We stepped into the Entrepreneur's Panel at Startup Summit, featuring four local entrepreneurs, all of whom are CED Members: Robbie Allen, founder and CEO of Automated Insights, Daniel Chalef, founder and CEO of KnowledgeTree, Luke Fishback, founder and CEO of PlotWatt, and Matt Williamson, co-founder and CEO of Windsor Circle.
What were your biggest challenges in starting your company?
Matt Williamson, and Windsor Circle's three other co-founders, went the entire first year without paying themselves, said Williamson. Choosing to go down this path created a strong commitment to the process, ensured that all four founders were pursuing the same vision and had the resources and ability to commit for a full year. Luke Fishburn echoed Williamson's comments, noting that PlotWatt's founders lived entirely on personal savings for a few years. "One of our biggest challenges," said Fishburn, "is bringing on your first hires who will take lower pay in exchange for some equity - and ensuring them that the equity is worth something."
Daniel Chalef returned to Williamson's comment about aligning the vision of the founders - in the case of Chalef's startup, KnowledgeTree, the co-founders were his original angel investors. It is important for you and your earliest founders or investors to be on the same page, with an aligned vision, said Chalef. "Are all of you invested in the same vision? Are you willing and able to invest in the vision? These are the most important questions early on," said Chalef.
For Robbie Allen, who founded Automated Insights (originally was known as StatSheet), the biggest challenge he hears from entrepreneurs is just getting started. He often gets asked why he would leave his job - Allen spent 13 years at Cisco - to start a company. He noted that many folks have a risk aversion to changing careers, but that he believes that it is actually more risky to stay within a large organization for many years. The problem becomes - and the audience loved this term - "network decay," or the process by which you become complacent in your role within the organization and aren't out hitting the pavement building your skill set and your network.
How can new entrepreneurs overcome 'initial inertia' and get from ground zero to a real operating business?
"One of the attributes that characterizes entrepreneurs is their willingness to learn and the ability to convince ourselves that we can become subject matter experts really quickly," said Fishback. In the early days, Fishback said, he often found himself investing time in reading material and studying an industry, worrying that he was not spending his time wisely. Now, however, "I look back on these times and realize that these were my most productive and high-value hours."
The next step, said Chalef, is to find customers. "This will give you a strong validation point," said Chalef. Go out and seek that first 2, 3, 5, 10 customers. They'll become strong feedback mechanisms and allow you to develop proof of concept.
Allen proposed a different approach, using what he himself noted as a cliche - follow your passions. "Turns out, there's no step-by-step guide to entrepreneurship," said Allen, "however, the one universal point I hear from entrepreneurs is that they are passionate about what they are doing." Successful startups will always figure out how to keep the business operating, said Allen. Most startups fail because they give up too early, Allen proposed. "Of course it will be difficult, and there will be challenges, but if you like what you're doing enough to persevere through these challenges, you will succeed," said Allen.
What advice would you share with folks about recruiting, bringing on first employees, hiring?
All panelists agreed that identifying proper channels for recruiting and building a culture to encourage retention and commitment to a communal vision were absolutely vital components of their business and core tenants within their hiring strategy. "We work our assess off on recruiting," said Fishburn, going on to describe PlotWatt's hiring process as an intensive problem-solving interview, noting that candidates often spend a full week working on a real-world problem, and that the hiring team reviews their code with them to understand their coding philosophy and knowledge. PlotWatt then offers a 'sliding scale' compensation package. "We do not negotiate salary," said Fishburn, "but we do allow new hires to select the package of compensation plus equity that makes the most sense for them."
Chalef discussed the importance of exiting folks the proper way. It is absolutely vital, said Chalef, to understand the impact of a team member leaving, and to pull the team back together to continue working towards that shared vision. While this is a vital skill, said Chalef, it isn't an easy one to learn. If you do offer equity to a new hire, said Chalef, "make sure you provide stock options, not stock."
Allen noted that one of the best ways to bring people onto the team is through identifying potential advisors - these may be investors, successful entrepreneurs, or strong business professionals who are experts in the industry or vertical in which you are targeting. This is a great way to get free work, and free advice, and a wonderful way to build your network, said Allen, because in the professional community, it is often seen as a "badge of honor". If you choose to go this route, said Allen, you must understand "that it is the founder's responsibility to reach out to your advisors."
What's your biggest mistake? What did you learn from it?
"I don't believe that entrepreneurs should have regrets," said Allen. Each mis-step is just "a part of the journey." Besides, said Allen, "the mistakes I made on my journey may not be a relevant 'fact' for you. There's no right way to go about the journey - it's a roller coaster ride and you will make mistakes."
Chalef helped re-frame the question, proposing that the audience think of their answers as "things that I would look out for or avoid the next time around." For Chalef, he would ensure that he built a team of people that fully understood startup finance and the pathway to an equity payoff. This fits into an earlier point Chalef made about company culture and ensuring that you surround yourself with people who buy into the shared vision. Equally important, said Chalef, is understanding that "you are not alone" in your venture. Understanding who you can discuss the challenges and doubts that you will inevitably have is vital, said Chalef. Finally, make sure that you "think big, because you're not going to build a big business if you think small," said Chalef.
Williamson shared two anecdotes from personal conversations. The first, from a west-coast entrepreneur: "if you're not failing 70% of the time, you're not aggressive enough." Second, from one of his investors, is that the true mistake "is not learning a lesson from when you do make an error."
What's a one-sentence takeaway, or motto, that aspiring entrepreneurs can use to guide their journey?
Fishburn: Make your venture something you care passionately about.
Chalef: Surround yourself with great people. Think big. Get out there, create something big.
Allen: Enjoy your journey. Build your culture so that everyone in your office loves coming to work every day.