I have quite a few friends who are doctors.  Most are around my age and they've done quite well for themselves financially.  They have the lifestyles they wanted, and if they work at all, they choose when.  Some have built small empires and have joined what most of us would think of as the truly wealthy.

When I was growing up, becoming a doctor was the ultimate path to success, if you were good enough.  Getting into medical school was challenging, surviving medical school was harder, and according to everyone I know, residency was true hell.  

But if you made it through the gauntlet, you were guaranteed success in every sense of the word: financially, socially, and making the world a better place.  And as I've described before, doctors constitute a significant percentage of angel investors in startups, so even after the contributions in their careers, many continue to pay back for their success.

If you ask doctors of my generation if you should go through medical school and become a physician, they'll give you a resounding yes.  They'll promise that all of the upfront challenges will be more than worth it.  And, they'll point to their own success.

Unfortunately, things have changed.

I've added this blog post to my  Startups category  because I wanted to look at the new challenges of becoming a 'successful' doctor from a business perspective.  Many people entering medicine do so not just as a way to achieve financial independence, but often also from an altruistic desire to help others.  In my mind, you really are a success if you can do both.  

So what's different now? 

Well, you still have to get into medical school - no small feat.  You still have to survive it - I don't think that's changed much either.  And, you still have to make it through residency, working ridiculous hours on very little sleep and endure what seems to be hazing by older residents and attending physicians who propagate the torture because if they suffered, you should too.

So, again, what's different?  

Let's look at how a new physician starts a career.  In general, there are two choices:  1) go to work for a medical group or hospital, or 2) open your own practice.

In the 'old' days, these were two viable choices.  But no more.  In my surveys, the average new physician starts her/his career with at least $250,000 in student loan debt and it can be much more than that if they go into a specialty that requires more education and longer residencies.  Several years ago, Ben Bernanke (former Fed chair) remarked in an interview about student loan debt that his son would exit medical school with over $400,000 in debt.  That was several years ago.  Medical school costs have skyrocketed since. 

Most of these new physicians are in their 30s, sometimes in their late 30s (again if they sought a specialty).  If they married before or during medical school and residency, there's a good chance they divorced.  Medical school and residency are hard on relationships.  Because of this, many physicians wait to marry and they often marry other physicians.  I know several couples who finished their residencies in their mid to late 30s and are now saddled with over $500,000 in combined debt.

But that's okay, right?  They're going to make a fortune.  Well, not so much.  

Starting a practice right out of residency while carrying and trying to service medical school debt has become much more difficult than it used to be.  Sources of financing for these startups are generally unavailable.  And with the debt load, it's virtually impossible for new physicians to come up with startup funds and then generate enough cash flow to live on while they try to bootstrap a practice.  So for the vast majority, this idea of starting your own practice fresh out of residency is no longer a viable choice.  That means you need to get started in with a medical group or hospital.  Not a bad choice, right?  You'll gain experience.  You'll make a good salary.  And many of these groups will help pay for your student loans.

Sounds like a great place for a career or perhaps it could be a jumping off point for starting your own practice.  

The reality is a bit different.  I'll just hit on a few points.  Larger medical organizations are businesses.  Years ago, most businesses provided a second home for their employees.  You could start a career and work towards retirement with health insurance, vacation, and other benefits guaranteed.  If you worked hard, you'd be promoted, you'd earn a good living, and your job would be secure.  That's changed in virtually all of our industries, and the medical industry is no different.  

In many ways, the medical industry is worse.  If you've followed the posts in my Startups category, you know that I have very strong feelings about business models that motivate and reward employees.  If you look around, you'll see that just as mergers and acquisitions have created huge corporations in most industries, there are now fewer and fewer medical/hospital groups as they too become giant enterprises.  In tech, some companies have worked to leverage their size to ensure the best environments for their expensive talent.  They provide flexibility to ensure creativity.  Not so with the medical industry.  Arguably, the talent there (physicians) is even more valuable and more expensive than what we see in tech.  So what does employment look like?

