How playing chess improves your startup game

Underlying a game of chess is an abstract structure of rules and relative powers, which can be quite mind-boggling. The game emerged in C5th India, but it wasn’t until the C19th, when the set was standardised into the Staunton version we play today.

To follow a professional game is to get lost in algebraic options and notations. When the 13-year-old Bobby Fischer sacrificed his queen against Donald Byrne in the so-called ‘game of the century’ in 1956, it was considered one of the finest moves in chess history – a greatness not quite communicated by Be6.

Chess is an endless pursuit, a game of longevity with logical consequences and sly entrapment. After sacrificing his queen, another 24 moves later, Fischer won – a result, he’d worked out, that was inevitable if he let his queen go. It was sacrifice that was also attack, aggression that was also composure.

When a chess player looks at the board, he does not see a static mosaic of contrasting, patterned squares, but a magnetic field of forces, charged with energy, potential and intrigue. A game of chess opens in a state of balanced equilibrium, and if the optimal move is made with each play, a draw is all but assured.

Norwegian Sven Magnus Øen Carlsen is the current World Chess Champion, holding the title since 2013. His peak Elo rating – the ratings given to chess players corresponding to their performance over the best five-year span of their career – of 2882, achieved in 2014, is the highest in history, ahead of Gary Kasparov at 2851.

Magnus tries to put the accent on play, less on preparation, and is seen as combining the talents of two of the all time greats, Karpov and Fischer. He’s known for getting his positions then holding on with a bulldog bite. Exhausting for opponents, one of his most feared qualities is his ‘nettlesomeness’ – his creative moves pressurise opponents into mistakes. Carlsen’s endgame prowess has been described as among the greatest in history.

The last World Chess Championship in 2018 began with a series of twelve games played under classical time controls, the traditional slow pace of play. Carlsen failed to win a single one of his contests against the challenger, American Fabiano Caruana, but fortunately for the Norwegian, Caruana never reached a checkmate or extracted a resignation either.

With each of the dozen classical games ending in a draw, the match moved to a series of faster-paced tiebreakers, starting with a series of four ‘rapid’ games, in which players are allotted less than one-quarter the thinking time of the classical format. Carlsen, the stronger competitor in speedier formats, won the first three games to clinch the tiebreaker and retain his title.

To the casual observer, three weeks of drawn games may sound excruciatingly boring, but like a football match with smart, impregnable defences, or a baseball World Series studded with scoreless pitching duels, chess title matches feature two equally matched grandmasters competing at an extremely high level.

You start the game with a set of pieces, from king to pawns, each with their own ability and position, each has their own purpose. Novice players push forward immediately with their back row, trying to get their most valuable pieces into win positions early. Experienced players, however, know that it is the pattern of all their pieces working in concert that creates reliable success.

Master chess players see the unfolding patterns of the board over time, thinking not in terms of one piece or one move, but in terms of the entire board over dozens of moves. This ability to analyse actions and their outcomes, combined with skilled pattern recognition, is what defines strategy.

The objective is to play the board, not just your plan. When playing chess your opponent is trying to predict and undermine you, applying their own strategy to capture more pieces, so, what do you do?  One crucial skill is the importance of taking time for reflection. It’s in reflection that the brain has time to learn, to process new information, to recognise patterns, and recall previous successful moves.

I see many similarities between chess and running a startup business from the strategy, thinking and tactics behind the game. Let’s look at the lessons and learnings we can take from Carlsen and his Word Championship success.

The first phase in a chess game: the opening As Carlsen shows, the purpose of the opening isn’t just to get immediately ahead, rather it’s to set the stage for the type of middle game you want. This can also mean manoeuvring for the type of game your opponent doesn’t want. The openings are the only phase in which there is the possibility of unique application, you can find something that no one else has found.

Be first, and be brave is the lesson for a startup, but equally don’t rush. Aim to be bold, but have some thoughts around what the early stages of your business could look like. Of course, early encounters with customers reshapes your thinking, so be prepared to be flexible and respond to feedback.

The second phase: the middle game What sort of middle game is our opening going to lead to? Is it one we are prepared for or have our opponents out foxed us and we’re playing catch-up? We must also play the middle game with an eye on the endgame.

In a startup it’s important to have a strategy, tactics and a game plan thinking in periods initially of no more three months, with objectives and key milestones, things are just too volatile to plan too far ahead. As you navigate what it often a turbulent first phase, what you should be doing in the second phase will emerge. Continue with innovation at the core, but listen to customers.

Dream a little, don’t settle automatically for routine solutions The paradox of chess is that there is a routine set down by mathematics to make a strong move based on its objective merits. But recall Carlsen’s approach is a combination of freedom and discipline, sober evaluation and calculation mixed with outlandish ideas.

In a startup, you won’t find new ways of solving problems unless you look for them and experiment and have the nerve to try them when you find them, but ensure flair doesn’t mean or you spend your life making beautiful blunders.

The future is a result of the decisions you make in the present The strategist starts with a vision of the future and works backwards to the present. Carlsen makes the best moves because they are based on what he wants the board to look like ten or twenty moves ahead. This doesn’t require the calculation of countless twenty-move variations, but an evaluation where his fortunes lie in the position and establishes objectives.

Having a vision for your startup is just as important. Where do you want to be in three years? Make a start, and try to make every day a step in the right direction towards your horizon.

Intuition & analysis Even the most honed intuition can’t entirely do without analysis. Intuition is where it all comes together – our experience, knowledge and judgement – or even hunches. But it doesn’t matter how far ahead you see if you don’t understand what you are looking at before you, so combine the two.

No matter how much practice or experience you have, and how much you trust your gut instincts, analysis is essential. It’s a balance between inspiration and perspiration, blue sky thinking and washing the pots. It’s dreaming, plus hard yards.

