There was a story on NPR recently where a junior soldier in Iraq was recounting a fire fight he was in where he was completely surrounded.  The soldier recounted the fear and desperation that gripped the team as they bravely fought the enemy in all directions.

The story turns when a more experienced soldier somehow arrives on the scene and takes charge of the situation.  The junior soldier explains the deteriorating situation and ends with restating the obvious that they were indeed surrounded.

The more experienced soldier replies: “Surrounded?  I LOVE being surrounded!  Now, let’s develop a plan, attack the enemy and get this job done!”… And in an instant, the entire mood in the platoon lifted, they felt a rush of confidence and set about quickly working a plan to eliminate the enemy and win the battle.

So, you may be asking, what does this have to do with entrepreneurship or starting a business?

Everything!

First of all, successful entrepreneurs tend to be strong leaders.

Displaying a consistent sense of calm in chaotic situations is critical.  When you start a business there are a million things that will go wrong… and even when things are going right there is tremendous pressure.  As a leader, if you fall apart or let the pressure get to you it will destroy your organization’s ability to function – even if you don’t consciously think about it, you are setting the pace, tone and mood of the organization – you are always on stage and all eyes are on you!

Secondly, the battle story talks about being surrounded on all sides and how difficult it is in a situation like that.  Start-ups are surrounded as well with cash pressures on one side, family pressures on the other and competition in all directions.  It is very easy to let this situation demoralize you and your team and you have to find a way of focusing on your plan and executing on it.

Lastly, a successful start-up operates in a very aggressive nature and tends to even use battle-like language when discussing operations not out of a fondness for war but more in the fact that the terminology of military operations tend to transfer well to both the specificity of the objectives involved in business but also, perhaps more importantly for a start-up, the energy and emotion associated achieving the next immediate objective.

Compare the two examples of a typical staff meeting at two hypothetical start-up companies:

Example-1:

“The next item on the agenda is the discussion of how we should think about our upcoming customer meeting.  As we reflect on the customer’s needs and our competition we should develop a well-balanced and comprehensive strategy that allows us to beat the competition at each milestone in the customer evaluation phase that prevents the customer from positioning themselves in a more favorable light.”

Example-2:

“We need to discuss our plan of attack for this next customer meeting.  We must develop traps and blocks that prevent the enemy from developing a tactical advantage while engaging this customer.  We must bring all resources to bear in eliminating this competitor as a threat in each customer engagement and prevent them from flanking us in the process.”

Both examples are technically similar in the discussion of a need for the development of a strong customer engagement strategy.

The difference, however, in emotional connection and energy and importance is striking.  Start-ups live everyday in a battle field and everyday they feel like they are surrounded.  And ultimately, they are fighting for their lives!

Much of my days (and many of my nights) since joining U-M have been focused on helping develop programs and activities that foster entrepreneurship and commercialization activities.  Students, Faculty and Staff seem to have an insatiable appetite for entrepreneurship and this, in many cases, is a good thing.  But should everyone become an entrepreneur?

In my opinion, definitely not!

It’s easy to get caught up in the excitement and great stories from individuals who have braved new paths and followed their dreams.  The freedom that comes from creating your own company and potential huge financial reward can be intoxicating.  But having been an entrepreneur for many years I still find it a bit odd that everyone is so romantic about entrepreneurship so I thought I would share a short list of the darker side of becoming an entrepreneur:

1)      There is no structure.  Each day when you wake up you must figure out what (of the million things) is the right hundred things to get done first.  No one is going to sit there and tell you what is more important or what needs to get done, it’s all on you!

2)      There is no 9-5.  Forget the possibility of a typical work day, that doesn’t exist.  The best you can hope for is that from 9-5 you will actually get something done as that is the time of day the rest of the world is active and most likely getting in your way (assuming you have the luxury of operating within one time zone).  The real work gets done before 9 and after 5.

3)      There is no financial security.  Most entrepreneurs realize that cash is king and you have more important things to spend money on than salary (especially your own).  There is no 401k or annual raises.  If you are in it for the money then you are likely to be very disappointed.

