tag:dantawfik.com,2014:/feedDaniel Tawfik2022-03-09T12:37:52-08:00Daniel Tawfikhttp://dantawfik.comdaniel@zenpatient.comSvbtle.comtag:dantawfik.com,2014:Post/the-limitations-of-resiliency-alone2022-03-09T12:37:52-08:002022-03-09T12:37:52-08:00The Limitations of Resiliency Alone<p>“Hustle, stick to it, the pain will eventually pay off.” The quivers of many self-proclaimed business gurus are filled with these paper-bullet admonitions. ‘More pain, more gain”—we treat the capacity to endure pain as its own special currency—the more you endure, the more currency you accumulate to tip the scales of success in your favor.</p>
<p>It’s from this ability to endure pain in the never-ending gauntlet of challenges that we convince ourselves of our heroic qualities. We treat the entrepreneur as a virtuous Don Quixote character slugging her or his way through the unrelenting headwinds of difficulty and failure.</p>
<p>Of course, it is true startups are indeed not easy. The onslaught of challenges they present is indeed unrelenting. The road less traveled is laden with an onslaught of obstacles. This is a dimension of most difficult tasks though.</p>
<p>This is also what makes hard endeavors so transformational. Over and over we are dropped into deep water and left to flounder. However slowly we learn to swim. In doing so, the obstacles we face become a catalytic source of personal growth.</p>
<p>Startups have the quality of being a perpetual sink or swim simulation. ‘I didn’t know how to do x, so I just had to figure it out.’ This is what I regularly hear from successful founders. Facing the many obstacles you will face, you simply have to learn more and more to stay in the game.</p>
<p>Resilience is the obvious foundation of startup survival. It is an important foundation, for no other reason than it extends the time horizon you have to actually learn enough lessons to eventually succeed. Through resilience you allow yourself to get more reps, and make the adaptations to gain some competency in your craft.</p>
<p>Resilience is an essential ingredient in the formation of wisdom. When things get difficult, however, it is tempting to tap out early. Countless talented people give up on their visions. When we are headed down the wrong path why not change course, or even better yet, go back to the drawing board and just approach things with fresh eyes?</p>
<p>There is nothing wrong with giving up on a particular idea. While giving up on a single venture can be a sign of maturity and wisdom, we often do so at the expense of something much greater. ‘I don’t have what it takes, I am not cut out for this.’ This is the refrain of so many defeated founders searching for the nearest startup offramp.</p>
<p>Perhaps as it stands today, with your current skillsets, you may not have what it takes to carry your current project over the finish line, but you are not born with some fatal flaw that precludes you from ever achieving your goals. You are not static, neither are your skills.</p>
<p>By staying in the game you buy the opportunity to grow into the person that could eventually succeed. When you hit the eject button too early though, you are inadvertently making a decision to arrest your own development.<br>
We don’t acquire knowledge through osmosis though. Resiliency alone though is not sufficient to attain wisdom. The capacity to endure failure is no virtue unless it is coupled with deliberate introspection and analysis of why we have fallen short when we do.</p>
<p>When we deliberately analyze our failures and missteps, we can start to build an arsenal of expertise—it is these experiences that we milk for wisdom. It is in fact this awareness and self-analysis, not age or experience, that leads to wisdom. Without this deliberate analysis of our shortcomings, we are just wittingly submitting ourselves to repeat the same mistakes.</p>
<p>Rest assured startups will quickly expose your shortcomings. It certainly did for me. We all start ill-prepared to lead a new enterprise. There is no school to be an entrepreneur so you’re learning everything in real-time.</p>
<p>I started my first company with very little insight into what it meant to run a business. I was gravely ill-equipped to lead a successful company. The list of my weaknesses as a founder could be written in volumes, while my strengths may have barely been able to fill an index card. At nearly every decision point, it felt like I made the wrong decision.</p>
<p>I was a beginner, and stepping onto the stage as a beginner can be painfully embarrassing as all of your warts and blemishes are transparent for everyone to see.</p>
<p>One particular source of insecurity for me was my ability to deliver a pitch for my company. Like many introverted founders, I experience a tremendous amount of anxiety around delivering presentations and public speaking. As such, I spend hours preparing for presentations leaving nothing to chance, and not letting my anxiety have an opportunity to creep to the surface.</p>
<p>On one occasion I attended a mastermind meetup, which I had volunteered to pitch my company. In attendance, that evening was one of LA’s biggest celebrity venture capitalists. I was scheduled to speak right after the investor. He had everyone in the group rapt at his every word. Then it was my turn to present—queue the crickets.</p>
<p>In less than a second into addressing the group a surge of adrenaline shot through my body. I’ve experienced this surge of adrenaline just as I was about to speak to an audience a thousand times. I could hear my heart beating what seemed like a million beats per minute, and well, the rest was history. When that adrenaline spikes, it becomes incredibly difficult for me to keep a linear train of thought. My mind spastically follows every tangent down a rabbit hole. That became clear to everyone in the audience. I was talking incoherently, and as the crowd looked at me befuddled, my nervousness just compounded.</p>
<p>When it was time to get feedback, the VC chimed in by saying something like it was one of the worst presentations he had experienced. I am sure he may have offered a more constructive critique, but I was still shellshocked and in the doldrums of what I perceived to be a catastrophe, and none of that got through.</p>
<p>To make matters worse, days after the presentation, I received a phone call from a friend who was not in attendance but got word of my presentation. He told me I shouldn’t apply to be part of the VC’s incubator. My performance was so bad I got a rejection to an incubator that I had not applied to, nor had any intention of applying to—a gratuitous reminder of how bad my presentation was.</p>
<p>Like any embarrassment, I stewed on it for a couple of days. ‘Pitching is stupid—either the product is good or it isn’t,’ I would tell myself. Or ‘the numbers should speak for themselves.’ A torrent of resentments flooded my thoughts. At that moment it would have been comforting to indulge those resentments and absolve myself of my shortcomings as a speaker.</p>
<p>It is a well-known adage to play to your strengths rather than build on your weaknesses. This is true for the most part, but weakness, when framed through the perspective of a career, can be a real anchor. Your weaknesses become the ceiling of your potential.</p>
