I started Idealab with a dream to make something like a modern version

of Thomas Edison’s Lab where we could test ideas under one roof and
then spin them off into separate companies. These companies would
have their own management teams and their own equity pools, while at
the same time benefitting from shared experiences and resources.

With lots of help from so many great people, my dream became a reality.
We have come up with more than 5,000 ideas, started more than 150
companies, and had more than 50 successful IPO’s and acquisitions. We are most proud that we created
more than 10,000 jobs and thousands of new entrepreneurs.

We learned lots of lessons - some great and some painful - and it’s my honor to share them with you
here. If even one tiny bit of one of these lessons can help you be more successful, that would make me
so happy. I love entrepreneurship, and hope that our lessons can help more companies and
entrepreneurs to be successful and change the world in a positive way.

I am so grateful to all the people who helped me make the Idealab “experiment” work for these 25 years.

Sincerely,

Bill Gross
Chairman and Founder,
Idealab

@Bill_Gross

Introduction

I am Bill Gross and I started Idealab 25 years ago.

It's been a long entrepreneurial journey for me. I have been an entrepreneur all my life. I
was selling candy at the bus stop when I was in junior high school, I was making solar
devices in high school in a mail-order business, I made loudspeakers in college to pay my
way through. After college, I started software companies.

And finally, I had so much fun being an entrepreneur, and I had so many ideas ..rather than
being a serial entrepreneur I wanted to become a “parallel” entrepreneur. So I started
Idealab to do exactly that.

Under one roof we could house multiple companies and I could have ideas in many, many
different areas.
Over the last 25 years, we've had many ups and downs and we started more than 150
companies and we have had more than 50 successful IPOs and acquisitions.

But most of all, I had many lessons learned. That's exactly what I'd like to share.

25 lessons from 25 years of starting companies. If any of these lessons learned could be
helpful to you in your business or improve your success, that would make me feel really,
really great.
Lesson 1
CHALLENGE THE STATUS QUO

I really feel it's very important to pick an idea that really makes a difference in the world.
That makes it harder for sure, but it also in some ways improves your chances of success.
By challenging the status quo you're picking something that other people aren't doing right
now. You're zigging where other people zag.

At first you might be ridiculed or even fail for having a great idea ahead of its time. But I
really feel that all truth passes through three stages. This is a great quote by Arthur
Schopenhauer. He says first an idea is ridiculed, then it's violently opposed, and 3rd is
accepted as being self-evident.

When you first start out with your idea, if it is a bold new idea that challenges status quo,
you could be ridiculed. You're only opposed when the idea starts getting some traction -
when people start feeling threatened by it. But if you push through those first 2 phases, and
people then look back at what you did as being self-evident, then you have truly changed
the world. You have caused something to come into being that would not have happened
otherwise.

I think that is super valuable, super exciting and a great basis to build business upon.
Lesson 2
FIND GREAT TIMING

I found, when I looked back at the 150 companies we started over the years, that a much
bigger factor in their success was the timing of the idea. Now, by definition, if you want to do
something bold and new you are probably going to be early because you want to be ahead
of your time. But you don't want to be too far ahead of your time - you want to be a little bit
ahead.

What do I mean by that?

You need the world to be ready for what you are delivering. Things have to be in place to
make it successful. It could be broadband penetration, it could be GPS adoption, it could be
any other technology that you don't control but is necessary for your idea to succeed. The
world really has to be ready because you can't push people too hard against their will if the
technologies are not in place.

One particular example I would give is in (the year) 2000 after we had a number of
companies that were very successful in the eCommerce, we were looking to figure out what
would be the next industry that would really move online in a big way and we figured it
would be entertainment. And of course, being located right here in Los Angeles, the
entertainment capital of the world, we thought what a great thing to do next.