I was shocked to discover that in spite of what appear to be contractual promises to the contrary, most of these groups have moved to a model where a physician's pay is 100% incentive based.   It didn't start out that way.  Medical groups wanted to provide incentives for physicians to spend their time on procedures that produced the most revenue, so they took a portion of the physician's pay and designated it as incentive-based based on Relative Value Units (RVUs).  

RVUs were originally developed as a mechanism to determine the relative value of medical procedures against each other.  This enabled insurance companies, and in particular, Medicare to standardize the definitions of the procedures themselves.  It made sense.  It even made some sense to provide incentives to physicians.  But now, it's gone too far.

Physicians are often now paid based on the number of RVUs they log.  If they go beyond what is expected, they get a bonus.  If they fall below, their compensation is reduced. 

One problem with this approach is that the physician has very little control over which patients are seen or what procedures need to be performed.  Scheduling is out of their hands as is the amount of time they are permitted to spend with a patient.  Add in the disincentive to spend time with a patient that needs more help but whose visit will generate fewer RVUs, and you get a physician who becomes frustrated that s/he can't deliver the necessary care, and patients who don't get the best care possible.

Worse, the number of 'expected' RVUs changes every year.  If the group of physicians does well with their RVUs, the expectation is raised.  After a few years, as the required RVUs  climb, physicians are doomed to miss the targets.  This model guarantees failure.  And that's not just from a financial point of view, it's also a question of the quality of patient care, and of the physician's motivation.  

But it's even worse.  If a physician takes vacation, s/he is not accumulating RVUs and those 'lost' RVUs are impossible to make up.  So, physicians avoid vacations.

And what about the new reporting requirements - physicians are required to fill out Electronic Medical Records (EMRs) documenting each visit, procedure, etc.  Do you think they get paid for that?  Not a chance.  Since they're only paid for RVUs, that work is done on their own time.  

All of the young physicians I know who are working for medical groups are stressed to the extreme.  Those that are making their quotas in RVUs know that it's just a matter of time before they can't do it anymore.  But they're making the big bucks, right?  Well, in the words of an urgent care physician I interviewed, "With the student loans and the current compensation structure, doctors are now blue collar workers."

And you know, there's no way out.  They can't just quit.  The student loan debt hangs over their heads.   Loan forgiveness in bankruptcy isn't generally granted to someone who could earn six figures.  Unfortunately, the only way they can earn it is to work as a physician.  There's no way out.  

If you really don't think it's that bad, take a look at suicide statistics for physicians.  They're more than double those of the general population.  Between the stress caused by lack of control of their work, the stress of trying to repay medical school debts, and the stress of knowing they can't quit,  and the lack of vacation time, it's not like it was for the physicians that came before them. 

Sure.  Some make it.  Some do manage to get their own practices started.  But unfortunately, it's not as easy as it was years ago.  Physicians get no training in how to start a practice.  And with the new reporting requirements, complex coding for insurance, and dealing with insurance companies who deny first, starting a new practice is a herculean task, worse for a new physician.

If you're thinking of embarking on a career as a physician, think twice.  Don't just listen to the physicians of your parents' generation.  Make sure you talk to younger residents and attending physicians.  Then, at least your expectations will be properly set.  
 

Congratulations!  You've done it.  You built a successful startup and you've sold it.  Perhaps you have some ongoing obligations: transition, earn out, pay out over time, but you'll soon be financially comfortable or on your way to your next venture.  Now,  are you ready for the disappointment?

Virtually every entrepreneur I've known has ultimately been disappointed after selling their startups.  They go in to the sale optimistic for the future.  Their businesses or the associated technologies will live beyond them.  The demanding work that they and their teams have faced is coming to an end.   They'll have financial success.  They can finally get a life and spend time with their families. 

Sadly, the fact is that most entrepreneurs are disappointed in one way or another.  Here are some examples:

Of course not all startup sales are disappointments.

One entrepreneur sold his struggling business in an all stock deal for $5 per share, worth nearly $5 million to him after a 3 year earn out.  His new job as CTO of the acquiring division gave him control and he became wealthy as the stock rose to $55 per share.  He, too, left the industry, happy with what he knew was a very lucky break.  Had the acquisition delayed even a month, he would have been out of business.

