First posted on Venture Valkyrie 5/11/2014
I spent the second half of last week at one of my favorite events of the year, the AARP Annual Health Innovation@50+ meeting. The first day of the meeting was a sort of entrepreneur “bootcamp” where there were neither boots nor camping, but an array of executives speaking to entrepreneurs about the kinds of things they need to know to build better businesses. I’m glad there was no camping involved; I hate camping. My personal view is that the whole reason I work is so I don’t have to sleep in the dirt, but I digress.
The “bootcamp” had four panels, one on patient-centered design, one on distribution in a complex healthcare world, one on investment (as in where and how to get it), and my personal favorite, (not just because I moderated it) the Harsh Realities of Launching a Startup. This last panel had three great participants: Jeff Zimman, co-founder and chairman of Posit Science, Phillipe Schwartz, President of Withings and founder of the company’s US operation, and Geoff Clapp, CEO of Better, Inc. and a good friend from the past start-up trenches.
The Harsh Realities panel was great because these guys were ready to be open and direct with their comments, including what they really think of the fundraising process; what had gone wrong on their way to launch and during service delivery; how functional or dysfunctional their boards of directors can be; and their unwavering ability to underestimate nearly everything from how long sales would take to how and when partnerships would occur. It was a great panel because they were candid and self-deprecating and funny, yet serious, and willing to openly share the bad and the ugly when it is usually only the good that gets told.
These experienced leaders talked about how many times they had to “pivot” their business plan and whether or not they twisted ankles in the process. They talked about operational disasters and calling in the cavalry to suck up to customers. None of them openly admitted to stockpiling tranquilizer darts for board meetings but I saw them blink hard when I mentioned that the presence of such an arsenal was a persistent rumor in the investing world, so I am guessing that somewhere there are a lot of VCs who might soon wake up and wonder how they got on the floor and exactly when that vote was taken.
One of the questions I asked the guys was, “Fill in the blank: If I knew then what I know now I would have ____.” I was particularly interested in Phillipe’s answer, which was spend more time building the company culture before the US launch. The importance of a high quality, high functioning employee culture is often overlooked and underestimated and can easily be the most important ingredient in success. Finding this out in hindsight is never optimal.
Hindsight, as we all know, is 20/20, but accurate foresight is one of the world’s rarest substances. And yet, without vision and the belief that they can see the future and thus change it, entrepreneurs would never get up in the morning.
Great innovators are, however, not great predictors of future market opportunity 100% of the time. We hear the legends of the great entrepreneurs when they have succeeded, but little about those who fail. Even the most successful ones have moments when they go up to dunk and entirely miss the net. Don’t believe me? Here are business predictions from 3 of the world’s most successful entrepreneurs:
- In 1943, Thomas Watson, co-founder and former CEO of IBM and now the person for whom IBM’s most famous current product is named, was quoted as saying, “I think there is a world market for maybe 5 computers.”
In 2013 about 314 million PCs and 195 tablet computers were sold. I hope this is not commentary on the predictive value of the Watson computer.
- In 2004 Bill Gates, Microsoft’s original founder and CEO, said, “Within 2 years, spam will be solved.”
Yet here we are in 2014 and it is estimated that 51% of all Internet traffic consists of spam.
- In 2003, the entrepreneur di tutti entrepreneurs, Steve Jobs, told rolling Stone that “The subscription model of buying music is bankrupt. I think you could make the Second Coming available in a subscription model and it might not be successful.”
As we all know, Jobs later changed his tune; Apple’s iTunes owns >60% of the worldwide music subscription market.
But here’s my favorite relevant quote about innovators, via author David Zindall, “Before, you are wise; after, you are wise; in between, you are otherwise.”
It is so important for entrepreneurs, particularly those who get knocked down or knocked around and then came back swinging (and winning) to pass down the stories of failure and what was learned in the process of picking themselves up, dusting themselves off and starting all over again. I think it is so informative that when I asked Phillipe, Geoff and Jeff whether they had ever thought to themselves, “this will never work,” and seriously considered packing it in, every one of them said “no” without hesitation. This, despite a myriad of challenges and unforeseen surprises (not the good kind) and moments of embarrassment and self-doubt. They must have learned enough from their own mistakes to make some great decisions and thus reshape the future after all, or at least how to keep trying. I want to thank Phillipe, Geoff and Jeff for sharing what they learned with those at the AARP Health Innovation@50+ Bootcamp and encourage others like them to do them same.