<p>In my case, if I didn’t overcome my stage fright and learn to be a better communicator, it would be hard to be taken seriously and would always be a roadblock to reaching my goals of building a company.</p>
<p>While it is comforting to look back at failure and riddle off the misfortunes that ultimately scuttled us, it’s not as easy as understanding how we as individuals contributed to our own failure. What areas have our shortcomings become roadblocks to our success? The reality is we can’t do anything about misfortune, but we can equip ourselves with more knowledge and insight to tackle future obstacles.</p>
<p>I ultimately hired a speech coach to help me overcome this challenge. I learned skills to slow down and be more present as I spoke. It’s something I constantly have to work at. To this day every time I present a get a surge of adrenaline that is slightly disorienting, but each time I put in the reps, I get a little better at it and it becomes less and less of a weakness.</p>
<p>This deliberate self-examination and self-awareness are the ways we persevere over the hurdles we face so we don’t have to face them over and over again. In sports, we go back to the film to see where we need to adjust; in the military, after-action reports are used to analyze what went wrong in a failed mission and make sure grave mistakes are not repeated.</p>
<p>The more frequently we can check-in, analyze your performance, and make adjustments, the faster we can catch ourselves from drifting off course.<br>
The Roman emperor Marcus Aurelius noted in his journal, “These are the characteristics of the rational soul: self-awareness, self-examination, and self-determination. It reaps its own harvest…It succeeds its own purpose…” Aurelius is telling himself to look inward, examine yourself critically, and ultimately make decisions based on the principles derived from that self-examination.</p>
<p>Aurelius maintained a practice of writing these axioms in his journal. He did so not because he was a master of these principles, but because he was prodding himself to live up to them.</p>
<p>The journals of the comedian Gary Shandling provide a perfect example of this purposeful self-examination. In Judd Apatow’s HBO documentary on Shandling, he turns the spotlight on the comedian’s journals and reveals how much Shandling leaned into his journal to scrutinize his performance and breakthrough the troughs of being a beginner during the early stage of his career.</p>
<p>His journals were riddled with mantras of encouragement to be resilient. He would say things like, ‘Do it. You are ready. Work. Be a comedian,’ or, ‘each day I will gain strength. Each day I will become more determined’ in order to stoke resilience and purpose as he was undergoing a monumental task of breaking into the comedy scene.</p>
<p>In his self-analysis, he would land on principles that would shape his performance. “The secret is to be myself,” he would write to himself. “Use everything you’ve got to be funny. I can still use more of myself, more voices, more faces, more characters, more attitude, more presence.”</p>
<p>He even had the humility to draw on the performance of others to model his own act. He would say things like, “I saw Jeff Altman kill, kill like I never have. This is not a comparison, there was something to learn.”</p>
<p>After dealing with a bad set due to a heckler, he would go to his journal and devise a strategy for the next time. “Dealing with a heckler: Relate to the audience, not to the heckler. Tie heckler into existing material,” he would write in his journal.</p>
<p>This was all while he was learning to develop his own comedic voice. “No one realizes that they want to hear Elvis, so it is with material. It doesn’t matter if it is like someone else’s, it is merely a vehicle to be Garry. The more you are Garry and the less you worry about the song you are singing, the more you’ll be yourself,” he wrote as more and more clarity would come to his work.</p>
<p>It was neverending. He always was fine-tuning his performance—as we are never fine-tuning ourselves as entrepreneurs. “I need to work on my space work,” he reminded himself. “Commit to killing. Commit to the performance!”</p>
<p>We all have hecklers, we all have bad performances, we all are trying to access our authentic voice or leadership style, and we all have the capacity to learn from these things to push ourselves to grow. When we have setbacks we have to use those setbacks as material for the daily lessons of our self-education.</p>
<p>If you were to read my journal you might see things like, “That meeting unraveled quickly, you need to make sure to send out an agenda to make sure we don’t lose focus.” Or “you were nervous during that presentation. Remember to slow down.” Or “you weren’t assertive when dealing with that individual, make it a priority to clarify your thoughts tomorrow.” Or “You spent too much time on that activity, and it is a distraction for your main purpose right now. Carve out more time to code, and less time for meetings. Be okay with saying no to people.”</p>
<p>This is not self-flagellation—there’s no virtue in being unnecessarily critical of yourself. It’s a process of perpetual fine-tuning that keeps us on the right course.</p>
<p>We use our failures not to define ourselves as lesser, but as the material to catapult our understanding of how to move forward. And with the actual success of any given venture subject to the whim of outside forces, the growth that we gain from this perpetual fine-tuning through self-analysis and awareness is indeed the non-monetary dividend that makes the experience priceless—it is the currency that really matters. That is the currency that will actually tip the scales in our favor.</p>
tag:dantawfik.com,2014:Post/craftsmanship-the-alternative-to-the-four-hour-work-week-mindset2019-11-11T14:06:12-08:002019-11-11T14:06:12-08:00Craftsmanship—The Alternative to the Four Hour Work Week Mindset
<p>(This article was originally published in TechCrunch: <a href="https://tcrn.ch/2r9lVsW">https://tcrn.ch/2r9lVsW</a>)</p>
<p>Often times when I attend a conference or a networking event I am surprised how many people operate at the periphery of the tech industry. Social media gurus, SEO ‘ninjas’, bloggers, etc. It’s a coterie of tech ‘club promoters.’ The hype men of the industry.</p>
<p>‘Hack your way to success.’ ‘Meet the right people.’ ‘Become a business superstar.’ They’ve found their silver bullet. They boast of building a passive income from a web business, all while traveling the world as the rest of us mortals are slaving away at our 9–5 jobs.</p>
<p>In a world where we are searching for silver bullets, these people seem to have amassed an arsenal of them. Moreover they’ve found audiences to sell their silver bullets to en masse.</p>
<p>The most blatant example of this are some of the disciples of the 4 Hour Work Week, by Tim Ferriss. The book itself is not really the issue. Ferriss indeed outlines some interesting tips on managing resources to get the highest ROI on your work. What is objectionable, however, is the hack-your-way-to-success mentality it has spawned in entrepreneurial circles.</p>