Attack An attacking strategy doesn’t have to be all or nothing, or recklessly lightning quick. Sustained pressure can be very effective in chess, and creating long-term weaknesses in your opponent’s position can lead to a win in the long run. One of the qualities of a Carlsen is his ability to get the maximum out of a position without overstepping and trying to achieve more than what is possible.

In chess, the defender has to race around to cover the threats, but against constant pressure the job soon becomes impossible. Moving to cover one breach creates another until something cracks and the attack breaks through. In chess we have the ‘principle of two weaknesses’. It’s rare to be able to win a game with only a single point of attack. Instead of becoming fixated on one spot, we must exploit our pressure to provoke more weak spots.

So a large part of using the initiative in chess, as in business, is mobility, flexibility and diversion. In business, it’s a combination of product, service and price that creates a winning position, then execution and delivery that secures a deal.

Initiative Once you have the initiative you must exploit it. Carlsen reminds us that the player with the advantage is obliged to attack or his advantage will be lost. In business, initiative can be converted into a sustainable position. Being a step ahead means we can keep our competition off balance, shifting and moving in order to provoke weaknesses.

In business, going on the front-foot requires perfect timing as well as nerve. The window of opportunity is often very small, as with most dynamic situations. No neon sign appears to say that there is a big opportunity right around the corner, so balance opportunity with rationale – back to the combination of freedom and discipline in your game plan.

When you are winning, don’t get complacent Winning creates the illusion that everything is fine, success is seldom analysed as closely as failure and we are always quick to attribute our victories to superiority, rather than circumstance. When things are going well it is even more important to question. Over-confidence leads to mistakes, a feeling that anything is good enough. Our egos want to believe that we won brilliantly against tough competition, not that we were lucky and ‘right time, right place’, but typically, however, the winner is just the player who made the next-to-last mistake.

Carlsen shows that if we’re going to get the most out of our talent we have to be prepared to have a game plan, practice, think on the spot, analyse ourselves critically and improve our weakest points. The easiest thing is to rely on talent and focus only on what we do well. It’s true that you want to play to your strengths, but if there is too much of an imbalance growth is limited. In business, the fastest way to improve overall is to work on your total game, and all the constituent parts.

He highlights long-term strategy, short-term gains, being creative in the middle game, and how important decision-making is at any stage of the chess game. We do need to think ahead in business, if not for ten moves, but then at least truly think through options and the consequences – that’s not calculating, it’s common sense. Carlsen illustrates that the unlimited number of subtle and intricate potential moves that lie within the 64 squares of a chessboard are totally applicable to business, how the game can help you step back and evaluate yourself to identify you strengths and weaknesses and thus better your game.

Chess is a mental game, that requires vision, tenacity, thoughtfulness, and multiple tactics. From this we can take the thought that in a startup we can look for ways to experiment and to push the boundaries of our capacity in different areas. It really is a combination of disruptive and disciplined approaches, and agile thinking that will bring success.

Innovation lesssons from Carl Elsener III and his Swiss Army Knife

Carl Elsener III started his working life as a teenage apprentice cutler straight from school, but from these humble beginnings went on to turn a relatively simple penknife into a global phenomenon – the multi-functional Swiss Army Knife.

The famous red-handled knife with the Swiss white cross has held a lifetime fascination for me, offering a spoon, fork, compass, screwdriver, mini-screwdriver for spectacles, can opener, wood and metal saw, toothpick, tweezers, scissors, pliers, key ring, fish-scaler and magnifying glass. Moving with the times, some latest models come with an LED light, laser pointer, USB memory stick, digital clock, Bluetooth or even MP3 player, but I’ve stuck with the basic model.

Elsener is up there as one of the greatest innovators of all time, with his product shaping a lasting impression of innovation, ingenuity and uniqueness. Today, 45,000 knives are produced daily in Ibach, Switzerland, providing current annual revenues of more than $500m and making Victorinox the largest cutlery manufacturer in Europe.

It started when Elsener’s grandfather opened a cutlery business in 1884. In 1891 the company won its first contract with the Swiss army. Members of the Swiss military received the first Elsener-designed knife, complete with a blade, reamer, screwdriver, and can opener. In 1897, he introduced the Officer’s Knife, which included a corkscrew. After his mother died in 1909, he chose her name, Victoria, as his trademark, then added the suffix inox (stainless steel was also called inox steel from the French noxydable) in 1921 as a nod to the tough components.

Elsener took over as CEO from his father in 1950 when the knives were still hand made. After introducing machine production, he quickly recognised the popularity of his Schweizer Offiziersmesser (‘Officer’s Knife’) among US forces personnel based in post-war Europe. It was the Americans who, unable to get their tongues round Offiziersmesser, first called it the Swiss Army Knife.

He was a tireless man who could work until two in the morning. When he woke up in the middle of the night with an idea, he wrote it down on the wallpaper so as not to forget it. Despite his success, his motto remained: Gueti sache chone immer no bässer wärde – Good things can always be made better.

US sales declined sharply after 9/11. Once a popular item at airport duty-free stores, the knives were banned from air travel. Victorinox refused to lay off employees, instead coming up with an unorthodox solution: it leased workers to other companies, but continued to pay their wages. The company has since adapted some of their products to be flight-friendly, including versions that contain all of the original tools minus any blades.

Does the Swiss army actually use Swiss Army knives today? Absolutely! The army also has an implement not found on civilian models that can open ammunition cans and scrape carbon from firearms. Not much of a weapon there. Corkscrews. Bottle openers. Come on, buddy, let’s go. You get past me, the guy in the back of me, he’s got a spoon. Back off, I’ve got the toe clippers right here. Apologies for the comedy, but I’ve had my Swiss Army Knife since a thirteen year old scout, and not sure I could fight off more than a rabid squirrel.