Another sold her very small technology startup to a large company in an all-cash deal, turning her product over to the acquirer.  She walked away and became an Angel Investor, helping several successful startups. 

The reality is, when you sell your startup, you don't really know what's going to happen next.  The economy could change, political winds or industry competition could obviate the need for your technology, the new owners could make big management mistakes, or their companies could fail.  You need to be careful:

And most important: Lower your expectations.  You're selling your business.  You have to be prepared to let it go.  Otherwise, I guarantee you will be disappointed.

First Building Your Startup Post
Previous Post: When Should you Throw in the Towel?

Most of my posts on #startups have focused on how to avoid making mistakes that may lead to failure.  My first post, How to Build a Startup Company - Part 1,  asked some fundamental questions about your motivations when looking at undertaking a startup.  Subsequent posts tried to get you thinking about viability of your product or service, business planning, hiring the right people, and management skills. 

But the reality is that even if you do everything right, there's a chance that you'll fail.  Sometimes markets change.  The economy can turn.  An unexpected competitor may arise.  You or a critical team member may become seriously ill or have an accident.  There are countless disasters awaiting a new startup.  And many very successful entrepreneurs admit to having failed multiple times before finally achieving their dreams. 

You need to be prepared for possible failure.  If not, you could lose more than your business.

As I described in earlier posts, building a startup is not only hard on you, it's hard on your family and those around you.   You'll spend too much time away from your spouse and children.  You'll be interrupted at the worst times and often need to be available 24x7.  Relationships suffer, divorces frequently follow. 

It gets worse if you fail.  Your confidence will be shaken.  You may get depressed.  You could be even less available to those who care about you.  

But absolute disaster strikes when you've led  yourself and your family into financial ruin.  No more savings, no more retirement monies, no more equity in your home, you've raided your kids' college funds, you've run up credit card debt, have no income, no prospects for a job, and no funds to do another startup.  As ridiculous as it may sound, you could end up on the street.  I've seen it happen.  You can't let it go that far.

To use an overused boxing analogy, you need to know when to throw in the towel. 

So, how do you know when to give it up?

In an ideal scenario, you would make this part of your business plan.  Just as you set milestones for success, you should set checkpoints to assess possible failure.  You need to draw lines you won't cross.  These will be different for everyone depending on their financial and family situations. 

This may seem obvious, but when you're in the heat of it all, when you're fighting to keep your company alive, when you're sure that if you borrow from your retirement monies or take out an equity loan on your house, you'll be able to save your business, you usually won't see that you're about to go too far.   It's hard to step back and take an objective look when you're under live fire.  But you MUST do it.

If at all possible, have an uninvolved observer look at your situation regularly.  It could be your board of directors, a friend you trust.  It might be your spouse. 

In my lengthy career, I've seen many disastrous business failures that ruined peoples lives. But I decided to do this post now because of two recent startup failures.  The first involved a person with no family obligations.  Unfortunately, she didn't draw that line and ultimately burned through savings, retirement monies, and equity, losing her business and owing the government a lot of money.

The second involved someone with a family who originally promised to give his dream a year.  He had sufficient monies to keep it going that long and wanted to see if he could make a living out of what had always been a recreational passion. 

But at the end of a year, monies were not flowing in.  Many of his targeted milestones had not been achieved.  Could he really give up his fledgling startup after investing a year and getting others committed to his vision?   When he told me he was thinking of dipping into his retirement accounts, I sent him a list of questions about what he'd learned about himself and his business opportunity over the past year.  Fortunately, he did an honest assessment of his strengths and weaknesses and determined that at least for now, in the way he's approached it, he wasn't going to be able to support his family via his new venture anytime soon. 

He'll continue to try to build the business part-time, but he's not betting everything on something that's not ready to support his family.  He's now interviewing for positions that will enable him to make a good living.  This was a wise decision.

Don't get me wrong.  I'm not suggesting you plan for failure.  However, I think it's critical for you to establish limits on the risks you're going to take.  And somehow, you must find a way to objectively assess where you are and avoid a failure that could destroy not just your business, but your family and your life.  Don't let yourself believe that even though you've missed your goals, if you just put more money and time in, you can save your business. 

You're much smarter if you can walk away before disaster strikes and as the old saying goes, live to fight another day.