4)      There is no leaving your work at the office.  See “There is no 9-5” above.

5)      There is no sleep.  Sleep is something you can do when you retire.

6)      There is no catching up.  You may have found that by working a little longer or a few hours on the weekend you could actually “catch up” or even “get ahead”.  That isn’t true when you are creating something from scratch.  You never catch up – there are always a hundred things you need to get to but can’t.

Yet, with all these negatives there are an equal or even greater set of positives that drive people forward down the path of entrepreneurship:  Personal accomplishment, self improvement, lifelong learning, changing the lives of people around you, following your dream, etc.

So why am I writing about all this?

The answer is simple.  I think all the attention and focus on entrepreneurship and fostering it at the University is terrific and ultimately it is critical to our long term success.  If we are going to put entrepreneurship under a microscope, explore it, teach and strive for it however, we better fully understand it.

Someone asked me the other day what magic did I use to resurrect one of my startups from almost certain death.  What tremendous insight did I bring to bear or epiphany did I have to change my company from having closed sales of less than $10,000 over two years to annual sales of almost $5mm over four years with a 70% compounded annual growth rate?

The answer is simple.  I talked to the customer.

This is fundamentally the most important thing that early stage companies can do and for engineers usually the most overlooked part of the creative process.  We (remember, I’m an engineer) tend to think that building a great company is all about the technology and fundamentally if build the best technological solution then the rest is easy… “Build it and they will come!”

What I’m describing is a basic failure we all make in the creative process that we know exactly what the customer wants.  The hard truth is – when it comes to thinking we know what the customers want – we are usually wrong.

Yes, we know complex algorithms, innovative ways to fabricate complex materials, highly efficient ways to harvest the sun’s energy and store energy in portable devices… but we don’t know what the customer is thinking!

This is not a simple problem as you are dealing with two fundamentally opposing issues that make great entrepreneurs:  A tenacious attitude to succeed no matter what anyone says and the processing of feedback we receive from people we share our ideas with.

The Center for Entrepreneurship helps students, faculty and staff members who have business and product ideas wrestle with these issues constantly and ultimately it’s a process that we know needs continual improvement.  There is, however, a fundamental rule that usually holds true and that is “talk to the customer”.  But more importantly, when you are with those customers – the really great entrepreneurs will actually “listen” more than talk.  The gold nuggets are usually right there in front of you and are made in an off-hand comment.  Something said in jest or anecdotally may be the key to unlocking a huge revelation.

So, when my company was faced with this fundamental problem of almost zero product sales and I stepped into the CEO role I rolled up my sleeves, jumped in my car and visited face to face with the people we were trying to sell our product to.  I didn’t skype them, phone them, text them or email.  You have to get the customer comfortable with you and a personal engagement is the way to do this.  Additionally, and perhaps more importantly it is the non-verbal communication of the customer that give away the important clues.  You can see the excitement in how they are leaning forward or using their hands when talking about a problem – or the rolling of their eyes when an idea you just described doesn’t meet the same resonance with them as you thought it might.

The multiple customers I talked to led me closer and closer to a problem that existed in our product… a technology implementation we had chosen that we thought was especially innovative was actually killing our sales!  Our assumption to leverage an existing IT system that was already in place at our customer’s site was actually the reason people wouldn’t buy the product – despite its novelty.  Once we removed that barrier and changed the product to play nice and not touch this other existing system we removed a huge barrier and started us down the path to rebuilding the company and generating sales!

There really isn’t any magic in this – just basic hard work, looking closely at the problem, asking questions and, above all else… talking to the customer!

So there I was; my first board meeting as the CEO of the company I co-founded was going to start in about 45 minutes and I was still in my car in the parking lot reviewing my presentation one more time.  Actually I was splitting my time between reviewing my slide deck and frantically flipping through Finance for Dummies looking for the page on how to understand a balance sheet!

You see, the company I had co-founded two years prior was on the verge of failure and we had just undergone what is affectionately referred to in the high tech world as a “restart”.   This is a simplistic way of saying you made way too many mistakes and it’s time to press the corporate reset button, promote anyone left standing and try again.