So, we reached out to some celebrities, we got some great people signed up. We actually
got Chris Rock and Adam Sandler signed up to build this great comedic entertainment
company. The company was called Z.com, we raised capital, we started making great,
great content. But broadband penetration was only at about 20%. So this great stuff that we
made, you had to do all kinds of browser plugins to be able to watch those movies. It was
very, very complex. We (Z.com) actually did not make it (survive) But only a few years later
a whole bunch of things changed. Broadband penetration crossed 50%, people had moved
from 9,600 baud modems up to faster connections. The flash plug-in came out which
allowed people to be able to play movies inside the browser without downloading some
other kind of crazy plug-in to make it work. And all of a sudden YouTube took advantage of
that and it took off like a rocket ship. The world changed because everybody understood
you can now watch video inside your browser. So, we were off by just a few years, but we
were off because we didn't understand that the threshold had to be crossed in the
marketplace for us to be able to be successful.

So I look back on all of our ideas … I always thought that the idea mattered the most in
coming up with a great idea ahead of its time was crucial. I always thought the business
plan really mattered. I thought that the business model mattered - how are you going to
make money. I thought that the executive team and the work ethic really mattered and of
course, all of those things matter. But timing really really makes a very big difference
because it can kill an otherwise great idea.

Another example of timing – Uber came out right after the iPhone was where the first
applications that really, really took advantage of GPS. All of a sudden many many people
had GPS and Uber almost wouldn't even work without GPS. But uber also had unbelievable
timing again, that they didn't plan, but that we just got through the Great Recession and
many, many people were looking for extra money. so many people signed up to the drivers
because a lot of people were out of work. So, two very fortuitous things happened to make
that company take off like a rocket ship when it first started.

So again, these are things that are outside of your own company's control but as a start-up
you really want to look at the timing and assess it very carefully. Are all the things in place
to make your great new idea really be successful, especially the things that you can't
control?
Lesson 3
SAY NO.

This is very hard for an entrepreneur to do. And very hard for me to do. So, this is definitely
one of those cases of “do as I say, not as I do”. Although I try really, really hard to do this.

It's very important, maybe more important, to say no to things, and pay attention to that,
than what you say yes to.

And here is why.

As a start-up, your time is so valuable and you're trying to compete against someone who's
doing lots of things usually and has more resources than you. So figure out what you can
actually say no to; the opportunities you don't want to pursue, the countries you're not going
to do business in, the people you're not going to work with, the opportunities you won't
pursue.

Figuring what those, are and having it very clear to everybody in your company so that
everybody understands, really can save you a whole bunch of heartache and a whole
bunch of time. And really, really is important for entrepreneurial success.

Again, this is very, very hard to do. But very, very valuable.
Lesson 4

BE SUCCESS SENSITIVE

Don't be dilution sensitive.

This was a lesson that took me a very long time to learn but I really learned that the
outcome of your company is so digital. You can build a great, big company or you can fail.
There of course is in between’s. But it's so valuable to find partners, investors, employees,
everybody that is vested in your success. I find the best way to do that is to give everybody
high equity participation.

I learned to not try and overthink fundraising games. It's just not worth it.

I learned that as the founder and CEO your goal is to set the strategy. Do the great hiring.
Get the money in the bank and keep the money in the bank.

And definitely, when you're choosing investors and partners, it is much more important to
choose people who really agree with your mission, really buy into your mission, and really
will be there for you in the long-term. Even if that's at a slightly lower valuation.

And again, it's very painful to accept when you're actually in that valuation negotiation. But I
have found from now doing so many different companies. The cases where I chose the
partner who was more missions aligned, over the higher valuation, it led to a greater chance
of success.
So, I really would say to be a success sensitive, not dilution sensitive

Lesson 5

Find product market fit

Product market fit is something which is very elusive but extremely valuable and you almost
never get it right out of the gate. But you win or lose on customer delight and that's what you
achieve when you have product market fit. Sometimes it only takes a very small twist to
take something from sort of snoozer to delight but your job is to find it. Finding that is so, so
valuable.

The thing you're looking for in product market fit is pulled from the customer rather than
push. You don't have to beg them to take your product, they want more of it. One way to
assess product market fit is what is the feeling of your customer if you told them you were
taking your product away. If you can get more than 50% of your customers to be angry or
unhappy if your product was no longer in their hands, then I think you're really onto
something in the product market fit arena. The important thing about product market fit is
you have to be very close to the customer to understand when you have it.

I never thought I'd be giving business advice with a boxing quote from Mike Tyson but he
had an incredible quote, which was relevant to boxing but actually relevant here too. Which
is, everybody has a plan until you get punched in the face.

