The Confidence of the Startup CEO

The most important quality of a great CEO?

con·fi·dence      
the state of feeling certain about the truth of something.

This series is for people who are currently a startup CEO or would like to become one, or are just interested in the topic.

CEOs ask people to do extraordinary things, especially in small companies that are trying to create something totally new and do it as quickly as possible. Their confidence is essential in getting people to do great things. 

Often I am asked questions about the engine that drives the CEO, what makes someone an effective CEO, a successful CEO, a well-liked CEO. These are big questions, but a lot of my answers have to do with the subtle mental aspects of being a leader of other people, what I call the “soft dynamics” of leading. I dwell a lot on the psychology of great leadership as well as the functional skills.

new york city

When people have asked me the key to succeeding in the CEO job, the word that often comes to mind is CONFIDENCE. I think confidence is probably the most important attribute in being a strong CEO, critically important and it directs every other part of being any type of leader.

Real confidence, true confidence, not false confidence. The ability to move forward and make a lot of decisions quickly. Action, movement. Real confidence encourages honesty and fairness and good will. And vastly increases the odds for success.

Confidence relates to so much of our lives, and is a very complex feeling and form of sensory intelligence. It’s fairly easy to sense a lack of confidence, or false confidence in a leader, which tends to make them lose the loyalty of those who work for them. A weak, uncertain leader is a risk for everyone around them.

What creates confidence? That’s a key question, because if you can synthesise confidence for yourself, your life and everyone’s around you will be better. It allows your brain and body to relax, get focused, be stronger.

The best type of confidence comes from within, doing something you know for sure that you can do well. We all have our lists. For me, running, playing certain sports, naming rock-and-roll songs from the first few bars, doing jobs I’ve excelled at in the past; I have a lot of confidence in being able to perform well at these things. 

In your work, as you become better and better at certain things, from practice, your confidence grows. When someone comes along and tries to shake your confidence, it doesn’t work. 

Try to assess your own level of confidence. What are you strengths? What are your weaknesses? How do you fill these holes? 

Fine Art

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Tom Nora is a five time startup CEO and counsellor to a dozen startup CEOs. He is also the author of Hacking The Core on Amazon Kindle.

Answer to askjelly.com question: How do I deal with my partner’s…

 

How do I deal with my partner’s very extreme mood swings, knee jerk reactions and short temper?

tl;dr. Put it into a larger context, agree on a set of guidelines for acceptable behavior and communication.

Extreme emotions are never a good thing in a business setting, especially among partners. There’s an unwritten agreement among a leadership team that no one will go outside certain bounds of anger, mutual respect, and patience.

Usually when this happens there are other issues like lack of trust or perceived unfairness. In a partnership, often one member feels that they are doing more than the other(s), possibly feels incompetent and is trying to hide it, has personal issues or possibly several other problems.

The best thing to do is to lay it all out, talk about it, figure out definitively how to stop it. Don’t let it go on. Honestly discuss what is happening on both sides, and reinforce your desire to work with each other. If that doesn’t work, changes are needed before you damage the business.

 

How do you know?

I’ve stepped into the CEO role at several companies and have seen the emotional pain it causes founders to let go of the control and lose recognition. The problem usually resolves itself over time with building trust and paying proper attention to it, but not always.

The Greenshoe = how to repay all those that helped along the way.

How is it that so many people associated with startups reap the financial benefits, yet others just as close get no financial upside This is a source of frustration among many people in the startup sphere. Imagine if you’re in Silicon Valley right now with no equity in a tech startup, but associated with several people getting six figure “bonuses” because they somehow wound up with some stock in one.

The free parties (or not free) and swag and great stories and boat rides in the bay are nice. Sometimes you’ll even score an iPad or Apple TV, but it’s not the same as being one of the insiders.

Often as startups grow and maneuver their way through the jungle of success or failure, they have a lot of help from those around them.

Often many these people don’t have any equity or upside from their advise or moral support or money lending, or even the spare couch they let you sleep on when you were in their town.

If the startup actually makes it to an IPO, there is actually something you can do.

It’s called the “Greenshoe”. You have to be very careful about this, you can’t imply or promise anything in advance, and it only works when the company goes public, but the Greenshoe is an amazing award for those involved that don’t have equity.

