From Students to CEOs

It is a matter of being determined and having the spirit to break through to the other side
- Yamamoto Tsunetomo

Foundry has officially made it through its first year. What began as an experiment with 18 undergrads meeting on Mondays in a borrowed conference room in Draper, UT has evolved into something that is being more and more integrated into the U of U's entrepreneurship pedagogy.

Our third cohort, F3 held its first meeting last week and as a Foundry "OG" participating with a new company, I am reminded of the power the program has to produce capable managers. The delta between the green newcomers and the graduates that have re-upped with their current startups (or new ones, if you've killed a few like me) is evident and I am reminded of my own diaper baby qualities.

For those of us there at the beginning, we are clear that the Foundry began without any idea of how long it would last or what it could become. Save for a few things, most of the Foundry's design was discovered by accident and none of us thought that it would produce the results that it did. A lot has changed over the last twelve months, but some of the few intentional design features remain. Ranging from local executives to heads of PAC-12 business schools, one common reaction from the community about the Foundry graduates is amazement at the operational and management rigor they bring to anything they touch, a result of going through the Fight Club-esque gauntlet that is the Foundry system. They are amazed because the average age of a Foundry graduate is about 24 or 25.

This is the result of an intentional design feature, hardwired in the DNA of the Foundry social system. I am going to talk about how we do it.

My friend, Dr. Robert Wuebker, post-doc professor at the University of Utah and faculty member who co-created the Foundry with the participants recently reminded me of the power of designing organizational roles to pull people to live into.

Upon induction, it is made clear to Foundry participants that they are no longer regarded as students. They are CEOs. Every communication, every interaction - from the emails to the meeting to the project reviews - sees the participants as CEOs and relates to them as CEOs. You are not an intern. You are not a student-founder. You are a capable, high-functioning CEO and are treated as such. Equivalently, you are expected to relate to everyone else as a CEO. This is a subtle but powerful distinction and I think that its effect on Foundry's outputs is critical albeit intangible.

When everyone relates to you like a CEO, (curiously) you start occurring as a CEO. When you have the experience of 30-45 people, from the other Foundry CEOs to community professionals and venture investors, all relating to you like you are at the helm of a company you want to be starting - it catalyzes transformation in some people that is absolutely astounding.

A classic example is from the original cohort: one of the most successful companies was led by an art major that had never had any business training at all - he did $12k in his first two weeks in the Foundry. While there are plenty of other stories like this in the Foundry, Nick just happened to get the most media attention. I recommend that you read one of many of his articles here.

However, we are careful to ensure that we do not just bolster egos. One ethos of the Foundry is that you develop self-efficacy by executing with precision. When you say that X will happen and X does happen, you gain power in your ability to call your shots. This is as simple as turning a management report in on time or accomplishing what you said you would do in your management report. The access to this type of operational/organization integrity (think databases, not morality) is our simple-yet-potent weekly management reporting technology which clearly demonstrates to you (and everyone else) exactly what you are getting done (or not). It also involves a lot of failure and not being your word and not executing precisely. It is this painful experience that catalyzes learning and thus the observable is that participants demonstrate some sort of mastery over the form (wax on, wax off).

The Foundry system provides the experience of you being your word and the power that comes when you believe yourself to be a person that follows through on what they commit to (hint: this belief is not mystical, it is realized when you do the act of following through). Layered on top of that is the shared experience of the group engaging in the same activity and finally a community that chooses to see you as someone who is capable of executing precisely (doing what you say you will do).

Human potential is the greatest, most abundant resource in the world. Few organizations know how to tap it and unleash it productively (Apple, Google, Stanford and MIT come to mind). Foundry aspires to be an organization that sees a human, a nascent entrepreneur as someone who is fully empowered to get for themselves anything that they want (in our case it is in the context of a new company). It is one of the fundamental (and intentional designs) of the system. Dr. Wuebker planted the seed of this design element, the early participants took it on and ran with it and as the graduates go on to create their own "Foundries" or emulate the social system design in their own companies, I whole-heartedly believe that it will be one of the greatest contributions to the lives of the scores of people that have and will pass through the Foundry...