And I feel in business you get punched in the face, metaphorically, by your customer when
they don't feel product market fit. When they just feel blase about what you're offering.
When they don't feel angry if it was no longer existing.

So your job is to constantly figure out what would it take to cause such delight in my
customer, that they would feel so mad if they no longer have your product. That means
they're going to recommend it to other people. That means they're going to pull more of it
from you. That means it's going to prove all of your aspects of doing business with your
customer. And sometimes it's more valuable to even narrow your customer set, narrow your
feature set, to get product market fit with a smaller group of people but to have that strong
feeling that's how valuable product market fit is.

Lesson 6

BECOME A GREAT STORYTELLER

Storyteller, is that really important for success in entrepreneurship?

Well, it's much more important than I ever imagined. It's really, really important to perfect
your story to both hire the best people, get the best investors, close your customers,
motivate your team, you need a story that makes your business feel inevitable. It's a much
bigger factor in success than I ever imagined because your story and your brand are what
you use to move your company forward.
When I was in college, I had to take a public speaking course and I was terrified, absolutely
terrified. Even though I was speaking to my friends about something that I knew very, very
well. I happen to be building loudspeakers in college and I was just talking about my
loudspeaker designs so I was completely comfortable with the material. I was terrified to
stand up in front of the class and explain that, to 20 of my peers. But that one class,
Engineering Presentations E10, was so valuable to me to get me over that fear and help me
learn how important it was to communicate my thoughts.

Now, I've learned in my career, every single business I start, I’m pitching my heart out.
Again, I'm pitching it out all the time again, not just to investors, not just to business
partners, but all the time. And I learn from every single one of those presentations.

I recently had to give about 15 presentations on a company and I saw how much better my
presentation was the 15th time than the first time. And you should always be looking to get
feedback and learn how to make your story sound better find out what didn’t resonate, what
didn’t work, how can I make that make more sense.

As you refine that, you will find you can get the best employees, the best team members,
the best investors, best customers, just by making your story match your product and feel
more inevitable and make the whole story makes sense in a way that really, really changes
the trajectory of your company.

Lesson 7

BE LEAN

You need to run a lean startup. There's a great book by Eric Reese called The Lean
Startup and I really urge you to read that.

But here's the basic premise, and I was doing this before I even heard the term lean startup
mostly because I didn't have the money to do otherwise. But it's really, really important to do
even if you have the money. And that is, to run your business with the scientific method, to
have a hypothesis of what thing you want to learn, to develop the simplest experiment to
test that hypothesis, to get feedback from that experiment, and then take that learning and
have a new hypothesis.

So, what does that mean in practice?

One of our famous companies, that grew to be more than a billion dollar exit was
CarsDirect. Cars Direct was built on the premise, this is back in 1998, was built on my
premise, that people would buy a car sight unseen online. That people would give $1,000
deposit, to configure the car they wanted, place that and have the car arrive at their house
on a flatbed pick-up truck with no interaction with the dealer whatsoever.

Well, that was something that I personally wanted. But I didn't know if anybody else wanted
it and in fact, when I told it to other people, they laughed at me and said no one's going to
do that. Again, think back to 1998, there were some people who back then said people
won’t even put their credit card online let alone $1,000 as a deposit. But I knew that I really
wanted that. I wanted to see if other people wanted that. So, I wanted to devise the simplest
experiment to determine if that was a true statement, that was my hypothesis that some
people would do that.

So, we hired a CEO to build this idea. And that CEO started, the goal was in 90 days let's
go find a way to put up a website and see if anybody wants to do it. So, I remember after
about 30 days of getting the team together getting it started, building the website, there
weren't great tools for building websites back then, we had to build everything from scratch.
I was asking them how they're doing and they said, well they're building the configurator,
they're testing out how you choose the option to your car and making sure you don't choose
invalid options and I was saying don't worry about that. We don't even know if this is going
to work. Don't build the configurator yet, you have to figure out all the options and all the car
models out there. Let's just let people type in what they want and will figure out in the back
end if that’s valid or not before we submit that to the car dealership.

