Good Hard Kick In The Ass
Rob Adams’ bootcamp for entrepreneurs shatters new
DC -- November 14, 2002) “I understand that all entrepreneurs want a checklist,” said Rob
Adams speaking at today’s Netpreneur Coffee &
DoughNets session. “They want to know exactly what to do
to make things work. Unfortunately, it's not that easy.
Quite frankly, if it were that easy, it wouldn't be as
rewarding as it is.”
a serial entrepreneur and former
Marine who now runs Austin
Ventures' bootcamp for entrepreneurs, was here
to discuss the lessons in his new book,
Good Hard Kick In The Ass,” exposing some of
the common myths about entrepreneurship that continue to
linger despite the bursting of the dotcom bubble.
“During the bubble,” he recalled, “we invested
in some companies that did some things very, very well.
Many of those companies, although not all of them, have
continued to do well. We tried to take them apart and
figure out what particular piece each of those companies
did that made it really good at one particular aspect of
Adams presented those lessons in the form of nine
myths that he and other venture capitalists hear over and
again from young entrepreneurs, the most common myth
being: Good ideas are scarce.
No, he said, ideas aren’t scarce, they are
commodities. He cited what he called the 1:8:20 Rule.
“If one person in Austin, Texas, has an idea, there are
at least eight people up and down the East Coast corridor
that have it, and there are probably 20 people in the
garages of Palo Alto in Silicon Valley that have it.”
does that mean for entrepreneurs? That it’s the ability
to identify a real market need and the quality of
execution that makes or breaks a company more than any
other factor—not the brilliance of the idea, or the
speed to market, or the defensibility of the technology.
It’s all about the business problem you’re trying to
fix and how well you and your team execute on making it
happen. Adams calls it “execution intelligence,” which
is "the ability of a
particular group of people in a particular place and time
to make a company thrive.
Adams’ model for execution intelligence is Dell
Computer. “Think of what Dell has done,” said Adams.
“They have taken something almost as ubiquitous as paper
clips, the personal computer, and they've executed to
superhuman perfection. The way they've been able to do
that is by hiring their management team. Who would have
ever dreamed that some kid named Michael Dell who was an
undergrad at the University of Texas would be the person
who knocked off Compaq, forced IBM to get out of the PC
business, and trashed a whole bunch of personal computer
companies over the last 10 or 15 years, companies that
most of us probably don't even remember?”
The second most damaging myth entrepreneurs fall prey
to is thinking that “I know my
customer.” All entrepreneurs believe that it’s true,
but, instead, they have too often based broad
extrapolations on insufficient evidence, such as limited
conversations with just a few colleagues or locking
developers away to work without market input. Adams
advised talking to at least 100 potential customers before
developing a product to see what people really need, how
badly they need it, and what they’re willing to do to
get a solution.
“We find that the best companies make this a part
of their culture,” he said. “When they want to figure
out a new product, they get everyone in the company on the
phone. I mean the receptionist. I mean the engineers. I
mean the salespeople. I mean the CEO. Everyone has a new
appreciation for what it's like to sell something. Does it
take 20 or 30 phone calls to get one interview done? Well,
now you understand what it's going to be like to sell that
That second myth is actually closely tied to the
third, “I have to ship the
killer product.” Both reflect too much focus on
product rather than on the business problem being solved.
When you follow this third myth, you try to build the
coolest, most complete, most elegant product you can
imagine, which delays your entry to the market, keeps you
spending rather than making money, and blocks your
receiving early market feedback. The key solution to both
myths is a heavy emphasis on market validation, first to
truly understand the market dynamics, and, second to help
you identify the minimally
functional feature sets that will get you into the market.
Adams’ model for the latter is, of course, Microsoft
which has a reputation for shipping imperfect and buggy
products, but it gets them vital customer feedback for
improving the product in frequent, future releases rather
than developing in the dark.
Adams went on to discuss and shatter five
more myths: Raise
a lot of capital quickly; Investors fund business plans;
Investors want their money back quickly;
Advertising is the hallmark of a good marketing plan; and
I can use partners to sell my product. His emphasis was on
the earlier three, however,
which cause the most and most difficult problems
entrepreneurs face. “They have the biggest impact
on the probability of success for any company, in
particular, technology companies. Market risk is what
kills companies, not technology risk.”
What do all nine myths have in common? For one thing,
avoiding them makes a company much more attractive to
investors, customers, and other partners. According to
Adams, “The more risk that has been pulled out of your
company, the more valuable it is to an investor.
Everything we talked about today incrementally reduces
risk. If you can build a company where the risk is reduced
because it's got a strong management team, a good product
spec that isn't trying to do too much, an understanding of
its market, revenue traction, and people paying money for
the product, those are all things that mitigate risk and
make the company more and more valuable to an investor.”
And although he spoke often from that
investor’s perspective, it all amounted to sound advice
for any startup, whether seeking outside funding or not.
In fact, when asked by an audience member what form of
funding he recommended for startups now, debt or equity,
he replied, “Actually, the best would be
2002, Morino Institute. All rights reserved.