The Greenshoe is an over-allotment of stock options, up to 15% of the total offering at time of IPO. You can offer these options to virtually anyone, friends, family, people who helped your company. Since they’re options, acquirers only exercise if the stock goes up, and have no downside risk or capital outlay.

Upon the IPO event, the option owner can gain the upside if the stock goes up over the initial offering price and essentially collect that difference.

I’ve used it a few times when I was lucky enough to be able to offer it to friends and family. Strangely enough, some people have declined, because they’re not sure it’s legal; they’ve never heard of it. Others have bought themselves a new Lexus with it.

Here’s more info on wikipedia:

Greenshoe

The Greenshoe should provide motivation for all of us in the startup world to try to continuously build our company steadily, continuously and profitably and to know that you can make many peoples lives a little bit better by sharing the wealth. The rewards are pretty amazing.

Contact me at

 #Web #Development #Digital #Strategy #Art| tomnora.com

“Creativity takes courage.” Learning from Matisse

“Creativity takes courage.” –Henri Matisse

This is one of my favorite quotes about innovation, by an innovator who is still revered 100 years later; it’s the first thing you’ll see if you go to my personal website http://tomnora.com/ . Matisse was an amazing innovator, and his innovation and originality

Innovation, Originality, Creativity – why are these things so important in the tech startup world? And what do they have to do with art or painting?

I have the opportunity to visit many secondary and tertiary startup markets in my travels, meaning not Silicon Valley or New York, and one of the things that always strikes me is the lack of originality in almost every company pitch I see or hear.

I can see that the entrepreneurs I meet are sincere, have usually put a ton of work and pride ion their invention or product. Often they have put a fair amount of personal or family capital into the venture (these days that’s usually their parents money).

The major flaws in their planning process are denial and ego fortification – they don’t do enough homework to see how many are already doing something similar because they don’t really want to know; and they highly overrate themselves as amazing entrepreneurs.  This is a bad combination for success, but I see it daily.

I get it; I know it’s more difficult than ever to build a real career and easier than ever to start a company. But the very core of creating an interesting and new business should be the concept of originality. Some originality, enough to be different, unique, without being too weird.

Real originality comes from within, because it is inspired, comes from adrenaline and emotion, not from a spreadsheet or desire to merely make money. Finding the mid point between originality and capitalism is what I define as business innovation.

There’s nothing new under the sun, so you must critically modify, hack, or turn sideways existing systems with a truly new vision. Instead of just copying or slightly modifying something you see, try to take it a few steps further.

One of the quite innovative methods Matisse and his peers used was finding inspiration from other skills they already knew, leveraging their expertise as craftsmen. Matisse was a draftsman, a printmaker and a sculptor, and you can see these influences in his paintings.

Part of the magic of great business innovations is knowing which rules to break. Matisse broke some of the rules, but kept many intact. The rules about the way business processes flow are too often just accepted, but if you can analyze them, find an achilles heel, then innovate a better answer. Get rid of the obsolete rules without breaking the good ones, and great things will happen. It’s about where to hack and where not to.

I went to a pitch fest in one of those secondary markets the other day. Most of the presentations were weak delivery, boring, been done before and uninspiring. But there was one that was pretty amazing, by an 18 year old who had become deaf at 12. He has developed an exercise system for handicapped people; you tell by his excitement and thought process that he was inspired, and created true innovation. He wasn’t polluted by how corporations work or the rules of business – he was still in high school.

Another Matisse quote is “There are always flowers for those who want to see them.” Look carefully, take the extra time and find the uniqueness in any idea you want to realize – it’s there.  Find me on twitter at @tomnora

 

What to See in Silicon Valley – Tech and non-Tech

Let’s start with the Non-Tech – Here’s a small piece I just wrote on the subject of how to visit the Bay Area and not be totally focused on techno-nerd things:

You should also expand your horizons beyond the techy stuff. I’ve worked and lived in Silicon Valley off and on for over 30 years (really!) and always enjoy the escapes from my techno-binary lifestyle there.

In fact, if you’re not so one dimensional and career/money/technology focused, you’ll probably have a better chance of meeting the right people.

I’m not disagreeing with the other lists here, especially Scoble’s list is very good and you should do all those. But here are a few of my favorites…

NON-TECHY EXPERIENCES:

>> Go to downtown Los Gatos and walk Main Street and University Ave, it has a very non-techy feel to it. Then sit in the Los Gatos Coffee Roasting Company for a bit.