Then we worked on that for a while and I came back another 30 days later, and they said,
well right now we're working on the source of supply. I’m talking to Ford and I’m talking to
Honda to figure out can we have a source supply of cars. And I’m saying, why are we
worrying about whether we have a source of supply of cars. We don't even know if we're
going to do this idea. We just want to see if anybody would buy this.

So finally, on something like on the 80th day, they said, OK we got it all already. We are
going to let people type in what they want. We don't even have credit card approval yet but I
said don't even worry about that. Let them type in their credit card, we won't even cash it.
We just want to see if they would have put in their credit card to see if they would have done
this.

So, I remember on Thursday we put the site live, I went home. I remember coming on
Friday morning and saying well how did it work?

And they said, well we sold four cars last night. I said, hurry up and turn the site off!

The reason was all we were going to do was go down to the auto mall in Monrovia and buy
the cars and deliver them on a flatbed truck and lose probably $1,000 or $2000 per car. So
now we're going to lose $8,000 for those four orders.

But, we learned the critical thing. For only $8,000, without the development of all the back
end and all the stuff we got to do and securing source and supply, we found the answer to
the critical hypothesis question which is, people would put their credit card in online to
configure a car that they wanted and buy it sight unseen for a fixed price.

That was gold.

With that gold, we then really set out to build the whole company. We delivered those four
cars to test out the experience, make sure they were happy but then we went out to build a
website and the website took off like crazy. This was really, really revolutionary.
Not everybody wanted to do it but enough people want to do it that the company went
public, grew to more than a billion dollar valuation, and continues to this day, in many, many
areas as part of Internet Brands.

But the critical thing there was, how do we learn that critical thing in a very lean method?

Well, every company can do that. You really need to think about how can I learn the most,
(maybe sometimes without even writing a line of code) if code wasn’t involved. Now in some
cases, it's very hard to be very lean but it's always possible to figure out, how could I spend
the least possible, to get the most critical learning. And the reason for that is, that’s how a
startup wins. By out learning their bigger competition.

Your bigger competition has more money than you. Your bigger competition has more
brand than you. Your bigger competition has more resources than you. But you could “out
learn” them by doing more tighter iterations with a great hypothesis at each step.

Lesson 8

BE REMARKABLE

Be remarkable. This is my conclusion from a great quote by Jonathan Cohen which is,

advertising is a “tax” on being unremarkable.

You need to find a way to make your offering exceptional. You need to find a way to make
your offering stand out.

Why is that so important? It is very expensive to advertise and convinced someone to buy
your product. Very often the amount you have to advertise to convince someone to buy a
product is an amount larger than the profit you can make on that product and therefore you
can't make that up in volume that's a negative, a negative return that you can't recover from.

The way you recover from that is to make your product so remarkable that it either doesn't
need advertising or the amount of advertising nudge that you need to push them over the
edge is in fact much less than the profit you can make on something.

So, therefore, looking very carefully at your offering, at how you explain it, and how you
make it appear remarkable and actually be remarkable is very, very crucial in the success of
a business.

Lesson 9

TRY AGAIN

Be willing to learn and repeat.

I had a few companies that I started that didn't make it and I was very sad about them, but I
pretty much had vowed to never go back and try a company like those again because I had
failed at them. And then I went to a conference, where Reid Hoffman, the founder of
LinkedIn was speaking. And he was talking about how LinkedIn, I think, was something like
his fourth social network. He tried one and it did work, he tried a second one in a different
way and it didn't work but he was really passionate about social networks he thought they
were very important. He tried a third one, didn't work and he finally had the right angle with
LinkedIn. He had the right idea on how to build virality with your phone book and your
contacts, he had the right value proposition and maybe the right timing.

I was very inspired by that talk where he talked about each one of these tries as an “at-bat”.
He thought of it like, if you strike out at an at-bat, you don't never ever play baseball again.
You try an assess what happened with that pitching, what did I swing at that I shouldn't
have swung at and how can you go back and have another at-bat and do a better job.

I never really thought about the companies that I was starting as at-bats. But listening to it
that way really made me think about, well if some of those companies that I was really
passionate about didn’t make it but if I go back and take another at-bat but with a new
stance, you know literally like an at-bat with a different angle and with learning and possibly
with new timing. Could I make a go of it again?