<p>It’s a mindset that is antithetical to everything I know about entrepreneurship. A mindset that I see when I hear people talk about having an amazing idea that they want to farm out to a young college student who can code or outsourcing development of a product to a cheap dev house. It’s a mindset that assumes entrepreneurship is a series of networking events and fundraising meetings, or even some silver-bullet business connection they have in lieu of a real distribution strategy. It’s taking a passive approach to a very difficult undertaking.</p>
<p>What is missed in all of this is the mindset of craftsmanship; that one’s expertise and deliberate focus on one’s craft is actually the primary driver for success and not some crapshoot of a series of hacks.</p>
<p>What happens on the periphery — whether it be the towel slapping we see on Twitter from tech celebrities or headline gossip out of TechCrunch — is not actually meaningful as a foundation of a business or a profession. Neither are the number of coffee meetings you have scheduled or the amount of networking meetings you attend. These things are tertiary at best, and at worst, just plain old distractions.</p>
<p>To be successful over the course of a career requires the application and accumulation of expertise. This assumes that for any given undertaking you either provide expertise or you are just a bystander. It’s the experts that are the drivers—an expertise that is gained from a curiosity, and a mindset of treating one’s craft very seriously.</p>
<p>A startup is by nature a crash course in developing expertise. What makes startups unique is the sheer dearth of resources. This dearth of resources forces founders to rapidly adapt their skills to meet the demands of the project.</p>
<p>‘I didn’t know how to do x, so I just had to figure it out.’ This is what I regularly hear from successful founders, whereas ‘I couldn’t find someone to do X, so I had to reconsider whether to pursue it at all’ is a common refrain from unsuccessful founders.</p>
<p>If you step up to the challenge, you’ll realize that the startup is nothing more than a teacher. It in fact is a great teacher for no other reason than it demands the accumulation of knowledge quickly for the startup to survive.</p>
<p>A technical founder, whose experience may relegate her or him to a specialist role in a large company, for example, has to adapt and take on more expertise in adjacent technical areas. There simply aren’t the human resources to hand off these tasks to another specialist.</p>
<p>This is true for taking on tasks in other domains, whether that be sales, finance, marketing, management or design. You have to take an interest in these domains because there is no one else to fill these roles in your early stage company.</p>
<p>It’s in exploring these unknown territories and facing the headwind of startup challenges that it becomes clear that the startup is merely a force of catalytic professional and character growth. With actual success of any given venture subject to the whim of outside forces, this growth is the non-monetary dividend that makes the experience priceless.</p>
<p>That is why the passive, 4-Hour Mindset is so self defeating. To lounge on a beach or travel the world and not actively engage in building your arsenal of expertise is professional malpractice.</p>
<p>It’s also not practical. No serious company has been created passively—the passive mindset that leads people to say “I’ve got a great idea. I’ll hire a team to build it out” or “I have this great connection who will drive sales,” while I play armchair visionary. Startup graveyards are full of visionaries without expertise or the proper skills to execute, for no other reason than ideas are not self executing, but are rather made into being by intense engagement by skilled operators.</p>
<p>Most importantly, to think of a business as a series of hacks and transactional relationships, you’ll never amass the expertise that your future self and future businesses need to succeed. Startups fail withstanding founder expertise, of course. It is certainly not sufficient to be an expert. However, expertise does make it possible to traverse the struggles of creating businesses over the course of a career. You’re not simply working on the idea in front of you, you’re building the knowledge to succeed at your next projects as well.</p>
<p>It is the expertise and the mindset of craftsmanship that allows someone like Elon Musk to jump from project to project and sector to sector with the knowledge of how to execute on the highest level problems. It’s not simply his ability to find interesting ideas. It’s his command of the domains of the business that allow him to execute the way he does. He is the epitome of interdisciplinary student of his businesses.</p>
<p>If you are to optimize for anything, optimize for the long term. Use the challenges of your business today to build mastery in your craft. There is no guarantee that any one venture will succeed, but that mastery will bend luck in your favor over the long course of your career.</p>
tag:dantawfik.com,2014:Post/what-if-elon-musk-went-to-harvard-the-costs-of-the-brain-drain2019-11-05T15:19:27-08:002019-11-05T15:19:27-08:00What if Elon Musk went to Harvard?—The costs of the brain drain.<p>I routinely run into folks working in finance romanticizing the virtues of startup culture. It’s easy to romanticize when you constantly are fed stories of a group of founders working out of a garage going on to sell their businesses for millions, if not billions. It’s the modern-day retelling of the tale of Don Quixote.<br>
How exciting it must be to go boldly into the arena to pursue your dreams and come out the victor. The grass is always greener on the other side I suppose. When I look at the career path of those in finance, I routinely think ‘that would be nice.’ It would be nice to choose a career where you didn’t have to run the risk of burning through all your savings to launch your idea. That’s what jumping in the arena often entails.<br>
This has been the trajectory of many of my friends who have started their own companies. It is a reality of startups. Ramping up a startup can be painfully slow. You can lose your mind conjuring up ways of how you are going to pay your bills while trying to get your company launched.<br>
You may not see the financial rewards of your efforts for a decade. For a lot of founders pursuing their idea means months without any income as they build out their product. They draw on savings until those savings dry up, and then they tap into their credit. It’s months before they have metrics to merit pitching VC’s.<br>
That was certainly the case for me while I was building out my first company. Much of my financial woes had to with me having no idea what I was doing frankly. I put things on my credit card that did nothing to push the needle of growing our company. In one case, I put thirteen hundred dollars into printing company t-shirts—which of course amounted to growing the company by zero customers. In retrospect, I would have done nearly everything differently in terms of being more risk-averse and more focused on how we deployed cash.<br>
Knowing that ramping up a business can be financially stressful, there becomes a selection bias towards founders who have a higher risk tolerance and pain threshold. In the tradeoff between pursuing their ideas and taking the short term financial hit due to the ramp-up stage, they’ll take the former. They want to be in the arena.<br>