>> Sit in the Rodin Sculpture Garden on Stanford Campus.

>> Drive the hills between Silicon Valley and the coast, go to the Half Moon Bay for dinner on the pier.

>> Drive up Sand Hill Road, slowly, and take it all in. This is the origin of most of the biggest VC deals in history.

>> Hit some dive bars in SF, there are too many to even list. SF is becoming more techy, but there are still many places where you can forget you’re in the center of techdom.

>> Walk the Golden Gate bridge.

Since SV is so tech focused, it’s actually a pleasant surprise when you find non-tech things to do there. If you do some of the above, I guarantee your trip to Silicon Valley will be much better.

For the technical visit list, my favorite was assembled by Steve Blank…

A Visitors Guide to Silicon Valley | Steve Blank.

 

Silicon Valley Uber Alles? I think so… Some of their Secret Weapons.

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Can any other region “catch up” to Silicon Valley, or be the next Silicon Valley? Statistics show that it’s probably kind of futile to even try. Many have tried, but must be content with their small market shares. How can other regions will ever match the MACHINE: Stanford, Andreesen, Draper, Valentine, Doerr, Facebook/Apple/Google Millionaires, 4 Generation VC firms, Hardware/Software partnerships, over 100 Billon $ market cap cos.

Because high tech and software industries are now being seen as lucrative, job creating, imperative and oh so sexy, many regions are trying as never before to get in on this – mobilizing their governments, old school industries, universities and grandmas to unite to be the next Silicon Valley, calling themselves Silicon- Beach, Forest, Plains, Alley, Prairie, Coast, etc. These towns are setting their expectations way too high while the real Silicon Valley giggles at the sight.

Here are some of the secret weapons that make Silicon Valley stronger than any other “region” and act as its barriers to entry:

1. Silicon – Uh, yeah, that word? It’s what started all this. Silicon Valley launched and was launched by the mainstreaming of the Silicon chip over 50 years ago, which is now part of everything. There was no other part of the planet where anything close in innovation, design manufacturing, equipment, marketing and sale of semiconductors has emanated from. This foundation still drives the area and the world, even thought it gets less attention now than the software side.

2. 100 Years of Growth – It all began with military electronics, low cost housing, lots of empty land and Stanford University. It has spread way beyond to the east bay. San Francisco, over 50 universities and trillions of dollars in revenue. The growth has had bumps but over time has increased more steadily than any other economy in history.

3. Recruitment – Most of the leaders in SV are from elsewhere because Silicon Valley aggressively acquires the best from all over the world. Why not? Via Stanford, Berkeley, Facebook, Google, recruiting Harvard and MIT undergrads, their wonderful PR machine, advertising free meals, free car washes, free dry cleaning, free day care. $150,000 salary right out of college. Unlimited vacation. Where else can you gat all this?

4. Stanford – Not sure this even needs explaining, but Stanford has been a wole new entity in the past 20 years, beyond anyones imagination in wealth creation, funding, computer science, a recruiting engine into SV then on to local companies, pride, confidence, location.

5. Money, money, money – There are so many giant sources of money in SV that it’s staggering. VCs of course, Angels, they invented the term Super Angel, San Francisco, Real Estate leverage, IPO millionaires, corporate funding, Asian and European money, and on and on.

6. Tolerance for Weak Links – Here’s one most people don’t know – most people in SV aren’t stellar; I know several weak players who fake it well and are millionaires or millionaires-to-be just because they’re in the right zip code. The public tagline is everybody has a high IQ, but in reality there are lots of dwebes running around – I know, I’ve managed plenty of them. SVs leaders smartly realize the win ratio can be pretty low if you have a few enormous winners. Most SV projects die, most SV companies die, but if you build the algorithm to plan for this you’ll put more possible winners in play. So what if a few totally unqualified employees that snuck in make a few million. Like any organization, there are several who skate by or get by on good politics. That’s OK if you plan for it, “engineer” for it.

That’s just 6, there are plenty more reasons why there will only be 1 Silicon Valley for along time to come. The best answer for any other local economy is to just make the most of who you are, embrace your own identity, partner with Silicon Valley. And don’t use the word “silicon” in your name. Take Boulder, Colorado as a model, they’ve successfully created their own very strong economy for startups. There’s a startup for every 50 or so people there. They have all the pieces and they are heavily connected to Silicon Valley without envying them.