And I actually went back and took a look at two companies of ours that didn't make it but
that I was very, very passionate about, actually three companies, and I started them again.
Different names, different people, different products but the same basic areas. And of those
three companies one of them failed but two of them became wild successes and are
growing today. And I'm so glad that I heard that Reid Hoffman talk to give me the
confidence to actually go back and take a lesson from what I had learned as opposed to
giving up from the thing that I have learned.

And one other way of looking at it was, I once had an advisor and CEO coach who was
talking to me in a prior company, before I started Idealab called Knowledge Adventure and
we had just lost some money on some project. I think we had lost $2,000,000 on a very
expensive painful lesson and he was giving me advice about it and said, Bill, you just took a
$2,000,000 class. Are you going to attend that class or are you going to skip that class? If
you learn from everything you just did, you could turn that into much, much more than what
you paid for that class.

And I really think that that applies to everything in business. Business really is a journey and
you have to take into account everything you learned along the way, to really make
something better and better each time, and that you really should be willing to try again.

Be willing to learn, rinse and repeat.

Lesson 10

BUILD A COMPLEMENTARY TEAM

You need to have diversity of thought in your company. In addition to diversity of thought,
diversity people, you need diversity of styles. You need people who look at the world in
different ways and have different viewpoints from their outset.
I learned this very late I was probably 35 years old before I learned this. Because up until
then, I was hiring all people like myself. I would go to try and find people that I went to
school with, other people who I liked at work, really to try and build up a company of people
like me. But then I finally reached a breaking point when I learned you needed to have other
styles. In fact, other people that maybe I didn’t get along with, but I had to learn how to have
mutual trust and respect for those other styles, to get the best out of the company.

So, let me explain four caricatures of people. No people are exactly these four caricatures,
but they all have varying amounts of these four things that I am going to call letters - E, P,
A, and I. E is the entrepreneur, P is the producer, A is the administrator, and I is the
Integrator.

I learned these things from a great CEO coach named Ichak Adizes and he has a great
book called Managing Corporate Lifecycles where he talks about the life cycle of a company
and how you need these different skills at different stages of a company. But to be
successful as a company to be in prime, you need all of them. So, let me give you an
example.

A company always starts out with an E, the entrepreneur. The E is the dreamer, the E has
the idea, and the entrepreneur is the only person who can start the company. The E gets
the company going, and if you look at time on this axis and success on this, it's going to go
up and up and up and up to the right but eventually, it will fail. If the E never can get any P,
and by P, I mean producer. If it can't produce a product if it can't ship a product if it can’t
make some revenues.

Now an E, an E person like myself, can also have a P skill also can have the ability to get
something done. But often, the E needs to bring in other P talent to be successful. Then the
company can go further. But eventually, even with E and P, a company will start to break at
the seams if it doesn’t bring in some A.

The A skill is the administrative skill. It's the ability to pay the bills, pay the rent, put the
money in the bank account, keep the trains running on time. Put all the systems in place to
keep the E and P running properly. And then finally, even with A, eventually the company
will fall apart at the seams it doesn't bring in some I, the integrator skill. Why does the
company need I?

Well, the A, E, & P don't necessarily get along. In the extreme, they would hate each other's
guts. Because they are just completely different mindsets, you think about the different
mindsets of those people so you need and I skill that can help resolve conflict, that can help
bring those people together, that can make sure that there is mutual trust and respect
between those 4, 3 three other personality types. But I'll give you a specific example that
can get some color to that.

Imagine that we're together in this room, with four extremes of those caricatures. And the
four of us are all in a conference room and were talking and then one of us notices over on
the window over there, there's some dirt on the window. Well, let me look at tell you about
the different ways that those four people would look at it.
The P and this will help you identify which kind of person you are. The P would look at that
and say, boy right after this meeting is over, we got to go clean that window. I don't like that
over there.

The A would look at that and say, you know I think something wrong with the window over
there. Let me make up a form for everything that is wrong in the company and put them in
order and we will go back to them in chronological order until they're all solved.

The E would look at it and say, look at the parking lot outside across that window there. I
wonder what we’re going to put over there. So, the E doesn't even see the scratch, the dirt
on the window, anything sees through the window, is looking to the future looking over the
mountains to figure out what's next.