So when I hear folks talk about an idea that they are ready to make the dive into pursuing but never actually do, I know what is more important to them—the paycheck.<br>
For folks in finance, it happens to be a really nice paycheck. It’s nicer than anything that someone in the first five years of a startup could ever expect to bring home. This is a hard truth about startups. Founders are not bringing home big paychecks; they are constantly having to reinvest in their companies in order to compete in the marketplace. It’s far less lucrative than what an outside observer would expect.<br>
I don’t know much about the inner psychology of Elon Musk, but I wonder what would happen if he had started his career out of college working at an investment bank or a hedge fund. Even with his endless ambitions and truly disruptive ideas, would he forego the paycheck to pursue those ideas? I have no idea what the answer to that question is. However, I do see this dynamic of golden handcuffs preventing talented people from venturing out to work on their own projects all the time.<br>
My wife attended Harvard. When we attend a wedding or a get together of her former classmates, I am struck by how many of them work in finance. It’s like there’s a conveyer belt from Cambridge to Wall Street. These are highly compensated people; a level of compensation that the rest of us mortals cannot begin to fathom.<br>
A lot of them had plans to start their own projects at some point—work for a couple of years and then start their own things when they had enough money saved up. Over that time though they adapt to a certain lifestyle though—a lifestyle that they are never going to give up, and frankly who could blame them for that.<br>
You have to wonder how many potential great entrepreneurs have been lost to these golden handcuffs. It’s the brain drain that has robbed the sciences of some of its best. So many world-class minds going to work on the transferring of money in banking. How many Elon Musks have we lost to this industry? How many innovative companies and ideas have not been created because of these golden handcuffs.<br>
It’s something worth thinking about as we graduate a new class of seniors whose talents will be put to use to find new ways to transfer money. Perhaps there is some intrinsic value of innovation and creativity that we can laud as being more valuable than creating the newest financial mousetrap and the compensation that comes with it.</p>
tag:dantawfik.com,2014:Post/a-stroll-through-the-minefields-surviving-the-startup-ramp-up2018-05-16T11:07:09-07:002018-05-16T11:07:09-07:00A Stroll Through the Minefields - Surviving the Startup Ramp Up<p>I understand how the trappings of tech culture seem alluring. Perhaps it’s the open office spaces, the ping pong tables, or the ubiquitous bring-your-dog-to-work policy.</p>
<p>Maybe it’s the idea of meetings with venture capitalist who are always eager to jump on a call to discuss your ‘exciting project.’ I get it. It can all seem like a high stakes role playing game that revolves around you, the ‘tech visionary.’</p>
<p>I am often amazed how the perception of startup culture and the actual operation of a startup are so disconnected. Creating a sustainable business, in fact, has very little to do with these trappings. It’s not VC meetings, ping pong tables, or how many buzz words you can fit into your pitch.</p>
<p>It has more to do with extreme discipline to keep your burn rate low and methodical attention to product development, operations, and aggressive user acquisition. It’s about getting through very testing circumstances to make a going of your business.</p>
<p>It turns out there is nothing really glamorous about starting a startup; particularly when you are in a ramp up stage. It’s a game of survival. It’s a stroll through a minefield where the wrong decisions can torpedo your company very quickly. This is all compounded by the fact that through all of this you somehow have to figure out how to pay rent and support yourself on your company’s very meager revenue.</p>
<p>What makes the ‘ramp up’ from an idea to an actual business so hard is the dearth of resources. Resources to build products, market products, and support products. It’s during the ‘ramp up’ that founders have to master the art of alchemy. The founder has to conjure up a product and customers at a rate to sustain the business. It’s the proverbial startup magic trick.</p>
<p>In this period of existential limbo, it’s a company’s burn rate that presents the biggest risk- a burn rate that is primarily driven by salary obligations. Fortunately, unlike other aspects of a business, salary is something a business has control over.</p>
<p>For an early stage company, the longer you can maintain a low burn-putting off expanding your head count and enduring a subsidence rate salary-the more time and space you buy yourself to figure out how to build a business that works.</p>
<p>This dynamic seriously limits the pool of individuals who can successfully start companies to those who have higher risk profiles, can defer immediate financial gratification, and who are resourceful enough to make something with scant resources. Most importantly it favors the operators who are skilled enough in their domains to command these aspects of the business on their own to absorb the costs of operating.</p>
<p>Some have the mindset that venture capital is silver bullet to all of these early stage conundrums; particularly the financial pinch of the ramp up phase. ‘I am going to pitch some angel investors to get my idea funded and I can quit my job.’ I often find this mindset in a category of people that have the lowest pain threshold and least likely to launch a product.</p>
<p>The error here is manifold. It starts with a misconception that you’ll meet this mythical investor who is going to fund your idea; an idea of course, that has no validation at all with actual users or paying customers. The basis of your company is purely dependent on whether or not an investor likes your idea and cuts a check.</p>
<p>I encounter this mindset with hopeful ‘entrepreneurs’ pitching ideas and never actually building those ideas without first having the green light of an investor. In a world where even the most fleshed-out startups consistently get rejected by investors, an idea stage ‘project’ has the slimmest prospects of getting funding.</p>
<p>This strategy is a sure way to relegate you to the sidelines in perpetuity. It’s the strategy of amateurs. If the strength of your belief in your idea is only as strong as the willingness of an investor to fund you, then perhaps it is not worth being built out in the first place.</p>
<p>Moreover, the notion that this investment money is going to enable you to avoid the financial sacrifice to start your company is misguided. Founders do themselves no favors by saturating their budgets with high salaries. They simply are putting the salaries of tomorrow at risk for the temptations of today.</p>
<p>To understand why this is the case, just examine some very basic math. In the ramp up phase, the primary goal is to create a sustaining business that at the very least pays you a salary so that you can dedicate your full time to the project. Say that your average customer pays $100 a month for your product. Then you need to find 70 customers to bring you a monthly salary of $7,000. How do you find these 70 customers?</p>