@tomnora

“Recommendation Swapping” on Linkedin

This has organically happened a couple of times for me – someone I’ve worked with in the past asks me to write them a recommendation and then spontaneously returns the favor. It’s a very cool gesture and it reinforces the relationship for the future.

Below is an example for a startup entrepreneur I just went through a short mentoring process with, Greg Weinstein. Greg will do very well with his company, I could’ve written a lot more about his attributes.

I recommend (get it?) you try this – swap a recommendation with close present or past colleagues; it will enhance both of your social business circles and create new connections.

It’s hard to derive extra value on linkedin, rise above the fray – this will help you do it.

#networking #linkedin #social_marketing

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Gregory A Weinstein has recommended you on LinkedIn

Gregory A Weinstein
Gregory A Weinstein Founder and CEO, One Fulfilling Life
To: Tom Nora
Date: August 22, 2013
Gregory A Weinstein has recommended your work as Founder, Marketing, Community Development at Startup Workshops.

Dear Tom,
I’ve written this recommendation of your work to share with other LinkedIn users.

Details of the Recommendation: “During the early and critical stages of the conception and start up of One Fulfilling Life, Tom provided us with thoughtful, wise and nurturing insight and guidance. He was our “Board of Directors” and the fit seemed very natural and intuitive.

It was an awesome opportunity and I relish the experience. His guidance saved us a lot of time and money and more importantly kept our momentum moving forward in the face of what could have been crippling obstacles. If your a tech start up and especially if this is your first business venture Tom’s your man. Catch him if you can!!!!!

Thanks Tom”
Service Category: Business Consultant
Year first hired: 2013
Top Qualities: Expert, Praxis High Integrity Systems

Update: What negotiation tactics does Dave Mcclure use? #500strong

Tom Nora‘s answer to:

500 Startups: What negotiation tactics does Dave McClure use?

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Tom Nora, startup CEO, software dev, ux Edit Bio

1 vote by Casey Allen

I’ve advised several founders from 500 su and they’ve all said Dave is fair, honest, easy going, and lets you know when you’re cheating yourself. Most venture capitalists will take a little advantage of naive entrepreneurs so this was surprising to hear over and over.

Dave McClure should be thought of more as a movement leader than asking how he negotiates. He doesn’t really have to use any tricks, the whole thing is a brilliant maneuver. Remember, this thing didn’t exist a few years ago.

By design his operation is humble (I know, I’ve lived on Castro Street twice!). He created a new layer for people to get a shot at launching a Silicon Valley start with some cash and mentoring that they never would have otherwise had.

Negotiate? He could be more hard-ass but isn’t. He could wear contacts (or real shoes) but doesn’t. He created his own ecosystem that spreads out all over the world now, and even used some of his own money.

The environment allows people learn how to negotiate. And to fail softly if they fail, which is almost critical to later success.

500 startups went from strange idea to an integral part of the world startup ecosystem. Not many major players are not involved or connected in some way. One of the things Dave doesn’t charge for in his valuations is the connections to that world, and for that he will surely make everyone involved a bit of a winner.

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Mark M. Whelan 1 vote by Tom Nora

Tom, this is a great endorsement; however, doesn’t address the question set, being fair, honest and easy going is not a negotiation tactic. I think you are suggesting he is a partner style of negotiator, i.e. looking to find common ground before determining the valuation opportunity…

 

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Tom Nora

Good points, but I think those are negotiating tactics, everything is. Dave’s strategy is to focus less on each deal and look for the wins through volume, hence the name. Many VCs on the other hand, heavily scrutinize and try to squeeze the best terms for themselves in every deal.

One key weapon VCs use is the threat of walking away from the deal at any moment. Dave pretty much takes that one off the table before starting the negotiation, giving an advantage to the green entrepreneur.

A classic trick is “all the deals are the same here, therefore there’s really nothing to negotiate” which is never true, but works often.

@tomnora

Be Audacious, like Sophia Amoruso.

Audacity. Boldness. Risk Taking. Vision.

Audacity is required to build an innovative startup, to invent something new, try to do things others say you cannot do, and Southern California needs many more audacious people in its tech and media startup ecosystem. So Cal is a perfect environment for innovation and bold risk taking. We have sunshine, 20+ Universities, a great history of tech innovation, and more idle capital than most places in the world. We also have some of the most brilliant scientists and financial minds in the world.

