First off, I want to thank Cari Sommer, founder of Urban Interns (a very cool company in NYC), for giving me the spark and title idea for this blog post.
I’ve come to realize that I learned a lot about start-ups in high school (and a few episodes of Saved By the Bell)…
Everyone wants to join the club that won’t have them
I have found this maxim to be true in so many different situations (friends, dating, sports). In fundraising, the smartest thing to say to a prospective investor is that the round is fully committed, or that you’re not sure they’re a good fit for the company (the fund is too big, not the right domain expertise, etc). As soon as an investor hears that, the email response time from VCs goes from days to seconds.
This lesson is a relatively simple one – scarcity creates desire – it’s just human nature. The technique works well when recruiting candidates (e.g. “we received a lot of resumes for this job”) or selling a new product. We’d often sell doctors on the fact that by buying our product they’d be among the first in their area to have what would become the standard of care in the future.
Pay it forward
Given my belief about the power of serendipity, I think the idea of paying it forward is crucial in that you never know from where the next opportunity will come. As much as possible, I try to hear out an entrepreneur with an interesting idea and given them as open and honest feedback as possible. In a sense, this should be the “entrepreneur’s code.” Since we’re all underdogs, I believe we have an unwritten obligation to help each other out. I often quip that “you get what you pay for,” implying that my advice while genuine is free and only one data point, and that I expect nothing in return. Ultimately, we all need to get paid for our efforts, but I believe in the short run one should expect no compensation for basic advice or introductions.
Deal or No DealThe gist of this one is that most of business, and life’s decisions come down to knowing when to take a deal offered (I learned this when I failed to trade my Jose Canseco rookie card). At my first venture, Handshake.com, we mis-played the “Deal or No Deal” game. We raised over $20M and had a $100M post, yet we had overcapitalized the business and should have opted to sell at a much lower price. Additionally, we should have taken less money and kept the valuation within reason to make more modest exits viable. Instead, we were caught up with the heady times and got overly greedy. At Brontes, we were much more careful and did our best to maximize our fundraising and exit, even if there was some potential of an even better outcome. You really do need to know when to hold them …
It’s fascinating to me how life’s (and TV’s) most basic lessons apply so well to building businesses.