NASA commissioned a special edition for their astronauts, and the knife has been invaluable in various space mission emergencies, including the first time the space shuttle Atlantis docked with the Russian space station, and one of the tools on the pocket knife was used to open the hatch connecting the two. There are pictures of the moment the penknife was used to open the hatch.

Swiss Army Knives in space is just one of the many extraordinary episodes in the history of Elsener’s product. These include bespoke penknives being made for US presidents, and models of the original Swiss Army Knife being placed in the collections of The Museum of Modern Art in New York and the State Museum of Applied Arts and Design in Munich.

There is real dignity and romance to Elsener’s entrepreneurial endeavours, his is a moment of time in building a unique product and a business that scaled into a global enterprise with a clear brand identity. So what can we learn about his spirit, vivacity, attitude and creativity into today’s startup thinking? How do you keep innovating and pushing the ambition? Here are some of the best values of entrepreneurship and disruptive innovation that I see from Elsener that should spark your startup thinking today.

A DIY ethic drives innovation Elsener was revered for his Do-It-Yourself abilities. He didn’t quite make it up as he went along, but like any startup he had to find his market, experiment and determine product-market fit, working out where the audience was. The ‘product’ was simple and yet a work of precision and design. Success is achieved by a host of variables, none more so that sheer-bloodied single-mindedness to get up there and make it happen – talent rocks, but attitude is king. It’s about conviction and determination to make it happen – by doing it yourself. 

Belief Elsener took on an established industry with major, established organisations in control and broke the rules with his own product thinking. In doing so, he changed the dynamics and disrupted an established market. He had enduring success and created a lasting legacy, measured in branding and cultural – finance too, but that’s the applause, not the goal. Elsener made the mind shift change that is needed to begin thinking and behaving like a startup and ask themselves the questions that an entrepreneur must ask.

Authenticity inspires customers Elsener started with a bold expression of his own, to be truly authentic, not seeking to copy or replicate others. The startup leadership lesson here is one of my favourites: you can be confident and competent all you want, but if you’re not accepted as real, and having a point of difference in what you offer customer, you won’t inspire a following. What’s your signature tune and tone of voice?

Just copying something is no good, unless you just want to be a tribute band. It’s vital to keep playing around and pushing yourself in business, create your own product. Don’t be afraid to build a business or revenue model that plays to your strengths, even if it’s non-conventional – is there anything else quite like a Swiss Army Knife?

Be your own image If you plan on getting noticed, establishing a brand promise, and creating an image is vital. Elsener’s design makes the product instantly recognisable, it stands out visually, just as John Pasche designed the ‘tongue and lips’ logo for The Rolling Stones in 1971, originally reproduced on the Sticky Fingers album.

Playing it safe gets you nowhere – turn your back on competitors If you don’t take risks you’ll never excel. Playing it safe all the time becomes the most dangerous move of all. Deviate from routines. Rote activity doesn’t lead to the path of innovation or disruptive technology. Elsener never played it safe.

Turn your back on competitors. Yes, ignore them. They aren’t running your business. You are. So instead of focusing on your competitors, focus on your customers. Be empathetic. Know them inside and out. Invest in relationships, not transactions. Learn what makes them tick, how they feel, what they need. This may sound like basic sales training, but it’s vital at the brand level, too. If you know what matters to your customers, you can structure your brand offering with the confidence that it will connect.

Open mindedness Elsener’s work is drawn from a diverse range of influences. The uniqueness in the product plus constant change and update, combining existing elements in new ways, produces something entirely its own, with a prowess for almost throwing stuff together randomly to discover new combinations and possibilities. This ability to create genuine uniqueness is a key trait of any entrepreneurial business. Not all of Elsener’s experiments worked, but their willingness to try out new ideas, knowing that not all will triumph, is a trait every startup needs.

Stand for something, and be true to your purpose Elsener had a vision, was strong minded and had a clear sense of purpose. He was shaped by deeply held personal and passionate values and remained true to them, quickly finding out that there are millions of people who shared those same values and aspirations. Founders never rest on their laurels, they retain the mix of spirit, drive, and passion, more than willing to rebel against the norm, are restless do go again, yet stay true to their vision.

Be a brand At the brand level, you’re not competing product vs. product. It’s not a feature vs. feature game. Your brand needs to have a relevant place in your customers’ hearts and minds. So be true to your brand and the promise you make and bring it out in everything you do. Leading from your authentic vision and consistency of purpose will help your brand mean more to people. And that alone will make you more memorable.

Can you make your product or service stand out as a Swiss Army Knife? It is held that consumers have mind-space for only three brands in any given category: the leader, the challenger, and the one other company lucky enough (or hard-working enough) to be noticed. The rule of three may still be true, but the sheer proliferation of brands flooding a sector can make it especially difficult for any startup brand to stand out.

In an over-crowded category you may find yourself fighting against forces greater than direct competitors. Sheer clutter can be a more powerful distraction to potential customers than any competitor’s offering. Your brand and how it connects to the people that matter to you is a key in differentiating yourself from your competition.

We’re all the same decaying organic matter as everything else. We’re all part of the same compost heap. You need to be authentic, as Oscar Wilde said Be yourself, everyone else it taken, and as Steve Jobs was known for his Be Unique, Be Different personal motto.

Be unique, like a Swiss Army Knife. Don’t compare yourself with anyone else, if you do so, you are insulting yourself. If you want to stand out from the crowd, give people a reason not to forget you. Are you unreasonable? Here’s one good reason why you should be: The reasonable man adapts himself to the world: the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man. So said George Bernard Shaw in his play Man and Superman back in 1903.