We hired too fast, missed critical customer feedback, failed to learn how to sell the product before building a worldwide sales channel and failed to deliver customer critical features.  By all rights we should have turned out the lights, closed the doors and walked away.  But we didn’t.

Instead, we took stock of what we had learned, swallowed our pride and started to rebuild.  We systematically looked at each of the things that had gone wrong and tried to learn from them as we started to put the pieces back together.  The result was that we built a terrific organization that was leaner, faster and more successful at delivering the right product, in the right way to the right customers.  The lessons learned from our early failures fundamentally shaped the path we went from that point forward.

Fail fast, fail often is more than a catchy phrase; this is the way of life for an entrepreneur.  In the span of the last five days at the University of Michigan we had three very successful and respected entrepreneurs repeat this phrase in one way or another:  Rick Snyder mentioned it during his speech at the first Distinguished Speaker Series of this semester last Friday.  So did RJ Pittman, Director of Search at Google in his presentation the day before.  Even Marissa Mayer, VP of Search Product and User Experience at Google repeated it in her fantastic presentation she gave on Monday of this week.

A key point, however, to keep in mind is that failure as an entrepreneur does not always have to be the near-death experience that my early stage company encountered.  It can, and should be part of the natural consequence of risk taking that leads to rapid innovation.

I just left a great meeting with a great group of early stage companies incubating in a basement in downtown Ann Arbor.  These early stage companies have in a very short amount of time achieved very early success in both commercialization and customer validation and some are even ramping towards significant revenue!  You might ask: “Doesn’t this violate the model?”  “What happened to fail fast, fail often?”

The answer is simple… they fail all the time… you just don’t see it.  They are constantly adjusting their business and technology to react to what they learn.  They are not afraid to try a new approach to solve a problem and if it doesn’t work out?  They learn from that and try again.  Sometimes all within the same day!

The end result is they are building very good companies and learning at a rapid pace.  Look out Ann Arbor, there is a whole new generation of seasoned entrepreneurs coming your way – ones that are not afraid to take risk, to try bold ideas and yes, even to fail!

Now that I’m working at a startup again (the Center for Entrepreneurship at the University of Michigan is very much a startup) I’m finding an old habit starting to emerge.  You see, when I’m in startup mode and I’m heading into the office I will often not fill my car all the way up with gas.

Back when I was a poor college student I would routinely stop the pump part way through the vehicle fueling process but that was purely a monetary issue – If I had $5.00 in my pocket then the tank got $5.00.  “Filling it up” was not a luxury in my daily budget!

In startup mode, however, the reason I shut off the pump before the tank is filled is TIME!  It kills me to waste time when there are a thousand things that need to get done and believe me; in startup mode you are never ever done.  Now I know some people reading this will be thinking:  “Wait, your being inefficient. If you actually filled your car up when you were at the gas station then you would be making less frequent stops for fuel thus increasing your efficiency.”  That is true, but to the entrepreneur in me, it’s impossible to be patient and focus on the long term efficiency goals when I know there are a thousand things that need my immediate attention (and all of them are #1 priority).

Time, in many ways, is the primary commodity of entrepreneurs.  At the beginning of a project it is their first investment (their time) that gets things done.  As things begin to ramp the chaotic activities that drown out each day evaporates all time remaining.  Eventually, raising capital usually is done to hire more people to accelerate product development in an effort to beat the competition to a release date or take advantage of a specific market window – both of which are time related events.

More importantly, you need your team operating at warp speed in order to achieve success and how you organize your business environment will have a huge influence on how successful you are at creating this internal velocity (which is required before you can truly show outward velocity).  Keeping people focused, motivated and removing extraneous distractions are essential ingredients.  You can even do subtle changes in your environment that in reality may not have a dramatic direct impact on time saving but will help set the bar and keep things moving.

I’ve even heard a rumor that a certain Ann Arbor located branch of a major high tech Internet company adjusted the elevators in their building to run 3 seconds faster than the default configuration just to squeeze out more time efficiencies within their building!  If true, that is a great (and creative) way to get the message out to your team.

