Avoid the ’emperor’s new clothes’​ hallucination of startup unicorns

In a matter of weeks, WeWork, one of the world’s most highly valued private companies and an emblem of venture-backed unicorns, had become a casualty of consensual hallucination between a bombastic startup founder, and investors who seemingly shopped at the tailor who makes emperor’s new clothes.

WeWork was valued at $47bn, a staggering amount for a company that lost $1.9bn on revenues of $1.8bn last year. It’s now postponed its IPO. Softbank, the majority 29% shareholder, has a gaping hole in its $100bn Vision Fund, and departed founder Adam Neumann has left a toxic waste to clean-up behind him – but with $750m in his pockets for his efforts.

In frothy capital markets such a romantic delusion is possible, where the charisma and audacity of the founder is more alluring than spreadsheets, and venture capitalists jostle with each other to write cheques of $100m. However, for me the fundamental flaw here is that capital isn’t a strategy – which has been the WeWork and unicorn operating model.

SoftBank has been acting like it’s the 1850s Californian gold rush all over again, where the hubris of megalomaniacal founder Neumann seduced their ambition, such that they ignored the usual red flags highlighting the need for diligence in startup business models. So, here’s my summary of the WeWork story, and then my thoughts on its impact for startups in Manchester.

In 2008, Neumann was subletting part of his office space to save rent, and convinced his landlord to let him take over an empty space in one of the landlord’s nearby buildings. He divided it up into semi-communal offices, and rented them out. The original space, Green Desk, was an instant hit. The landlord wanted to expand it to his other properties, but Neumann decided to do his own thing and opened the first WeWork in 2010 in NYC. WeWork was thus born as a co-working space.

In 2017WeWork opened its 200th location in Singapore, and Neumann met Masayoshi Son, the head of SoftBank, a Japanese company reinvented as a VC. In 2016, SoftBank had launched the $100bn Vision Fund, backed by $45bn from the Saudi Arabian government. Son told Neumann he had precisely twelve minutes for a meeting, after which Son sketched out a deal to invest $4.4bn. Son told Neumann to make WeWork ten times bigger than your original plan and to recognise that being crazy is better than being smart. Neumann didn’t hold back.

Today, WeWork is the largest private occupier of office space in London, New York and Washington. In central London, it has more branches than McDonalds. It has become the biggest and fastest-moving force in what many see as the future of work and remote working. But disrupting the world of commercial property required capital, and Neumann excelled at pitching his vision, raising $12bn.

WeWork could simply be described as a leasing company, renting desks to startups and freelancers. However, the IPO filing describes it as a community company, a worldwide platform that supports growth, shared experiences and true success. This sounds like self-important deluded jargon, and therein lies the root of the problem.

Neumann declared that WeWork’s valuation and size are much more based on our energy and spirituality than on a multiple of revenue. He maintained that categorising WeWork as a property concern was too limiting. For example: WeWork Mars is in our pipeline, Neumann declared. He said he’d met with Elon Musk and offered the company’s services supporting Musk’s future Mars missions. He forgot to add that Musk wasn’t interested.

So, what are the lessons for startups in Manchester from this debacle? It is important, as there are four existing and a fifth WeWork office being built in the city.

1.     Startup valuations

Are Unicorns overvalued? In a recent survey, Yes said 91% of VCs who don’t have any Unicorns in their portfolio; and Yes said 92% of the VCs who do. The spiralling prices of tech startups have been based on unsustainable rates of assumed rocketing growth. Uber, once considered the biggest and fastest unicorn of all, lost $5.2bn in Q2. Uber’s growth has been spectacular, but there is something unreal about a company losing $40k a second.

Takeaway: We need to blend the reckless ambition of founders with the sober adult supervision of investors. Show your startup has a genuine edge and innovation, an ambitious customer scaling roadmap, but also a credible strategy to achieve cash generation – and don’t get greedy on your valuation.

2.     Attracting investors

Asked whether they make a gut decision to invest in a fledgling company rather than relying on analysis, 44% of VCs said yes. Some 9% admitted they didn’t use financial metrics to back this up.

Takeaway: Scale unit economics. A startup is a bet on a business model attaining the scale/critical mass beyond which the unit economics starts making sense. Focus on determining the economic drivers of success, not throwing out outrageous revenue projections, and build a growth story around this. WeWork failed to demonstrate any economies of scale.

3.     Growth strategy

SoftBank’s cash infusion helped WeWork cover the increasing costs of its whirlwind growth. WeWork spent heavily to fill the desks it was adding – they bought out new tenants from their existing leases, and provided a year rent free. There was thus a spiralling chasm growing between revenue and costs. WeWork’s occupancy rate went up, but the deals made it difficult to determine the natural demand and price point for its product.

Takeaway: Think of scaling as building the base of a pyramid, the foundation upon which everything else is built, and you know that it will hold. Focus on building your architecture in an intelligent way that will allow you to grow to realise your potential, without over taxing your cash or endangering your roadmap.

4.     Set and hit your (proper) metrics

WeWork has consistently been wildly off its forecasts. Their forecasted profits in their original pitch deck are: $14m (2014), $64m (2015), $237m (2016) $542m (2017), and $1bn for 2018. It hasn’t made a profit yet.

Finding normal accounting a bit boring? WeWork published a financial metric it called Community-adjusted EBITDA – a proven accountancy way of measuring a company’s performance, but Community-adjusted excluded many costs, claiming they would disappear once it reached maturity in an attempt to show it could make a profit. The Financial Times dubbed WeWork’s doctored version perhaps the most infamous financial metric of a generation.

Takeaway: The hype superseded numbers. It was accounting jujitsu at its finest. At some point, startup gestalt of overpromise and underdeliver can paint founders into a corner where they begin massaging numbers. Simply, set and hit your metrics to get trust and confidence from investors.

5.     Know the risks in your business model

WeWork isn’t a commercial property firm renting desks, it’s a Space as a Service (SAAS) firm according to Neumann; but ultimately it is a property based business model, signing long leases even though their own subleases to customers are short. The IPO prospectus disclosed $47bn in future lease obligations and forecast $3bn in revenue this year. What could go wrong?

Takeaway: In all markets, the market leader gets an unfair advantage because casual and unsophisticated customers choose the leader because it feels easier and safer. But your strategy is not to wish and dream of becoming a big fish. The strategy is to pick a small enough pond. By engaging with the smallest viable audience, you gain the reputation and trust you need to move to ever-bigger audiences.

6.     Have a vision and purpose, but don’t hallucinate

Until recently the image of an entrepreneur was of a thrifty workaholic toiling away long hours. But Neumann was more emperor than entrepreneur. In such cases, attention invariably focuses on the founders’ hubris. Their rise and fall is the stuff of barnstorming, bestseller novels. Ultimately, they fall off their pedestal because the foundations lack a sense of reality.

Takeaway: The startup world is filled with the idolatry of winners, constantly promoted on Instagram, creating a high many then chase. The ‘startup founder’ badge, the spoils, coupled with the false narrative that we live in a meritocracy, have dulled our sense of reality.

We’re kidding everyone. We’re deluding ourselves. We’ve lost sight of what’s important. We’ve lost ourselves. We’re addicted to growth at all costs. Emulate the tortoise, not the hare. I’ve always preferred opportunities where time is an ally, not an enemy.

7.     Blitzscale doesn’t work

The folly begins with a sound idea. Startups need scale to become global. The ideas spread quickly, because of network effects, and the more people use a service, the better it gets. The fastest growing firms like WeWork ‘blitzscale’, they attempt to disrupt a whole industry before anyone can stop them, raising fortunes to acquire users – at any cost.

But ultimately, unless you can finance your growth from a growing revenue stream, Blitzscaling means you need investors with very deep pockets. And you usually need more money than you thought, because you’ll need further funding to recover from the mistakes you’re likely to make along the way.

The fast-paced Blitzscaling process is marked by organisational chaos – Zuckerberg’s move fast and break things mantra at Facebook means every week is an emergency – and that’s what insiders said about WeWork. For every company like Paypal that pull off that feat of hypergrowth without knowing where the money would come from, there is a graveyard of startups that never figured it out. The risks of potentially disastrous defeat are ignored.

Hoffman and Yeh, architects of ‘Blitzscaling’ explain the conditions in which it makes sense, which includes having a sustainable competitive advantage and high gross margins, so that the business will generate positive cash flow and profits when it does get to scale. This is good advice, but it didn’t apply to the WeWork model.

Takeaway: There maybe a hard landing here. Startups with no recognisable route to profitability will find it harder to get cash, even before WeWork’s fiasco the taps were being tightened. Blitzscaling may become a dirty word. It’s a do-or-die approach. Cash-burning firms may find themselves stranded. For your startup, don’t fall for the hype.

8.     Leadership red flags

I’m stunned at how Neumann’s sheer force of personality kept the obvious questions about WeWork’s future viability at bay. The cult of personality provided for an outsized view of his own leadership capabilities, and frankly a delusional view of the firm’s role in society. Also, WeWork looked to some like an old-boys’ club, the management ranks were sprinkled with Neumann’s friends and extended-family members.

Neumann sold $750m of his shares. I understand the need for some liquidity and to diversify holdings, but three-quarters of a billion dollars? He was on the brink of becoming a decabillionaire.

Takeaway: If my daughter informed me she’s dating a premiership footballer, that would be a red flag. The vacuum of leadership and governance transparency in WeWork has undermined the often fragile startup leadership culture that investors tolerate and accept.

As a result, the balance of power may shift from founders to investors, as whilst no one wants to crush a creator’s zest, for a while at least, there could be fewer high-risk innovations funded. The key takeaway here is build your leadership team and culture as much as your brand and product.

The salutary lesson from the trauma of WeWork is that common sense has prevailed, and the free rocket fuel stoking the tech startup mania may be rationed, rewarding firms that will generate cash or profit. This will cause a shift away from the quest for growth at all costs towards more responsible stewardship of startup capital to improve runway growth.

The goal for startups should be to make their ventures sustainable, not just explosive. After years in which VCs have cast themselves as infallible Merlins, it is good to see investors shouting when an entrepreneur, for all his charisma, cannot demonstrate how they’ll zoom from unprofitability to massive profitability in a way that’s not obvious to the naked eye – the tailor making the Emperor’s new clothes has a lot to answer for.

Startups – improv and all that jazz

I’ve been a clumsy, enthusiastic saxophone player for several years now, able to knock out a few recognisable tunes and get folks’ toes tapping. They say ‘don’t play the saxophone, let it play you’ – but sometimes I just can’t get a decent sound out and it sounds like a deranged parrot. As Miles Davis said, ‘Anybody can play. The note is only 20%; the attitude of the person who plays it is 80%’ – so I continue to give it a go.

As part of learning the sax, you have to be able to improvise, playing jamming ‘free flow’ sessions to stretch your style, and speed of thought, playing chord progressions as spontaneous practice. Alas my concrete fingers constrain my dexterity, but playing sax is fun, relaxing and energises me.

My favourite saxophonist is the late American John Coltrane, also known as Trane. Coltrane pioneered the use of modes in jazz and was at the forefront of free jazz. He played with some of the greatest jazz exponents, including trumpeter Miles Davis and pianist Thelonious Monk.