In addition to surreal jokes about extracting boy scouts from horses’ hooves (or vice versa), there are tales of how the Elsener knives were carried by famous explorers from Everest climbers and American astronauts who took it to the moon. Sometimes macabre stories did the rounds of emergency self-amputations and life-saving tracheotomies. But it is a truly unforgettable product and brand.

Elsener would often be mistaken for a janitor when he opened the door to visitors to the factory in his overalls. He went to work daily on his bicycle. He handed over control of the family firm in 2007 to Carl Elsener IV, the oldest of his eleven surviving children. He was humble, but remarkable.

We look to the skies to change the world, but you don’t change the world simply by looking at it. You change it by living in it. Take a leaf from Carl Elsener’s book of life, and make your mark.

Lessons in entrepreneurship from the poetry of John Cooper Clarke & Rudyard Kipling

Poetry, for me, is not something to be read quietly in a corner and reflected upon. It is always a phonetic medium, every time. At school, we had to memorise it. This included all twenty stanzas of The Lady of Shalott by Alfred Lord Tennyson. It was a compendium, unbelievably long, and we were often called upon to stand up and recite selected verses to the rest of the class from memory. That brought home the fact that poetry should be heard first.

I’ve recently been revisiting the work of Salford born ‘punk poet’ John Cooper Clarke. Now aged seventy, with nine albums behind him, his current tour is no different to that when I saw him in 1979, a set characterised by lively, rapid-fire renditions of his observational poems performed a cappella.

Known as ‘the bard of Salford’, he usually refers to himself on stage as Johnny Clarke, the name behind the hairstyle.  He has a huge talent, kind heart and sparkling wit. He’s the godfather of British performance poetry, a poet who writes about darkness and decay but makes people laugh, a human cartoon, a gentleman punk, a man who has stayed exactly the same for over forty years but never grown stale.

John Cooper Clarke uses words of anger, humour and disdain in equal measure. He’s the real deal, funny and caustic, the velvet voice of discontent. His anarchic punk poetry has thrilled people for decades and his no nonsense approach to his work and life in general has held appeal for many years. Long may his slender frame and spiky top produce words and deeds that keep us on our toes and alive to the wonders of the world.

His last collection titled The Luckiest Guy Alive contained forty poems and amply demonstrates that his scabrous wit and vivid way with words remains untamed. His writing is guided by a desire to communicate his thoughts on our shared humanity.

Learning poetry by heart at school, while you won’t understand it at the time, it may sneak up on you thirty years later. Poetry is the shortest possible way of saying something that needs saying. There’s something to cherish in the words, a thought that the work itself will outlast us all.

One of my favourite poems is If, written by the English poet and Nobel Prize for Literature winner Rudyard Kipling. This poem has always been a stand out piece of writing for me, I think it’s inspirational not only for startup leaders and entrepreneurs, but for all people who want to maximise their potential and live life to the fullest.

The poem contains mottos and maxims for life. The poem is also a blueprint for personal integrity, behaviour and self-development. If is perhaps even more relevant today than when Kipling wrote it, as an ethos and a personal philosophy.

Kipling’s life was one replete with trials, hardships, and sorrows, but time and again he overcame them. This poem, which is really one long single sentence, encapsulates the lessons he learned. It is believed that he wrote If as four, eight-line stanzas of advice to his son, John,

If you can keep your head when all about you

Are losing theirs and blaming it on you,

If you can trust yourself when all men doubt you,

But make allowance for their doubting too;

If you can wait and not be tired by waiting,

Or being lied about, don’t deal in lies,

Or being hated, don’t give way to hating,

And yet don’t look too good, nor talk too wise:

 

If you can dream — and not make dreams your master;

If you can think — and not make thoughts your aim;

If you can meet with Triumph and Disaster

And treat those two impostors just the same;

If you can bear to hear the truth you’ve spoken

Twisted by knaves to make a trap for fools,

Or watch the things you gave your life to, broken,

And stoop and build ’em up with worn-out tools:

 

If you can make one heap of all your winnings

And risk it on one turn of pitch-and-toss,

And lose, and start again at your beginnings

And never breathe a word about your loss;

If you can force your heart and nerve and sinew

To serve your turn long after they are gone,

And so hold on when there is nothing in you

Except the Will which says to them: ‘Hold on!’

 

If you can talk with crowds and keep your virtue,

Or walk with Kings — nor lose the common touch,

If neither foes nor loving friends can hurt you,

If all men count with you, but none too much;

If you can fill the unforgiving minute

With sixty seconds’ worth of distance run,

Yours is the Earth and everything that’s in it,

And — which is more — you’ll be a Man, my son!

So what makes Kipling’s If, the ultimate entrepreneur’s poem? This is an inspirational poem that expresses various ways in which you can rise above adversity that we will almost face at some point in one’s startup life. Throughout the poem, Kipling offers multiple scenarios, contrasting both positive and negative, along with a glimpse into how one should conduct oneself.

The poem has an almost mathematical proof about it with its if-then scenario. Kipling leaves the then until the final two lines, revealing that if he or she is able to do all that was just mentioned, he or she will not only have the world at his or her fingertips, but he or she will also be a ‘Man’ – as it’s written for his son John, it’s heartfelt fatherly advice.

Kipling keeps a positive and upbeat tone throughout, informing the reader what to do in order to be a successful person in life. The poem reads like one continuous thought. I read it as a magnificent tribute to many  great virtues – staying composed under stress, remaining humble when victorious, never despairing when defeated, and always retaining honour and authenticity.

So let’s look at a few of the verses and their relevance to startup founders.

Trust in yourself

If you can keep your head when all about you are losing theirs and blaming it on you; if you can trust yourself when all men doubt you, but make allowance for their doubting too.