But audacity is different than intelligence or experience or brilliance or funding, it’s a unique form of energy and effort that is the tipping point of incredible startups. It’s often more important than any other attribute in making the impossible happen. If you look at some of the best inventions on the Internet and throughout time, they’ve either been accidents or major audacity. In the history of Southern California, there has always been a large slice of creativity involved also.

Where’s our google?

So why haven’t we produced a Google or Facebook here? In Silicon Valley people like Ron Conway and Tim Draper sometimes write a check for $500,000 without even seeing a pitch. They base their investments on instincts, probabilities, betting on the people involved. Where are these investors in L.A.?

Southern California certainly has a history of audacious visionaries who did it – created something from nothing. Louis B. Meyer, Howard Hughes, Edward Doheny Sr., Peter Drucker, Richard Meier, Frank Gehry, Walt Disney, James Irvine, Cecille B. DeMille, Sofia Amoruso and many other creative leaders. These people made something out of nothing, took enormous risks, lost it all and won it back.  Most used all of their own money, many started with nothing. People like this are required for L.A. to ever have a chance of approaching Silicon Valley’s success machine.

In the So Cal startup ecosystem, most of the companies launched are “safe”, evolutionary extensions of current business models and features, enhancing existing business ideas around the world. There are many cool twists, but not much in the way of revolutionary new ideas that succeed. Strange singe we are the #1 place in the world for entertainment origination in film and music. This does not attract investors from Silicon Valley. They’re looking for audacity, would rather invest in a low probability bold idea than in something “safe”.

Sometimes situations necessitate audacity, other times audacity generates the idea, the “manic” brainstorm. Audacity allows you to see beyond what others see, but requires an underlying confidence in the face of likely failure, criticism from people around you, and possibly major financial losses. Not a conservative approach. The reason for most startup failures is that they aren’t audacious enough – they try to be too much like everyone else, they stand way back from the leading edge. Or they mistake arrogance for audacity “we can’t fail” because we know everything. Audacity is threading that fine needle between crazy and lazy.

Be Like Sophia.

A great and very current case study of So Cal audacity and incredible success is Sophia Amoruso, founder of the Nasty Gal clothing dot com. At 22 in 2006, she was a junior college dropout, living with her step aunt working for $13 an hour checking student IDs. She had no business experience, no fashion experience, no Internet experience, didn’t know what e-commerce meant and zero $ in the bank. Today she is CEO of the fastest growing retail company in the US, according to Inc. magazine, with a valuation of somewhere between $600 million and $1 billion. So where’s the audacity here? In 2006 Sophia quit the admin job and started hunting through thrift stores for vintage jeans she could enhance and resell. Since she nothing about web design she used EBay. Not much audacity yet, many millions had tried that. Since she was in San Francisco there was lots of inventory available.

Then she did something extremely audacious – named it Nasty Gal. The name came from an album she owned by Miles Davis ex-wife and singer Betty Davis. She actually had to acquire the URL from a porn site. Most people have to do a double take when they hear the name. Audacious move #2 – her markups were insane, 10x to 100x in many cases. She never got an MBA so she knew none of the rules of profit margin, her guide was to be bold, ask for a lot. She bought one jacket for $8 and sold it for $1,000 as a “vintage” piece. Then she moved the company to L.A. to be in the center of hip fashion commerce. Nasty Gal even convinced a Silicon Valley VC to invest over $50 million into the company. They said “only in L.A. would we find a company like this”. In 2012 sales were over $130 million last year with $100 million net profit.

After all this success, Sophia still handles most of the marketing, using the same guerrilla tactics that have always works. Urban Outfitters recently made a bid for ~$600 million but she turned them down. Pretty bold. Remember this someone who was making $13 an hour 6 years ago. They’re now launching their own publishing company Super Nasty; of course Sophia is Editor in Chief. So we need more Sophias here. It’s not knowing how to code; it’s audacity and confidence in the face of certain failure.

It will happen in L.A.; the proliferation of original ideas that spawn leading tech companies is just around the corner. We have all the ingredients – desire and hunger for success, migration of brilliant minds from all parts of the world to this area, capital that is slowly getting less conservative and more audacious.