And the I looks at that dirt on the window and says, I wonder what those three people are
thinking. The I is more concerned about the other people than about the window, the
process, any of that.

So, think about how different people look at the exact same thing from those different
angles and how you want to have all those views in your company, and you have, want to
have all those views in your company working in harmony.

It is very hard to achieve but it is very valuable to achieve. And it was eye-opening to me to
realize that that was even something possible to achieve. Now when I started a company, I
really think about the roles and desires of people, even when I'm hiring people. I'm looking
at what skill they have and what skill they want to have and what role they want to have in
the company and make sure that is filling a deficiency of the company or not overloading on
something the company already has too much of. Because again, the most important thing
is to have all four of those traits in beautiful harmony.

That is building the perfect complementary team.

Lesson 11

BE PERSISTENT

The emotional journey of creating anything great often comes with a dark swamp of despair
in the middle. A chasm that you need to cross that feels uncrossable at times but
understanding that that is there is very, very valuable. Even the greatest of entrepreneurs
had that chasm in front of them.

Steve Jobs getting fired from Apple, Next not working out, coming back to Apple, being
weeks away from being out of cash, having Hail Mary financing from Microsoft to keep them
alive, incredible things. There were many, many darkness swamps of despair for Steve
Jobs.

Even Walt Disney, he mortgaged everything to make Snow White the first full-length
animated feature. He mortgaged everything, to make Disneyland happen in 1955.
There were dark swamps of despair for almost every great entrepreneur. And, across many
companies that I have started, I have seen this and the companies that fight to persevere to
cross that dark swap lead to great, great success.

So I really urge you to understand that's going to be part of it and that, that really is an
important crossing the chasm for every grade start-up.

Lesson 12

PROTECT YOUR INTELLECTUAL PROPERTY

Protect your IP

It is very important for a start-up to have something novel and something protectable.

So, think through about what's novel about your solution. Look even for obvious angles but
things that no one has tried before and then you can go ahead and protect it very
inexpensively starting with provisional patents, maybe turning into full patents later. But it's
really valuable even as an exercise to think through all the things that could be differentiated
and special about what you're doing.

It's going to be useful for recruiting, it's going to be useful for fundraising, and it might be
very, very useful for growing your business and protecting yourself later. I'm even thinking
about this from the standpoint of never ever having to take anybody to court over your IP
but I’m just thinking about making your core offering stronger and the thought process that
goes into thinking about that differentiation.

So, building up your IP portfolio whether it's protected with patents or even just keeping its
trade secrets but really spending time to think that through and always think that through.

I love having IP brainstorming sessions with my team to assess what have we done recently
that's new and novel that no one has tried before and even just collecting among ourselves
but then often filing it as provisionals is a very, very valuable exercise.

Lesson 13

IGNORE DOWNTURNS

Downturns are very frustrating times for entrepreneurs but there actually great times for
entrepreneurship; 2001 after the dot com crash, 2009 after the Great Recession, they were
actually great times to start companies. Why were they great times to start companies?

First, there was less competition. Many people are scared away by the downturn. Second,
during these downturns usually, the only things that actually go down are valuations. But
what is actually going up are users, usage, dollars spent all those things, for example,
continue to skyrocket through the dot com crash but the only thing that crashed were
valuations. So, taking advantage of the momentum that was coming through that period
was extremely valuable and there were some seminal companies created both in the dot
com crash and right after the recession.

So, I think you should be focused on the customer demand, customer opportunity, and not
worry about the specific economic climate. Of course, it might be harder to raise capital, but
again as I talked about in one of my other lessons, don't be dilution sensitive, be success
sensitive. Get the capital you need, and very often you could be even more successful
starting a company in a downturn than in good times.

Lesson 14

USE MOORE’S LAW

Exponential curves crush linear.

Nothing has ever gone down as much in price or as fast as the cost of computing power
and businesses that can smartly harness this effect will win.

Look carefully at your business opportunity and see if there's some way to embed more
computation in than your competitors. Because, the computation is going to approach free
and if you can embed more computation, although that might take a lot of software
development to execute the first time, each incremental time it will be almost free. And
every year as you progress that costs will go down. So you will have the wind at your back
of decreasing computation costs to help make your business even more competitive than
someone who isn't embracing that.