Growing up in North Carolina, in the 1930s, he benefited from a musically family: his mother sang and played piano; his father played clarinet and violin. But during his seventh grade, Coltrane’s fortunes took a tragic turn. Within six months, his maternal grandfather, father, and maternal grandmother all passed away. John became tortured by his inability to remember what his father looked like. In this emotional vacuum, Coltrane threw himself into the alto sax.

When his family moved to Philadelphia in 1943, Coltrane found himself in a cauldron of jazz and a breeding ground of the hard bop style. He soon began a journeyman’s life, gigging with cocktail trios and R&B combos. At the Granoff Studios in Philadelphia, he took a course of music theory and lessons. Coltrane arrived early in the morning and remained through the evening.

Practicing at home, as the night wore on, he would finger but not blow into the instrument so that he could quicken his reflexes without waking his neighbours. Coltrane’s perfectionism was legendary. Borrowing exercises from a pianist, he stunned fellow musicians by forcing his fingers to navigate arpeggios, trills, and wide leaps in melody.

In 1955 his career took off. Miles Davis hired Coltrane into his quintet, gambling on a 29 year-old with a jagged style and a heroin habit. The quintet’s albums Round About Midnight and Cookin’ were landmarks, but Davis grew aggravated with Coltrane’s unreliability. In 1957 Davis fired him.

The dismissal was a shock. In its aftermath, he experienced what he called “a spiritual awakening” and quit drugs and alcohol. Under the influence of pianist Thelonious Monk, Coltrane started obsessing over harmonic variation. “I would go as far as possible on one phrase,” he said, “until I ran out of ideas.” His style was dubbed “sheets of sound”.

With modal forms, Coltrane found a way to combine side-slipping chromatic movement with more lyrical lines. The end result was the sound of a saxophone flitting, hovering, baiting the rhythm section, then colliding with it head-on in a moment of harmonic convergence.

His greatest recording success, A Love Supreme (1964), was a jazz blockbuster with over a million copies sold. It solidified Coltrane’s innovator status. In one of jazz’s defining moments, Coltrane conjugated its leading four-note motive through every register and key, then gravitated back to the original key to chant the four-syllable mantra, “a love supreme.”

After A Love Supreme, Coltrane went further with his experimentation. His music became even more exploratory, dropping the rhythmic pulse that had structured even his most wayward previous ventures. Coltrane began bridging out to a new generation of free jazzers. And then, on July 17, 1967, he died of liver cancer.

To truly know Coltrane’s work is to hear every note in context, my favourites being his chord substitution cycles known as ‘Coltrane changes’, heard on Giant Steps, generally considered to have the most complex and difficult chord progression of any jazz composition. His development of these altered chord progression cycles led to further experimentation with improvised melody and harmony that he continued throughout his career.

Coltrane’s rich productivity of releases left behind a considerable body in unreleased work that has been posthumously issued. He won the 1981 Grammy for Best Jazz Performance for Bye Bye Blackbirds, a live recording made in 1962, and he was given the Grammy Lifetime Achievement Award in 1992, twenty five years after his death. Coltrane lives on, in 100 albums on iTunes.

Coltrane was a jazz entrepreneur, he did what any startup leader does: he improvised, inventing novel responses and taking calculated risks without a scripted plan or a safety net on any guaranteed outcomes. Coltrane didn’t dwell on mistakes or stifle ideas – like entrepreneurs in today’s hurried, harried, innovative and fertile world of startups, he made it happen.

Coltrane believed that musical creativity was an act of discovery. He knew that spontaneous creativity was the business of jazz. With less than 1% of the notes on the written page, he made up the rest on the fly – no going back to correct mistakes or rethink a passage.

In his revelatory book, Yes to the Mess, jazz pianist and management student Frank Barrett shows how this improvisational ‘jazz mind-set’ and the skills that go along with it are essential for effective startup leadership. He describes how like skilled jazz players, startup leaders need to master the art of unlearning, perform and experiment simultaneously, and take turns soloing and supporting each other.

So let’s look at the lessons startup entrepreneurs can take from Coltrane:

Playing it safe gets you nowhere If you don’t take risks you’ll never excel. Playing it safe all the time becomes the most dangerous move of all. Rote activity doesn’t lead to the path of innovation for disruptive technology.

Jazz follows a basic chord progression with a simple beginning, middle and end. In startups, we also start with minimal structures. Iterations begin as prototypes progress and then final aesthetics, allowing us to identify what works and what doesn’t throughout the iterative phases of product innovation.

Make it matter in live performances A favourite saying of jazz trumpet legend Miles Davis was: If you’re not making a mistake, it’s a mistake. Jazz musicians assume that you can take any bad situation and make it into a good situation. It’s what you do with the notes that counts. Reach beyond your comfort zone.

Listening to those around you is more important than what you play yourself If you’re the one talking, you’re not learning anything. Listen, absorb what you hear, and use the information to make a conscious choice about whatever you’re facing.

In jazz, performers vary their sounds and provoke others to respond, creating new music through collaboration. Similarly in startups, there is constant ideation and creation to disrupt, to simplify the complicated and generate new ideas. This collaboration happens best when everyone is working and listening together.

A jazz player listens in two special ways. Firstly, they ‘listen with generosity’, listening for the beauty, brilliance and ingenuity of their band mates, encouraging the expression of their virtuoso talents. Secondly, they ‘listen to the silence’ between the notes. In business, listening rather than talking is a key skill. In your startup, listen closely so you can move as one.

There’s a time to stand out as a soloist and a time to be a team player You rocked a project. However, it’s more likely the case that your team rocked a project, together. Katie was on top of the customer pitch, Sue got the product demo sorted, James nailed the process map. The best startup leaders are those that make others sound and look good.

In jazz, it is common for individual performers to alternate between lead and supporting roles in a single performance. Startups should employ a similar approach to develop the team and bring new thinking to the fore.

Expect surprises and adversity, since jazz (and startup life) is about how you respond If running a startup was always smooth sailing, and it followed the notes on the score, everyone would do it. The old adage applies, that ‘a smooth sea never made a skilled sailor’, so anticipate hurdles and maximise learning from them.

Jazz has its roots form being–in the-moment collaborative innovation, just like the act of starting and growing ventures. If you’re not actively seeking new challenges and ways to expand your horizons, living the ups and downs, you are falling behind.

Don’t seek growth alone There is no such thing as a mistake in jazz – come and listen to me play! Coltrane built a constant change of pace to create new sounds. Startups should also embrace errors and accept new possibilities as they adapt, solve problems and learn.

Jazz musicians feed off of each other to inspire. Startups should foster similar innovation by embracing chance encounters and conversations. A microcosm of spontaneous moments nurtures an aesthetic of openness and surprise.

Jazz, like a startup, is about pitting your wits in the heat of the moment. Just watch the different solos and see how the other members support the soloist and you will be surprised on the amount of dynamic emotion that is created. If you’re a startup founder, grow your business by growing your team.

Find your own sound: rely on minimal structure and maximum autonomy Jazz musicians prepare themselves to be spontaneous. Startups must do the same. To the uninitiated, jazz seems like chaos, whereas the reality is an underpinning structure to the apparent randomness is a long tradition of education and practice.

Coltrane played jazz as smooth and cool, and as a rage; his solos never seemed to begin or end. Coltrane wasn’t methodical, but wasn’t messy either. His saxophone playing was a conversation, a give and take, a connection and a dialogue between himself, his instrument and his audience. Coltrane knew this instinctively, he used innovation to find his own sound.

Coltrane teaches us that you have to find what’s right for you, leading to finding your own place of uniqueness. Trying to be what others want you to be will lead ultimately to failure. You have to find what you do best, and find what is best about you, for you.

What Coltrane and entrepreneurs share is the ability to address complexity and thrive while playing in the messy, fertile space of uncertainty, ambiguity and promise. He said, I start in the middle of a musical sentence, and move in both directions at once.

His spirit of adventure, desire for improvisation and innovation captures the essence of an entrepreneur: don’t play what’s there, play what’s not there. Improv makes you present in the moment. You listen, you’re attentive. You’re not acting, so much as reacting, which is what you’re doing in startup life all the time.

Don’t have wool in your ears, be driven by curiosity

Unconscious habits stop us from being more productive, none more so than our compulsion to check a smartphone screen, explicitly designed to exploit our addictive psychology. This is not the result of passive addiction or weak willpower, it’s engineered. A Harvard math genius, Jeff Hammerbacher, took the job as first research scientist at Facebook and created the original algorithm that tracked our online behaviours.

What concerns me most about this behaviour is it’s turning us all into sheep. Where I live I’m surrounded by hills, and surrounded by sheep. Sometimes I get so angry with the simple life they lead. They just stand there, looking like they’ve never questioned anything, never disagreed. Sometimes I think they must have wool in their ears.

We laugh at sheep because sheep just follow the one in front. We humans have out-sheeped the sheep, because at least the sheep need a sheep dog to keep them in line. But we’re in danger of following the herd ourselves.

Sheep are not curious, but contrary to what you may think, sheep are not stupid. They rank just below the pig in intelligence among farm animals. Simply, sheep react to the domestication that has decreased their instinctive behaviour and increased their docile nature, and being ‘one of the herd’ is what they’re all about.

But we need to be heard rather than one of the herd, to build the habit to be ourselves and be thinking, not doing something banal like smartphone addition, trapped in a repeatable mobius loop of technological determinism.

Bottom line, we’re not asking enough questions and more cognisant of what we don’t know. We need to be more inquisitive about everything, to organise our thinking around what we don’t know. It’s becoming a bad habit to simply spend time browsing without purpose. We need to be less curious about people’s social habits and their selfie photos and more curious about new ideas and learning.

Asking questions helps spark the innovative ideas that startups bring to market. In my own research, I track business breakthroughs, and from the Polaroid instant camera to the Nest thermostat, you find some curious soul looked at an existing problem, asked insightful questions about why that problem existed, how it might be tackled, and came up with a solution.

The Polaroid story is a favourite. The inspiration for the instant camera sprang from a question asked in the mid-1940s by the three-year-old daughter of its inventor, Edwin Land. She was impatient to see a photo her father had just taken, and when he tried to explain that the film had to be processed first, she asked: Why do we have to wait for the picture?

More recently, Steve Jobs’ curiosity for design sensibility became an essential part of Apple’s core culture and product differentiator. His genius may be outside the reach of most of us, but his quest for understanding is worth emulating.

When we open ourselves fully to our curiosity, we are able to think without limits. Curiosity isn’t about solving problems, it’s about exploration and experimenting. Curiosity can start and lead anywhere, and that’s precisely the sort of broad, open mindset startups need.

Curiosity is the driving force behind discovery and learning, continually building upon itself, allowing your mind to open to new ideas, fuelling our imagination. It’s fundamental to our success, it shapes your instinct to explore which should grow into an instinct for inquiry, and it ultimately helps you discover amazing things about what you can do now and in the future.

A curious mind can relate and connect ideas better. Maintain an open mind and be willing to learn, unlearn and relearn to find get the answers you seek. Your curiosity will develop into an amazing discovery. Something you will easily identify with and can pursue further. Curiosity can give you more and better building blocks to develop creative solutions. It fuels the soul and drives innovation.