..if they so choose to be imprinted upon by the system.

It is a subtle but important distinction: a constant choice of the group to be stand for people living into the role that they assume when accepted into a Foundry cohort. It is difficult to do as we naturally try to hide our flaws and our shortcomings or hide in the comfort of silence and not calling someone out (or be coachable when getting called out). Some will opt in for this type of experience, others self-select out of it (which is why we say this is not for everyone). But those that decide to double down and play for keeps are the ones that keep the program attract to newcomers. It is an individual choice and each person faces that decision in their own way and their own time. When you aspire to be something great (like a CEO), you must be willing to place something great on the alter (some perspective of who you thought you were).

An Ode to Non-Technical Entrepreneurs

I'm a non-technical startup guy. When selecting my major, I was given the choice between an engineering path and a business path. I opted for business because I like the thrill of hustling and as a kid I was always figuring out how to put extra money in my pocket in addition to my weekly allowance.

I'll admit that I have some irrational fear of programming. After a weekend spent on w3schools.com learning HTML and CSS, I pathetically bumbled my way through setting up and editing a wordpress site. And along each step of the way, I could hear the proverbial ghost of every programming nerd who had their lunch money stolen in high school sneering at me. Like the IT guy from the SNL skits, I felt that no matter what I was doing someone, somewhere was having a vindicated laugh at my expense. Again, irrational. But admitting you have a problem is the first step, right?

However, I will be starting to learn Ruby on Rails with a group of other non-technicals at school so I am relieved that misery will have company. I must admit that not knowing a programming language is the equivalent to not knowing Word or Excel a decade ago. I feel that in order stay relevant, I'm going to need to just get over my childish fears and start being able to have some basic programming skills so that I can have an intelligent conversation with my future engineering guys when.. you know.. I'm COO of a 50M startup.. someday.

With all that being said, here are my thoughts about the unsung heroes of startup world: the operators. The VP-of-get-shit-done guys (and gals). I also have something to get off my chest:

I am sick and tired of hearing about someone farting a new Web 2.0 company every 30 seconds and presenting it at some overblown conference where everyone's tweeting and retweeting the same crap like it's the next Facebook or Groupon or totally pushing the edge of augmented reality. Creating a new way to send a text message is not interesting. We have text messaging. And stop calling is a mobile communications platform.

I love reading VC blogs as much as the next guy but just once I want to hear someone say, "I'm investing in the social layer because anything that requires hard goods and inventory makes me sick to my stomach."

Don't get me wrong, I would love to get investment from Mark Suster or Ben Horowitz, but it seems like unless you are an internet-based company or green-tech startup you have a snowball's chance in hell of getting any attention.

Last time I checked, the water bottle I drink out of isn't composed of C++. My jeans aren't written in Java and the individual apple I ate this morning came from a tree, delivered by truck, sold by a real person and did not have a "post to Facebook" function on it.

The point I'm making is that there are a number of things that the twitterverse takes for granted that gets a little more difficult once you step away from your screen:

1. Try getting the door slammed in your face - getting to product to market-feedback is easy when you are shielded behind a username and have a delete key at your disposal. It's a lot harder when you are in the person's office, having the conversation in real-time, looking for non-verbal cues to gauge what you should say next and personal rejection to stomach (coz they aren't buying the product, they are buying you - ask any salesperson what I'm talking about). I would love for Eric Ries or Steve Blank to try and talk as flippantly about "sell, design, build" after attempting it in the real world: cold-calling for three weeks and then going on a 1 week sales meeting bender. Month in and month out.

2. A new product is not necessarily innovative - I am thankful for the tech industry, the innovations in business models over the last decade are pretty novel. And while they might be saturating the industry, they have yet to be implemented in existing industries. Want to see a highly disruptive opportunity that will make VCs craploads of money? Find a team that is employing the freemium model with hard goods (it's the future). I personally know a team (pair of undergrads) that is tinkering to find a way to give road bikes (quality ones) away for free and still have the firm make money.