Hoping to accelerate the time to get his service business going live,  one of the entrepreneurs I'm working with recently asked me whether he should have developers build software, find a third party who could deliver something sooner, or find open source software that the developers could customize. 

Of course, I said it depends. 

Obviously it depends on cost versus the benefit of time to market, but there are other considerations including impact on your staff, your support plans, and perhaps most important, your exit strategy. 

Although most entrepreneurs are faced with this decision at some point and most have no problem making a good decision, I thought I'd jot down a few considerations just in case there's something you might not have thought of. 

Build it yourself

I must admit that in all of my companies, we built our own products.  This was largely because our initial products were 'under the covers' - inside operating systems and invisible to users.  At the time, there really weren't any off-the-shelf solutions that we could use as the basis for what we were building.  In fact, most of our products were these tools that others could use to build their products. 

This approach worked well for us for the following reasons:

Of course we had to pay for development and it took more time to get to market, but for us, this approach worked out well.

Using Open Source Software

In my last company, we moved from tools to end-user products and since we weren't the strongest in building beautiful user interfaces, we took advantage of publicly available open source software that was subject to the GNU public license (GPL).  This sped up our development substantially, and since we had a solid proprietary base, the addition of the open source code presented little risk to our products.  We kept the code modularly separate from our main code so we were able to avoid some of the more restrictive aspects of the GPL.  The main advantages to this approach were:

The way we handled it presented minimal risks, but there were disadvantages:

Because we were careful and knowledgeable in how we used the open source code, it worked to our advantage, advancing our time to market while preserving our control of the code, and presented only minor issues during our exit (acquisition).

Buying/licensing from a third party

Although we never bought components from a 3rd party to incorporate into our products, we were one of the third parties that sold components and tools to others to help them get to market quicker.  Our products were closed to the buyers.  That is, they bought functionality and we provided external interfaces.  We never supplied source code and they never needed it. 

From our perspective (and theirs since they paid us), buying from us had the following advantages:

• Very rapid time to market.
• A professional organization who guaranteed responsive support.
• No requirement to hire expertise they didn't have or want to have longer term.

As it turned out, well more than half of our customers were acquired by larger companies.  Because we had assignment clauses for our licenses with clear explanations of what that meant in terms of fees and rights, all of these deals went off without a hitch.  And of course, we were happy to welcome these much larger companies as our new customers. 

So, if you're faced with the choice of build it yourself, use open source, or buy from a third party, each can work:

Build it yourself if you have the expertise and can afford to take the time to debug before getting the product/service to market.

If you need quicker time to market and have some expertise in-house, try for open source.  Be sure to keep the open source separate from other components of your offering if at all possible and to follow the GPL rules about publishing.

If you need to get to market as soon as possible, and don't have a lot of expertise in development, consider licensing from a third party.  They can give you a leg up.  Ensure that you have solid enforceable agreements for customization and support, and that assignment clauses are clear and wouldn't scare off a potential acquirer.  Also, vigorously negotiate the license fees.  Most companies are more flexible than you might imagine and many are willing to 'invest' in new ventures for back-end payments upon success.  If possible, get source code/designs.  In the worst case, ask for an escrow in case the company should go out of business. 

But whether you make it yourself, get a leg up from open source, or license a product, ultimately the packaging and presentation is yours.  You're also the face on the support.  From the public's point of view, this is your product/service.  Own it!

Over the course of my career, I've been involved in both building companies from scratch and in purchasing companies.  While most entrepreneurs in high tech go the first route (building companies from scratch), in other industries, it is more common to purchase an existing business.  Each approach is fraught with its own perils.

One big advantage of starting from scratch is that you can bootstrap the company.  You and other founders can start up with very little overhead, growing incrementally as business develops. 

While purchasing a business costs money up front and comes with overhead, an existing business will already have customers and income.  If the business was well-run, it should have financial systems in place and a team that drives administration, sales, product/services and support.  The day you close the purchase, you can hit the ground running.  You can probably even take home a decent paycheck - enough to support your family without putting your whole life at risk. 