So how do you create and sustain a culture and the mindsets of curiosity within a startup as part of its business model, when the pressure is on in a race to simply get things done? Instead of the think-build-ship routine which quickly becomes a wash-rinse-repeat cycle, adopt more of the build-measure-learn heartbeat, with its essential focus to be curious about feedback, learning and iteration, on several levels:

Be curious about the outside world We all need to take our focus off our immediate surroundings and get curious about other people, their thinking, about trends, about other cultures and points of view. About anything and everything beyond our too often insular worlds. Ideas know no hierarchy. We need to get better about responding to ‘What if?’ with ‘let’s find out’ rather than ‘let’s wait until someone else tries’.

Be curious about customers Don’t see customers simply as a transaction or an opportunity for a future revenue stream, understand why they buy from you and how your offering in turns helps your customers’ customers. You need an external focus beyond winning the next customer, and see them as a source of innovation: ‘what would an existing or new customer say to this?’ An enquiring mentality, asking ‘is this the best we can do?’ will bring success.

Assume nothing, question everything Judge a man by his questions rather than by his answers – Voltaire. The acquisition of knowledge and learning derives its energy through questioning. Brilliant ideas can come out of a better question. Einstein reckoned that if he had an hour to solve a problem, he would spend the first fifty-five minutes making sure he was answering the right question. Start asking better questions to find the right answers.

Be curious about your people Many startups work hard to attract people with inquisitive mindsets and then stick them in an environment in which curiosity is discouraged as they pivot to ‘business as usual’. Hire people with a diverse range of backgrounds, experiences and aptitudes and then enable those differences to spark off each other. Building a culture of curiosity starts with seeing the individuals behind the job.

Be curious about what you’re working on When was the last time you lost track of time working on something? If you’re curious about something, you’ll worker harder than the next person, who is just trying to maximise some other metric. If you follow your curiosity, you’ll end up somewhere nobody else is. Meanwhile, people who aren’t curious are trying to figure out who they should catch up with. They create a world of the uncurious, parroting something someone else told them.

Curiosity makes your mind active instead of passive Curious people’s minds are always active. The mental exercise caused by curiosity makes your mind stronger, and it makes you observant of new ideas. Without curiosity, new ideas may pass right in front of you and yet you miss them because your mind is not prepared to recognise them. Just think, how many great ideas may have lost due to lack of curiosity?

Curious minds connect information better Leonardo da Vinci was insanely curious.His observation and belief that ‘everything connects’ informed most of his work. Making connections between seemingly unimportant things is perhaps one of the most crucial creative thinking skills you can ever master.

Curiosity will conquer fear and uncertainty even more than bravery will. And that’s the point: a culture of curiosity inspires courage. The courage to challenge all those assumptions and hesitations that for too long have held us back, and those unknowns.

It was this belief that shaped the philosophy of Andy Warhol. I read that Warhol would just walk around New York City on rainy Sundays. That was one of his favourite things to do, and that gave him ideas and inspiration. He called it From A to B and Back Again.

Of course, curiosity is the key trait for finding out what we don’t know. I’m always minded of former US Defence Secretary Donald Rumsfeld who made semantic history back in 2002 when he gave the profoundly perplexing explanation about known knowns, known unknowns and unknown unknowns in relation to the military conflict in Iraq:

As we know, there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns – the ones we don’t know we don’t know.

Those three sets of simple word pairs, used by Rumsfeld to describe military strategy, also convey powerful conceptual ideas with relevance to developing your startup thinking. Satisfying your curiosity and making entrepreneurial decisions based on knowns – truth, facts, and evidence – are far more likely to succeed than those based on hopes, wishes, and mythology.

We can know things but not realise how important they are. We can know things but not understand how the pieces fit together or know what is causing what. We can be blind to the obvious or blind to the implications of the obvious. It’s curiosity that brings us an awareness of how things connect. What this conveys is that ‘knowns’ are fewer and rarer than people believe, and ‘unknowns’ are ubiquitous. They surround us on all sides.

Curiosity has been a major factor behind many scientific and technological discoveries and the advancement of human development. It’s never too late to starting focusing on developing curiosity instincts. Begin practicing mindfulness and be conscious of your immediate surroundings. Be curious about things you usually ignore.

Following your curiosity can lead to the breakthrough ideas you have been waiting for as a startup founder, but you can only harness and make the most of curiosity if you recognise and accept the need to make time for it. As Walt Disney said, We keep moving forward, opening new doors, and doing new things, because we’re curious and curiosity keeps leading us down new paths.

Back to sheep. I’m curious that sheep only sleep 3.8 hours in a day, meaning they are active 20.2 hours a day. What do they think about for all that time? But don’t be a sheep. Either you get eaten by a wolf today or else the shepherd saves you from the wolf so he can sell you to the butcher tomorrow. Assumptions are quick exits for lazy minds that like to graze out in the fields without bother. So ask yourself, What am I most curious about?

The importance of trust between startup founders and investors

Most startup founders have an uncanny ability to suspend disbelief when it comes to the future of their venture. They’re always in sales mode – to themselves, early customers and investors, and the world in general. Startups that are on the brink of huge success are often also on the brink of spectacular failure, the line between the two extremes is often wafer thin.

Early stage startups, by definition, are almost always missing something as they iterate on product-market fit. Meanwhile, early stage angel investors can often see past these shortcomings due to their experience and learnings from their own mistakes, and provide the care and nurturing to founders needed to unlock success.

Investors focusing on early-stage startups understand this reality and accept the associated risks in anticipation of making bets on founders working on ‘10X’ ideas to realise outsized rewards. This relationship between founders and investors is a key ingredient to startup success, and isn’t just from a commercial perspective, but at a personal level – rapport, respect, mentoring and trust are vital.

Early stage investors invest because they believe in the founder at a personal level. There is something about you, and your idea that convinced them that you could make it happen. Usually, it is just a feeling and not some tangible thing they can put their finger on. Ironically, most angel investors will imagine a future version of a startup far more enticing than most sane founders are willing to pitch.

The startup game isn’t for everyone – it isn’t really for most people. At the end of the day the most likely outcome is failure, even angel investors expect most of their bets in startups to fail. In this cauldron of uncertainty and high-stakes, the most important element of the founder-investor relationship is trust.

Startup founders have the singular authority to address high-stakes challenges and make tough decisions. However, to a large extent their autonomy rests on the willingness of the investors to cede it to them. In other words, it depends a lot on investor’s trust. Leaders who violate that trust soon find themselves ousted – Travis Kalanick, whose brash and at times inappropriate behaviour repeatedly raised eyebrows at Uber, was blamed for creating a toxic culture and forced to resign by an investor revolt.

Founder trust has also been eroded by Mark Zuckerberg at Facebook. In April 2018, Zuckerberg was before Congress and questioned about Facebook’s commitment to data privacy after it came to light that the company had exposed the personal data of 87 million users to Cambridge Analytica. Then in September 2018, Facebook admitted that hackers had gained access to personal information of 50 million users. Then a New York Times investigation revealed Facebook had given Netflix, Spotify, Microsoft, Yahoo, and Amazon access to its users’ personal data, including in some cases their private messages.

So when Zuckerberg announced that Facebook would launch a dating app, I shook my head. And then they announced releasing an app that allowed people to share photos and make video calls. Why would anyone trust Facebook with personal data on something as sensitive as dating, or with a camera and microphone given its horrible track record?

Our need to trust and be trusted has a very real economic impact. More than that, it deeply affects the fabric of society. If we can’t trust other people, we’ll avoid interacting with them, which will make it hard to build anything, solve problems, or innovate.

Startup founders can’t build trust unless they understand the three fundamental promises they make to investors and the resulting responsibilities: economic – to provide value to customers that enhance their lives; legal – that they will follow the letter and the spirit of the law; ethics – investors want founders to behave with integrity.

To investors, if founders repay the trust of investment made by delivering the above promises, it means returns; and to society, it means growth and prosperity. But trust is fragile, it waxes and wanes. It means being competent, playing fair, and most of all, acknowledging and, if necessary, remediating, all the impact your decisions have, whether intended or not. Of course, it’s not always possible as a founder to make decisions that completely delight investors, but it is possible to make decisions that keep faith with and retain the trust they have in you, by being authentic and acting with integrity at all times.

Being authentic means that the gap between who you are and who you portray to be as close as zero as possible. In other words, being authentic means bringing the ‘real you’ wherever you go, in every situation and conversation. You can look at it from a moral angle, but I’m particularly interested in making a business case for being authentic.

Let’s start with what happens when you are not authentic. You will start with creating an image of yourself that is different from who you really are. It takes an effort to do that. Now, you will have to act out that image and make everyone believe that what you act out is who you really are. It takes even more effort to fulfil that. Once you act this out, you need to remember this image because you need to behave consistently with your image with all the people that have seen you portraying that image. That seems like a burden that you have chosen to carry to me. That you are interacting daily on a superficial level is odd, as betraying trust means betraying yourself.

Thinking about authenticity made me aware of my own conversations I’d been involved in as an angel investor, and recall the awkward situations where I considered my trust had been abused. Trust in humanity will only continue if we cultivate authenticity and sincerity in face to face conversation, and once these behaviours have lapsed, trust is broken and I’m done with that relationship.

Authentic’ is derived from the Greek authentikós, which means ‘original’, but just being original doesn’t mean you will be perceived as authentic. You could be an original phoney. At its heart, authenticity is about practicing your underlying principles and values – being totally clear about who you are, your purpose and what you stand for. When your rhetoric gets out of sync with your values, you lose your integrity and future persuasiveness suffers.

So I’ve used trust as a key part in assessing my appetite to work with startup founders, and my experience is that it is a hallmark of high-performing startups – employees are more productive, more satisfied with their jobs, put in greater discretionary effort, are less likely to leave, and are healthier than those working in low-trust ventures. Startups that build trust among their customers are rewarded with greater loyalty and higher sales, and negotiators who build trust with each other are more likely to find value-creating deals.

I’ve developed an approach to assess the trustworthiness of founders on five dimensions: competence, motives, means, impact and sincerity. I’ve found that founders who demonstrate these five dimensions can deepen the trust others place in them and foster stronger relationships. Conversely, founders who don’t pay attention to them can easily behave in ways that undermine trust, often without even realising it.

For me, motives and sincerity are the essential qualities I look for, they make up the moral or ethical domain of trust, the areas where I judge founders on the choices they make, whether it’s whose interests they serve (motives), how they go about achieving their goals (means), or whether they own all the effects they have on others (impact).

By understanding the behaviours that underlie trust, startup founders are better able to elevate the level of trust that investors feel toward them, and for me this can be captured into the following three elements:

Positive relationship trust is in part based on the extent to which a founder is able to create a positive relationship with investors. To instil trust a founder must:

  • Be empathetic to the concerns of investors
  • Be open minded and listen to advice
  • Respond to feedback in a constructive way

Good judgement the extent to which a founder is able to show balanced judgement, shrewdness and perceptiveness gives an investor confidence. This means:

  • They show balanced judgement when making decisions
  • Creating conviction when expressing their ideas and opinions
  • Can anticipate and respond quickly to problems, offering solutions

Consistency The final element of trust is the extent to which founders walk their talk and do what they say they will do. Investors rate and respect a startup leader highly if they:

  • Are a role model and set a good example at all times
  • Follow through on their commitments and keep promises.
  • Act in the best interests of everyone, not just themselves

Watching the current political discourse (and deadlock and chaos), I experience a longing for an authentic discussion of the core values that ought to be guiding us as a society. I feel that we are morally adrift, that we do not have a clear sense of how to ground our identities and actions to ultimate values that transcend time and place.