<p>If we assume that a great product is a requisite, then the other part of this story an aggressive user acquisition mindset. Aggressively acquiring customers in the earliest phases of your company is the surest way to propel you out of the ramp up phase in the most expeditious way possible.</p>
<p>Developing features of your product without a commensurate push to grow your user base can set your startup on an inertialess path. This is what I learned when I was my previous company’s ramp up phase. We developed new features thinking each feature would cause the inflection point we were looking for. ‘Ticketing will be a game changer,’ or ‘this new mobile app will allow us to sell at a higher price point.’ Each time we barely pushed the needle when it came to growth. We dreamt silver bullets, but we were only pushing out what amounted to paper bullets.</p>
<p>It turns out paper bullets are expensive. Features cost money in the form of engineering hours. We invested all of our seed funding in developing a great product. In doing so, our feature list expanded, but our actual revenue growth never changed in a meaningful way to support that development.</p>
<p>Eventually we stopped making new features all together. We had no choice; we couldn’t meet payroll to continue all of this development. We were in what I call a startup tarpit. The startup tarpit is the land of inertia. We had a good enough product but not enough marketing resources to get out of our stagnation. We raised money to build a great product and when we ran out of money we had nothing to show for it; making it nearly impossible to raise additional money.</p>
<p>Now imagine your ramp up phase company has to support multiple salaries. Or imagine your want to pay yourself the same salary as the job you just left to start your company. The return on investment for those salaries just doesn’t compare to putting those same dollars into growth and marketing. </p>
<p>It’s very simple. I can acquire a user for X amount of dollars through marketing channels. That user will result in some multiple in revenue of the acquisition cost.</p>
<p>That is how companies grow - they arrive at a place where they can predictably acquire customers at a given cost, and earn some multiple of that in revenue from that user. I spend $100 through PPC campaigns, for example, to acquire a customer and receive $400 back over the course of the user’s lifetime. I can grow the company by replicating this process over and over. This is the beginning of creating a marketing engine that will continue to grow the company in perpetuity. This is how you support salaries and get through the ramp-up.</p>
<p>There is no feature to revenue ratio that is as predictable or fruitful as that of a marketing investment. I say this as a person whose craft is product development. Invest early in marketing and maintain a low salary burn, and you might just find a way out of the precarious ramp up phase. Otherwise, you’ll end up in an inertialess startup tarpit.</p>
<p>You have a choice at the onset of the project. Focus aggressively on growth and you stay alive. Through this path you can be a self-sustaining business or have the metrics to raise additional funding. You open up possibilities.</p>
<p>On the other hand, if you ignore early growth trajectory and solely focus on product development, and end up having nothing to show for it, you’re dead in the water. Game over. There’s no follow up funding; there’s no reboot.</p>
<p>Anything that jeopardizes this prime directive is a liability, which is critical to remember when you put together your founding team. Your team has to buy into this mindset. It’s something I have to remind myself of as I am recruiting for my new project, Zen Patient.</p>
<p>It’s hard to get talented people to quit their jobs to work on startups, and especially hard in our industry where you have to compete with established companies offering high market salary rates.</p>
<p>When thinking about the team I want to put together for Zen Patient, no matter how talented I think the individual may be, I have to remind myself that if the condition for having the person come on board is providing anything close to a market-rate salary, bringing the person on board is too much of a liability during this fragile stage.</p>
<p>Too much burn is too much risk. It’s better to build things on your own until you can find the right person to accept that pain threshold with you. Stay lean and stay alive.</p>
<p>Thanks to Colin Nederkoorn for inspiring this article. I hope you enjoyed this article. If you did, please share it on Hacker News or your social media feed.<br>
If you’re interested in connecting about my new AI focused health care project Zen Patient, please email me at <a href="mailto:daniel@zenpatient.com">daniel@zenpatient.com</a>.<br>
For more updates from me, follow me on Twitter at @dantawfik</p>
tag:dantawfik.com,2014:Post/it-s-not-a-feature-problem-avoiding-startup-tarpits2017-10-20T14:27:20-07:002017-10-20T14:27:20-07:00It’s Not a Feature Problem—Avoiding Startup Tarpits<p>Startup growth can be painfully slow. So slow that many entrepreneurs just give up and quit when their launch doesn’t go as expected. When you think about it, who can blame them for quitting. Yes, it is really hard. So hard that you may end up in a nut house if you think about it too hard. However, that’s not why I expect that most founders opt out.</p>
<p>They fail because they never had a chance, not when every incentive leads them in the wrong direction. The top thought leaders and business experts deceive us with shortcuts and tricks that optimize for short term success. There are no silver bullets; there are no shortcuts.</p>
<p>We’re dazzled with the idea of hockey stick growth — the idea that there is an inflection point in a startup’s growth that moves the rate of expansion from linear to exponential. One day you’re working in your garage on an idea; the next day you’re Facebook, Uber, or AirBnb.</p>
<p>We’re told this jump from linear to hockey stick growth happens when a great product meets a great market; that at this moment word of mouth will begin to propel extraordinary growth.</p>
<p>Products and markets do matter—they actually matter a lot. However, there’s a temptation to take this too far. To toil away at a product until you get a perfect product. That was precisely what we did when launched our first company. It was one of our original sins.</p>
<p>We developed new features thinking each feature would cause the inflection point we were looking for. ‘Ticketing will be a game changer,’ or ‘this new mobile app will allow us to sell at a higher price point.’ Each time we barely pushed the needle when it came to growth. We dreamt silver bullets, but we were only pushing out what amounted to paper bullets.</p>
<p>It turns out paper bullets are expensive. Features cost money in the form of engineering hours. We invested all of our seed funding in developing a great product. In doing so, our feature list expanded, but our actual revenue growth never changed in a meaningful way to support that development.</p>