This reminds me of one of my favourite business quotes, from former CEO of Netscape Jim Barksdale: If we have data, let’s look at data. If all we have are opinions, let’s go with mine.  In a startup, we will always have doubters and critics in all that we do. Listen to them because someone will be valid observations, but also have confidence in yourself, don’t fold, stay composed when under pressure. So, on the same hand, take constructive criticism to heart, without being too self-righteous.

Keep a balanced mindset and outlook

Kipling reminds us of the importance of maintaining a level head:

If you can dream — and not make dreams your master; If you can think — and not make thoughts your aim; If you can meet with Triumph and Disaster, And treat those two impostors just the same;

It points to the relationship between inspiration and desperation, which we’ve all faced in our startup ventures. When you are under pressure, the things that are best and worst about people and business, come to the fore. We’ve all been there. Pushed a bit too far, been a bit too snappy. Truth is that these things happen to us all but that’s not the interesting part; it’s the response that really does matter.

Kipling urges us to not follow the crowd, but be our own thinkers and stand firm in our own beliefs and values. He reminds us there are answers we may not have, and to keep an open mind to learning. Kipling urges us to dream and think, but to not get so caught up in dreams and thoughts that we lose our grasp on reality.

Just be

This is my favourite lesson of the poem. To treat triumph and disaster as the same imposter is to learn how to just be. Startup life is a journey of ups and downs. I’ve learned that the founder who can embrace all volatility and just ‘be’ has the most peace in their entrepreneurial journey.

If you can make one heap of all your winnings; And risk it on one turn of pitch-and-toss; And lose, and start again at your beginnings; And never breathe a word about your loss;

Kipling demonstrates here the importance of being able to pick oneself up and start again if we fail. We must always be prepared to start again, and be willing to forget about the loss and not dwell on it.

Endurance is a great virtue

If you can force your heart and nerve and sinew; To serve your turn long after they are gone; And so hold on where there is nothing in you; Except the Will which says to them: ‘Hold on!’

These lines are particularly powerful. All entrepreneurs must endure, even if that feels both physically and emotionally impossible. It is also worth noting the capitalisation of Will. Perhaps Kipling wanted to emphasise the resilience of the human spirit by making it a power that is separate from the person who possesses it?

Craft the outcome to your journey

The fourth and final stanza reveals the consequence of doing all of these ifs, but not before Kipling presents us with three more scenarios. The first one deals with how to treat others, regardless of their station in life. Maintaining your honour and authenticity is a standout human quality, treating everyone with respect and open-handedness will take you far.

Take risks. Do what you love. Lead your startup from the front. Do it! Life is too short for dogma, and being trapped living a life you don’t enjoy. It’s easy to let fame and success get to our heads, but Kipling urges us to stay grounded and to remember where we came from.

Life is short. We only have a finite time here on earth – the unforgiving minute, with sixty seconds worth of distance run – and should use it as best as we can. Kipling tells us to never give up or waste even a single second of time. If you are given a minute, make sure you use all sixty seconds of it.

Finally, in the last two lines, the outcome of abiding by all of these thoughts is revealed:

Yours is the Earth and everything that’s in it, And – which is more – you’ll be a Man, my son!

For me, John Cooper Clarke joins Kipling for his art of writing that contain timeless lessons that stays relevant. In fact, I believe these writings and lessons are not just enjoyable, but vital, in that we can reflect on our own situation, find inspiration, and stay grounded.

With our technology advancements, continual globalisation, and the dawn of artificial intelligence, it’s good to be reminded at the end of the day that we must learn to enjoy life for all that it is, and remember life lessons can be captured in poetry, and not just focus on the frenzy of our startup endeavours.

While it’s beneficial to have a work rhythm, don’t let your habits turn into mindless routines. When this happens, you can fall into the doldrums, where you operate on autopilot and stop thinking creatively. Poetry will help you develop a more satisfying and more successful work life.

That is because as entrepreneurs, like poets, we benefit greatly from studying our craft and continuously reflecting on how we’re engaging with our work, colleagues and our surroundings. Even if you have little experience with creative writing, I encourage you to read poetry, it will refresh your perspectives, thinking and reinvigorate and reinspire your daily work habits.

Lessons for startups from the rugby world cup: the resilience of Maro Itoje

Not since winning the 2003 World Cup has English rugby enjoyed a more stunning moment. Their 19-7 semi-final victory on Saturday left the All Blacks’ players strewn on the pitch, dreams of becoming the first team to win three consecutive Webb Ellis Cups dashed.

As well as inflicting New Zealand’s first defeat in 19 World Cup matches going back to 2007, this was the best England performance I’ve witnessed. The All Blacks had dominated the tournament, but could not cope with England’s relentless power, defensive strength and tactical acumen, after Manu Tuilagi’s second-minute try set the tone.

England’s forwards played the collective game of their lives – Maro Itoje, Tom Curry and Sam Underhill delivered stunning performances when it mattered most. George Ford kicked four vital penalties and when the inevitable All Black fight back came, England’s tackling, particularly from Underhill, was phenomenal.

From the moment England formed their deliberate V-shaped arrowhead to greet the haka, there was an edge, and the opening minutes saw England’s statement of intent, with a try after just 98 seconds. A stunning attacking sequence ended with Tuilagi plunging over, Farrell’s conversion made it 7-0, and it was seven minutes before New Zealand could get their breath.

It was the team in white who dominated the first half, a 10-0 half-time blank noteworthy as the All Blacks’ first at a World Cup since 1991. Savea 57th-minute try, converted by Richie Mo’unga woke us all up. With just nine defeats in their last 105 matches, would the All Blacks come back? The answer was no. Despite two disallowed tries, two more Ford penalties propelled the English chariot sweetly into next Saturday’s final.

