Lessons from Silicon Valley

You would think from media headlines that any entrepreneur in Silicon Valley can become a billionaire. All you have to do is come up with an idea, pitch it to a venture capitalist, get millions in funding and take the nascent company public for billions. Didn't that work for Steve Jobs, Larry Ellison and Mark Zuckerberg?

Not so fast. There are buildings in the San Francisco area filled with young (and old) one-desk entrepreneurial hopefuls that turn over almost daily. Very few of these people and ideas ever get off the ground, let alone go on to great wealth.

First of all, and surprisingly, many of the ideas appear lame, even to the non-engineer who might peruse a list of them. Most of these ideas are derivative or just have no obvious mass use or appeal from the get-go. None of them are the vaunted "disruptive" technologies that the locals like to find. But all are looking for that lucky break that usually never comes. Sounds like show business.

Yes, there is plenty of excess cash here itching to get early into "the next big thing." That's how the Big Bucks are made. Buy Founder's stock for pennies, and then turn the shares around later for huge gains.

In fact, that is actually how a good many of these VCs ("sharks," in parlance) got their money to begin with. Then they turn around to become what one former executive of Yahoo!, who had cashed out for millions, ingenuously told me he was now: an "angel investor." And it is actually a fairly small community of players who seem to all know each other and network furiously, looking for the next golden opportunity.

So what do you need to get in on the gravy train? A PhD from Stanford, a power Rolodex (remember them?), a strong resume, a great product pitch, or all of the above?

The late Arthur Rock, one of the earliest and most successful VCs (Apple, for instance) told me that he used to get approached often about funding. When I asked how he evaluated them, he told me that he looked at the resumes and business plans but he really only cared about the person. Business plans can be re-written, but character, intelligence and the kind of drive necessary to succeed are inherent. And the latter, particularly, is rare. There is a lesson here for docs, too. I learned a long time ago, the hard way, to hire the best people, not the best resumes.

It's hard to define and harder to measure, but "you know" when you are confronted with talent and EQ (people skills). And "hiring up" always pays off, just as hiring for expediency will always rises up to bite you in the behind.

For some additional, start-up insights from the horse's mouth, Sam Hogg, a partner at Open Prairie Ventures, had three pieces of advice in a recent issue of Entrepreneur.

First, "Act before you think" — too often people over-think their business plan. Success in business is far more dependent upon good execution than it is a good idea. How many times have you heard people say "If I only knew then what I know now, I never would have started ______”?

Secondly, Hogg says to get funding. “Fake it, take it and then earn it… Take every bit of your BS (fantasy projections) and drum up every ounce of credibility you have to try to deliver on a promise." For that's all any of us have when starting a business, a career, or even a marriage, come to think of it — credibility for a promise.

His third, and most shocking, point is to actually sell your company and make money. "Don't play nice. Reaching that point usually involves being a pain-in-the-ass threat to a competitor, ideally one with deep pockets." Surprisingly, what you hear a lot here in the Valley is talk about the much more common buyout, not the IPO, being the goal. With Jobs, Ellison and very few others being exceptions, starting, building and running large companies are three different skill sets, usually requiring hiring professional managers and easing the founders out or to the sidelines. Look at Steve Wozniak (the actual inventor of the Apple computer) not Jobs when you want to see the more common result.

There is a takeaway from all of this uncertainty and angst in Silicon Valley, aside from the vicarious fun of reading about the rapid wealth gain of the few, and the absolute importance of hiring right the first time. That is, for all of the turmoil in the medical economic sector, docs have a career that will survive, admittedly with some pushing and shoving along the way and all of the madness and quirks of the market place. And the government, for that matter.