3. "Hard" entrepreneurs are operational gladiators - going "lean" is a lot harder when you are dealing with inventory and not a lot of cash. You have to be more intentional about your actions and you aren't afforded the privilege of being completely at the beck-and-call of the market, sometimes you got to move product and hustle. That being said, any freedom that the firm has to pivot is the result of operational prowess. Striking a balance between organizational agility and efficiency when working with hard goods, takes a REALLY smart person (Google: "G Score") with the cahones to even attempt it in the first place.

I'm not advocating that "hard" entrepreneurs are better than technical, "soft" entrepreneurs or that the Web 2.0 surge hasn't benefited the nation. I'm simply attempting to shed light on the fact that there are number of entrepreneurs who are quietly hacking away at innovative non-technical problems in "mature" industries. It requires someone with well-rounded knowledge and competency in areas that are "boring" and "non-sexy": accounting, operations management, and sales. And it will be these entrepreneurs who will take the learnings from the tech industry and apply them to the rest of the world (yes, there is a world outside of Stanford's walls).

And here's my strong claim: while we spent our endowment on Facebook and Twitter, China doubled down on it's clean tech investment. China is working on gaining mastery of a hard problem, cheaply producing things that tend to be expensive. The US is mastering the art of coding an app over the course of a weekend.

In the coming years, "hard" entrepreneurs are going to be more critical if the US wants to remain an economic player in the world. Maybe we should start thinking about providing them with the support mechanisms that technical entrepreneurs have been enjoying for the last decade. Places like the Foundry are a good start and we'll be reporting AUTM numbers for our first year soon. Hopefully, it will serve as an example of what is necessary to support entrepreneurial development in a non-technical realm (hint: it doesn't involve money or resources).

Fear.

Maybe then honesty need not be feared as a friend or enemy.

- The Fray

Fear is your friend.

It lets you know that something important to you is at play.

Fear indicates there's fertile ground for a breakthrough.

Fear reveals an opportunity to expand your contributive capacity as a human.

Fear indicates something real.

Fear also indicates something unreal.

Fear appears to be a brick wall that's actually paper thin.

Fear is a means to an end - not the end itself.

Fear is an open gate, not a closed door.

Fear means that you are attempting to live your life.

For most people, fear finds them.

Be the person that lives in such a way that fear is found - uncovered, like a diamond in the rough.

Let fear be your friend. Get to know its intricacies and quirks, its truths and its fallacies.

Have long, deep, deconstructive conversations with fear.

Treasure the honesty and clarity in which fear communicates with you.

Fear knows you better than you do, trust its feedback.

Bond and grow in your relationship with fear. For it may be the best relationship you will have.

If you're willing to let fear be a friend and not a foe.

Don't Shoot the Messenger

I was reminded of an article I read in Harvard Business Review titled How to Handle Surprise Criticism. There's a lot of good advice in the article but the most poignant bits are:

1. Look beyond your feelings.
2. Look beyond their delivery.
3. Don't agree or disagree. Just collect data.

It was written about 6 months ago, the day before I shelved my first startup. I was in the thick of a new normal in my daily life experience: I receive a lot of surprise criticism - and I haven't historically been the best at taking it. However, in my quest to be an effective entrepreneur and executive, I've realized that the key is being coachable. Always.

I have found that this is a rare quality among managers and leaders since the autocratic, appeal-to-authority approach is the default mode for most people. I always thought that taking a stand, being vocal and challenging the conventional thought process was a form of strength. It's lionized in movies and NYT bestsellers. Yet I've realized that it takes quite a bit more strength to be cognitively flexible and emotionally mastered in the face of a critical onslaught... especially from someone with formal or institutional power.

For entrepreneurs that operate in the earliest stages of business discovery, you are confronted with a lot of passionate feedback about everything that you are doing wrong. People in general, are not emotionally mastered and they relate to their feelings, thoughts and perspectives as if it is the undeniable reality of what is happening (rather than coming from the perspective that they are just feelings and thoughts, separate from reality). When given the chance to make you wrong, most people will take it. Anyone who has been a server knows this. And I think it's mostly subconscious - most people would be disgusted with themselves if we showed a video of them ripping into someone without the power to defend themselves or dole out retribution.