That is not to say that our society is largely immoral. Just amoral, lacking a clear compass or foundational guide at a critical time. Instead of a moral compass, people are constructing their own moral decisions. They don’t seem to know where they belong. They don’t seem to know that they are doing the right things with their lives. They don’t seem to know what the right things are.

And that’s a parallel to startup culture, where founders pursue their own unilateral agenda, failing to ground their perspective in a moral perspective and the legal and ethical commitment they made to angel investors who gave them their first chance. I’m seeing founders following a loose, poorly defined moral individualism that, for many, bleeds into an extreme moral relativism.

The emerging reflections on right and wrong generally reflect weak thinking and provide a fragile basis upon which to build robust businesses. Moreover, founders behaving like this do not rely on any moral traditions or philosophical ethics to make decisions. Instead, the basic position is for each individual to make up their own rules and do what is good for them.

Ultimately, it comes down to personal integrity, the state of being honest, and respecting trust given. The golden rule: don’t do anything that you wouldn’t want someone to do to you. Doesn’t mean it’s wrong or right, that is determined by each person, their experience, their perspective. And of course, we have laws. They pretty much cover it.

I believe that in healthy humans there is an inner compass that guides right from wrong. It may get modified through various lenses of philosophy, religion, and culture, but I think integrity and not causing harm by breaking trust are pretty universal. Unfortunately, it is also possible to get estranged from that compass, the influence of others, circumstances and opportunity may divert us from the path we know to be right.

For founders, it can be hard not to diverge from the path guided and shaped by trustworthiness with their early stage investors if they can see a quick personal gain. However, look in the mirror, and can you reconcile breaking the trust given to you? For certain, it is good to stay in balance and in touch with being a founder your investors trust, as much as you can.

For me, I am never one to patiently pick up broken fragments and glue them together again, and tell myself that the mended whole is as good as new. What is broken is broken, and I’d rather remember it as it was at its best than mend it, and see the broken pieces to remind me that you broke my trust.

Leading a startup in times of political & economic uncertainty

The current global economic indicators make uncomfortable reading, even before the impact of Brexit is factored in. The UK’s Q2 GDP figures recorded the first quarterly fall since 2012, indicating the economy going into reverse. As investment and exports continued to fall, the conclusion is an economy stalling at best.

Consumer spending and government expenditure are currently keeping the economy afloat, a pattern we have seen for a while. Boris Johnson seems intent on easing the public purse strings, announcing a new commitment to spending money every day on health, education, social care and crime. However, this contradicts his tax cutting promises – you simply can’t have a high spend, low tax financial strategy. His numbers don’t add up.

So we are likely to see a growing imbalance in the UK economy, as rising consumer spending and government expenditure offset declines in investment and exports, and the risk of ‘no-deal’ and the uncertainty surrounding Brexit stalls investment. The Bank of England’s low interest rate policy is exacerbating these imbalances too, by supporting borrowing and encouraging savers to look for more risky investments because the returns on bank and building society deposits are so poor.

A Brexit-driven recession in the UK may be avoided, but there is still little clarity on whether the UK will be in or out of the EU come November, making Brexit the big story for the economy with this uncertainty. Johnson has begun to brace us for a no-deal Brexit, ramping up public spending by £2.1bn on preparations including stockpiling of medicines, and a public awareness campaign about potential disruptions.

Businesses remain largely unprepared for a disastrous cliff-edge no-deal and are in sit-and-wait mode, while the CBI continue to speak out against the ongoing economic chaos. At the same time, inflation unexpectedly rose above the Bank of England’s 2% target in July, putting renewed pressure on British households as the cost of living increased.

Also in July, the unemployment rate ticked up to 3.9% while the number of unemployed rose by 37,000. The number of vacancies – which had been on the rise since 2012 – started falling at the start of the year and continues to fall. This suggests that the UK labour market has started to turn down and that weaker economic growth and the rising risk of a no-deal Brexit could be starting to impact the job market, although the jobless rate remains at the lowest level since the mid-1970s.

The average British worker still earns less than they did in 2007. In place of rising wages, consumption is being driven by growing unsecured household debt, which is now the highest we’ve ever seen in the UK. With incomes low, savings drained and debt levels high, a turn in the business cycle will mean financial hardship for families.

Outside of UK specific issues, the global economy is slowing at the end of a ten-year-long weak recovery from the 2008 financial crash. Germany has fallen into negative growth and is heading towards recession. In the US, Trump’s confrontational strategy to a trade war with China is having a negative impact on both countries. Washington and Beijing have ratcheted up the threats of tariffs on each other, dragging down global trade volumes and economic growth.

It all adds up to fearing the worst that the first global recession since the crash of 2008 is just around the corner. Recessions usually happen every ten to fifteen years: business confidence drops, investment declines, employment stalls and demand shrinks. Eleven years on from the crisis of 2008, expectations are that the next recession is unlikely to be a repeat of the last crash, as while there are risks to financial stability, none will impact the economy in the way the collapse of Lehman Brothers did.

So, let’s draw breath on the economic analysis. As a startup entrepreneur looking for meaning in this analysis, the information has contradictions, a mix of emotion, biases and cold-eyed calculation, yet expresses something about both the mood of investors and the temper of the times. Yes a recession is so far a fear, not a reality, but it is evident firms are struggling to get to grips with uncertainty, and anxiety could turn to alarm.

Often danger signals are ignored until too late. America’s decade-long expansion is the oldest on record so whatever economists say, a downturn feels overdue. For me, the portents are evident, confidence is being eroded and the storm clouds are gathering. My fear is that we’ll have a torpid economy at best, that is prone to curtailing innovation, entrepreneurship and startup investment.

There’s just no way to completely prepare for future uncertainty facing your business, simply understand that circumstances change and unforeseeable events occur, and you can make smart choices to prepare well. Not only will this provide you some peace of mind that you’re as ready as you can be, but you’re more likely to respond quickly and more effectively when trouble strikes, so here are some practical tips designed to help your startup prepare for the unknowns.

1. Stay in the now It’s easy to get caught up in your own startup bubble, but that’s a trap to avoid. One of the best ways to combat uncertainty is to stay abreast of economic indicators, as highlighted above. By being aware of the general state of the economy, and how economic forecasts might affect your business, you can put yourself a step ahead of others.

A forward-thinking entrepreneur understands the value of analysis, and not just ‘gut instinct’ intuition. Are you consistently reviewing your business strategy assumptions, value proposition and pricing to ensure they remain valid?

2. Prepare for multiple outcomes It’s wise to stop assuming a single outcome will turn up as the conclusion of a situation. You should prepare for multiple outcomes regardless of what you expect. Foresight enables you to respond effectively. The best way to prepare is to include your team in the planning process, you’ll get fresh, unique perspectives that are more likely to result in critical and innovative thinking.

There isn’t a crystal ball to help you predict the future, and there are many factors completely out of your control. Instead of trying to guess what’s going to happen next, place as many small bets as you can on multiple outcomes that are within your control. For example, focus on product improvements, customer communications, experiment with pricing and new marketing strategies.

3. Build relationships to create opportunities to grow In times of uncertainty, is a spreadsheet going to help you regain solid footing? It’s possible, but unlikely. The best investment you can make for future stability is relationship building to help weather the rough patches.

What are the signals telling you it’s time to be different and bold? Signals to watch for regarding customers are: Are your regular customers asking you for new things? How are new product/new customer sales against forecasts? When your regulars ask for new offerings they’ve shown you the direction where you’re likely to succeed.

4. Know your numbers When you’re dealing with uncertainty, it’s essential that you have a firm grasp of key financial numbers, cashflow and KPIs so you can make the appropriate changes quickly. Also, sit down with your sales team daily. This will help you pinpoint the messages to be taken between ‘lead’ and ‘lag’ indicators.

5. Regain control of your time Evaluating how you and your team spend your time helps you stay focused on the tasks that grow your business. For example, spending time writing content means you must understand what the timing and targets are for following up leads.

What’s more, tracking your time keeps you in control. It’s like weeding your garden; if you don’t stay on top of the weeds, they’ll eventually consume your entire garden. Also you should automate and delegate as much as possible so you can focus on those aspects of the business where you can personally make a difference.

6. Ensure that your passion adds up Passionate entrepreneurs can have rose-coloured spectacles, over-estimating sales and underestimating costs, being positive on the upsides and conveniently ignoring the downsides. In times of uncertainty, to convert your passion into tangible business, emphasise a strategy that makes financial sense based on how the elements of your business will come together. It’s all about the clarity of your thinking and your assumptions. The numbers fall out from this.

7. Attach to the market, not your idea Passion is an essential ingredient, but a successful start-up is rooted outside the founder, in the market with customers. To turn your passion into revenue, always think about your business from the customer’s perspective. Why would they buy from you? What problem are you solving? What is compelling about your value proposition?

8. Develop a sense of timing Waiting for the right moment to take a decision often makes the difference between success and failure. Adopt a ‘So What?’ and ‘What if?’ mind-set, and map out alternative options. It’s a marathon not a sprint, reflection and consistency are as important as innovation in resetting a ‘business as usual’ model in turbulent times. Be alert, timing is everything. You need to say ‘no’ sometimes, and make some bets.

9. Don’t micromanage Getting deep in the weeds gives you little time to get that 10,000ft perspective, you should work ‘on’ the business not ‘in’ the business, you’ll find your greatest contributions come when you pull yourself back. Focus on your vision and North Star – each week ask yourself What have I done to move the business forward?

10. Don’t be too opportunistic, don’t be too defensive Strike a balance. Adopting a pragmatic, balanced approach is likely to maximise the chances of you surviving a period of uncertainty. Recognising that cost-cutting is necessary to survival while also understanding the role investment and innovation plays in long-term growth, is key to steering your business through choppy waters.

A balanced strategy accepts the reality of the present and reacts accordingly, while also preparing for the future. You can not only survive uncertain times, but also learn valuable lessons that will stand you in good stead for longer term success. Judicious investment, proactive innovation, increased operational efficiency, refocused propositions, honed processes and competitive advancement are all possible when it’s tough going, there are silver linings.

So, are you preparing for the potential recession into which your startup maybe heading in the next six months? Don’t ignore how much is beyond your control nor take your focus off of what is within your control. Develop the resilience, flexibility and competitive edge to ride through the rough waters and come out in good-nick, ready and aligned for when sailing becomes smooth.

Strategic readiness comes through a combination of awareness, flexibility, strong navigational leadership, resilience, collaborative working, considered learning, ongoing innovation and agility. Now is the time to act. Make the necessary adjustments to your business now to help prevent it becoming another statistic of an uncertain environment.

