Twenty-five years ago, there lived a young entrepreneur named Chris Howard. He knew nothing about what his future would foretell, yet all the steps he took in life led to a future full of innovative startups, global corporations, all surrounded by amazing people and a company of his own with hundreds of employees. Before he reached his goal, Chris hit a few bumps in the road. Luckily, he has posted his experience on his Twitter account to inspire entrepreneurs and investors and to encourage them to keep their businesses on track. We have assembled twenty-five of those lessons for your ease of use.
So, let’s walk this path together with Chris and see how to:
- Avoid expensive investment mistakes
- Get long-term customers, who come back for the 2nd, 3rd, and 4th-time
- Use business-killer events to make your company thrive
- De-escalate a conflict with an angry customer
- Run a successful startup
Lesson 1: Buying the Stock Instead of the Product
Chris was an early Amazon fan. He spent a lot of money on Amazon products over the years, but not on the stock. It was the same with Tesla. As an early Tesla auto fan, he bought one of their first 1,000 cars, but again not the stock.
If you love the product, it might be a perfect candidate for your stock portfolio.
Lesson 2: Investing Right, Not a Lot
Chris was convinced Google was the next Microsoft. When Google stock debuted at $54, Chris thought it was too rich and passed.
If you only have $1,000 but have a good feeling about the stock, it could be worth XXX in a few years.
Lesson 3: Feeling Like You’ve Missed the Opportunity
When Chris finally decided to buy Amazon and Tesla stock, he did it at a crazy price‒Amazon at $750 and Tesla at $180. Some years later, Amazon went up to $3200 and Tesla to $900.
Seems like your portfolio candidate is surging? That doesn’t necessarily mean that its incredible run is over.
Lesson 4: Getting No Can Be the Best Answer
In the 1970’s Steve Wozniak was designing his own personal computer as a hobby. He was working at HP and tried to get the company interested in it. His managers turned down his offer, thinking people would never use computers in the home. Then, Wozniak and his friend Steve Jobs built the first personal computer themselves in a garage. Now Apple is worth over $2T.
Next time someone tells you "no," don't get upset.
Lesson 5: Searching for the Next Open Door
A few years back, Chris’s biggest client, representing over 80% of his business, was terminating their contract. A good thing happened: Softeq had an opportunity to offer another customer a large team that was immediately available. Not all competitors could offer that.
Ultimately, three companies were competing for those resources, and we were hiring as quickly as we could. A few years later, one of those clients acquired the team that was working on its project, allowing Chris to hire more people and push his company to the next level.
When one door closes, another opens. Look around to see it.
Lesson 6: Having Control Over Your Day
Chris celebrated his 12th birthday with his family a week before his actual birthday. A week later, he wanted to see if anyone would remember what day it was. But nobody did. Chris became more and more depressed as the day wore on, but he was determined not to tell anyone. Instead of actually enjoying his birthday, he ended up having a miserable day.
It could have been much different if he had said that morning, “Yay! It’s my Birthday!” and let everyone congratulate him.
We can either wallow in our own self-pity. Or we can bring positivity to ourselves and to others.
Lesson 7: Stepping Into the Twilight Zone
Every time Chris started something new, it felt like entering a madhouse. It was all so unfamiliar whether it was about starting a family, learning programming, becoming an entrepreneur, learning a foreign language, launching a business in a foreign country, or getting a pilot’s license. Learning and growth come from stepping out of your comfort zone.
Inside the comfort zone, we won’t learn anything.
Lesson 8: Seeing Failure as Learning
Chris built his first electrical device when he was 10 years old. He took some wire, a lamp plug, and a small lightbulb, and wired them together. Once when he was at home, he got a chance to test his creation. He plugged it in, and the bulb did light up. In a millisecond, the house breaker blew. When his mom came back, she found him in a dark house, and he had to explain what he’d done.
Chris’ father was periodically showing the "device" to his friends, and they laughed. He might have done that out of a sense of pride about Chris’ initiative to experiment, but Chris was a little embarrassed by his failure.
Over the years, Chris made many different devices: a dual-rocket launch controller box, a Morse code system that he wired between bedrooms... Now he’s a founder and CEO of a company that designs and builds gadgets for businesses along with the firmware and software that makes them work.
You may be stopped by failures or find that they’re just a learning tool on your way.
Lesson 9: Finding Time for Learning
If you go to a doctor who graduated over 45 years ago, half of his original knowledge is already outdated. In the IT industry, this happens even faster. A Harvard Business Review concludes that the skills currently acquired during college stay relevant only for five years. To not stay behind, you need to invest extra time in learning.
To find that spare time, Chris uses a hack called Double Time. Here's what it's about: you can listen to podcasts or take classes—all while standing in line, driving, eating, preparing dinner, or exercising.
Combine your everyday activities with learning, and you'll carve out time to stay relevant.
Lesson 10: Embracing Failure
At the age of 27, Sam Walton bought a variety store in Newport Arkansas. He wanted to make the store the most profitable in the region within 5 years. And he did it. Then, in the blink of an eye, he lost everything due to a bad lease. So, he picked himself up and opened a store called Walmart. Second time’s a charm.
Fire destroyed Kirk Christiansen's business several times. The first time it was his woodworking company, the second time‒his wooden toy factory. The third fire burned up all the company’s wooden toy inventory. After that, Kirk Christiansen decided to stop with wooden toys and move ahead with plastic. This is how the modern LEGO was born. Three busts and a boon brought LEGO into this world.
Be brave to start from scratch—it may be just your way to the next level.