So, I feel that using Moore’s law can be a great competitive weapon in your business
arsenal.

Lesson 15

ITERATE LIKE CRAZY

Iterate like crazy – you never get it perfect out of the gate.

Your first and best idea is just step one. But you find gold by adapting to what you learn
from your customers. You win by iteration by getting the most learning per unit time.

In fact, looking back on the history of Idealab and now 150 companies. I realize, I probably
even shouldn’t have called it Idealab I should have called it Iterate Lab. I was in love with
the idea. I always thought the idea was the essence but in fact, the idea really is just the
starting point.

Making small changes, making those adjustments, being adaptable is probably more
important than even the quality of the idea on day one. And that's why iterate like crazy, is
one of those valuable things you can do to make your business successful.

Lesson 16
BE FRUGAL

It is very important to take the money you have last as long as possible. You need to spend
your money on your product and your customers. Saving money on your surroundings and
all the things that don't drive product-market fit are the most valuable thing you can do.

Here's a picture of Jeff Bezos in 1999 at his little desk, door as a desk, after he went public.
This is in 1999 after Amazon was already a public company and look how frugal that
company was being.

It's even more important, as a startup, long before you go public, to adapt that attitude. It's
very, very hard after you've raised a lot of money to still act frugally but it's very, very
important to build that culture in your company. It's very, very crucial for success to always
have that be a critical part of the DNA of your business.

Lesson 17

FIND YOUR PURPOSE

It’s very important to figure out what you are uniquely great at and where you have a special
competitive advantage and where you have a special heart-driven desire. Your purpose and
your passion are what's necessary to carry you through the tough times and every startup is
going to have tough times.

So your passion is not so important for your success because you’re going to be better at
what you’re doing because your passionate. Your passion is important because that's
what's going to keep you going when you have those dark days which inevitably every
startup has.

So finding your purpose, really understanding it, articulating it, knowing why you're doing
what you're doing, is very crucial to your startup success.

Lesson 18

CULTURE EATS STRATEGY

Peter Drucker had a famous quote in business that “Culture eats strategy for breakfast.”
What does he mean by that?

It means that you can have the best strategy in the world to take your company or your idea
forward but if the culture of the company is different or distinct from what the strategy is,
that's going to win. And, that means that the culture really, really is important.

So, how do you affect that? How do you change that? How do you do something about
that?

Well, it's very important that everybody in your company agree on a culture. It’s very
important for the CEO to articulate what culture you want to have. I think it's best to have
that culture derived as a group by having everybody participate. But, however, you derive it,
whether it's solo coming from the CEO at the top or whether it's a group effort to determine
it, it's very important that everybody understands what the culture is and one thing that's
incredible is that the CEO, founder, might have their culture very clearly articulated in their
own head but everybody else in the company can’t articulate it. Think about how that
applies even to all the daily interactions of people in the company. You want people to be
able to make decisions like you would if you want everybody to share the same culture.

Well, how do you get people to know what that is? Only through a lot of repetition, a lot of
discussions, and a lot of sharing, a lot of scenario playing of what to do in different
situations so that people can make smart decisions.

I really think that if you spend a lot of time talking about the culture of your company and
listening and taking input from others and making sure you all agree on it; then you can
have a situation with the strategy that you want to carry out your company can actually be
executed because the culture will help make that succeed as a pulse as opposed to getting
in its way.

Lesson 19

HAVE LASER FOCUS

Focus is how you, as a startup, can take on a bigger competitor.

You can have a narrow focus and outdo a competitor by specializing in one particular area.
Now choosing that focus is very hard and very scary. I know as an entrepreneur, I often
want to try more things or keep more opportunities open because it feels like that’s safer.
It's almost like hedging your bets, by having more balls in the air or more chances for
revenue to come in or more chances to win the customer. But in fact, it's the opposite of
that, I learned that the very hard way.

In one of my companies, Knowledge Venture, I learned that as I continue to narrow the

focus, the company did better and better. We did better and better because we could win
against that customer base, more successfully, but also by saying no to things that we
weren't as good at, the company succeeded more and more. It was a very difficult lesson to
learn but a very valuable lesson to learn.

