MOST IMPORTANT LESSON LEARNED?

Chris Weiss (Co-Founder, President, and CEO, Dynamic Clinical Systems):  I recently heard serial entrepreneur Jonathan Kaplan interviewed on NPR. Among other things, he advised that an entrepreneur who is “… willing to hear ‘no’ so many times that it sounds like ‘yes,’ [will] probably be successful.  Why do I think this is important advice? It’s because risk is fundamental to the notion of entrepreneurism. In their heart of hearts, most entrepreneurs enjoy the thrill of risk. Entrepreneurs start things knowing at the time that they don’t have the resources to complete them.  An outsider looking in at an entrepreneur’s risk-seeking life – particularly an outsider who is not an entrepreneur him/herself – is likely to think “no” as a first instinct.

  • No, that idea won’t fly
  • No, we won’t pay you for that
  • No, nobody will invest in your idea
  • No, you’ll never see a return on your efforts
  • No, I won’t join you in taking on that risk

If you’re a person like me, you probably grew up thinking “no” generally meant you weren’t going to get what you wanted. If you’re an entrepreneur like me, you had better get used to hearing the word a lot – and that it just might mean you’re onto something important.

 

Michael Stern (Founder, Premier Retail Networks):  Building a new business means you’re doing things differently than they’ve been done before; taking a new path. While it can be a very exciting process, the fact is that when you do something new, you often don’t get it right the first time. That means that in developing your business, there’s a good chance that you’ll encounter lots of setbacks before achieving success (at least that was the case for me). For example, the first iteration of our business generated great consumer interest but minimal revenue opportunity, and we nearly shut down. We then went through the painful process of changing our business model two more times, until we landed on a model that generated meaningful revenues and still kept our customers happy. During that period we felt as if we were failing, but what we were doing was really learning our business and what was needed to make it work. Had we not persevered and pushed through all the setbacks, we would have missed a great opportunity to succeed. The fact is you really do learn most from your failures, and sometimes building a successful business is nothing more than surviving all your mistakes. So learn to expect setbacks – they’re part of the process and absolutely your best teacher.

 

Brad Jefferson (CEO and Co-Founder, Animoto Productions) and Jason Hsiao (President and CEO, Animoto Productions):  When we explored founding Animoto with each other and other friends we asked a respected mentor what he thought of the idea. He asked rhetorically, “Are you good friends? Do you want to stay good friends?”  We understood the odds were against us. What we didn’t understand was all the complexity that can drive friendships apart when growing a business together.  Marriage counseling before marrying is a good idea.  The same is true for starting a business with friends. Have a very personal, heart-to-heart discussion up front before embarking on your startup. Any awkwardness then will only be magnified over the months and years that follow if they aren’t resolved at the beginning. The beauty of founding a company with close friends and family is that it can be much easier to have these discussions, since often there is already a deep level of respect and trust that strangers take years to develop. Some important topics to talk about before starting a company with a co-founder (friend or otherwise):

  • Equity division
  • Goals and philosophy for the future
  • Compensation
  • Job titles and responsibilities
  • There will not always be parity; there can only be one CEO

As a founding team at Animoto, we come together at least twice a year, typically in a remote location, to check in with one another on a personal level and make sure we’re all still 100% motivated. There’s no better feeling on a team or within a company than when you feel everyone is as motivated as you and working as hard as you, and that there is still the same level of accountability you expect from your family.

 

Chris Pearson (Founding CEO, Sound Innovations):  Important lessons Ilearned when thinking about licensing or taking a product to market. At Sound Innovations, we licensed a key technology from a university, matured the technology, and considered licensing to a larger company. We found that big companies don’t start listening until you have a product that works, and they get interested when you have sales. For them, scaling sales offers a safer return than developing unproven technology. Here are some lessons I wish I knew when I started Sound Innovations:

  • Patents don’t create value, sales do. Companies assign a low value to a license for a technology that is pre-sales, even if it is patented. Market value is uncertain until sales begin.  
  • Go for the quick license or the long road to sales, but don’t get stuck in-between. Licensing a mature pre-sales technology is not much easier or more valuable than licensing a pre-sales lab-bench technology. So either license early or plan to take the technology all of the way to market.
  • When licensing, set low expectations for what you will get. Companies will invariably value your technology much less than you, and for good reasons. Cast a wide net, quickly establish a market clearing price and expect a long, low-probability wait for royalties.
  • When taking a technology all the way to sales, be realistic about time and cost.  Getting from a patent to product sales will take years of effort and often millions of dollars. This means you will spend several years of your life on the endeavor and be in a constant cycle of raising money. Plan for this up front!  This is not an easy path to success, but it can be one of the most interesting, exciting, and rewarding challenges you can ever try. 
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