Is it Time for You to Earn or to Learn?

I often have career discussions with entrepreneurs – both young and more mature – whether they should join company “X” or not.  I usually pull the old trick of answering a question with a question.  My reply is usually, “is it time for you to earn or to learn?”

Let’s face it.  If you’re thinking about joining as the director of marketing, product management manager, senior architect, international business development lead, etc. at a startup that has already raised $5 million the chances of you making your retirement money on that company is EXTREMELY small.  That’s Ok.  Not every job you have is supposed to be your big break.  It’s Ok for that to be your job to “learn.”

Yet I often hear people asking about these types of opportunities express their questions to me whether I think this company is going to be a big hit.  It’s clear to me that many people confuse learn with earn.  I will do a simple calculation for them that goes like this.  OK, you would own 0.25% of the stock.  They raised $5 million in their B round.  Let’s assume that the company raised it at a normal VC valuation, which means it gave up 33% of the company and thus $5 million / 33% = $15 million post-money valuation.  If you never raise another round of venture capital (a big if) and if your company is sold for the normal venture exit ($50 million on average for 200 or so annually that get sold) then what is your stake?  $125,000.  Yup.  Simple math would have solved that but people rarely do the calculations or think about it.

And let’s say that it took 4 years to exit – that’s $31,250 / year.  Now … these are stock options and not restricted stock so you’ll likely be taxed at a short-term capital gains rate (see comments section for why).  In California that averages around 42.5% so in my state after tax you’d make an extra $18,000 / year and that’s in a positive scenario!  BTW, this ignores liquidation preferences which actually mean you’ll earn less.

So let’s go CRAZY!  You get 1%, you sell for $150 million and it’s in 3 years (e.g. you won the lottery).  That’s an after-tax gain of $287,500 / year for 2 years.  Not bad.  Doh!  Wait a second.  Stock vests for 4 years.  You didn’t get acceleration on a change of control?  Sorry bud.  We’ll have to either cut your earnings in half to $143,750 or you’ll have to complete 2-years at BigCo that bought you making the money spread out over 4 years so it’s $143,750 / year for 4 years.

Don’t get me wrong.  This isn’t shabby money.  But given that a home in Palo Alto or Santa Monica will set you back $2 million it’s hardly riding off into the sunset.

I’m not trying to depress you.  I’m just trying to be realistic.  If you want to “Earn” (and by earn I mean the chance to buy your house outright or greater) – you have to start a company or join as a senior executive.  Or you have to hit the lottery and be an early player middle management player at Google, Facebook, MySpace or Twitter.  Let’s be honest – how many of those are created per year in the entire country?  1?  2 max?  I spoke with an investor recently who told me that 1,500 deals get funded / year in the US, 80 (5.3%) eventually sell for $50 million and only 8 (0.5%) eventually sell for $150 million or more.

So when the Stanford MBA, the ex senior technology developer or the former Chief Revenue Officer of a company is calling me and asking my advice on their next gig you can see why I start with “are you ready to earn or to learn?”

For most people it’s learn.  I only emphasize the question before I find it much more helpful to join a company with realistic expectations of what you want to get out of it.  My advice is often, “make sure that what you get out of working at this company is one or several of the following: a great network of talented excutives and VCs, more responsibility than your last job, specific industry or technical skills that will help you in what you do next, a chance to partner with companies that will increase your industry relationships, etc.”  Learn now to earn later.

When I was CEO of my first company (where I admittedly F’d up everything before I figured it all out) we initially calculated for people how much there options were going to be worth some day.  It was 1999.  Ventro was trading at $8 billion on sub $2 million of revenue.  It was easy to do these calcs.  Over time I realized that this created a rotten culture.

Over time I took to telling people the following, “join BuildOnline because you think you’ll get great experience.  Join because you like the mission of what we’re doing.  Join because if you do a good job we’ll help you punch above your weighclass and work in a more senior role.  And if you ever feel that in the year ahead of you you don’t think that you’ll increase the value of your resume and you’re not having fun then go.  Join because we pay well but not amazing.  Stock options are the icing on the cake.  They’ll never make you rich.  Don’t join for the options.”

Obviously you should only take jobs that you enjoy and that let you be passionate about coming to work every day.  That’s a given.  Don’t blindly join a company without knowing why you’d join or asking the right questions.