If England have ever produced a better eighty minutes then no-one dancing or screaming around our front room on Saturday morning, refreshed with a copious supply of beer and bacon butties, could remember it. The tension of being ahead from the second minute, the relentless tackles making you grab your own ribs and wince, it was simply a truly great game of rugby.

Maro Itoje had the game of his life, making twelve tackles, winning seven lineouts, and three turnovers. But that does not tell you the half of it. He was a one-man highlights reel. You kept catching glimpses of him, forcing his way through the maul to reach over and wrap his hands around the ball to stop Aaron Smith snapping it out, soaring into the air at the lineout to grab the ball from Sam Whitelock, charging into half a gap, bent double over a tackled man, rooting around with his hands till he pulled up the ball, like some frenzied prospector digging around for the gold nugget he had spotted in the river mud.

Itoje was named player of the match as England’s pack dominated their All Black counterparts. England won sixteen turnovers. No team has won more at this World Cup. Breakdown won, set-piece won, discipline won. England conceded just six penalties to the All Blacks’ eleven. They were faster and they were more precise. They kicked from hand better, and they tackled like their lives depended on it.

Around twenty minutes into the second half, the camera zoomed in on Itoje, getting his breath back at a lineout, chest was heaving, lungs gulping, but the eyes… well, the eyes were something else. They were wide open and staring, bearing an expression that simultaneously implied total aggression and total stillness. He did not blink. Itoje was in the zone of complete focus, the moment of concentration and clarity.

This was his greatest performance in an English shirt, in attack and defence, in open play and at the set piece, in its bravery, discipline, ingenuity and skill. To get a measure of his impact, look at his opposite numbers – Sam Whitelock and Brodie Retallick were a fraction of their imposing best. These are greats of the game, World Cup winners with 200 international caps between them. Itoje made them look like statues. To be the man, you’ve got to beat the man, Itoje said last week.

The menace and verve of New Zealand’s potent team was nullified. He gave a technical and tactical masterclass, his performance forged through continuous breakthroughs, small steps and iterations, each possible because he had his eyes and ears wide open in the moment, with the resilience and mindset to keep going.

Putting to one side his rugby skills, it was the resilience shown by Itoje to simply keep going that stood out for me. It is the virtue that enables entrepreneurs to move through their own battles and achieve success. If we have the virtue of resilience, then we can move forward, whatever the challenge.

Many misunderstand what’s at work in resilience. For me, it’s not about ‘bouncing back’, rather its about the ability to integrate harsh experiences into your thinking, learn and apply the lessons, and then be motivated to go again, expecting to go one better, as Thomas Edison said, I have not failed. I have just found ten thousand ways that won’t work.

Like Itoje, entrepreneurs consciously choose a life of challenge, yearning success whilst also inevitably encountering times marked by sheer graft, chaos and disappointment. Entrepreneurial endeavour is a series of higher highs and lower lows, in which the peaks and troughs are more vivid, but as Sir Edmund Hilary said, People do not decide to become extraordinary. They decide to accomplish extraordinary things, and he should know.

Ryan Holiday, in his book The Obstacle Is The Way, draws lessons from philosophy and history and says if you want to achieve anything in life, you have to do the work, be prepared for knockbacks – but most of all, be resilient. It’s a great book, inspiring us to be bolder and mentally able to handle the pressure of running a startup.

Here are some quotes from Holiday, which I think say a lot about building your resilient mindset, and could have been written about Itoje on Saturday.

No one is asking you to look at the world through rose-coloured glasses.

See the world for what it is. Not what you want it to be or what it should be. Hey, we’re back to being realistic – but it’s also about optimism, the mindset to expect the best outcome from every situation – and that’s resilience to make it happen. This gives entrepreneurs the capacity to pivot from a failing tactic, and implement actions to increase success.

Where the head goes, the body follows. Perception precedes action. Right action follows the right perspective. When something happens, you decide what it means. Is it the end? Or the time for a new start? Is it the worst thing that has ever happened to you? Or is it just a setback? You have the decision to choose how you perceive every situation in life.

No thank you, I can’t afford to panic. Some things make us emotional, but you have to keep your emotions in check and balanced. In every situation, no matter how bad it is, keep calm and try to find a solution. Sometimes the best solution is walking away. Entrepreneurs find it hard to say no, but that can be the best option.

If you want momentum, you’ll have to create it yourself, right now, by getting up and getting started. If you want anything from life, you have to start moving towards it. Only action will bring you closer. Start now, not tomorrow. Maintain active optimism, observing how others were successful in similar situations, and believing you can do the same. It’s not what happens to you, but how you react to it that matters.

It’s okay to be discouraged. It’s not okay to quit. Entrepreneurial life is competitive. When you think life is hard know that it’s supposed to be hard. If you get discouraged, try another angle until you succeed. Every attempt brings you one step closer. Don’t have a victim’s mindset, have courage to take decisive action. Great entrepreneurs become tenaciously defiant when told they cannot succeed. Then they get it done.

We must be willing to roll the dice and lose. Prepare, at the end of the day, for none of it to work. We get disappointed too quickly. The main cause? We often expect things will turn out fine, we have too high expectations. No one can guarantee your success so why not expect to lose? You try with all your effort, it doesn’t work out, you accept it, and move on.

The path of least resistance is a terrible teacher. Don’t shy away from difficulty. Don’t do things just because they’re easy. How do you expect to grow? Nurture yourself: gain strength from the unrealistic achievements of others. We can’t choose what happens to us, but we decide how to respond. Successful, resilient entrepreneurs don’t just accept what happens to them. It’s all fuel that you can use to move forward. It defines you.

Itoje will tell you, you get tackled, you’re hurt, you’re down and the play is now twenty-five metres away. Resilience means getting right back in the game, remaining optimistic in the face of adversity. Resilience is accepting your new reality, but being able to take a step forward when others sit there watching.