<p>Eventually we stopped making new features all together. We had no choice, we couldn’t meet payroll to continue all of this development. We were in what I call a startup tarpit. The startup tarpit is the land of inertia. We had a good enough product but not enough marketing resources to get out of our stagnation. We raised money to build a great product and when we ran out of money we had nothing to show for it; making it nearly impossible to raise additional money.</p>
<p>Thankfully our product was stable. Our CTO was beyond talented engineer and built an incredible resilient and scalable product. We didn’t have to shut down the company altogether, we just had to keep product going on a nominal budget. A nominal budget meant no more features.</p>
<p>There was a silver lining in killing our addiction to features. We started reinvesting revenue into marketing. We had never committed to marketing before. We always feared that our product was not ready to be marketed. If we pay for users they’ll just cancel their accounts early into their subscription was the thought.</p>
<p>When we turned on paid advertising for the first time the increase we had a sizable increase in signups. We always feared that a new user would just churn because of what we perceived as deficiencies in the product. While there were users who churned for that reason, it was never the nightmare scenario that we imagined. All the imperfections we noticed weren’t even a consideration for our users. The majority of our users were perfectly satisfied in the product as it was.</p>
<p>It became clear that we had been sitting on a business; we just didn’t know it up to that point. It made it clear that the business more dynamic than just the product itself. The business was actually a dynamic model with the foundation of a product.</p>
<p>The model was really predictable. A customer finds us through Google Adwords. The cost to get that business to become a paying customer by clicking on one of our ads is on average around $70. The average user pays us about $35 a month for our subscription service. That means it takes less than two months to recover the marketing investment it took to acquire that user. After those first two months any further revenue is basically profit. It was just a matter of keeping the customer satisfied, which was easier than we thought.</p>
<p>Bar none marketing was the single best investment we made. The small iterations of the product just didn’t compare to the return on our marketing investments. I imagine this is the case with most startups. Withstanding some meaningful pivot of an idea, the first iteration of a product delivers the kernel of value that delivers for years to come. Small iterations in the product just deliver marginal returns.</p>
<p>This is why the product development is not everything. It is certainly the foundation of the business, but without ever getting users in a meaningful way you’re never giving your business the chance to survive.</p>
<p>The implications of marketing early are really easy to understand. Imagine if we thought of our seed funding as a means to propel revenue and not our list of features. If we hired one less engineer and took what would be that person’s salary and invested it into our marketing budget for example. It would have fundamentally changed the trajectory of the business.</p>
<p>Say we took 12k each month and invested into Adwords. We know it cost us on average $70 to acquire the customer. That means with 12k monthly budget marketing we would buy about 170 users a month. A user on average pays us $35 per month. This means we are adding $6000 to our monthly recurring revenue. The marketing budget pays for itself within two months.</p>
<p>With that budget, when you factor in customer churn, it should take about 16 months to hit a 1m run rate. Create a marketing engine early and the fruits of that work will pay off forever. A million dollar run rate gives you some peace of mind that you are not going out of business any time soon and it also allows you to continue to develop your product. Get to a million dollars in revenue and you have a business and you don’t have to be dependent on VC funding to survive—that’s the startup promise land.</p>
<p>Now imagine if you build your product on your time. Imagine that your only product costs are nominal hosting and operational costs. Imagine then you raise your round and invest early into customer acquisition instead of features. You can have a business that can sustain itself forever.</p>
<p>There are also additional byproducts of this approach. In our case marketing lead to an actually improvement in our product in a measurable way.</p>
<p>Prior to our marketing initiative we had made development decisions on the basis on a small user base that found us through free acquisition channels (blogs, word of mouth, et). This is how a lot of startups end up in their own version of a startup tarpit; they assume word of mouth and organic growth will be the primary diver of growth.</p>
<p>The amount of traffic we generated from those channels was anemic, which I imagine is the case for most startups. As a result, we only really listened to the needs of a small user base. Listening to those users led us to believe we had a product problem. Our stagnation was because we had not built something feature rich enough.</p>
<p>In actuality one of the biggest impediments to our growth was not that our product lacked features, but instead it was really hard to actually signup for our service. When we turned on ads this became apparent to us. We would spend thousands of dollars a month to get users to a signup page that was a bottleneck to getting to the product.</p>
<p>Meaningful improvements in a product are created through feedback on a larger scale. At scale you see the see the fissures in the business and product. In our case, we were able to decrease the cost to acquire a customer from an average of $130 a user to $70 with small changes to the signup. We did this all while staying lean.</p>
<p>Staying lean is in fact a critical piece to avoiding a startup tarpit. It is something I wished we focused more on. In fact, I would never raise money to propel more development again. I would raise money with a functioning product already developed. The alternative is just too risky. If you raise money and make no progress except in expanding your head count and list of features, there is no way to raise additional funding—your dead. Why would an investor invest in a company that hasn’t shown any ability to hit some meaningful metrics?</p>
<p>Going head first into marketing is scary. I have come to believe it is essential though. The physics of a startup are important. To stave off inertia you have to be methodical about your resources. If you can invest early into customer acquisition you can create a sustainable business from the outset you create an engine of growth that is almost self executing and propelling you past the startup tarpit.</p>
tag:dantawfik.com,2014:Post/selflessness2016-05-23T01:00:11-07:002016-05-23T01:00:11-07:00Fencing in the Mirror<p>Suriname is a small Caribbean nation on the Atlantic coast of South America. It has a population of a little over half a million people. If you’re like me, you had probably never heard of it. And you’ve certainly never heard of Edward Gessel.</p>