But we don't have that luxury. What now?

Being able to take criticism as data collection by separating what's being said, how it's being said and the emotional undercurrent of the message connotes, to me, someone committed to mastering the art of living. Here's some recent examples in my life that reminded me of the value this skill will deliver:

* Hearing the faculty constantly create a new complaint about the coffee I deliver (for free) to them while I worked on my laptop in the lobby were it was served. No change was made to the coffee, yet the complaints would change every day. It's interesting hearing what people say about you when they don't think you are around. And over time I learned which ratio of grounds-to-water delivers the least amount of complaints.

*I watched, and loved, the TED Talk that General Stanley McChrsytal delivered on what he's learned in leadership. I've had a number of responses, ranging from inquisitive to cautionary, about McChrystal's questionability as a leader. Frankly, I don't care. Remember, it's about objective data collection - McChrystal gives a great speech AND he's got a questionable past. Sounds like every other human I know.

I learned about the literary fallacy of ad hominem when I got a C on one of my high school english papers. From that point, I opt to separate the message from the messenger. F. Scott Fitzgerald once said that holding two seemingly conflicting notions in your mind at the same time is a sign of marked intelligence.

You are free to discount someone based on the way they deliver the message or the fact that they made mistakes at some point in their life. As a result, you may just be missing out on a highly valuable (though poorly packaged) idea or perspective that could make a big difference in our life. You may also be signaling the upper bound of your ability to learn - a potential bottleneck if you want to significantly alter the trajectory of your life.

Leadership is Listening.

I taught a class last week. A class that I've been enrolled in for 13 weeks now.

The people I presented to know me (or about me) more than I know them and it's not fun being in a class with me. For a week they knew that I would be teaching a class on sales/hustling.

There were no adults, grades were already given out and there was nothing preventing them from not showing up. Half the class showed.

Given all the things they could be doing on a Wednesday night, I asked why they showed up to a class that was technically over. The answer amazed me.

They wanted to hear what I had to say.

They granted me 2 hours of their life. 2 hours they could have spent somewhere else doing something more interesting than witnessing me struggle to keep a lively dialogue going.

It was my first true leadership experience. I was their peer, I have no formal authority over their lives to make them doing anything, much less show up. I was overwhelmed with gratefulness.

But they showed up anyway and listened and participated. It was in that moment that I realized that leadership is the simply being granted the listening of the community you serve.

Think about it. Have you ever had a boss that has formal authority (a title) that everybody pretends to listen to but goes back to 'business-as-usual' once their back is turned? That is a leader who has lost the listening of the people he or she leads.

Ever known someone who has no control over anything material in your life and yet you would swallow your fear and show up to contribute to whatever that person needed you to?

That's leadership. It's a powerful feeling when you have it.

Powerful in that your gratefulness is only outweighed by your sense of responsibility.

And that weight is heavy.

Stanley McChrystal: Listen, Learn. Then Lead

"[The new changes in warfare and digital communication] also produced something that I call an 'inversion of expertise'. We had so many changes at the lower levels in technology and tactics, that suddenly the things we grew up doing were no longer what the force was doing anymore. So how does a leader stay credible and legitimate when they haven't done the thing the people you are leading are doing?"

The Next Generation of Entrepreneurs: Drug Dealers and Hustlas

If colleges and non-profit programs want to capture and equip the next generation of entrepreneurs, they can start with their local teenage drug dealers.

Yep. Drug dealers. I'm not alone on this one and there appears to have been some research on the linkage between drug-dealing as a juvenile and self-employment as an adult.

I am fortunate to have had a post-hoc peek into the underworld of localized drug dealing through some acquaintances who are ex-dealers. Most of them are now self-employed legitimately (I think). Listening to them talk about their experience is simply inspiring. Talk about resourcefulness:

By the time they graduate high school, these teenage drug dealer know more about margins, sales, customer relationship management, building a brand, strategic alliances, viral marketing, inventory management, supply chain management, product-market fit, negotiations and government regulation than most second-year MBAs. They have more experience in strategic decision-making and maintaining competitive advantage in a fiercely hostile commodities market than 2/3 of academia and know precisely what contributes to the local economy.