Taking risks is what a startup is all about, but you can research and keep your ear to the ground too – the process of planning is important – but in the end you have to work from your instinct and be fearless. When you’re feeling the apprehension about the horizon, that will help you manage the ambiguity of an unknown future and forge ahead in confidence.

For entrepreneurs, the dream of a future lies in the present moment. Great innovation comes from asking what could be. Don’t be afraid to take a risk to see your dream into reality, even if the waters are choppy. Security is mostly superstition. Avoiding danger is no safer in the long run than outright exposure. Life is either a daring adventure or nothing.

Take a giant leap for your startup

On July 20, 1969, the world slowed down to watch a key moment in human history. Dinners went cold, families stayed up late, staring at their television sets. After a journey of eight days, three hours, eighteen minutes, thirty-five seconds Neil Armstrong walked a few steps down a ladder and placed his boot in the fine light-gray moon dust, followed by Buzz Aldrin. We were all standing there with them.

President Kennedy’s vision for putting a man on the moon stretched the best minds in aerospace to their limits and necessitating new ways of thinking and working – everything a startup needs to do.

It was incredible innovation, but it was also intimate. The Lunar Module was small – the two astronauts had 4.7m3 of pressurised volume between them, roughly twice the volume of a red telephone box. A tiny world, but a fully functioning spacecraft like none before it. Everything else on Apollo had been tried out at a smaller scale, but there had never been anything like the Lunar Module, designed to come down to land by its commander’s hand and eye in a place where nothing had landed before.

Humans going into space, the prospect of an unprecedented experience. Their hearts are beating fast. They see the moon surface in contours, pocked surface, hard-to-judge distances and near horizons, which gives them the ‘Earthrise’ view of Earth.

At the critical moment, Aldrin got a klaxon ringing in his earpiece. The console responded with error code 1202. Despite months of simulations, Aldrin didn’t know what this one meant; Armstrong, equally baffled, radioed Mission Control for clarification. The stress in his voice was audible. In that critical moment, hurtling like a paper plane toward the surface of the moon, the guidance computer had crashed.

The two men had trained for a computer error scenario, but it was up to Houston to make the call. When Mission Control heard Armstrong’s tense request for information, a well-rehearsed sequence of events played out. The scenario was a go – because below a 100 feet altitude an abort was no longer possible. Armstrong would be forced to attempt a landing even if his computer was malfunctioning.

He had little margin for error. On a hard crash landing, the astronauts might be killed; on a not-so-hard crash landing, the astronauts might survive, only to be stranded on the moon. In this nightmare scenario, Mission Control would bid Armstrong and Aldrin farewell, then cut communication as the two prepared to asphyxiate. Michael Collins, in the command module, would make the long journey back to Earth alone.

Imagine pulling the plug on the moon landing. Imagine not pulling the plug, then explaining to a nation and their families why two astronauts had been killed. By the time Houston relayed the message to Armstrong, almost 30 seconds had passed.

Armstrong resumed assessing the course to the landing area, from spending hours studying surface photographs, committing landmarks to memory. He’d noticed earlier that his trajectory was a little long, but before he could fully react, Aldrin queried the computer for altitude data. As before, he was answered by an alarm. The computer crashed again.

Back at Mission Control, was Don Eyles, 26 years old, who had programmed the software for the final descent. The first restart had alarmed Eyles. The second terrified him. This was not just a glitch but a crash. Eyles was out of the command loop, but he knew how the computer worked better than anyone. What Eyles deduced in that terrifying moment he would not reveal publicly for years to come: this scenario was not a go. It was an abort.

The console displayed nothing, just blank. Armstrong’s heart began to race, rising to 150 bpm, the same as a man at the end of a 100m sprint. With the moonscape zipping by outside his window, he was the closest any human had ever been to another world.

There were five computer crashes in four minutes. Mission Control went quiet, there was nothing useful left for them to say. Armstrong, following protocol, assumed manual control. He was going to have to eyeball it, piloting a malfunctioning spacecraft on an alien world.

He slowed the forward momentum, then rotated the legs toward the surface. Aldrin read aloud a steady stream of figures. With almost no fuel to spare, the Lunar Module dropped in slow motion to kiss the surface upright, and the particles of moondust hung suspended in the sunlight until the gentle lunar gravity pulled them back to rest.

Shortly afterwards, Armstrong planted the first human foot on another world. With more than half a billion people watching on television, he climbed down the ladder and proclaimed That’s one small step for a man, one giant leap for mankind. Only a few have shared this vantage point.

Armstrong and Aldrin spent 21 hours, 36 minutes on the moon’s surface, including a rest period of seven hours sleep. They blasted off back home, knocking over the American flag they had planted. They reunited with Collins, then three days later, splashed down in the Pacific.

Now, half a century after Armstrong planted his foot on the surface of the Moon, a new era of space exploration is beginning. Falling costs, new technologies, Chinese and Indian ambitions and a new generation of entrepreneurs promise a bold era of space development. It will range from the big business of launching and maintaining swarms of communication satellites in low orbit to the niche one of tourism for the wealthy.

Back in 1969, I was there. I saw Armstrong take his giant leap for mankind in grainy black and white images on the television screen. I’ve always had a keen interest in space adventure. At university, when looking through the Careers Guide for Graduates 1984 I stopped at the letter ‘A’ and send off applications for ‘Accountancy’ roles. I never got to ‘Astronaut’. Anyway, there probably wouldn’t have been the legroom in my allocated Apollo seat.

Landing on the Moon is, for me, mankind’s greatest entrepreneurial act. Think about it. Go outside tonight and look up. Imagine yourself up there, looking down. Imagine! How would you feel, blasting out of the atmosphere, orbiting the Earth, and standing on the moon! WOW.

Courage, ingenuity and one heck of a big adventure, leaping off into the unknown, driven by your vision, just like launching your own startup business. So what lessons can we take from the anniversary of this extraordinary achievement for startup entrepreneurs?

1. It starts with a vision

President John Kennedy went before Congress on May 25, 1961 and said we were going to the Moon. To say Kennedy’s vision was bold and set an ambitious timeline is an understatement. As a startup founder, he set down the purpose and the vision, expectations that you don’t think are realistic.

2. Have a sense of purpose

We knew what had to be done. How to do it in 10 years was never addressed before the announcement was made. But quite simply, we considered the program a number of phases – Dr. Maxime Faget, Chief Engineer & Designer of the Apollo command and lunar modules

When launching your startup, it’s a case of not knowing the unknowns, so don’t bother in trying to craft a detailed plan based on guesses, instead, break it down from the big vision into small steps and focus on attaining each one, one at a time.

3. Iterate – and don’t be afraid to modify the plan

On descent to the moon, the Lunar Module’s computer died, threatening the landing sequence. Likely crash at an alarming velocity, Armstrong took manual control, while Aldrin fed him altitude and velocity data. They successfully landed on the moon’s surface with just seconds of fuel left. If they hadn’t acted, Armstrong’s iconic moonwalk would never have happened.

No business plan survives the first contact with a customer, so remember that even the most well thought out startup plans may need to be altered if circumstances change or a new opportunity arises.

4. A startup is an experiment

We said to ourselves that we have now done everything we know how to do. We don’t know what else to do to make this thing risk-free, so it’s time to go – Dr. Christopher Kraft, Director of Flight Operations

Without taking that risk, the achievement would never have been made. NASA handled risk by actively looking for it and constantly asking themselves, ‘What if?’ It’s about calculated risk, don’t let an acceptable amount of risk keep you from pushing ahead.

5. It’s all about the team & communication

The Apollo team scaled rapidly, from a small founding team to thousands of people. Coordinating such an effort required aligning the entire team with set priorities. At no point was any team in the dark about what another group was doing, or what support needed.

As your startup team grows, don’t just trust communication will fall into place on its own, or that everyone assumes the same priorities. Create a communications plan, and check in frequently to ensure processes are running smoothly.

6. Recruit for attitude and fill your skills gaps

Responsibilities were delegated to people who didn’t know how to do things, and were expected to go find out how to do it – Howard Tindall, Mission Technique Coordinator

Delegating to people who don’t have experience may seem counterintuitive, but NASA actively encouraged this – the average age of the Operations team was 26, most fresh out of college. NASA gave someone a problem and the freedom to run with it, and the results speak for themselves. Do the same in your startup, give people the opportunity to grow.

7. Keep asking questions

The Apollo program was home to some of the most brilliant minds, and yet no one was shy about their mistakes. They made learning from their errors a central part of their process. Failure was simply an opportunity to learn and improve.

For a startup, get out of the building, talk to prospective customers and fail fast – validated learning and making retrospectives an ongoing part of your model, not one-time events, it is crucial to startup success.

8. Celebrate success as a team

We would like to give special thanks to all those Americans who built the spacecraft – the construction, design, the tests, and put their hearts and all their abilities into this. To those people tonight, we give a special thank you – Neil Armstrong, July 26 television broadcast from orbit.

At every opportunity the astronauts called the world’s attention to the efforts of their teammates back on the ground. So when you win that first customer as a startup, share that applause with the team.

Armstrong dared to dream. Life has its its twists and turns – he was nearly killed twice in his NASA training, but he never quit. Success is failure turned inside out, and you never can tell how close you are. He lived his life for a decade dedicated to training and preparation, absorbing the set backs as well as keeping his dream alive. Now whether you’ve launched a brick-and-mortar startup or mobile app, taking an idea into a product is a miraculous one. Fifty years on we’re reminded of the legacy left behind.

Armstrong had the true spirit of a pioneering entrepreneur, and Steve Blank has rewritten Kennedy’s Apollo vision, capturing Armstrong’s spirit: We choose to invest in ideas, not because they are easy, but because they are hard, because that goal will serve to organise and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one which we intend to win.

Only those who will risk going too far can possibly find out how far one can go, said poet T.S. Eliot, capturing everything about Armstrong, Aldrin and Collins that makes them true entrepreneurs. What a giant leap for mankind they made. Now go and make a giant leap for your startup.

True grit: the dna of northern startups

Manchester was, and continues to be, the home of great free-traders and free-thinkers. It has a stunning C19th architectural heritage but today is a proud C21st European city of technology, science and education, with a clubbing scene second to none – or the Hallé Orchestra, if that gets your toes tapping more.

Manchester was the site of the world’s first railway station, the place where scientists first split the atom, and the home of the first stored-programme computer. Today, tech start-ups abound, there is enough shared workspace options for every woman and her dog, and internship students and apprentices with high ambitions for themselves have great opportunities.

The elements of Manchester’s well-being are based on long‑term deep-rooted social cohesion, personal resilience and sheer graft. Compare this to the imbalance with the south-east economy, with its reliance on foreign funds and an over-sized financial services sector.

So what is it about the north that has seen people pull themselves up by their bootstraps, and grab opportunity by the scruff of the neck to set up their own businesses? It certainly isn’t anything to do with government.

The Power Up the North campaign was launched in June in a co-ordinated effort from thirty northern regional newspapers, a demonstration of regional solidarity on an unprecedented scale. The united call was for the devolution of investment, powers to self-govern and for the north to make its own future. The campaign, led by The Manchester Evening News, The Yorkshire Post, The Liverpool Echo and The Northern Echo, called for the government to launch a revolution in how the North is viewed and treated by government.