<p>Edward Gessel serves as the Chairmen of Suriname’s Special Olympics delegation. Suriname’s participation in the Special Olympics was nothing less than improbable. In the months leading up to the Games, Gessel had a problem. There were no funds to pay for the travel expenses for his delegation. Gessel had to stare down an ominous ledger every day, and the math was not in his favor. The $3000 plane ticket to the Games is more than the average Surinamese household income. Getting the funds to send the delegation to Los Angeles seemed impossible.</p>
<p>Left with no other recourse, Edward Gessel mortgaged his home. With the funds from this selfless act Gessel was able to send the 24 athletes from Suriname to Los Angeles to participate in the games.</p>
<p>If you have ever had the privilege of attending the Special Olympic Games, you undoubtedly understand the power of selflessness. A shared purpose of athletes, volunteers and families makes the games so special. </p>
<p>Shared purpose and selflessness: these are the forces that underly any great undertaking. </p>
<p>We see the opposite of selflessness all too frequently. We live in an era where trust in institutions has collapsed, with the possible exception of the military. And it’s not without cause. An era of systemic fraud in business, politics, religious institutions and sports have contributed to the degradation of trust in institutions that seem incapable of accomplishing their missions.</p>
<p>A culture of “me, me, me” has helped make these institutions seem completely impotent. But there’s an alternative. Simply ask any veteran about group purpose and you’ll understand the power of selflessness in an organization. </p>
<p>The objective of the group—'unity over self’— is the foundation of military service. When one person forgets the mission and goes out on his or her own the entire mission is put at risk. No individual is more important than the cause. This is what makes many military units so successful.</p>
<p>To understand the power of ‘unity over self,’ simply examine the life of Senator John McCain and how he overcame half a decade of torture in a North Vietnames prision camp.</p>
<p>During the Vietnam War, McCain’s father was the commander of all military forces deployed between the Americas and the Indian Ocean. John McCain was offered a chance to be released. </p>
<p>McCain knew that the North Vietnamese would use his release for propaganda purposes. No one would have faulted him for succumbing to the pressure. With each day he spent in his prison cell his chances of survival became more and more bleak. </p>
<p>Faced with the prospect of continued torture, McCain said no to his release. McCain certainly was no zealot for the cause. He had his own doubts about the war. His cause was his men. He drew the strength to endure the pain of the torture by putting the well-being of his fellow prisoners above his own. He would put his men above himself and provide leadership as they endured their own hardships.</p>
<p>McCain had a mission. He had something to live for that was bigger than himself. He knew he couldn’t do anything about his fate, but he could provide leadership, support, and direction to his fellow prisoners. This mission provided him with the will to survive.</p>
<p>The stories of Edward Gessell and John McCain are powerful for the pragmatic implications for anyone trying to do something lasting and meaningful.</p>
<p>Build an organization where everyone is out for themselves and you’ll build what Schopenhauer called a culture of individuals “fencing in the mirror.” When we are caught up in our own agendas and circumstances, we forget to live up to our obligations and commitments to each other. This is where dysfunction foments; this is how startups die and missions never get completed.</p>
<p>Selflessness does not, of course, mean martyrdom. There is no virtue in martyrdom or needless asceticism. Ask any entrepreneur who has tapped into their personal savings in order to meet payroll each month. Without shared sacrifice and group purpose there is no way employees can truly grasp the magnitude of the sacrifice. </p>
<p>We need to create a culture of shared purpose. This is where leadership counts. Anything difficult to build, whether it be a cause or a business, requires getting a group of people to work together to do things over a long period of time. And it can be boring and grueling.</p>
<p>Teams need to be bonded by the mission. In order to create a great team, you need to create a sense of shared purpose. No fencing in the mirror, no selfies, but instead ‘unity over self.’ </p>
tag:dantawfik.com,2014:Post/the-tunnel-vision-trap2015-08-23T05:18:19-07:002015-08-23T05:18:19-07:00The Tunnel Vision Fallacy<p>This is the age of the selfie-stick. We lionize those that clamor for our attention and impulsively beat our own chests because of an unflinching belief that we are special.</p>
<p>One only needs a pulse to understand the importance we place on the self. These are the fruits of narcissism. It’s easy to lament its corrosive effects on our culture; it’s much harder, however, to look inward and see how we as individuals foster and let narcissism corrode our own lives.</p>
<p>I think about this particularly when it comes to individuals we consider “driven”.</p>
<p>When we send young people out to the arena we arm them with a myth. It’s the myth of tunnel vision, of singular focus: if you sacrifice and dedicate yourself completely to an end you will emerge on the other side the victor.</p>
<p>Pick the arena: athletics, business, politics– within each field there exists a hero that tackles an obstacle through a singular and unyielding focus. Jordan worked harder than his competition. Zuckerberg tenaciously built an empire out of his dorm room. It’s a narrative that is easy to comprehend. Work hard, sacrifice, and you win.</p>
<p>What the tunnel vision myth doesn’t take into consideration is the whim of circumstance, the things that are out of our control. Markets crash, growth slows, injuries occur.</p>
<p>When I founded my company, I took on the role of “martyr for the mission”. No salary, working 7 days a week—every fiber in my body was dedicated to the success of the company. It sounds like a great plot line for an Aaron Sorkin script, right? Out of the spartan existence of a shared apartment, startup founder wills his way through the gauntlet of Silicon Valley.</p>
<p>Having tunnel vision is great when things are going well. When I received our first term sheet from a VC, I felt unstoppable. I poured all my resources into my identity as the leader of this venture and it paid off. I received funding. I was a success. I was validated.</p>
<p>What happens when things aren’t going well? </p>
<p>It turns out having tunnel vision is like investing in the stock market, but your portfolio only consists of one stock. When the stock goes up, you are a success. When things take a turn for the worse, you are stuck with the reality of your perceived failure.</p>
<p>I remember talking to a friend who’s company was facing some significant challenges. “You guys don’t understand my problems,” he would say. “My life, my issues. I have a lot of issues that you can’t begin to understand.” The totality of ‘his’ situation, 'his’ drama, 'his’ misfortune had become the filter through which he could see the world. Narcissism crept in and his esteem stock crashed.</p>