Much like purchasing a home, the business will have intrinsic value which will likely appreciate over time.  Thus, while you may need to come up with money to buy the business, if you've chosen well, you should be able to sell the business at a profit (should you ever need/desire to do so). 

On the other hand, there may be issues with the business itself, its products/services, and/or the team.  Sometimes these things are hard to see from the outside before a purchase.

Worse, unless the business is exactly what you want it to be, it may be too entrenched in its own product/service market to make the changes you want to make, be they growth or new products/services. 

But starting a business is hard.  Ask anyone who has done it. 

You will put in the hours.  You will see less of your family and friends.  You will have less time for non-work activities and interests.  You will put yourself and your family at financial risk.

Add to this the risks in getting started, the time to develop your product/service and get it to market, and the challenge of putting systems and team in place to make the business run smoothly, and you can understand why so many startups fail and why so many founders get divorced. 

If you purchase a successful business, you probably don't have to worry about a possible short-term failure and with less stress on the family, perhaps the divorce can be avoided too. 

You might argue that you'd miss the thrill of doing it all yourself.  Maybe it's true.  However, I'd counter that any business is a challenge and starting with a stable platform may allow you to more aggressively focus on what you want to do rather than having to deal with the necessary, time consuming tasks that are part of any business, but which will distract you from what you really want to accomplish in a startup. 

Okay.  Buying a business is not for everyone.  But for those who can find a well-run business in their area of interest which can provide a springboard for the next great idea, it's certainly worth considering.  And if you find the right seller, e.g. someone looking at retirement, you might be surprised by how easy it is to finance the purchase.

One of the guys I surf with told me a harrowing story today.  He's suddenly facing major financial problems.  He's been working for a company that supplies high-end construction components.  He does sales, helps with design, and supervises installations.  His largest customer is a major contractor in the Silicon Valley. 

Over the past few years, this customer has given him more and more work and started generating a nice income for him.  He focused on this customer because they were the fastest way to success.  He and his wife are in escrow on a house and life looked good.  The customer even suggested he start his own company - they would go with him. 

Then disaster struck.  One of the components failed.  It was the manufacturer's fault, but the customer needed a scapegoat and terminated all contracts with him and his company.  He lost 80% of his income because of something that wasn't his fault.  Fortunately, he still has a job, his wife is employed, and he can hopefully start rebuilding a more balanced client base. 

Since he was looking at starting his own company, I told him my own horror story of relying too much on one customer, emphasizing that this is an important lesson to be learned by anyone forming a startup.  I call it the one-customer syndrome.  As tempting as it is to all of us, it must be avoided.

When I formed Syzygy Communications, my first startup, I decided to bootstrap it.  I began by doing strategic-level consulting for a number of large networking companies and performing technology evaluations for Venture Capital firms.  It was lucrative, fun, and offered me visibility into potential product/service opportunities. 

One of my customers was IBM.  I had completed an architecture project for them and the manager of the project asked me if I could build the product for them.  I put together a team of contractors and we went to work.  That project led to another, then another.   Within a year, I had 25 people working on IBM projects in different divisions across the country. 

With the rapid growth of Syzygy and reliable revenue pouring in, I converted most of the contractors into employees, promising stable income, great benefits, vacations, the rewards of working with a team, and all the things that independent contractors have a hard time getting on their own. 

I expanded our office space and staff, bought the best equipment, software, and tools for my team, and put forth the image of a successful company that we deserved.  We got a receivables line of credit from a local bank. 

The bank had a policy that if a single customer represented more than 50% of the total receivables, they would limit their line with respect to that customer.  I ultimately convinced them that each IBM division was a separate entity and each division should be treated as a separate customer, so we didn't have a single customer that represented 50% of our business. 

I honestly saw the divisions as separate customers.  I had separate contracts with completely different terms and was paid from different places. Knowing the size of IBM and the independence of the divisions, I felt safe.  If one division had problems, others would be fine.  But in a reality I refused to see,  IBM represented nearly 80% of our business. 

As you can probably guess, in the midst of a minor recession, IBM had a reorganization.  Corporate dictated that all outside contractors had to go.  Within a few months, we had zero business from IBM. 