In 1962, Harold Macmillan’s home secretary Henry Brooke warned that if the Government did not prevent two nations developing geographically – a poor north and a rich south – our successors will reproach us as we reproach the Victorians for complacency about slums and ugliness. On multiple metrics, the north fares worse than the south, a yawning imbalance on income, life expectancy, and spending on everything from culture to business.

Policy orthodoxy has assumed that investment in London would create a trickle-down effect, but in practice this has never happened, and the north-south divide in England remains Europe’s most regionally imbalanced country. Since austerity began, public spending in the North has fallen by £6.3bn, while spending in the South has risen by £3.2bn. A time-warp persists. It shouldn’t be cheaper and quicker to get from London to Paris than from London to Newcastle.

Faced with such stark disparities, Power Up The North calls for new economic, social and industrial strategies that are informed by an awareness of the challenges and opportunities facing the region – an independent north would be the ninth-largest economy in Europe. Both Scotland and Wales have smaller economies but enjoy far greater devolved powers.

Through its promotion of the Northern Powerhouse, David Cameron’s Government paid rhetorical tribute to the north of England. Yet the reality remains that the original vision for the Powerhouse of a joined-up market and labour force enabled by connectivity could not be further from the reality.

Cameron’s Northern Powerhouse legacy produced little more than a succession of bland ministers who knew little about the north, and cared even less. Today, the Northern Powerhouse minister does not have a budget, or a cabinet seat. How is the voice of the north to be heard at the top table? But this is not a sob story. Power Up The North offers a timely reminder that the future of our country does not begin and end at the M25.

I’m glad I am northern. I grew up with a coal bunker outside of the house and teenage years in pubs with chunky beer glasses with a handle. I miss that – the beer glasses with handles, not the coal-bunker. I was 17 before I caught sight of Euston Station. I had no need of London then and I guess it had no need of me. However, I do believe there is such a thing as a northern sensibility and it’s nothing to do with chips & gravy. It’s a grittiness that I think is behind the sheer determination of our startup communities.

The north has a dictionary and thesaurus of its own and its words are for everyone. As Paul Morley describes the north: warmth, decency, truth and proper beer, with a side order of menace, whilst T S Eliot noted Lancashire wit is mordant, ferocious, and personal.

When you’re northern, you’re northern forever, and you’re instilled with a certain feel for life that you can’t get rid of. Let me not become too misty-eyed, but there are places in which brass bands and allotments still thrive. There is still much about northern life that would make Orwell puff on his pipe and smile.

Of course, there are also town centres that have become desolate denizens of payday lenders, discount stores and kebab shops, and employment opportunities are desperate for many despite what The Bullingdon Boys would have you believe. However, the north scores highly for self-employment hot spots, an indication that people are willing to strive for prosperity under their own efforts, even if that’s a matter of necessity after paid employment has been lost.

With jubilant jeers from the Government benches and bold growth forecasts, the innate fire-in-the-belly entrepreneurial spirit that made northern cities great from the Victorian Era onwards is present today with renewed vigour and confidence. In the lexicon of media clichés, the north is always grim, but let’s accept that there is and will always be a North-South divide because the leverage of wealth towards the global-status of London is an irresistible force, but the northern enterprise culture never died, it just went into hibernation.

But what is missing is a recognition of the innate entrepreneurial and mercantile spirit that made the great northern cities in the first place, and that from my perspective living on the edge of the Pennines, quality of life and purpose derives from people, landscape and culture, rather than weight of money.

I’m fed up of working with some great entrepreneurs and founders based in the north who can’t raise funding for some amazing innovations, backed by talented teams, yet there are five new online food delivery startups raising £2m a week in London. Or so it seems. So stuff them I say. Let’s get some of the Wilson-Gretton-Hannett-Erasmus- Saville spirit from Factory Records and let’s crack on with the unknown pleasures of our own efforts.

Can you overcome setbacks, or do you get easily discouraged? Are you confident, or do you smell of insecurity? You can’t be thin skinned or faint hearted when you run your own show. You’ve got to have vision, stamina, creative thinking and, most of all, grit and resilience. Even when your friends and family think you’re nuts, there are fundamentals of being a self-starter to push yourself outside your comfort zone. Easier said than done.

I get to work with many incredibly gifted entrepreneurs, and I’ve noticed a common thread that connects them: grit and resilience. They’re all bravely owning who they are to push their business forward. They put in the hard yards to get there. It’s all too easy to let doubt fill your hearts and minds and create self-doubt that our dreams are too far-fetched or if we’re good enough, but grit and resilience – not other people’s money – gets them through.

Sometimes you have to give yourself a good pep talk: note to self. Remember how far you’ve come, not just how far you have to go. You are not where you want to be, but neither are you where you used to be; Spectacular achievement is always preceded by unspectacular preparation. Never hope for it more than you work for it.

Grit trumps everything else. And it’s not just a north of England thing, research shows that it is one of the defining characteristics of successful start-up entrepreneurs. Psychologist Angela Duckworth’s research at Penn State University defines psychological grit as perseverance and passion for long-term goals. Check out her TED talk here:

http://www.ted.com/talks/angela_lee_duckworth_the_key_to_success_grit.html

Duckworth’s research focuses on two traits that predict success in life: grit and self-control. Grit is the tendency to sustain effort towards goals. On average, individuals who are gritty are more self-controlled, stay with their focus, and succeed.   She’s formulated a survey to determine your level of grittiness, see how you score: https://sasupenn.qualtrics.com/SE/?SID=SV_06f6QSOS2pZW9qR My ranking was 4.25, 85% on the True Grit dashboard. Not bad!

Grit has emerged as a significant indicator for success – even more than IQ, talent, and social intelligence. It’s the part of you that simply will not give up on your ideal future and works to figure out a path to get there. Many people lack this grit because they see life as a series of circumstances that happen to them rather than an ideal future that they can create.

Actor Will Smith talks a little differently about grit: The only thing that I see that is distinctly different about me is I’m not afraid to die on a treadmill. I will not be outworked, period. You might have more talent than me, you might be smarter than me, you might be sexier than me, you might be all of those things – you got it on me in nine categories. But if we get on the treadmill together, there are two things: You’re getting off first, or I’m going to die. It’s really that simple.

Launching your own startup is like jumping off the cliff with no parachute, with no promise of a parachute. You need grit and mental toughness to manage your mind-set and emotions whilst you aim for that landing spot for your business.

Grit gives you the sheer will power and determination to keep going day after day, when the going gets tough. Sometimes it’s difficult to see progress, how can you keep your eyes on the prize and yet your head down during the inevitable slog period of anything worthwhile? You fall down seven times, but have to get up eight.

Grit, courage and the human spirit are at the heart of everything I believe in, and I see that in the northern entrepreneurial vibrancy. Perseverance is the hard work you do after you get tired of doing the hard work you already did. Over time, grit is what separates fruitful lives from aimlessness, and imagine this: the north fully restored from its own efforts. That’s True Grit.

Jony Ive: how to respond when a rockstar exits your business

Jony Ive, the chief architect of ground-breaking and distinctive designs from the iMac to the iPhone, announced on Thursday that he is leaving Apple. Ive’s work seeded a tech revolution that has changed our lives. He was the key influencer on the simplistic designs of the most sought-after gadgets on the planet, curator and custodian of the Apple aesthetic. That aesthetic impulse dovetailed nicely with a business model based on frequent upgrades.

Ive’s mark is on everything Apple builds, from the airy, minimalist chic of its retail stores to seminal devices like the iPhone and iPad, newer pieces like the Apple Watch and the HomePod speaker – while Airpods look set to become another classic.

But Ive’s influence extended beyond hardware design. In 2012, he took over design of Apple’s software, which resulted in an overhaul of the iPhone’s operating system, iOS. Ive jettisoned the cutesy faux leather and paper icons and pseudo-3D textures, opting for flat and abstract iconography.

He has always sought to make things that aren’t just beautiful but are extremely functional too. He sees design about self-expression: the spark of a dialogue between inspiration and possibility; the idea sort of bashes backward and forward between a thought, a conversation, another drawing; it remains very fluid for quite a while.

Of the handful of companies that have defined C21st tech, only Apple sells its own hardware. It’s difficult to determine how much Ive’s physical designs contributed to Apple’s twenty-year growth, versus their software or marketing, but the look of the products is a big part of Apple’s brand. Ive was obsessed with the idea that the look and feel of a product was as important as the technology inside.

He gave Apple desirability. He stripped away layers of clunky technological design and created these incredible smooth shiny objects with rounded edges and fewer buttons. He applied the tradition of German modernism, which upheld the philosophy that less design was better, and simplicity was a desirable product attribute: the more you can reduce something, the more beautiful and functional it is. He created the ideal of a tech product, which was easy to use, beautiful and uncluttered.

Ive’s departure comes at a tricky moment for Apple, which became the world’s first trillion dollar company in 2018, but has faltered amid increased competition, slowing demand for smartphones, and the escalating trade war between the US and China. The company shocked investors in January when it downgrades sales forecasts.

The departure of Ive is the latest sign of major shifts in Apple’s strategy. Apple became one of the world’s most highly valued companies on the back of the iPhone, but sales of the device have begun to decline and it appears the age when hardware ruled everything has passed. Apple has begun openly discussing what’s next.

The most important thing is Apple’s culture of innovation. They are unbelievable in creating hardware, software and services, and getting them to work together. Increasingly, unifying the whole Apple experience over the individual product is showing up in their strategy. The biggest sign of change came in March when CEO Tim Cook discussed how the company was planning to launch a series of subscription services – Apple News Plus, Apple TV Plus, and Apple Arcade, a gaming service. There were no new hardware announcements.

Apple said that Ive’s role would be split, with Evans Hankey taking over industrial design and Alan Dye human interface design, reporting to COO Jeff Williams, an executive known for his operational skills, not his vision for product and design. The subtle demotion of the design group shows that Apple is emphasising its online services, the power of its components and how its products seamlessly work together, as opposed to their design. The design goal now is driving focus to the screen. A more distributed design decision-making process might be good for Apple.

Ive’s departure will not immediately impact. Apple still has talented designers, and the product planning process takes about three years, so it’ll be a while before we see the first products without Ive’s fingerprints on them.  Equally Ive’s departure may not hurt too much because of their new focus on streaming services. It’s not as if the iPhone and iPad, are going to see radical innovation anyhow, and these markets won’t see the sort of explosive growth of the past, thus there’s less need for a superstar hardware designer hanging around.

Although he’ll continue to work with Apple via his new design firm, where this leaves Apple and Ive with his new one-foot-in-one-foot-out job is unclear. Notwithstanding this, Ive leaves a yawning gap and is clearly irreplaceable as he has been one of the most important figures throughout the past few decades, his fingerprints are deeply woven within Apple’s core DNA. After the death of Job in 2011, it’s the most significant departure of somebody who was a core part of the growth story. Ive was Job’s co-founder of the second incarnation of Apple.

So how does Apple, or a startup, come to terms with the exit of a rockstar employee, or co-founder? The immediate concern is the impact on culture and loss of knowledge. Will this immediately have a downward spiral impact on the dynamics and confidence of the team, and their productivity? Here are some key steps to consider to address the issue.