My conjecture is that if we tell them to keep doing what they are doing and simply replace the drug(s) they are hustling with some other hard good of their interest, we would see a HUGE spike in high growth startups and innovative revivals in mature/dying sectors like manufacturing and retail. Detroit anyone?

My point is that we as a society should not take a position of moral opposition to their current activities but rather praise their resourcefulness and make an attempt to show them the possibility of "legal" enterprises. Based on my discussions with people who have dealt drugs as teenagers, most grew bored with society's traditional models of classroom learning and mind-numbing lever-pulling jobs at minimum wage. Overall, they have vocalized disgust for anything that appealed to authority or followed general consensus.

Conversely, the University of Illinois at Chicago after conducting research on local dealer behavior and impact to the economy found that archetypical drug dealers in depressed metropolitan areas were not motivated to destroy the community but rather (highly) motivated by the same things as "the rest of us" and were simply presented with different opportunities.

My intuition is that drug dealers, regardless of demography, get a high from hustling. This something that I've experienced first hand - a little of which you can read here. There's something about making things happen, making connections, finding a need and delivering on it - and doing so faster, at better quality with the least amount of resource expenditure as possible. Hustling is a form of creating, it is the feeling of being the exception to the Theory of Impossibility, the sense of personal fulfillment when you break the First Law of Thermodynamics: creating matter - economic value - by taking ideas, relationships conversation and resources and rearranging them in a way that only you can. All this to create the existence of dollars in your pocket and happy customers.

There is simply nothing like it. It doesn't matter what you are hustling, simply being in the midst of the process (e.g. "the game", "the grind") is addictive.

This is a good thing. It is at the core of all entrepreneurial individuals that have a chance of doing something impactful and this country has no idea how to channel this type of energy, intelligence and potential. The best that they've come up with so far is ADD/ADHD medicine and sending drug dealers to jail. I have some theories about possible solutions but nothing solidly based in fact.

Except that you could send them to the Foundry.

As I surveyed the landscape for resources/programs that would help me sharpen my talent potential, nothing seemed very interesting. It all occurred to me as another version of a class project: hypothetical and detached. I discovered that there were other students who were going through the exact same experience. This, in part, led to 20 undergrads co-inventing the Foundry with some super cool (and super smart) "adults" about a year ago.

Hustler's like the "realness" of the grind: fear, risk, uncertainty, ambiguity. Everything looked to me like another appeal to authority: some judge or mentor who as no idea who I am or what I've done is in a position to say what is good and what is not.

This is not the way to teach entrepreneurs and it is not the way to allow hustlers and drug dealer to see the possibility of applying their skills, expertise and talents where this country really needs it: job creation.

I think this is why Foundry attracts a certain kind of individual and why graduates weigh in heavily on the cohort formation process: hustlers like being around other hustlers. Iron sharpens iron. We select for people, not for companies because hustlers can hustle anything, whether it's weed and ecstasy or water bottles and recycling bins.

Again, we don't have a resource problem. In fact, I don't think we even have a resourcefulness problem. We have a training problem. Yes it's scary to think about the prospect of training drug dealers to be contributing business leaders. Yes, drug dealers can be dangerous (a function of being in dangerous work) and can smell a feeb from a mile away. The don't appeal to authority (they actually subvert it) or listen to the general consensus about how things should happen. They have a different relationship to fear than most people and definitely not interested in the hokey pokey of Cubiclelandia that modern society has been offering for decades.

Judging by the current state of the union, it seems that even the President agress that we could use less of the lever-pulling types and more of the lever-creating types.

If you are, or know, a 20/30/40-something drug dealer/hustler that might be interest in a new career opportunity hustling something other than drugs and be part of a group where your skills, perspectives and overall approach to life are praised and sought after, Foundry is actively recruiting for people to fill our summer cohort: F3. Feel free to contact me directly or you can submit an application here.

Just leave your drugs and weapons at home - and please don't take my lunch money.