If you landed on Unbridled Naivety first, pleas consider starting this blog at the Prologue: Ehh?
Ehh? Chapter 1 – Unbridled Naivety
“When you jump off a building – make sure you celebrate every window on the way down, because there may not be a big party when you reach the ground.”
Unbridled Naivety – Part 1
No one would ever start a company if they truly believed they were up against the heavily unfavorable odds that the journey actually entails. People have equated starting a company to jumping off a high-rise building and assembling an airplane as you fall. I’m going to add that when you jump off a building, make sure you celebrate every window on the way down, because there won’t be a big party if you reach the ground.
Unbridled naivety is required in your magical first year: you’ve got an idea, people believe that it’s a good one, you believe it’s a good one, you’ve made a few excel models that show a nice hockey stick curve in revenue growth, it shows you getting paid in six months, and it shows your – very lucky to have met you – investors earning a dividend by years end!
Lets do a little test:
I’ll share a secret: You are about to risk your personal finances and probably not make any real money for many years, you are going to work 60 or 80 hours a week unpaid so some asshole can’t force you to work 35 hours a week and then pay you for them! Don’t worry I get it, I support your decision, I did the same, but here’s the uncomfortable truth: statistically only 9% of North Americans take this leap (well done!), 50% of all companies fail in the first five years, and only 4% ever make it over one million in revenues… 550 to 1 odds anyone?
“Not me, buddy!” you say, “I’m going to make money in year one!”
Perfect, you are one of us now, an entrepreneur… and you passed the unbridled naivety test… I said the exact same thing to a smart lady who told me it would take me five years to make money. So grab your tools, let’s take the leap and build that fighter jet! May I suggest that we build the ejection seat first?…
“No!” you say? “Wings, engine, and jet fuel – I’m all in!”…
Ok! Giddy up! Let’s do this!
Make a Plan
In the ideation phase you really only need three things: a plan, some money and some help. I’m going to simplify these ideas now and dive deeper into each one on their own later. In the words of General George Patton:
“A good plan, violently executed now, is better than a perfect plan next week.”
A business plan is a great tool to make sure you aren’t forgetting some important piece of the puzzle, and that you’ve thoroughly thought everything through, but don’t spend months and months making a perfect plan because a plan is just that: a plan. Indeed a business plan may fall squarely into the Dunning-Kruger cognitive bias where naivety (read incompetence) keeps you blissfully unaware that you are actually very incompetent at this.
“Everybody has a plan ’till they get punched in the mouth.” ~ Mike Tyson.
I’ve only written one highly detailed business plan prior to starting a business in my life. It was useful as a thought process, but went out the window when reality set in. It also did not use its excessive length and detail to impress even one banker or investor, everyone just read the executive summary and flipped to the financials.
More valuable than a traditional business plan is an agile step by step approach. Use a vision, mission, and a one year strategic plan that breaks down SMART goals (Specific, Measurable, Achievable, Relevant, Time Bound) for each quarter, month, and week. A mechanical engineering professor friend of mine likens this approach to SpaceX’s agile model of engineering. They do the best analysis and engineering they can, but until they fly the rocket, they won’t realize any of the unexpected factors that fate, physics, and mother nature can throw at them. There is no computer modeling detailed enough to plan for a hungover mechanic leaving a wrench in the propulsion module. Flying and failing fills in the gaps that planning (and naivety) can’t possibly account for! Lucky for us, right now we are just trying to stop that airplane we are building from falling, not launch into space!
Potentially we should start with a glider instead of a fighter jet, what do we really know about airplanes?
Ask for Help
“The secret to business is simply: Sell something for more than it cost you to make it. “
New entrepreneurs often suffer alone, believing they need to have all the answers, or that their idea is so valuable that someone might steal it. Aww, I remember when I thought that too! Then I tried to raise capital for said idea… And no body wanted it. To challenge the “Steal my Valuable Idea” argument, consider that Ronald Wayne, the co-founder of Apple sold his shares in that valuable idea for $800! You don’t need to give away the secret sauce to ask for help! Outside of your idea, you are not doing a single thing that hasn’t been done before. At the highest level the secret to business is simply: Sell something for more than it cost you to make it.