Wish the former team member well privately and in public It’s not productive to be hurt or offended when someone leaves, on the other hand, you have everything to gain by parting on good terms. When a key team member leaves, understand and support the decision that’s right for him or her, thank them for their contribution, and wish them well. Do this privately and publically.

Maintain respect for the individual As a result of this approach, some of my best colleagues have returned to work with me, whilst others have become advocates. People leave for all sorts of reasons, many, if not most, of which will have nothing to do with you or your company, and everything to do with the life circumstances of the team member.

Be open and honest with your people The business need the straight story, authenticity in the face of what on the face of it is ‘bad news’, is what builds trust. It’s also important to be candid with your employees. Be clear that the departure is unwanted, change is unavoidable, but we have a solution to make it through the turbulence.

Move quickly to stop any false rumours, but don’t be afraid to show your vulnerability. If losing this team member is a big blow for you, tell them. Move on from the negative emotion of the moment by sharing your feelings, and see the challenge as an opportunity as a result.

Think it through, but do it quickly Every action has an equal and opposite reaction. When you get big news, you have to make big plans, and fast. Don’t get bogged down by emotion and stall from thinking about the next steps. Folk in the business don’t immediately need to see a plan, but they do need to know there will be a plan, and quick.

Ask your inner team for help Your team wants to help, they want to come together to overcome this challenge. You don’t have to take this on by yourself. It’s OK to say I’m really sad to be losing Jo, and it’s going to be tough to get through the next few months without her. I’ll need your help to explore all the options and come up with a plan by the end of the week. Show that you’re open to input for your proposed plan.

Build consensus around a plan, and implement it Many startup leaders fall into the trap of thinking they need to express boundless enthusiasm and confidence at all times, and always have a plan. If you come up with a plan by yourself and simply tell everyone else what it is, you’ll have less committed buy in.

Gather ideas from your team and let them create the plan with you. Focus on turning a negative into a positive. Ask for their input on how this situation provides an opportunity to do things better. As your team feels ownership, they’ll be more involved in overcoming the challenges posed by the loss of the team member.

Don’t assume you must instantly replace My preference is always to promote from within if possible, but now is the time to stay calm and think, not leap into a quick, knee jerk reaction. As the enterprise evolves, it’s imperative that you take time to evaluate the future options now available on role, skills and structure – a potential new hire could help the company with their new skills or fresh perspective – and only then determine how the role should be defined, who should fill it, and when. It’s better to make the right decision than a fast decision.

Discover your team’s hidden strengths A team may already have the resources it needs to still be successful, it may simply require some creativity and a return to basics. What talents have been hidden or lying dormant? What skills have never been shared or developed? Losing a star performer may provide a way to better engage and retain others.

See this as an opportunity for skills development and growth Every person has an inner drive to grow and develop, instead of viewing the loss as a vacuum in the business, reframe the situation as an opportunity to upskill the current team to a new level.

Steve Jobs and Jony Ive, the Jagger and Richards of Apple. Despite my thoughts on how to respond above, it’s impossible to see the company not stumbling now it’s without the most creative partnership in recent business history.

Both looked to the horizon beyond the day-to day, wanting to wrestle with the big things that made a difference. Both were relentlessly curious, fixated on following through until satisfied with the outcome, restless to a point of perfection.

With hardware getting harder, the focus of technological innovation has shifted to machine learning-based software running on cloud based servers, rather than individual devices. In smart homes, cars and wearable devices, increasingly the battlefield for tech giants like Apple, Google and Amazon, voice interfaces are more central than the tactile-visual interfaces Ive excelled in.

No wonder, then, Ive picked this moment to step away. His new firm, LoveFrom, will have Apple as a client, but Apple no longer needs him like it did. Once Ive stopped being essential, per his own paramount rule, it was time for him to disappear.

But the man who started his career by designing toilets and toothbrushes and ended up giving us the most profitable product in history is assured of his legacy. How Apple move forward with their strategy without his influence is a challenge many organisations face when they lose their own rockstar. It will be interesting to see how they respond.

Be remarkable. Be a Purple Cow.

Last week Radiohead issued a vast collection (1.8 gigabytes) of unreleased tracks from the sessions for their 1997 album OK Computer, after a MiniDisc archive owned by frontman Thom Yorke was hacked, and were reportedly asked for a $150,000 ransom to return the recordings.

Instead of paying the ransom, the band made eighteen MiniDisc recordings, most of them around an hour in length, available on Bandcamp for £18. All proceeds will go to climate activists Extinction Rebellion.

Frontman Thom Yorke described the hours of recordings as not very interesting, and guitarist Jonny Greenwood – who confirmed the hack via Twitter – said: Never intended for public consumption it’s only tangentially interesting, and very, very long. Not a phone download. Rainy out, isn’t it, though?

Yorke and Greenwood are absolutely wrong: the files are a treasure trove. Frankly, a look behind the curtain of one of the most innovative albums of a generation is priceless.  This hoard of private material is an illuminating chronicle of a band reinventing the mainstream. The eighteen tracks have been documented in a Google Doc by fans. If anyone understands the dynamics of content, innovation and the internet, it’s Radiohead.

Radiohead is an English band formed in Oxford in 1985 by five school friends. Initially the band were called On a Friday, the name referring to the band’s usual rehearsal day in the school’s music room. In late 1991, after a chance meeting between band member Colin Greenwood and EMI’s A&R representative at Our Price, the record shop where Greenwood worked, they signed a six-album recording contract with EMI. At the request of EMI, the band changed their name – Radiohead was taken from the song Radio Head on the Talking Heads album, True Stories.

Since their formation, Radiohead have been lyrically and musically spearheaded by Thom Yorke, the essential spark of innovation in the band. Yorke’s somnambulant ramblings and markedly individualistic performances cutting a strangely solitary figure, making him look like a man in the throes of a tortuous titanic confidence crisis. It’s all there in the songs, spooked, soul-baring millennial masterpieces. Yorke’s vocals trail through atmospherics with angst and despair of a tortured performer.

Radiohead are in many ways the Rolling Stones of Gen Y but without the ostentatious commerciality driven by a marketing machine. They are a serious band that make serious music, a touchstone for adventurous music, yet you have to actively listen to the music and the lyrics, they have meaning.

Just like Joy Division, they are seen by many as morose, gloomy harbingers of doom and introspective sensibilities, purporting monochrome view of the world. Not everyone’s cup of tea but for me there are toe tapping and sing-a-long moments a plenty. Something about Radiohead inspires a disorienting kind of hope.

What Radiohead did to counter the hack was remarkable. It reminded me of Seth Godin’s Purple Cow, the concept that you’re either remarkable or invisible. In a world that grows noisier by the day, Godin’s challenge has never been more relevant.

Godin evolves the traditional ‘4Ps’ marketing thinking with a new P – the Purple Cow. He identified this when he was with his family driving through France and were enchanted by the hundreds of cows grazing on picturesque pastures. For dozens of kilometres, we gazed out the window, marvelling about how beautiful everything was. Then, within twenty minutes, we started ignoring the cows. The new cows were just like the old cows, and what once was amazing was now common.

Worse than common. It was boring. Cows, after you’ve seen them for a while, are boring. They may be perfect cows, brown or black cows, attractive cows, cows with great personalities, cows lit by beautiful light, but they’re still boring. A Purple Cow, though. Now that would be interesting.

On a long car drive you may see some cows on a hill, and see many more as the hours pass. Brown cow. Brown cow. Black Cow. Black Cow. There’s nothing remarkable about them, they pretty much look the same. But if you spotted a purple cow, then wow, that would be remarkable. You’d sit up in your seat and take notice; you might even pull the car over, let the kids out, take some pictures and share them with friends on Social Media.

Godin’s book came out in 2003, before the first iPhone, however, it is almost like Steve Jobs took everything Godin mentions in his book and put it into creating the iPhone. The iPhone succeeded wildly as a product everyone wants, and it stood out like a Purple Cow in the field of normal phones.

Tesla, Uber, Airbnb are all Purple Cows. As is Paypal. Banking is probably one of the hardest industry of all to try to disrupt, because the barriers to entry are huge – you need mountains of capital, regulatory approval, and years of building trust with your customers.

Banks’ business models are largely unchanged in hundreds of years, and they’re insanely powerful and almost impossible to displace – as we’re seeing with the Challenger Banks and Open Banking initiatives still to truly disrupt their business model – but for some crazy reason PayPal didn’t seem to care, and became remarkable.

Look at their Purple Cow attributes:

  • PayPal spends less money on technology than even a medium sized bank does. Yet its technology platform is far superior.
  • Consumers trust PayPal as much if not more than they trust their bank. Even though PayPal has been around for a fraction of the time.
  • When a customer buys with their PayPal account, the bank has no clue what the customer actually bought. The transaction appears on the bank statement as ‘PayPal’. That gives PayPal all the power when it comes to data mining.
  • PayPal is quicker to market with just about any kind of payment innovation going.
  • PayPal refuses to partner directly with banks – instead opting to partner with retailers directly.

In a small period of time, PayPal inserted itself as a whole new method of payment to become a real alternative to debit or credit cards. But how did it manage to do it? There are two huge pillars of success to PayPal’s story.

They seized the moment. They got a lucky break when they ‘accidentally’ became the favoured payment provider for eBay transactions. This was followed a few years later by their $1.5bn acquisition by eBay themselves. eBay were smart enough to leave them alone, and their newfound sense of boldness saw them strike a series of deals with other online retailers to try and replicate the success they’d had with eBay.

The second pillar of their success was Partnerships. Banks had always been wary about forming partnerships directly with retailers, instead they relied on their scheme partners Visa/MasterCard to do that for them. They didn’t want the hassle of managing so many different relationships, and were extremely confident about the fact that credit and debit cards would always be at the heart of the financial payment system.

But the problem was that MasterCard themselves were already working on a partnership with PayPal, leaving the banks out in the cold. Today, PayPal has 20% market share of online payments in the US, and 63% of the eWallet space. Almost all of that growth has come from their direct relationships with merchants large and small.

Paypal is a Purple Cow. Making something remarkable means asking new questions and trying new practices, doing the unexpected and creating an offering that is genuinely innovative. Godin identifies some key traits of Purple Cows, for example:

Get into the habit of doing the unsafe thing. Remarkable isn’t always about changing the biggest machine in your factory, it’s about being bold and every time you have the opportunity to see what’s working and what’s not. It’s safer to be risky. Use this mindset to go for the truly amazing moon-shot things.

Explore the limits with early adopters. What if you’re the cheapest, the fastest, the slowest, the hottest, the coldest, the easiest, the most efficient, the loudest, the most hated, the copycat, the outsider, the hardest, the oldest, the newest, or just the most? If there’s a limit, you must test it. The early adopters heavily influence the rest of the curve, so persuading them is worth far more than wasting time and effort trying to persuade anyone else.

Target a niche. The way you break through to the mainstream is to target a niche instead of a huge market. With a niche, you can segment off a chunk of the mainstream, and create an ideavirus so focused that it overwhelms that small slice of the market that really and truly will respond to what you offer. The market is small enough that a few wins can get you to the critical mass you need to create an ideavirus.