We scrambled to replace the projects with work from new customers, but our dedication or perhaps addiction to IBM had enabled us to ignore other opportunities.  We had to start almost from scratch.  And closing new sales takes time. 

Of course at that point, we had the overhead associated with nice offices and thirty employees.  We drew on our line of credit, hoping to bridge to our new contracts.  It looked like we were almost there.  Unfortunately, because of this same minor recession, our bank was acquired by a foreign bank who decided to get out of what they considered the risky high tech industry.  They called our line - demanded immediate repayment.    Syzygy was in trouble.

For me personally, this was a complete disaster.  My integrity was on the line.  Most of my team had given up their own businesses because they had faith in me and in the future of Syzygy.  My team was my family.  And now, the situation dictated that I had to layoff the majority of them.  It was difficult for them and humiliating for me, but I learned a lesson. 

We reduced the size of the company to ten people and started rebuilding.  We never again allowed ourselves to become dependent on one customer for our survival. 

Ultimately, we rehired most of the people we'd laid off.  Syzygy became one of Red Herring's top ten companies to watch, as we developed a world-changing technology that should have made us rich.  But that's another story (which is chronicled in The Silicon Lathe). 

Bottom line?  Bootstrapping a company is hard.  It's easiest if you have customers who can pay your way.  But the one-customer syndrome can be fatal.  I gave an example of financial dependence.  But even if you can avoid financial dependence, that one customer can demand too many of your resources.  What seems to be focus on this customer's needs can prevent you from building the best product/service.  Tunnel vision may cause you to miss the market altogether because your view is so narrow. 

So, for multiple reasons, avoid the one-customer syndrome at all cost.

Years ago, I was surprised when a group of sales people I was working with made a  bet on who would earn the most money for the year.  The losers had to chip  in to buy the winner a Porsche.  

Countless times since, I've  heard colleagues talk about leaving their jobs because they could make more money elsewhere.  And as I mentioned in Eliminating Performance Reviews, even some of the best companies tie money to performance and vice versa.   

Is money really the big motivator?  If we pay our team members more, will we see a corresponding increase in productivity and creativity?   

In my post Managing the Best of the Best, I discussed my philosophy in managing a startup team.  In that and subsequent posts, you can probably see that I'm really focused on motivating a team.  For me, the team is the company, and keeping that team motivated is the most important part of my job as a CEO and for all managers in the company. 

If money were the answer, I would have done my best to make sure my team members were paid more than they could receive anywhere else.  Of course at one point, I was competing for engineers and Cisco had over 5000 reqs out.  There's no way I could compete with the compensation packages that some of the industry giants offered.  I certainly hoped money wasn't the primary motivator for engineers.  If it was, my startup was doomed.

So how can a startup compete? 

To be successful, we need to know what it is that motivates our team members.  At first glance, it may appear that people are motivated primarily by money, or for those who join a startup, by the promise of future money.   To some degree this is true.   Everyone needs to make a fair wage to work productively.  I have argued that eliminating things that interfere with a person's ability to do their job, whether money issues, healthcare expenses, or inflexible schedules, will certainly improve productivity and build team members' loyalty to the company.  But if another company can offer similar things, how do we motivate our team members to stay with us and do their best work? 

Although the research has been around for years, most organizations and managers fail to realize that promising rewards or compensation for creative tasks actually decreases creativity.  It appears that having a dangling carrot causes people to focus on how to get to the carrot, not on doing the best job possible. 

So ultimately, once a team member's basic needs are met, compensation will not be the primary motivator.  What is?

It's tempting to say that motivation is different for different people.  But aside from the  salesperson who wants to make the most money possible, if we think about engineers, construction workers, healthcare professionals, CEOs, lawyers, pretty much any profession, it certainly seems like there are common threads that motivate these people to pursue their careers:

Making a difference -   whether it's the engineer creating the next great thing, the nurse helping the sick or injured, the construction worker building something to last, the CEO founding a company, or the lawyer pursing a case, all of us want to make a difference.

Be challenged in their daily work - mundane work is boring and can be the quickest way to lose a team member.  Of course there are always tasks that we don't want to do.  But as long as they're complemented by challenges that make us stretch, we remain interested in our work.