Lesson 11: Having Grit
All sorts of things can happen to those who become entrepreneurs. They lose their largest customers. Their factories burn to the ground. They run out of cash. Entrepreneurship involves failures, risk-taking, and commitment to years of work before success arrives.
At Softeq, when Chris lost a customer that was 80% of his business, one option was to fold up the shop. Instead, he prevailed and Softeq has since made the inc 5000 list of fastest-growing companies for three consecutive years.
Grit makes you determined to bounce back from failures and setbacks.
Lesson 12: Providing Salary Reviews
Imagine, you’ve got a great team and they love working with you. Because of that, they may be shy to ask you for a raise. If you don't give them enough attention and don’t review their salaries, they may slip away in a few years.
Don’t take your team for granted.
Lesson 13: Increasing Return with Due Diligence
Angels who spend less than 20 hours of due diligence have an average return of 1.1X capital. Angels who spend 20+ hours average 5.9X. Angels who spend 40+ hours have an average return of 7.1X.
The amount of due diligence correlates with investor returns.
Lesson 14: Reviewing Many Deals to Start Seeing Patterns of Success
Chris was speaking to a very successful seed stage VC about his new $50M fund. He shared that he reviews 1400 deals a year and invests in only 7. Over three years, it’s just 21 deals out of 4200. Why? Because every shot needs to be on goal. Six or seven deals will provide 80+% of the returns in your portfolio.
By seeing tons of deals, you’ll develop pattern recognition for what truly exceptional looks like.
Lesson 15: Not Building Version 3.0 Before Shipping
Avoid bloating your product with features before you ship version 1.0. This may increase cost and time-to-market. Also, you can only guess what customers want instead of getting early feedback and knowing for sure.
Select the core features for version 1.0 to get real feedback from customers as quickly as possible.
Lesson 16: Focusing on Making Your First Customers Really Happy
Once you’ve defined core features for your version 1.0, focus on making them really great to make your very first customers happy. As Facebook launched, it was available just to one university for years. After finding the product/market fit with your first happy customers, pump it up.
Don’t go worldwide right out of the gate.
Lesson 17: Listening to Early Feedback
When AirBnB launched, they were present in California while their largest customer base was in New York. Then their advisor asked, "Why aren't you in NY?" They used the hint and scaled up their business.
Early feedback will help you understand what's important and what's not.
Lesson 18: Acknowledging Their Distress
Dealing with an unhappy customer can be a pain. All hell breaks loose when emotions kick in. So when that happens, you have to cool down emotions at the beginning. The quickest way to do this is to agree with the client.
This can be just, "If this happened to me, I'd be angry, too”. After that, you can ask, "How can we get things back on track for you?"
It’s hard to argue with “Yes, you’re right”.
Lesson 19: Admitting Your Mistake
Acknowledge your (or your company’s) part in the situation. Don't try to brush it off, explain what went wrong, or blame someone else. Saying “We messed up there” helps the customer feel they’ve been heard.
By being responsible for your actions and admitting your faults, you can prove to your customer your honesty.
Lesson 20: Saying “I’m Sorry”
Saying "I'm sorry that happened to you" shows that you aren't taking a defensive approach. This is an obvious reaction but apparently difficult for many of us to do. It may be a bit of a bruise on the ego, especially if you're in a situation where you don't believe you're at fault. However, in some capacity, you did do something wrong when someone has had a bad experience with your product or service.
An honest apology tells the client that you understand his/her feelings about it.
Lesson 21: Doing What You Said
Keep your word and do what you originally said you were going to do. It makes it more likely that the client will want to rely on you next time. To do so, it’s important to listen carefully to the customer and properly document requirements. And if you do something wrong, be willing to invest in the outcome.
Don’t sell time, sell delivery.
Lesson 22: Delivering When You Say You Will
In addition to breaking trust, missed deadlines can have a domino effect and disrupt the rest of the customer's plans. This is unprofessional and lowers your chances of winning your next project. These experience-tested recommendations may come in handy.
Make sure your delivery milestones are both documented and realistic. Communicate it to the client and remind them of that when your team delivers it. Keep an eye on feature creep. If your client wants to change or add new features, make sure they’re aware of how it will affect the schedule.
Do your best to keep deadlines.
Lesson 23: Doing For How Much You Said
Features and schedule both work against you. Therefore, it is important to monitor changes in scope of work and communicate its impact to the customer. Don't try to maximize profits on the first project. Instead, it's better to invest in short-term success to win long-term business. This approach has not failed Softeq yet: we have customers on their 38th SOW (Statement of Work).
Surprising the client with a big bill won’t help you win the next project.
Lesson 24: Relying on Experienced Technology Partners to Mitigate Risks
Many advisors are pushing tech startups to hire an internal development team. And some investors won't invest if you don't have an in-house team. But this is not always an advantage for development.
Since the team has never shipped a product together before, it can be expensive and risky. For a PoC (Proof of Concept) and an MVP (minimal viable product), you need a team that can deliver.
A less risky option would be to hire a technical partner who has delivered a similar product before. This is what companies like Intel, Verizon, and Epson do. They have the capital to hire anyone they want. But when it comes to innovative products, they rely on technology partners to get products built.
Working with a tech partner is not only a way to ensure delivery. You also access technical resources without paying for permanent employees.
Lesson 25: Leveraging Resources of the World to Reduce PoC and MVP Costs
Building a PoC or an MVP, there’s no reason to hire an iOS, android, or backend developer, business analyst, solution architect… and pay them all high local salaries. Instead of wasting your precious initial capital on hiring an in-house team, you also can use the resources of the world. And once you’ve found your product/market fit, you can raise that Series A and build your internal team.
Don’t waste your initial capital on hiring when building a PoC or MVP.