So a friend recently called to ask for advice on becoming the CTO of a startup.  He’d be employee number 3.  The company was being spun out of a larger company.  I asked him how much of the company would be owned by the parent company and how much would be owned by management.  He hadn’t thought to ask.  When we next spoke he had found out that the CEO had about 5% and there was no management option pool in place.  My advice was … run!  I said, “all the hard work is ahead. Why start the game with a company with a structure that’s likely to fail.”

Another talented young man I recently met called to talk shop.  He had an offer in NY, an offer with a well known startup in the Bay Area and an offer with a startup in LA.  He also has his own company that he started 6 months ago.  He’s not even 21.  He wanted to know what to do.  I told him that he needed to decide whether to learn or to earn.  He’s young enough to do either but know why you’re doing it.  I advised against the SF role because it was a bigger company and his role would be pushing paper from one side of his desk to the other.  If you’re going to learn then at least go work somewhere exciting where you can really do something.  If it works you can stay and grow for the next 5 years.  If it doesn’t you’ll have done 3 startups by 26.  And you’ll be ready to earn.

On the other hand, at sub 21 you have the ability to swing for the fences and try and earn if you’re so inclined and if you think you have the skill sets and the idea.  When you’re 40, have 3 kids and a mortgage this is much harder.

Now, for the “Earn” part.  Another friend of mine is a very talented executive.  He went to Harvard undergrad, Harvard Business School and has worked at 3 prominent startups and 2 well known big companies. He’s worked in the US and internationally.  He’s in his early 40’s.  Whenever he calls me he must think I’m a broken record.  I always say, “Dude (I live in SoCal now!) – it’s time to EARN.  Stop dicking around with another number 2 job (he always gets offere the number 2 job). It’s time for you to be in the driver’s seat.  Either start a company or go somewhere where they need a CEO.”

If you really want to earn you need to be in the top 3-4 in the company.  Best to be a founder.  Very few people can do this.  It’s a rare skill.  Be realistic about your skills, background and ideas.

Anyway, I hope this post hasn’t been too harsh.  I’m not all about the money.  I think working in a startup can be an enormously rewarding experience.  I wouldn’t recommend it any other way.  But you need to match your talents, age, skills, ambition and economic situation with your current reality.  At a minimum be realistic about the outcomes.  And make sure you ask yourself the question, “am I here to earn or to Learn?

From- 

Vipin Sharma

Udaipur

7 Lessons I Learned From The Failure Of My First Startup

I thought I would make millions through my startup, but I failed miserably. I read shiny stories of Flipkart and Zomato, but nobody told me that 90% startups fail within two years of starting up, I failed in the first year. Sometimes I feel being cheated but it my fault that I believed one side of the story.

I built an ERP product for schools and we attracted some customers but could not scale up the operations. I shared my bitter experiences with selling to schools. It was the failure of my startup but not me. I learned some of the great lessons even if my startup was not a success story. I wish to share few with you.

1. Know your customer before building your product

The point should be clear by now. We built our product based on the assumptions and feature lists of our competitors. We should have talked to our customers before building our product.
We should have convinced two or three schools of different size to test our product. In exchange, we should have provided a life-time free product and support for early adopter schools. We could have offered unlimited free SMS or something similar to save instant money.

2. Know where to spend money and where to avoid

We spent most of the money on office infrastructure and employee salaries. We could have avoided 80% of expenses by working from home and hiring employees on survival salary + ESOPs.

We were avoiding expenses on the professional design of sales material, marketing tools, and paid consultancy. We should have spent money on the things that translate into more sales or leads.

Now it seems no brainer but still most of first-time entrepreneurs are repeating our mistakes. If the primary source of your customer acquisition is your website then you should spend money on content marketing, sales deck, and sales pages. If you acquire your customers offline then spend money on sales brochures and other printed material.

3. Get your hands dirty with the code, even if you are a non-techy

Non-technical co-founders remain clueless of technical know-hows. They should not behave like a foreign client who just assigns work and expect to be completed by the technical team.

That did not work in my startup and it will not work in your startup.I advise you to start coding even if you are non-technical. There might be some exceptions (that we can discuss in later articles) but a non-tech co-founder can take better decisions if he knew how things get implemented.

If you do not have a tech co-founder and building a software product, then there is no exception. Joel, co-founder of Buffer share why non-tech co-founders must learn coding.