Opportunities for Growth - Most of us do lose interest if our job never changes, if we never learn anything new.  Hand-in-hand with being challenged is that we need to see that we can grow as professionals in whatever we do.  The French have a word that describes this best: épanouir.  There really isn't an English equivalent.  It's kind of a combination of enrich, grow, and blossom.  That's what we all want to do.

Recognition - While there are some of us who can work tirelessly with no one ever noticing, the vast majority of people work better if they know that their efforts are appreciated.  I have a former employee who received a small plaque nearly twenty years ago recognizing his achievements.  It still sits on his desk.  Cash bonuses he received were spent long ago and I doubt he can remember what the bonuses were for or where the money went.  Recognition doesn't have to come in the form of money.

As CEOs and Managers, we can motivate our employees.  If we take care to ensure that their basic needs are met and then focus on keeping them challenged, offering opportunities for professional growth, showing them that they are making a difference and recognizing their efforts, we will help them grow as we ensure the success of our company.  To me, this all comes down to that basic philosophy that IBM championed many years ago: Respect for the Individual.  Respect them and they will give you their best.

As for the salespeople who are only motivated by money?  Well, maybe there's actually more to it for them too.  I suspect that if we look closely, behind all the bling, we'll find that each and everyone of them is motivated by exactly the same things as everyone else.  For them, like the rest of us, money is just the frosting on the cake.

It's April Fools Day.  My wife might consider this a joke blog posting. 

A few weeks ago I bumped into a former associate on Facebook and LinkedIn.  He's a technologist and serial entrepreneur who has had some significant successes, but whose latest company, even after raising two solid rounds of venture funding, didn't make it.  I read the press when it happened and heard a lot of speculation about VC interference, competitors using unethical tactics, pushing a product to market too fast, quality issues, and improperly-set customer expectations.  Most of the industry analysts at the time thought the company could survive or even thrive, but that the VCs had pulled out too fast.  All or some may be true, but knowing my former associate and his technological prowess, I suspect management of VC expectations may have been at least a part of the problem.  I'll get the full story when we meet for lunch in a week or so. 

Once we'd reconnected on the social networks and set up our catch up meeting (he's out of the country on a well-deserved vacation), he asked me a very pointed question:  Am I DONE?

I suspect he's nearing the same place I was when I decided to pursue writing for a while.  While it may look glamorous from the outside, the Silicon Valley can be a cutthroat place.  The best technologies don't always win; the hardest working don't always get rewarded; and you can do everything right and still end up down and out - or at the very least, viscerally discouraged. 

When I stepped out, most of my former team as well as executive level friends and other entrepreneurs predicted I wouldn't last six months.  My dream of writing, staying in great shape, and pursuing the sports I love wouldn't stand up to the excitement of developing new technologies and getting them to market. 

To some degree, they were right.  I do miss the technology and my team.  I stay current on what's going on, but I rarely design a new system or see it solve a customer problem.  Managing my team, doing my best to encourage their professional growth, and seeing them accomplish things together that would have been impossible alone, inspired me.  And, writing is a solitary pursuit.  I spend a lot of time alone.  Still, I don't miss the stress, the long hours, being available 24x7,  or seeing world-changing technologies crushed by the big guys who feel threatened.  But am I really DONE?

Not long ago, I came up with an idea that would take advantage of new systems which collect medical records electronically to predict outcomes of treatments based on history, genetics, environment, etc.  It seemed particularly fortuitous because not long after formulating the idea, while waiting for an EV charging station,  I met the head of strategic partnerships for a major medical manufacturer.  They were interested in predictive outcomes based on analysis of application of their equipment in treating cancers - what an amazing coincidence - it must be fate!  He seemed to think he could raise sufficient funding to build a prototype.  Maybe I wasn't DONE after all. 

I discussed the idea with my wife as well as with a couple members of my former team.  My wife was shocked.  She'd been working hard to get her business to a place where she could exit to join me in retirement and now I was going back into startup mode with all the stress.  And I was going to abandon her? 

Of course my team members were enthusiastic.  I started laying out a business plan.  Then I had a second thought.  Did I really want to do this?  Maybe I could just get it started, build the prototype, line up at least the first major customer, raise some funding, and step out. 