Ultimately, the entrepreneur that can actually create a technology that gives me more time at the end of each day will unlock untold fortunes and success.  For now, I’d settle for a business plan that creates a fuel pump that fills my car’s gas tank in 30 seconds or less!

It seems like once a week someone mentions to me that it is really critical that we find the next Google. “What Michigan really needs…” (They’ll usually start) “Is another company like Google and then we will have achieved success”.

I’m sorry, but to me that is not how entrepreneurship works.

I seriously doubt that when Larry and Sergey were exploring the mathematical properties of the web that they were focused on world domination as their number one goal!

Entrepreneurs are at their best when they are laser focused on the “next” immediate goal and not distracted by the “what if” scenarios of potential ultimate success. Don’t get me wrong, entrepreneurs dream BIG and that is a very good thing. But obsessing about the final destination is distracting and does not help achieve the next milestone.

Innovation can happen in the most unusual way and it may not be apparent to the casual observer when a truly “big idea” is being worked out. Honestly, it is most likely not apparent to the entrepreneur who is hard at work solving a problem. For them, it’s just another obstacle that needs to be removed.

This concept is not limited to startups, it is part of an entrepreneurial mindset and used by people in the largest of companies. One of my favorite business analysis authors, Jim Collins, writes in his book “Good to Great”:

In each of these dramatic, remarkable, good-to-great corporate transformations, we found the same thing: There was no miracle moment. Instead, a down-to-earth, pragmatic, committed-to-excellence process—a framework—kept each company, its leaders, and its people on track for the long haul – Jim Collins, October 2001.

So the next time someone tells you that what Michigan needs is another Google tell them they’ve got it all wrong… what Michigan needs is a thousand entrepreneurs all focused directly on the obstacle right in front of them.

As my first blog entry as the new Managing Director of the Center for Entrepreneurship it seemed only fitting that I blog about what entrepreneurship means to me.

So, before I do that I have a confession to make. I’m a serial entrepreneur. They say the first step to self improvement is admitting you have a problem… Let me explain.

When I started my career in computer software in the late 80’s I had never heard of entrepreneurship or the entrepreneurial mindset. I knew that I was different from my peers in the way I engaged my job and technology but there was not a word for it. I was called tenacious, impatient, aggressive, passionate, competitive, innovative and even sometimes crazy… but never entrepreneurial.

Over the years I have come to accept these defects as an undeniable part of my fabric and part of what has made me who I am.

I have worked for some amazing companies during my career and have been fortunate to work with the most amazing people in the high tech industry. I have continually found that being surrounded by the best and the brightest pushed me harder and helped feed my desire to create, innovate and do the impossible.

I have never been satisfied with the face value of a situation and always dug deep to understand why. Where some would simply rejoice in a sudden increase in product sales I would want to know more and dig deeper and try to understand exactly what caused the spike.  When customers complained about specific product problems I would be hearing revelations of technology innovation that could unlock enormous potential.

Many people have asked me why a serial entrepreneur like me would choose to join a very large institution like the University of Michigan.  The answer is simple.  I’m passionate about Michigan and I believe the future depends on innovation and the creation of new companies and new industry.  I believe the Center for Entrepreneurship is uniquely positioned to unlock this University’s enormous potential of technological innovation, commercialization and social change thus having a significant impact on changing Michigan and the World.  I have learned to trust my instinct when an opportunity presents itself, to be surrounded by the best and brightest and, although it’s not a conventional path, I believe in the work being done here and the people who are passionate about making a difference!

So what does entrepreneurship mean to me?

It means being comfortable in taking an unconventional path, in digging deep to understand the root cause of problems and opportunities and in not being satisfied with face value. It means saying “yes” when others say “no”. It means seeing opportunities where others see loss. It means embracing failure as the most noble of teachers. It means recognizing time as the single most precious commodity in the entire world. It means being tenacious, impatient, aggressive, passionate, competitive, and innovative… and yes, even sometimes, a little crazy!