<p>I understood his situation all too well. I found it nearly impossible to escape my identity as a founder. I built a narcissistic fortress around that identity. It’s the inescapable pending doom scenario. Money will run out, investors won’t continue to write checks, slowing growth, big companies will sue us to the point of oblivion, founders kill each other, you name it–somehow the founder has to step in to do whatever it takes to save the company from splitting at the seams.</p>
<p>I am an insomniac. I’ve been an insomniac since I was 12 years old. When you are perpetually dealing with quasi crises your insomnia becomes an order of magnitude worse. Your thoughts become relentless.</p>
<p>Enter Mr. Sandman. I was prescribed sleeping pills for my insomnia. The pills helped me sleep, but it was all a haze. I was perpetually hungover from the prescribed pills. So what do you do when you wake up every morning with a hangover? Take stimulants of course. In fact, our whole team was taking pills to get an edge.</p>
<p>Downers to sleep and stimulants to be awake. I lost 25 pounds of muscle. My nervous system was a mess from the yo-yo'ing of these antagonizing chemicals in my blood stream. I was a wreck.</p>
<p>As the challenges of running the company amassed I became more and more isolated as I became more deeply whetted to the outcome of my startup. I became more dependent on the sleeping pills not just to sleep, but also to allow me to check out every night—a brief respite from my problems, my situation, my drama. Narcissism had turned me into a pill popper.</p>
<p>We do this when we have tunnel vision—we become our success and failures. We build glass castles to show the world how great we are and with one whiff of misfortune the castles turn into a personal prison of sorts. One moment you are a success, the next you are languishing in the cocoon of your circumstances and failures.</p>
<p>“I think, therefore I am,” Descartes famously said. The only reality that exists is our own, the only one we can experience. Sometimes we need a break from our reality. Our reality is very fickle—sometimes it provides great esteem, and sometime it saps us of it.</p>
<p>When we gather our identity from many sources we create a more diversified sense of esteem. We can fail or stumble at one thing and still derive esteem from something else. I can face a challenge in building a new startup, but still redeem esteem from my identity as a writer, musician, hiker, family member. When the market crashes in one aspect of my identity, investments in other aspects of my identity mitigate the losses.</p>
<p>This is critical. In order to prepare ourselves for the arena we have to prep ourselves for the deluge of obstacles we will find there. It requires a strong and robust constitution built on a foundation of high self-esteem; otherwise we will simply crumble when we encounter adversity. Esteem allows us to view our challenges objectively rather than catastrophically. These problems aren’t insurmountable, they are simply challenges that help us grow.</p>
tag:dantawfik.com,2014:Post/why-i-created-a-blog-about-doing-hard-things2015-08-07T13:22:11-07:002015-08-07T13:22:11-07:00Why I created a blog about doing hard things<p><em>“No man’s good by accident. Virtue has to be learnt.” —Seneca</em></p>
<p>Some of us dream of Elyssium. We point to the moon and see it in arm’s reach. We quit our comfortable jobs to embark on a new venture, or catch a Greyhound bus to Hollywood from somewhere in the obscurity of the Midwest to pursue our dreams of appearing on the silver screen, or wake up at dawn to train to compete at the highest levels. That’s the life we choose. We visualize, have purpose and execute. </p>
<p>These dreamers are the modern day Don Quixotes; jumping into the arena, scoffing at conventional wisdom, and taking the proverbial road less traveled. In every industry we find them and glorify their success, often times ad nauseam, but this of course is not the purpose of the blog. This is a blog about doing hard things. </p>
<p>When I started my company I had the fortune of befriending my own band of Don Quixotes. We were entrepreneurs starting our first software companies and we were all doing hard things.</p>
<p>Who were these folks? These were the best minds of their generation. They had all the right outward signals: Stanford Computer Science degrees, Y Combinator bound, former Google project managers. These Don Quixotes were the best at their respective crafts and Silicon Valley investors flocked to them with big checks in hand. </p>
<p>Outwardly these individuals were the paragons of success. They had accomplished so much of what folks on the sideline only could dream of. They built the product that users flocked to, got the venture capital check, and all the accolades that go along with that. </p>
<p>Inwardly, things couldn’t be more different. The same company that was just lauded in TechCrunch for being the next big thing was secretly struggling to not break apart at the seams. Founder feuds, seemingly insurmountable cash flow issues, dealing with legal threats from big companies, or simply working themselves to the bone to make something happen, each one faced it’s own seemingly existentialist threat. </p>
<p>For most of us first time founders, going to work seemed like going straight into a headwind. Some of us languished and some of us persevered. Depression and anxiety, isolation from the world and even self medication were all part of our respective stories.</p>
<p>How did we get here? These of course were the best and brightest; so much so that the biggest Silicon Valley firms had placed big bets on these twenty something prodigies. </p>
<p>It was clear that while we had enough courage to jump into the arena and were smart enough to master our respective crafts, we weren’t always mentally prepared to deal with gauntlet of challenges we faced.</p>
<p>There are tombs of articles on the subject of success. This is not an article on success. Challenge, failure, fear and perseverance are all elements in the path towards success, but for far too many we find ourselves crippled before we reach the ark of that path. </p>
<p>I am not interested in glorifying success, but instead share my story and contribute to a discourse on facing obstacles, fear, and failure. What I learned over the course of running my business was that doing hard things requires a mental resiliency and internal robustness that most of us are not naturally equipped with. We don’t get this training in the womb of our 9 to 5 jobs or in the halls of our universities. </p>
<p>The truth is we can only prepare ourselves for the obstacles that come with doing hard things by actually doing hard things. This is experiential learning not found in books. It’s knowledge only found in the arena.</p>
<p>I will avoid gushing cliche optimism because that of course is not realistic. The knowledge that we acquired while running our companies often came through some very painful experiences. It was neither gushy, nor fun. It was through relentless pragmatism and objectivity that we overcame our difficulties and it is with relentless pragmatism and objectivity that I write these series of articles.</p>
<p>The goal of these series of articles is simple: how do we build a mental framework that helps us see challenges as objectively as we can, flip failure on its head and persevere through the challenges that await us. It’s both the mean and the end. </p>