Itoje is the essence of persistence, resilience and mental toughness, so take a leaf out of his book. Give it everything, every day, be the last man standing when something needs to be done. Never be outworked, remember that true failure only comes when you give up. Hold yourself responsible for a higher standard than anybody else expects of you. Never excuse yourself. Never pity yourself. Be a hard master to yourself. The human capacity for burden is like bamboo, far more flexible than you’d ever believe at first glance.

England played an absolutely incredible game, the stamina, the resilience, they just never let up. Never have I seen an All Blacks team defeated quite like this, they were outplayed, outsmarted, outmuscled. Perhaps it’s time to accept that nothing lasts forever, no one can outrun the sands of time. With the iconic Kieran Read stepping down from All Blacks duty next month, and others including Sonny Bill Williams, Aaron Smith, Joe Moody and Sam Whitelock unlikely to feature in the next World Cup in France 2023, maybe this current pantheon of All Blacks greats has reached the end of the road.

Greatness is a hard thing to sustain in any walk of life, but for nearly a decade this All Blacks team has done that. Success can take the edge off soaring ambition, the passing of time perhaps dampens hunger and with it the mindset for repeated challenge. New Zealand have been the epitome of resilience, but now a brighter, younger team, one bristling with unwavering belief, and players like Itoje showing their own immense resilience, has landed a killer blow when it matterred most. Make sure you take a lesson from Itoje for your own entrepreneurial endeavours.

Amelia Earhart – a role model for C21st female entrepreneurs

The most difficult thing is the decision to act, the rest is merely tenacity. The fears are paper tigers. You can do anything you decide to do. You can act to change and control your life and the procedure, the process is its own reward.

The words of Amelia Earhart. Spoken like a true entrepreneur, this quote captures her drive and focus. Her flying achievements are extraordinary, and demonstrate her strength and spirit as a female pioneer.

Yet despite Earhart’s achievements and those of other iconic female role models, female entrepreneurs with the ability, influence and passion to transform a generation are often ignored, with just one in five startups that receive investment being founded by a woman. Why?

One reason could be that female entrepreneurs seeking investment for their new idea are likely to be almost entirely male faces. Just 13% of senior investment teams are women, and almost half of investment teams have no women at all. This surely contributes to a stark gender imbalance in the businesses that investors fund.

The gender bias female entrepreneurs face undoubtedly deters many. Add to this the reality that women still take on a far larger share of family related responsibilities than men, and it is no surprise that so few female innovators take the plunge. While this is fundamentally unfair in a diverse, democratic and open-minded society, it is also economically short-sighted – research shows that the UK is losing out on £250bn of economic value each year because of the daunting barriers facing women entrepreneurs.

However, there are signs of some positive change, with the Government’s commissioning of Alison Rose (Deputy CEO NatWest) to lead an independent review of female entrepreneurship earlier this year. The review shed renewed light on the barriers faced by women starting and growing their own businesses, and identified ways of removing them.

In response, the Government has announced an ambition to increase the number of female entrepreneurs by 50% by 2030, equivalent to nearly 600,000 additional female entrepreneurs. The Rose report and Government response is hopefully the catalyst needed for society undergoing a shift in outlook. While the UK is in many ways the startup capital of Europe, it lags well behind the Netherlands, Spain, Australia, the US and Sweden in terms of the proportion of female founders.

For investors, putting money into female founded startups makes financial sense, as there is substantial evidence that gender diversity fosters creativity and results in better decision making by encouraging new perspectives which men frequently lack or disregard. Yet women-owned enterprises represent less than 25% of UK business.

Alison’s report thus identified three fundamental changes needed to overcome the barriers faced by women entrepreneurs:

Increase funding directed towards female entrepreneurs. Access to and awareness of funding was highlighted as the number one issue for female entrepreneurs across the entire entrepreneurial journey, from intention to scale-up. Female-led businesses receive 53% less funding on average than those headed by men at every stage of their journey.

To combat this the Alison recommended making more start-up funding available to women. The rewards for the wider economy and society could be huge, even if Britain does not achieve full gender parity in levels of entrepreneurship, but catches up with its best-performing peers.

Provide greater family care support for female entrepreneurs. Disproportionate primary/family care responsibilities affect female entrepreneurs throughout the entrepreneurial journey.

Making entrepreneurship more accessible for women Increasing support through accessible mentors and networks is key to boost female entrepreneurship. Alison found three reinforcing cultural barriers affect women at all stages of the entrepreneurial journey:

– Women typically have higher risk-awareness than men and are more cautious, limiting their willingness to risk their livelihood on an uncertain venture.

– Women are less likely to believe they possess entrepreneurial skills: only 39% of women are confident in their capabilities to start a business compared to 55% of men. This is a perceived gap in ability, rather than an actual gap in skill sets.

– Women are less likely than men to know other entrepreneurs or to have access to sponsors, mentors or support networks.

Alison’s report recommended eight initiatives.

Initiative 1: Promote greater transparency in funding allocation through a new ‘Investing in Female Entrepreneurs Code’, which commits all financial institutions to the principles of gender equality for investment.

Initiative 2: Launch new investment vehicles to increase funding going to female entrepreneurs, who can thus access new, potentially profitable market opportunities whilst helping women-led enterprises to grow.

Initiative 3: Encourage investors to support and invest with a specific focus on gender diversity by launching funding rounds for businesses in female-dominated sectors such as healthcare and services.

Initiative 4: Focus banking products aimed at entrepreneurs with family care responsibilities, to help parent entrepreneurs manage their businesses and the challenges of raising a family.

Initiative 5: Improve access to expertise by expanding and encourage private sector actors to offer their time to business hubs.