Think small. One vestige of the social media explosion is a need to think mass. If it doesn’t appeal to everyone, the thinking goes, it’s not worth it. No longer. Think of the smallest conceivable market and describe a product that overwhelms it with its remarkability. Be remarkable by being curated.

Differentiate your customers. From the above two points, find the market segment that wants your product and ‘own your market’. Within this, find the group that’s most likely to influence other customers – cater to the customers you would choose if you could choose your customers. Have the insight and guts to craft a Purple Cow product/service offering that gets the right people to seek them out.

Find things that are ‘just not done’ in your industry. And then go ahead and do them. Ask ‘Why not?’ – almost everything you do is the result of fear or inertia or a historical lack of someone asking, ‘Why?’ Uber and Airbnb did just that, and what about Tesla – who gave away their IP of their electric batteries.

If you’re remarkable, then it’s likely that some people won’t like you. That’s part of the definition of remarkable. The best the timid can hope for is to be unnoticed. Criticism comes to those who stand out.

Playing it safe. Following the rules. They seem like the best ways to avoid failure. Alas, that pattern is a dangerous and mistaken fallacy. In a crowded marketplace, fitting in is failing. In a busy marketplace, not standing out is the same as being invisible. Boring is always the riskiest strategy. Startups realise this and work to reduce the risk from the process. They know that sometimes it’s not going to work, but they accept the fact that that’s okay, as ultimately, chewing your own cud leads to being remarkable.

Understand the urgency of the situation. Half-measures simply won’t do. Being noticed is not the same as being remarkable. Running down the street naked will get you noticed, but it won’t accomplish much. It’s easy to pull off a stunt, but not useful. Extremism in the pursuit of remarkability is no sin. In fact, it’s practically a requirement. Remarkability lies in the edges. It doesn’t always matter which edge, more that you’re at (or beyond) the edge.

Part of what it takes to do something remarkable is to do something first and best. Roger Bannister was remarkable. The next guy, the guy who broke Bannister’s record wasn’t. He was just faster, but it didn’t matter.

Godin challenges us to be a Purple Cow, crafting something truly exceptional in everything we create or do. Like the Radiohead reaction to being hacked, like Tesla giving away their IP and PayPal did in challenging the status quo, be unexpected, be innovative, standout from the crowd, make people stop in their tracks and think. Be remarkable.

The myopic thinking of 110% effort

During a meeting I had last week, a bloke poured water into his glass and it overflowed slightly. Clumsy I said jokingly, to which he replied, Not really, I always give 110%. This is one of my utmost bugbears: You CANNOT give 110% effort, and this chap had used the phrase twice times already – before attempting to fill a glass 110% – trying to convince me he was going to be the next Elon Musk.

I call on the mathematically literate to join forces with me and together defeat the scourge of giving 110%. It’s a numeracy blight on the intelligence and lexicon of our country and it needs to be stopped. For non-pedants wondering why this phrasing that peppers sports vox pops and TV talent shows annoys me so much, maximum effort is 100% – 110% is beyond your capacity.

Even 101% means you are making an effort beyond your actual capacity. Some may argue it’s justified as you’re increasing your effort beyond what you thought was possible for you – you’re going the extra mile – yet that’s irrelevant as the percentage is a measure of maximum output.

You can only pour water into a glass to fill it 100%, and thus you spill 10% if you’ve given it 110%. The expectation to give or receive 110% would also mean it would have to be reasonable to expect many other things that fly in the face of logic and what is impossible according to the laws of physics. A day is 24 hours in duration so how could you expect it to magically become 26.5 hours long? Where is the 110% there? An idiomatic expression for going beyond, that’s all, but it’s meaningless.

I know this is a lot of numbers, but stick with me. I recall walking into the front room one Saturday afternoon and the dog was watching Sky Sports, when one footballer being interviewed promised to give 110% and later another promised 150%. Did this mean one was going to output more effort than the other? No, it means both of them were talking utter poppycock.

Maybe I’m too literal, maybe I’m too curmudgeonly, but you can only give 100%. I know the phrase is meant to embody the notion of doing more than what was thought to be possible, but to me it puts the emphasis on the wrong element. It’s not that you did more than you could, which is impossible, it’s that you had the wrong assumption about what was possible to begin with.

So I’m a founder member of the Quantitative Pedants 2019. Of course, percentages greater than 100 are possible, that’s how startups experience 200% growth in year-over-year revenue, to pick one example. It all depends on what your baseline is – x% of what?

Here’s actually a more serious (and more mathematically precise) way to look at this. Economist Stephen Shmanske produced a paper titled Dynamic Effort, Sustainability, Myopia, and 110% Effort that actually brings some stats and benchmarks to bear to figure this out in the right context.

For Shmanske, it’s all about defining what counts as 100% effort. Let’s say ‘100%’ is the maximum amount of effort that can be consistently sustained. With this benchmark, it’s obviously possible to give less than 100%, but it’s also possible to give more. All you have to do is put forth an effort that can only be sustained inconsistently, for short periods of time. In other words, you’re overclocking.

And in fact, based on the numbers, entrepreneurs pull >100% off relatively frequently, putting forth more effort in short bursts than they can keep up over a longer period. But in giving greater than 100%, this can reduce your ability to subsequently and consistently give 100%. You overdraw your account, and don’t have anything left. This seem like a rough-but-reasonable analysis of what athletes and other people mean when they use the ‘110%’ language.

Thus an elastic 100% does exist, but only temporarily, and at the cost of future performance – you borrow from the future in short-spurts of extraordinary effort. As well-renowned basketball coach John Wooden used to say to his players, if you don’t give 100% today you can’t make up for it tomorrow by giving 110%: your maximum effort is 100% of what you are capable of – period.

Every entrepreneur wishes there were more hours in a day to get their work done. These days, with all the new technology, many are convinced that multi-tasking is the answer. Yet there is more and more evidence that jumping tasks on every alert for a new email, text, or Skype call actually decreases overall productivity.

According to Rasmus Hougaard, the founder of the Potential Project, delivering mindfulness programs to Amex, Nike and Accenture, taking time for what matters, there are some basic rules that can help you manage your focus and awareness in work activities. Practicing these will ensure greater productivity, less stress, more job satisfaction, and an improved overall sense of well-being.

With mental health of entrepreneurs being given more attention, to balance the machismo of I work 24/7, this is highly relevant. Hougaard outlines eight mental strategies that every entrepreneur needs to cultivate, to keep the mind clearer and calmer, and increase your overall productivity.

Mentally be fully present and engaged in the current task Presence is foundational for focus and mindfulness, it means always paying full attention to the people around you, making a conscious decision to intentionally be more present.

Deliver rational responses rather than impulsive reactions This requires patience, and an ability to stay calm in the face of challenging situations. Patience is more concerned with larger goals, rather than temporary quick-fix solutions. Practice by stopping and taking a few breaths to calm down, before reacting.

Choose to always give honest and constructive responses It’s easy to give negative responses and find the downside in a proposal made to you. However, make a conscious decision to always find the positive aspects, even if it’s a proposal that isn’t for you and you can see lots of downsides. Practice positivity in every interaction with people.

Approach every situation with a beginner’s mind Without a beginner’s mind, what you have seen and done in the past, called habitual perception, can be problematic. It means you may not actually see today’s reality. Practice by overtly rejecting any habitual perceptions, and challenging yourself to be more curious in your day-to-day activities.

Refrain from extended fighting with problems you can’t solve Accept and realise that every problem can’t be solved, and frustration won’t resolve the issue. It will just make you less effective and less happy. Practice by choosing to move on, without carrying an inner battle.

Balance your focus between instant gratification and discomfort work Consciously identify the tasks that come easy to you, versus tougher tasks, and also a balance between short-term and long-term, that inevitably have different levels of satisfaction once completed. Practicing awareness of balance will lead to a change in your level of achievement and long-term avoidance.

Proactively seek moments of joy throughout your day Most of us are ‘always on’, always connected and always running, all day. The key here is to anticipate at least some activities you enjoy daily. Many people find this in just sitting still for a few minutes in quiet contemplation, maybe reading or going for a walk. Whatever it is, just switch off and find some personal quiet time.

Consciously let go of heavy thoughts and distractions Letting go is a simple but hard to do mental strategy to clear your mind and refocus on the task at hand. Let go of a problem stuck in your head means putting it to one side, and when you return, create the opportunity to refocus your thoughts.

Without these initiatives to balance your effort and get a clear focus, most people will find their ability to focus declining, yet still live with the rhetoric of 110% effort. We all face overload, increased pressure to move fast, and a highly distracted work reality. Our attention is continuously under siege, with more things and stuff to do causing distractions.

Pragmatic optimism is not fashionable, yet virtually any problem that can be articulated clearly enough can be solved without overthinking and overworking it to 100%+ effort. Being comfortable with uncertainty is perhaps the most important trait we can develop in ourselves as entrepreneurs, and not default to becoming overwhelmed.

Are there occasionally stressful moments? Sure, such is startup life. Is every day peachy? Of course not . But do your best so that on balance be calm , by choice, by practice. Be intentional about it. Make different decisions than the rest, don’t follow-the-lemming-off-the-cliff worst practices. Step aside and let them jump!

Chaos should not be the natural state at work. Anxiety isn’t a prerequisite for progress. Keep things simple, leave the poetry in what you make. When something becomes too polished, it loses its soul. It seems robotic.

Equally, chose fulfilment ahead of growth. Small is not just a stepping-stone. Small is a great destination itself. Build something of purpose, of intent. Growth can be a slow and steady climb. There is no hockey stick graph, simply looking inwards at the success you are achieving, it may be the time to accept no last minute rushes to ‘go the extra mile’ will make a difference long-term.

I am turned off by the super rapid growth companies. It’s not stable. Just look at oak trees. They grow slowly, but they have the kind of solid foundation to withstand storms and other disasters. You need a solid core, which is why I’m such a big fan of consistent and steady growth.

Periods of extraordinary effort borrow from the future. It just doesn’t work. Thomas Edison captured it well, with his words: Genius is 1% inspiration and 99% perspiration. Maximum effort is the minimum requirement for sure, but 100% is all there is to give and that’s that.

The problem isn’t that we have too little time – we all get the same amount of time each day and each week – it’s possible that we have too many things to do. Actually, the real problem is that we want to do too much in the time we have. We want more, and what we have is never enough. It’s this lack of being satisfied that is the real problem. If time flies when you’re having fun, it hits the afterburners when you don’t think you’re having enough.

We live in actions, thoughts, breaths and feelings, not in figures on a dial, yet it is the hands on the clock that dictate our attention. It’s being here now that’s important. Time is a very misleading thing. All there ever is, is the now.

What might have been is an abstraction, whilst time remaining is a perpetual possibility, but both exist only in a world of speculation. As T S Elliot said, Footfalls echo in the memory, down the passage which we did not take, towards the door we never opened.

So, let’s reflect again on the words of Annie Dillard: How we spend our days is how we spend our lives. What we do with this hour, and that one, is what we are doing. The most productive entrepreneurs think about what their time will be worth in the future, and focus on doing stuff today that is important for tomorrow. Think about it, all that really belongs to us is time in the moment – and that’s 100% of today, nothing more.