taking it. I’m really fucking smart, but I have some pretty big holes in my abilities, so partnering with two people I like and respect and who are probably more talented than me in most ways is great–because they are especially good at a lot of things I’m not good at. It allows me to just focus on things I AM good at, which is really relieving.
Third, we have a great business model. I don’t want to explain all of it here, because I think there are few things we’re doing that no one else is that could be pretty innovative. Plus, we haven’t executed on all the things we plan to, so until that happens, I’ll wait. It’s always better to tell people what you’ve already done, instead of what you plan to do. [James Altucher gets close to it in this piece; he essentially used our company to release his last book, but it was before we officially formed, and he liked us so much and wanted to invest so bad, it was part of the reason we combined forces]
Fourth, we’re mature adults now. Well, I think this mostly applies to me–Ryan and Nils have been mature adults much longer than I have (which is sad because they’re both younger than me). The fact is, in the past, I would say that at least 75% of my failures were caused by me and various aspects of my immaturity. Not even by simple mistakes–I’m talking about my personal and emotional flaws that I refused to address. That is very much less the case now (though by no means eliminated).
Fifth, we have great people working for us. I like each person on our team, and I think each one has legit potential to be stars. It’s hard to find and hire great people, but once you get them, it’s amazing. [NOTE: We are always looking for more great people. If you are a doer, email me: email@example.com]
Sixth, I’ve learned how to be a boss. I didn’t say I was GOOD at it yet, but I’m no longer bad at it. For example, though I still have a long way to go before I can be considered a good manager of people, I do some things much batter now:
-I delegate and assign work to people
-I set clear goals for them to achieve
-I set up the process by which I want them to report
-I follow through consistently and check up on progress, offering help where its needed
-I give relevant feedback in a positive way
-I demand excellence from others by showing in my work what excellence is
-I analyze both success and failure–on myself and others–honestly and directly
Seems obvious, right? It’s been hard for me to do these things in the past.
And last, I think I’m really starting to internalize the two most important lessons all leaders must know:
1. I always put my responsibilities to others ahead of myself, and
2. I never expect anything of others I won’t do myself.
Those are the things I have learned thus far. I expect this list will be much longer in no time at all, as I learn something almost literally every day.
So…that may have been much longer than it needed to be, but it’s my experience with start-ups, and what I learned from them.