4. Do Sales, even if you are from non-sales background

I was afraid of doing sales because I thought my co-founder is better at communication and public speaking. We were unable to close sales despite his good communication and HR background. One main reason was that we were not talking about the pain points of the customer but just trying to sell our solution. The sales process is not just about good public speaking but addressing the concerns of the customer.

When I moved to Chandigarh, I tried sales in the local schools. I visited about 50 schools in one month and closed three deals. I learned not only the sales process but also got acquainted with customer’s real issues. You can build a great product with a better understanding of customer’s pain areas.

Disclaimer: I am not suggesting that all co-founders should be doing all the things at all the time. NO. They should be owners of their areas but at the same time they should have first-hand experience of all kind of jobs in a startup.

5. Take decision and trust your intuition

We became bad at taking firm decisions. We started postponing tough decisions like spending budget of sales, hiring or firing an employee, offering equity to the employees, chasing big schools or small schools, offering a free solution or charge premium, and at last how to separate our ways.

Since the closure of my first venture, I started taking firm decisions based on the available information at that time. You can never have 100% data available for taking any decision. You should be smart enough to derive a conclusion with 60-70% information and fill the gap with your intuition.

Trust me, I always felt happiness after taking a decision and sticking with it until I find a solid evidence to change my decision. That is how things evolve. If you are confused with your decision then you will not be able to execute with 100% confidence.

6. Don’t stop learning

Alarm bell rings in my ears when someone starts behaving like an expert and refuse to learn new things. You are doomed to fail if you stop learning.There are so many sources of my learning – I love to read books/blogs, I learn from my juniors/seniors, I learn from competitors/customers/vendors, and I don’t hesitate to learn from my three-year-old kid.

The biggest source of my learning is by experimenting with my startup and life.

7. Money is just a by-product of a startup

I learned it very late, but some of you might have realized by now. We entrepreneurs start a venture to solve a customer’s problem (or to explore our passion) and money is just fuel for our startup vehicle.

If you focus on money then you will become short sighted. You can make money in short-term but you will lose strength in the long term.

Focus on solving problems and keep your customers happy. The money will follow.

and Be Generous
The most important lesson from my entrepreneurial journey – Be Generous, Be Polite, Be a Giver.I always remember a beautiful line

“Be nice with everyone when you go higher in your life because same people will meet you when you come down.”

First give something to the world then expect something in return. It will be even better if you just give without any expectation. Help people who can not help you at this time, that is the real gesture of generosity.

From-

Vipin Sharma

www.MyCleanMart.com

YOUR success will DEPEND on those that work for you

Today I want to give you a real world example of how big of a role employees play in your overall success or failure.

Now the example in question has nothing to do with a cleaning business, instead it involves a hotel I stayed at recently.

But that doesn’t change a thing, because “business is business” across the board. What I mean by that is this: Fundamental rules of success “know no boundaries”. So a hotel will depend on good employees JUST AS MUCH as your little cleaning business does.

To make a long story short, I’ve been on the road quite a bit lately (I’ll cover WHY in a later post). So this means I’ve been staying in hotels more than I ever have been in my life. And of all the ones I stayed in, one stood out. Not by just a little bit, but by a LOT.

Much like any other business, hotels tend to offer a very similar experience from one hotel to another. They give you a room for a night or two. So how a hotel STANDS OUT from their competitor across the street boils down to basically a few things.

• The appearance of the hotel on the inside and outside.
• Their services and amenities.
• How well the staff carries out their functions.

Now there is more to it than that, but what I just mentioned are three of the biggest details that matter. Now the key fact to keep in mind is that all three of these core functions are completely dependent on the STAFF THAT WORKS THERE.

The person who owns the hotel can’t do it all. It would be impossible. The owners role is to put a TEAM IN PLACE that carries out the VISION that he or she has. Given that even larger hotels don’t generally have many staff on at a given time, EVERY STAFF MEMBER IS IMPORTANT.

This means that everyone who is working on a given shift needs to be “pushing in the same direction” to get the best results. The top rated (and most profitable) companies KNOW THIS. The ‘best of the best” rake in the dough while others that provide the EXACT SAME TASK (a room for the night) struggle to make ends meet.