Find a business accelerator, or a business association, and ask for help. Some like VIATEC in Victoria have startup programs that match startups with executives in residence, others can potentially put you in touch with the right coach or mentor. There are groups like EO, TAB, YPO, WPO where local business owners consult one another on a monthly basis facilitated by a mentor. I belonged to a TAB board for 6 years, It is amazingly valuable to let your peers guide you and hold you accountable.
To this end, go for coffee or happy hours with other entrepreneurs and business owners too (drinking might come in handy later). Once you find help, listen attentively and open-mindedly, but do not believe that anyone knows exactly how to start your business in your time with your skillset, because frankly they don’t. You’ll both be learning that and fucking up together along the way, luckily a good coach or mentor has been fucking up for way longer and knows its just a part of the learning curve. They will be able to set you up with proven models, processes, and systems, and steer you away from the mistakes they made on their own journey to ten year overnight success. They will not build your business for you, only you can truly love your business, so don’t take your foot off the gas for one second!
The Triple-F Round
“Tell your Triple F’s to only invest as much as they are willing to loose.”
Starting a business is like going to school. The more money (runway) you have, the longer you get to learn how to do it right, serve your clients, and solve their problems.
It takes money to make money, so how do you fund your dream? You’ve maxed your credit cards in that hockey stick excel model you made in quarter two, you are years of net profit away from a bank loan that requires zero risk (and also requires you don’t need a loan) to qualify. You are a proven model with sales traction (long way) away from an angel investor, let alone product market fit and Venture Capital (only 1% of companies ever get VC funding). You have two choices: Work a day job to fund your business as a side gig, or ask the people that love you for an investment: the Triple-F Round (Friends, Family, and Fools) is how most early ventures start, so don’t be shy, but after you nail that hockey stick investment deck presentation… please trust me here… tell your Triple F’s to “only invest as much as they are willing to lose”, you will thank me later, I really want you to win but even when you do, the poor long suffering “Triple F’s” are at least five years from liquidity. You do not want to have a liquidity conversation every year with a relative that needs their investment back to pay rent.
Want to Read More?
Unbridled Naivety with a plan, some money, and some help is a terrifyingly effective force of nature, and the backbone of most entrepreneurial journeys! Stay tuned for an in-depth look at these ideation topics in the next few blogs. Up Next: Personal Plan
If you make it through the startup phase to product market fit, check out my Business Growth Consulting practice.
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About Me
Hi, I’m a founder-CEO with 20 years of experience growing companies, building relationships, imagining the future, and creating new things. I started my entrepreneurial journey in 2002 when I founded my first company, creating visual effects for Hollywood TV shows, where I won an Emmy for ‘Lost’ and received four nominations.
In 2010, I founded an aerospace and defense technology startup and led the company through unbridled naivety, survival, bootstrap, dogged resilience, and scaling. Over the years, I’ve had the opportunity to sit on numerous boards and round tables comprising diverse companies, communities, people, and points of view. I’ve successfully sold to Hollywood giants like SyFy, Fox, ABC, and Disney, to aerospace leaders such as Boeing, Lockheed, and Babcock, as well as the Canadian government, securing multi-year multi-million dollar contracts.
Now, my mission is to help fellow founder-CEOs by bringing proven strategies and customizable playbooks into their businesses. I coach them on building a solid team and executing their plans while focusing on what they love to do, ensuring their business thrives. My coaching expertise lies in strategy, business development, B2B & B2G, marketing, sales, and creative problem-solving. I’m here to help you get your business working for you, not the other way around!
Awards
1 Emmy, 4 Nominations, News Maker of the Year, Young Entrepreneur of the Year, Team of the Year, Tech Company of the Year, Top 5 Moments in Television History (Lost – Pilot), 4 Time Top 75 Defence Company
Achievements
TEDx Talk, FuckUp Night Talk, Host of Western Innovation Forum, Trade Show Panelist, and Speaker.
Boards
Victoria Innovation, Advanced Technology & Entrepreneurship Council (VIATEC) Western Canadian Defence Industry Association (WCDIA), The Alternative Board (TAB), Vancouver Island Aviation Association (VIAA)
Hobbies
Painting, Running, Sailing, Hiking, Camping, Traveling, Reading, Cooking.
Great Books
Scaling Up, Unfuck Yourself, Good to Great, Everything is Fucked, The Untethered Soul. How to Sell an Elephant