Initiative 6: Expand mentorship and networking opportunities, with public and private sector organisations coming together to share best practices and support a centralised networking platform to create greater connections.

Initiative 7: Accelerate development and roll-out of entrepreneurship-related courses to schools and colleges by commercial organisations to collaborate on education focused on entrepreneurship, financial literacy and self-belief.

Initiative 8: Create an entrepreneur digital first-stop shop, encouraging private sector actors in partnership with public bodies to collaborate to create a comprehensive nationwide digital first-stop information shop for female entrepreneurs.

There is no silver bullet that will transform the landscape for female entrepreneurs overnight. Many barriers are cultural and societal, and will take many years to overcome. However, the eight initiatives provide a starting platform for the significant and sustained action required to release the unrealised potential of women as entrepreneurs.

In the modern world, female role models are plentiful, to transform a generation. For example: Sylvia Plath, Malala Yousifazi, Margaret Cavendish, Maya Angelou, Elizabeth Garret Anderson, and Anita Roddick to name a few – but Amelia Earhart – the first woman to fly solo across the Atlantic and back to her quote at the top of this blog – is the stand out to me for today’s female entrepreneurs.

It was when Amelia attended a stunt-flying exhibition that she became seriously interested in aviation. On December 28, 1920, pilot Frank Hawks gave her a ride that would forever change her life. Earhart took her first flying lesson on January 3, 1921 and, in six months bought her first plane, a two-seater biplane painted bright yellow – The Canary – and set her first women’s record by rising to an altitude of 14,000 ft.

Then in April 1928, she took a phone call: How would you like to be the first woman to fly the Atlantic? After an interview in New York, she was asked to join the flight. She left Trepassey Harbour, Newfoundland, in a Fokker F7, Friendship, on June 17, 1928, and arrived at Burry Port, Wales 21 hours later. On her return, she was greeted with a ticker-tape parade in New York and a White House reception with President Calvin Coolidge.

George Putnam entered her life, too. The two developed a friendship during preparation for the Atlantic crossing and were married February 7, 1931. Intent on retaining her independence, she referred to the marriage as a partnership with dual controls.

Together, they worked on plans for Earhart to become the first woman and the second person to fly solo the Atlantic. On May 20, 1932, five years to the day after Lindbergh, she took off from Harbor Grace, Newfoundland, to Paris. Strong north winds, icy conditions, and mechanical problems plagued the flight and forced her to land in a pasture near Londonderry, Ireland.

President Herbert Hoover presented Earhart with a gold medal, Congress awarded her the Distinguished Flying Cross – the first ever given to a woman. Earhart felt the flight proved that men and women were equal in jobs requiring intelligence, coordination, speed, coolness, and willpower.

In the years that followed, Earhart continued to reach new heights. On January 11, 1935, she became the first person to fly solo across the Pacific from Honolulu to California.

In 1937, approaching her 40th birthday, she was ready for her biggest challenge: to be the first woman to fly around the world. Despite a botched attempt in March that damaged her plane, a determined Earhart had the twin engine Lockheed Electra rebuilt. I have a feeling that there is just about one more good flight left in my system, and I hope this trip is it, she said.

On June 1, Earhart and navigator Fred Noonan departed from Miami and began the 29,000-mile journey. On June 29 they landed in Lae, New Guinea with just 7,000 miles remaining. Frequently, inaccurate maps had made navigation difficult, and their next hop to Howland Island was by far the most challenging.

Howland Island, in the Pacific, is a mile and a half long and half-mile wide. Every unessential item was removed from the plane to make room for extra fuel. The US Coastguard was stationed off Howland Island and two other US ships, burning every light on board, were positioned along the flight route as markers.

On July 2, 10am local time, the pair took off. Despite ideal weather reports they flew into overcast skies and intermittent rain showers. This made celestial navigation difficult. As dawn neared, Earhart called the US Coastguard reporting cloudy weather, cloudy. At 7.42am, the Coastguard picked up the message Fuel is running low. Been unable to reach you by radio. We are flying at 1,000 feet. The ship replied, but the plane seemed not to hear.

At 8.45am, Earhart reported We are running north and south. Nothing further was heard from her. A rescue commenced and became the most extensive air and sea search in naval history. On July 19, after spending $4m and scouring 250,000 square miles of ocean, the search was called off.

In 1938, a lighthouse was constructed on Howland Island in her memory. On 5 January 1939, Amelia Earhart was declared legally dead. Neither the plane nor bodies were recovered.

There is no doubt that the world will always remember Amelia Earhart for her courage, vision, and groundbreaking achievements for women. In a letter to her husband, written in case a flight proved to be her last, her brave spirit was clear: Please know I am quite aware of the hazards. I want to do it because I want to do it. Women must try to do things as men have tried. When they fail, their failure must be but a challenge to others.

Amelia Earhart is a model of the modern independent woman, and an icon of the spirit of adventure, her myth made all the more alluring by her mysterious disappearance and failure at her final challenge. Like all entrepreneurs, her success was down to passion, sheer effort, thinking big and bold, and having a clear focus.

The unprecedented energy and attention around gender equality for entrepreneurship makes this a moment when extraordinary progress is possible. We short-change women if we set our sights too low. In the earliest days of American democracy, Abigail Adams (wife of John Adams, and mother of John Quincy Adams) urged the architects of the Constitution to ‘remember the ladies’. Now is the time.

So on the back of the eight initiatives of Alison Rose’s report, and the memory of Amelia Earhart, I believe our goal should be to expand women’s power and influence in entrepreneurship. I think of power and influence as the ability to make decisions, control resources, and shape perspectives. It is something women exercise in their homes, in their workplaces, and in their communities, and they can have the same impact on business.

 

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.