Fear is the Mind Killer of the Silicon Valley Entrepreneur (we must be Muad'Dib, not Clark Kent)

Okay folks... i am getting really fucking tired of all your

negative shit. 

yeah, i know it's gonna be tough.  and the credit crunch / downturn / whatchamacallit has already changed the balance of power from entrepreneur to investor in less than a month.  if you are lucky enough to *GET* financing, your term sheets are gonna suck ass (learn about liquidation preferences & protective provisions). if you are running an existing startup, you are probably going to have to cut spending, cut hiring, and you may even end up firing people / doing layoffs.  and then you pay taxes and then you die. 

sorry, life's a bitch.

but listen up:

• Silicon Valley isn't Wall Street.
• Internet Startups are not mortgage finance companies.
• and... Entrepreneurs are not supposed to be Clark Kent.

in other words... WAKE. the FUCK. UP.

if you came to Silicon Valley to do a startup (or to join one), it ain't always fun & games.  this isn't Disneyland, or a Harlequin romance novel (unless of course you're Tom Perkins).  you don't always win every hand of poker, you don't always get a free lunch, an Aeron chair, or free child care. 

the popular [mis]conception of startups being free rides to a pile of cash and/or stock options is just so much horse shit.

twenty years ago, i moved out to Silicon Valley after graduating from college.  i did not do so with the intent to get rich quick, but neither to live among sheep.  i came here for geeks & technology, ultimate frisbee, and a free-wheeling, entrepreneurial spirit that has electrified the valley since The Traitorous Eight walked out of Shockley Semiconductor over 50 years ago and started a Revolution.

while i don't profess to understand credit or capital markets, i do know that internet startups cost less money than ever to get started. and unless i missed something, there are more people online now than ever, spending more money online than ever.  and i doubt any of these trends will likely reverse in the long-term -- lower costs, more people online, more e-commerce.  doesn't that seem like a pretty good environment for building new online businesses?  if not, then what the fuck are you doing here?  go back home & get a safe job in insurance or mortgage appraisals (oh, wait a sec...)

the long-term macro trend of growing global internet e-commerce has been the foundation of my own personal startup bets, and why i plan to continue to invest going forward.  the companies and people i bet on HAVE to be both optimistic & opportunistic, if only because THE ODDS AGAINST STARTUPS SUCK ***ALL*** THE TIME, not just in downturns.  you damn well *better* have a positive attitude, or you're just never going to get out of bed in the morning.

you mean the current market environment scares you?

try making payroll on credit card advances when you're carrying over $100K in personal debt (been there).  try dealing with your servers being stolen on new year's day while you're in the middle of trying to close an acquisition (yeah, that sucked too). try looking yourself in the face every morning, knowing 10-20 people depend on you for their jobs & families & kids, and feeling like you're completely inadequate to the task and can't hide it (every day for 3 years).

being an entrepreneur is a friggin' FEAR FACTORY, and a living nightmare every day of the week. this is nothing new.  4 out of 5 small businesses fail within the first few years, and the odds aren't that much different for startups.  you are going to be embarrassed, ashamed, labeled as an idiot, shunned, ridiculed, and occasionally driven from the village with pitchforks.  on average, YOU ARE GOING TO FAIL. MULTIPLE TIMES, in NEW & INTERESTING ways.

GET USED TO IT.

in fact, the more you are used to failing -- and failing fast, with data on how you fail -- the better off you will be.  for a great presentation on how to use speed & fast failure as the ultimate startup weapon, check out mike cassidy's presentation on SPEED: The Ultimate Startup Weapon.

Best Strategy Is Speed (Startup2Startup May 2008)

View SlideShare presentation or Upload your own. (tags: stylus.innovation xfire)

and while we're at it, let me take on this issue of "conserving cash".  personally, i think it's the wrong message.  the point is not to spend less cash.  the point is to FIND YOUR FRIGGIN' BUSINESS MODEL.  if you know which direction you're going, it's ok to RUN... on the other hand, if you have no friggin clue where you going, it doesn't matter how slow you crawl you ain't gonna get there. you can slow down your spend until you figure out your business, but once you DO understand it, then by all means STEP ON THE GAS!  use your cash effectively to build product features, expand marketing, and hopefully use cash-flow positive arbitrage to MAKE MONEY.

to put it more succinctly: in a down market, it's even more important for you to understand the fundamental metrics of your startup, how activation & retention work, how customer acquisition & referral work, and how to make money.  these were always important, just more so now when people are looking harder at #'s.

*PLUG*: for more about how to learn more about Startup Metrics, see our recently completed STARTonomics conference. 

Silicon Valley has never been without risk or fear.  in fact, quite the opposite -- Silicon Valley is rife with fear & paranoia.  and yet GOOD entrepreneurs somehow manage to overcome their fear, somehow make their hopes & dreams bigger than their fear, somehow manage to find imaginative solutions to problems whilst being backed into a corner by a guy with a .44 Magnum who outweighs you by 75 lbs, and nothing in your pockets but a butter knife and a paper clip.  it doesn't matter.

and so i leave you with this:

the true Silicon Valley entrepreneur will find a way around these obstacles.  the true Silicon Valley entrepreneur is not frightened by a "down market".  they are not daunted by VCs who now have massive leverage.  and they are not going to back down.  the true Silicon Valley entrepreneur is full of optimism,  and sees the world as his or her oyster.

you are MacGyver. 

you are Jeanne d'Arc.

you are Luke Skywalker. 

you are Paul FUCKING Atreides, and the SPICE must FLOW, motherfucker.