I contacted a VC friend who convinced me that the medical industry was a mess I didn't want to step into.  He urged me to enjoy my 'retirement': pursue my sports write, relax.  Sadly, it didn't take much to talk me out of it.  So maybe I was DONE.  Of course I've since learned that he had just retired when he gave me the advice that he was following himself. 

So, am I DONE?

Well, I am meeting with this former associate.  He's a brilliant guy and a great technologist.  I'm pretty sure he's looking for ideas for his next startup.  On the other hand, maybe he just wants to know what it's like to be DONE.  But ultimately, who knows what will happen when  two technologists who are both former entrepreneurs decide to brainstorm over lunch?

A good friend of mine is an HR specialist and is considering going to work for a startup that just received a large round of funding.  The company plans huge growth in the coming months and they'd like to have an HR person help them preserve their startup culture as they grow.  Unfortunately, I don't think this is possible. 

As companies grow, they change.  Any culture that existed at the beginning must adapt to the changing environment.  It can't remain the same.  If it did, the company would stagnate.  So ultimately, the goal must be to help the culture evolve.

In looking at the problem, the first question is: what is this company's culture?  After all, you can't preserve or evolve something unless you know what it is. 

Most of the time, 'culture' is just a feeling.  With any luck, a startup feels exciting.  The team feels committed.  The management and the team feel connected - there is open communication among everyone.  Everyone feels they're pulling together for a common goal.  People feel they can work hard and still have fun.  They feel rewarded through recognition, and perhaps through compensation.   But is this the culture?  Or are these feelings the result of the culture? 

Related to the culture of a company are its customs.  Maybe it's a custom to celebrate a new contract, project completions, birthdays.  Perhaps it's a custom for the CEO to hold weekly all-hands meetings with open discussion allowing questions and suggestions from anyone.  Or maybe one of the company's customs is to share in the company's financial success through bonuses or a company-wide adventure.

The reality is that once a company grows, particularly if it grows quickly, and even more so if outside investors become involved, the customs will have to change and many of those good feelings may change as a result.  Celebrating every birthday with everyone in the company will likely become impractical.  So too with new contracts and project completions.  Even the all-hands meetings will have to change.  There's only a finite amount of time available and if there are lots of questions and suggestions, it's unlikely everyone will be heard.

And then there's the money aspect.  Outside investors are going to be looking closely at financial results.  They will likely argue for more reinvestment into the company, its marketing, product development, and expansion, and may want to reduce those bonuses or company-wide adventures.  They may even want to cut back on the toys, free drinks, and meals that made it easy to work ridiculous hours.

What's the result?  People are going to feel less connected.  Then they'll feel less committed.  They won't work as well together, and it won't be as much fun. 

So how do we preserve the culture?  We don't.  We protect the roots of the culture.  These are the company's values.  They need to be identified, codified, and regularly reiterated to the entire team.  Years ago at IBM, it started with 'Respect for the Individual'.  It was simple, but went much deeper into the company than might seem obvious.  This was followed by the reminder on most everyone's desk: THINK!  IBM grew consistently and maintained the culture of Big Blue. 
But let's come back to those feelings that constituted our startup culture:

• Excitement
• Team Commitment
• Open communication 
• Pulling together for a common goal
• Work hard, and have fun
• Individual and team recognition

It seems to me that these can become company goals and values.  Different companies will approach them in different ways based on the CEO's philosophy.  As a company grows, the customs that support them will have to change but the core values don't have to.  Birthdays, project completions or new contracts might be celebrated in the responsible groups.  The CEO might conduct smaller group/team meetings to get more personal feedback than can be realized in an all-hands meeting.   Working hard and having fun may mean offering more flexible time or telecommuting.  Continue to recognize accomplishments and you  will motivate  individuals and teams.   

Above all, the CEO must foresee impending changes to the culture and customs, discuss them with the team, solicit feedback, and explain the realities of the changing environment.  S/he  must continually reiterate the goals and direction of the company and show how current tactics are going to help achieve them. 

Company culture can evolve if core values are protected and if the team understands the reasons for change.  Knowledge leads to understanding.