The Startup CEO #4: Restraint

In 1987, at 185 lbs I was perhaps the lightest pulling guard in college football.  But as a wrestler and a physicist, I knew the secrets of momentum, leverage and timing and so I could generally block most of the lard-balls I faced, even though they often weighed 100 lbs more than I did.  This was club ball.

Sometimes it took a few seconds to get them where I wanted, or at least to move them away from where I did not want them.  We had a wonderful tailback who could read the development on the line like a top skier does a mountain, and would hold back and then scoot through even the tiniest of holes, breaking out into the secondary more often than not.  I loved him.

One day at practice, there was a clean cut, tanned man wearing a Carolina Blue golf shirt watching us and taking notes.  He showed up again the next day, and then again at our game on Sunday morning.  The next week at practice, half our guys didn't show up, and we found out that Mack Brown, who was well on his way to his second 1-10 season at UNC, had had a mutiny among his own players and drafted the best of ours (but not me).  Our tailback was gone, and so our fullback moved back, and he read the line in brail with his shoulder pads and helmet, leaving me with bruises and footprints all over my backside as I got caught between this warthog and the lard-balls over and over again.

Another Example

A little over two years ago, about the time I started this blog, I prayed and asked God to fix my company.  The board had degraded into a cesspool of factions each pushing different agendas with telephone trees to their list of supporters, and secret investor meetings that everyone knew about and nobody attended but which had acrid minutes that were passed around in chain emails.  The employees were still doing their best, but funding was difficult in 2010, and every potential investor could see the troubles on the board, and they were shying away.

I trusted that God was still God and had heard my prayer and would act on it when it was His will to do so. So I put one foot in front of the other and tried to do the right thing and the best things for the company, and waited.

In November 2010, I was relieved of my position. 

I was without a job, was owed $70,000 in back pay and expenses, had a mortgage and small children who needed to be fed, and the company was refusing to honor my severance package.  But God is God, so I put one foot in front of the other and cut back on everything except our donations to our church and some local charities, and began to think about what I might do after Innegrity.

Within a few weeks I was approached by my current partner with the idea to form Dreamweaver, and after I researched the patent landscape and the technology and the market opportunity, I began to draft a business plan, and we started the company almost exactly two months after I was fired from Innegrity with nothing but an idea and Jim's good intuition.  I put my nose to the grindstone and studied and ran experiments and tried to learn quickly what went on inside a battery under different conditions, and how it could be improved by making paper with nanofibers.  I was way out of my element, but learned fast and within six months we had built a tiny little hearing aid battery that seemed to show some promise, so we started the process of raising money and building a real company.

 

Restraint in a Startup

Working with Jim is a dream for a young CEO (well, COO) like me.  You see, when I walk into my closet to get dressed in the morning, I know what the wavelength is for each color and how colors mix to form other colors and why some materials shimmer and others flicker and others are bright and others dull--but I still have to ask my wife if a sweater matches my shirt.

Jim has a few phrases that he applies over and over, and I've noticed that they have more to do with what we choose not to do than with what we choose to do.

"If you lie down with dogs, you're bound to get fleas."

"Talk is cheap, but money buys the whiskey."

"Only a few things are going to ring the cash register."  

By listening to Jim's advice, I am learning not to lay down with too many dogs, not to waste too much time with people who talk a lot but won't back up what they do with actions or money, and also not to spend too much time on stuff that has little chance of ringing the cash register.  Here are a few practical examples:

• Choose partners carefully:  Jim and I discuss every new addition to the company, be they a supplier, customer, employee, manufacturing partner, test lab.  Some we choose on technical ability alone, but most also have to fit our culture, to fit our bias for action and have the right expectations.  It is arduous and we leave some good people behind, but it really is about finding the top few percent that will work, and leaving behind everyone who even has a hint of being an A- fit.  Something that does not come easily to me, but that I'm learning, is leaving behind good technology in companies that are populated with people who won't execute.
• Not all investors with money are good investors:  We screen and screen and screen and in general have avoided most financial investors as being people who would not have a chance of understanding our business.  Our supporters all have an operational background and understand the slow and arduous process of developing and commercializing a material that can be a real change agent in a "fast moving" market.  Only a few financial investors have made the cut.
• Delivering value to the customer is everything:  We spend an inordinate amount of time, and I am flying and driving all over the world to really understand the intricacies of what our customers needs are and how their decisions are driven.  It took almost two years for us to decide how to position our product (the lowest cost high technology battery separators in the world), and we are still exploring the dynamics of the process to get placements.  This market is big, and we can make a lot of money in it, but first we had to learn with a high degree of precision what it is our customers value--what combination of product and service will make them part with their hard-earned money to include our product as a component of theirs.
• Don't make any major decision until you have to:  We didn't price our product until we were about to take an order.  We still haven't priced our second product.  We have resisted adding people to the board, adding advisors, choosing materials, deciding how to market in other regions.  In each case, we are studying the market and the other options before deciding how to position ourselves.  Every decision is made with the customers' best interests in mind, and so we gather and gather and gather information so we can make the decision that will serve the customer in the very best fashion.

I think it's clear, but I love working with Jim and his participation has helped give Dreamweaver a fighting chance of becoming one of the best new advanced materials companies in our industry.