I must not fear.

Fear is the mind-killer.

Fear is the little-death that brings total obliteration.

I will face my fear.

I will permit it to pass over me and through me.

And when it has gone past I will turn the inner eye to see its path.

Where the fear has gone there will be nothing.

Only I will remain.

Comments

[maneck]

Dave what's with all the cussing? I prefer this place when it was family friendly...

[Allen]

amen.

[Mike Montano]

great post dave.

"with data on how you fail" << I really like this point. Most people leave that out when they talk about failing fast and failing often.

[Pug Nagual]

Common man sees destruction. Exceptional man sees new opportunity.

[WalKnDude]

Well, 'dave'I am coming to the valley, and this sheeple is looking for NASA BLOOD.
feel me PSYOP?

WalKnDude
*nofear*

[Wondering]

You are my hero....great words and great inspiration for those who want to do something and not just 'finance' something.

[Ryan Graves]

Gotta say Dave, I'm never bored reading your shit.

Love the positive but realistic message your preaching. One last point... Entrepreneurs are committing suicide if they are constantly reading the news...nothing is more powerful in killing the entrepreneurial spirit than constant bad news! Turn of CNN and focus on making that $krill!

[Leila Boujnane]

Hell Yes! Thanks for your blog post. Awesome start to the day in this gloom and doom world. As you said: enough already! Back to work folks.

[surya]

this is the greatest post you have ever written.

[Ben Tremblay]

As one VC CEO pointed out: growth sectors always recover faster than other (more "mature"?) sectors.

[Christine Lu]

this totally rocks. i think i'll skip my coffee this morning. i'm wired after this post. :D

[Daniel James]

Thanks Dave, this is just what I needed to read this morning, you are spot on. Rock n roll, mates!

p.s. I don't mind the swearing, so much.

[Davide Di Cillo]

very true.
the positive aspect of online businesses is that they can profit anywhere in the world and when things go bad here there is always another market with a positive cash flow to target.

[Kris Colvin]

Love "the spice must flow, mofo!" Love this whole post. A newbie startup, I've left the safety of only working for others and am building products myself. Perfect "wake up" advice for people who might fret, and never START, in or out of the valley. Thanks for the awesomeness.

[antje wilsch]

LOVE this post, although hard to believe you still love FB so much :)

thanks for kicking some arse; I am tired of the moaning too, esp coming from certain investors

[daveschappell]

Amen, Mr. McClure -- I was just telling some folks last night that "at least other people are starting to feel the same pressure that I've been feeling for the last year!". Time to suck it up and double-down, because there's work to be done, and opportunities to be taken advantage of!

[sprfrkr]

Someone get me a worm!

[bernard lunn]

Yeeha, great post Dave. Still think FB suck as a business :-)

[David Kendall]

> try dealing with your servers being stolen
> on new year's day while you're in the
> middle of trying to close an acquisition

The memories come flooding back.

The phone rang at - maybe - 7:30am on the holiday weekend. It was a cop calling saying that there had been a break-in. I was a little bleary-eyed having been out to - ahem - a "social engagement" the night before. Apparently the cop had found a phone list on your office wall, he started dialing numbers from the top of the list. I was the first person to answer the phone.

The thieves had been super efficient. The cables to the computers looked like they had been cut with heavy duty shears. I bet they had been in and out in minutes.

I think one machine had contained the source code repository and the other was the development server with the working code on it. All the code for the project written since the last backup had been lost. Lesson learned: frequent off-site backups are important.

The true lesson, though, was how fast we can recover from crisis. When I arrived at the office to find the cop and the pile of broken glass I had visions of canceled contacts, lawsuits, and the prime resume fodder project we had been working on all going down the tubes. The reality was that we were able to rewrite the lost code in a day or two. The hard part of coding is the figuring things out. Typing the code is the easy part. In the end the delays at the client end slipped the launch much much more than the couple of days that were hit by that theft.

Crises come and go. We muddle our way through the difficult times and surf the waves of the good times. In the long run the good luck and the bad luck cancel each other out and what we are left with is fruit of our labor.

Those were the days....

[Kingsley Joseph]

please keep the swearing, the Dune references and the crack color schemes coming.

[Faisal H]

...you had me at "Ultimate Frisbee"...

[rashmi]

Needed this after seeing the doom and gloom all around. You are right. being an entrepreneur is tough. Sometims its tougher. Suck up and deal with it.

[Boris M. Silver]

One of the benefits of not being in the Valley is that I don't get hit with this herd mentality when it creeps in both times of boom and bust.

One of the benefits of being a 20 year old CEO is I'm an eternal optimist.

One of the benefits of reading this blog is I get to read awesome posts full of passion and flare.

Awesome post Dave!

[robert]

Awesome post...

With a few tweaks it could be reposted and targeted at the VCs with their heads stuck in the sand.

[Rob]

Thank you Dave. This is getting ridiculous. One person (or fund) screams panic and everyone freaks out. Let's pull ourselves together and continue doing what we believe in. Let the panicky wimps get back scream themselves to irrelevance.