The hotel I stayed in STOOD OUT in every regard. The front desk personal greeted us with a big fat smile on her face, gave us some free complementarily water bottles and had our key cards ready when we arrived. Check in took FIVE SECONDS.

The room we had was CLEAN and WELL MAINTAINED. The grounds were spotless. The amenities such as the pool, restaurant and bar were neat, well taken care of and appealing visually. THIS WAS NO ACCIDENT. To get this to happen EACH EMPLOYEE that worked there DID THEIR JOB to a tee.

As we were checking in I even ran across the chef of the in-house restaurant who greeted me with a “hello” (and who later cooked a great meal for us). All in all, the place was outstanding. I praised the front desk staff upon checkout, indicating how pleased we were with our stay.

The person responded that they were happy to hear that and then told me that they were the THIRD HIGHEST RATED HOTEL IN THE COUNTRY for that particular chain. The person said that PROUDLY. This indicates whomever the owner is INSTILLS a deep sense of WHAT IT TAKES to be the best.

I’ll wrap this up by saying you can learn a lot by just “paying attention” to what the most successful companies do. It’s easy for a company to make “promises” in a brochure or letter, but it’s much harder for them to actually follow through on them.

The best of the best do so only because of their staff.  So be sure to HIRE SLOW and take your time to find the GEMS. They are out there if you look hard enough. And, in case you were wondering, the hotel was the Hilton Garden Inn located in Florence South Carolina. I highly recommend you stay there if given the chance.

From- Vipin Sharma
Founder- www.MyCleanMart.com

How to Start a Cleaning Service

At first glance, a cleaning service seems like an incredibly easy and low-cost business to start: How hard can it be to find someone who's willing to pay you to take care of household chores?
There's no question that the market for home cleaning is huge, but the challenge lies in making yourself stand out as a high-quality, trustworthy service provider.
"People think you just need a bucket and mop to get started, but that's not really true," said Meg Roberts, president of cleaning-service franchise Molly Maid. "You're not in the cleaning business; you're in the customer-service business. People have different ideas of what cleanliness is, and if you're not interested in always making the customer happy, this is not the industry for you.

If you're thinking of launching your own cleaning service, here are a few factors to consider before you get started:

Supplies

One of the first decisions you'll need to make about your business is whether you're using your own cleaning products or those of your clients. Some customers are particular about the products used in their homes and may ask you to clean with items they've purchased, but if you and your staff use your own supplies, you'll need to figure out an economically smart method of replenishing them.

"Mobile workforce businesses often struggle with figuring out the right way to supply their workers with enough money to cover company costs while limiting the exposure of theft," said Toffer Grant, founder and CEO of prepaid business Visa provider PEX Card. "Since most of a cleaning business's work is done out of the office, you need the right operational support and cash-management tools."

Grant noted that many PEX clients who run cleaning services request receipts from employees when they pick up more supplies. Even if your business doesn't have many employees, keeping meticulous records of purchases and product prices can help you maintain a good overhead budget. You can also save money on fuel expenses by efficiently scheduling your route, Roberts added.

Hiring

You may be able to handle your cleaning service on your own in the beginning, but as your business grows, you'll probably need to expand your staff. While a person doesn't necessarily need any special skills or education to know how to clean a home, the individuals you hire to work for you should be committed to doing an excellent job.

"The quality of the staff you hire is a key component to success," Roberts told Business News Daily. "They're out there representing your brand, so they should take a great deal of pride in their work."

Payments

As a business that travels to its clients' homes, you'll also have to tackle the issue of accepting payments. In today's high-tech world, mobile credit card processors like Square are a top choice for businesses like cleaning services.

"As smartphone adoption has increased, so too has the number of ways to accept payment via mobile device," Grant said. "Businesses like the idea of closing up receivables by taking credit card payments on the spot. There is a fee, but for some business owners, getting paid faster is the only way to ensure payroll needs are met and money is being used immediately to grow and continue operating."

Customer service

As Roberts pointed out, being in the cleaning business means being in the customer service business. Building up a relationship of trust with your clients is of utmost importance, and the best way to do that is to go the extra mile for them. 

"Molly Maid's success comes from the fact that we put a lot of time and energy into taking care of our clients," Roberts said. "At the end of the day, it's how comfortable customers feel with the company they're entrusting with the keys to their home."

From- Vipin Sharma

Founder- MyCleanMart.Com