It’s always hard to choose the right focus but what I learned from that experience and others
was that if you have a choice between three things that you're choosing between, it's even
better to pick an inferior one, than to try and do all three of them. That even the wrong focus
is better than being unfocused.

That was something that was very surprising for me to learn, very hard to believe but I
really, really feel strongly that having laser focus is the keyway that a start-up with less
resources can take on a much better resourced competitor.

Lesson 20
MAKE INVESTORS MONEY

One of the things I've learned is it's very important to make investors money as for more
reasons than you might think.

Of course, you want to be fair to your investors. Of course, you want to be able to work with
people again in the future. But another thing I've learned, if you're really focused on making
a deal with investors that’s truly win, win so that you show that you really care about how
things turn out for them, that will be a really powerful way to actually close your investment
and to build a great partnership that's really going to work great for you in the long term.

So, it's really important to always be thinking about making a great return for your investors,
as well as for making a return for yourself and all of your employees.

Lesson 21

BE A LEARNING MACHINE

It's important to always be improving, always be learning, always be looking for feedback.
Entrepreneurship is really hard and you can't be good at everything. But you can improve
upon your strengths and mitigate get your weaknesses.

One outlook that I've used is called “closed the gap.” When I think about a skill that I wish I
had and look at where I'm lacking, rather than the way I used to think about it, which was,
oh I'm not very good at that. I now think about it as a gap. There's a gap between where I
am and where I want to be and how about if I just close that gap. Maybe even just a little bit
at first, but then keep on learning, keep on closing a little bit more, over time, until the gap is
closed.

It's hard but a different and powerful way to think about it as something you can chip away
at over time, as opposed to a chasm that you can’t cross. That has made it easier for me.

As a company, you always want to have your company learning but as a person, you
always want to be a learning machine for yourself as well.

Lesson 22

ALWAYS BE FUNDRAISING

This might sound silly or even wrong.

But what I mean by it, is that you as an entrepreneur should always be thinking about
improving your story. Making sure that you use that to get the capital you need to achieve
your long-term objectives. And also at closing around the financing does not mean that it's
over, it just means that it's enough for the next hill.

Even after you close a round of financing, you should be thinking about your next step in
growth. You should be thinking about; How do I tell my story better? What do I now need to
do next? And always be meeting people that could be helping you for that next round.

Lesson 23

BE TRANSPARENT

I have found that transparency wins but it comes at a cost of extra care.

By sharing more about your successes and failures internally, by being more open book
about your finances and really about everything, you will have a team that can make better
decisions and you can scale your organization beyond yourself.

The price you pay is that you have to earn the trust of others, and you have to take the time
to explain all the ramifications to everybody, that takes more effort. But the ROI on that
effort is high. As now you have people who know the facts, and can act more smartly on
their own, and also feel more empowered, and more like owners.

The more every person in your company feels like an owner, the more you can unlock
human potential from every corner of your organization and that leads to dramatically higher
success.

Lesson 24

IGNORE SUNK COST

I think that to succeed in business you have to be very adaptive.

You have to have what I call low "inertia." You have to be able to change direction with new
but validated information. It's very hard to do because we have this built-in tremendous
sunk cost fallacy.

It makes us want to adhere to a given direction, even in light of new contradictory evidence.
However, when you have that new evidence you should listen to it.

You should ignore those sunk costs. You should just agree that those costs, with a valuable
learning to get to this current place and move forward with the new information.

Lesson 25

EMBRACE DIVERSITY

Inclusive diverse teams win.

There is a really great talk and great book by Frances Frei that I love. That says this even
better than I can hear but I'll take a stab.

Think about a Venn diagram with three circles. A homogenous team will give you one
overlapping circle the same size as all three circles on top of one another. A diverse team
spreads out that circle into three separate ones but if not inclusive, only includes the small
overlapping triangle, in the center of those three circles. But a diverse team that is inclusive,
gives you the sum of the area of all three circles or the broadest set of knowledge and
ideas.

So, it’s not good enough to just have broad ideas or diversity. You need to build an
organization that truly is inclusive of and listens to all those ideas to get the best outcome.
Companies that build a culture like this, will be unstoppable. And it's extremely worthwhile
to put tremendous effort into building an inclusive and diverse team.