Rat Race Armaggeddon: Practical Strategies For Starting A Business

Practical Strategies For Starting A Business written by John Jantsch read more at Duct Tape Marketing

In this episode of the Duct Tape Marketing Podcast, I interview Steve Hoffman, also known as Captain Hoff. Steve is the CEO of Founders Space, one of the world’s leading startup accelerators with over 50 partners in 22 countries. Founders Space was ranked the #1 incubator for overseas startups by Forbes and Entrepreneur Magazines. Steve is also the author of Surviving a Startup: Practical Strategies for Starting a Business, Overcoming Obstacles, and Coming Out on Top.

Key Takeaway:

Over 90 percent of all new start-ups fail. Every entrepreneur must face this harsh reality and learn to master it if they hope to survive and wind up on top. In the episode, I talk with CEO of Founders Space, Steve Hoffman about the tumultuous journey of launching a startup and revealing what it takes to make it. We dive into how to avoid mistakes, overcome obstacles, and master the skills necessary to make the right choices along their path to success.

Questions I ask Steve Hoffman:

[2:30] How did you get into the business of advising start-ups?
[3:49] How would you define the difference between a startup and somebody starting a business?
[5:04] So in the beginning, even with the bigger vision, are there different challenges?
[7:46] What is your first question when someone comes in looking for funding?
[10:27] Should everyone get funding?
[12:50] What are some of the secrets to effectively growing a team?
[15:05] Do you think that the no headquarters model is going to impact startups going forward?
[17:14] Are there any traits that you think make somebody more likely to succeed?
[18:05] How does the Founder Space operate?
[20:21] Where can people find out more about your programs and your book?

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John Jantsch (00:00): This episode of the duct tape marketing podcast is brought to you by the salesman podcast, hosted by Will Barron and brought to you by the HubSpot podcast network. Look, if you work in sales, wanna learn how to sell, and frankly who doesn't check out the sales podcast, where host Will Barron helps sales professionals learn how to find buyers and win big business ineffective and ethical ways. And if you wanna start someplace, I recommend the four step process to influencing buying decisions. Listen to the salesman podcast, wherever you get your podcast.

John Jantsch (00:43): Hello, and welcome to another episode of the duct tape marketing podcast. This is John Jantsch and my guest today is Steve Hoffman also known as captain Hoff. He's the CEO of founders space. One of the world's leading startup accelerators with over 50 partners in 22 countries, founder space was ranked number one, the number one incubator for overseas startups by Forbes and entrepreneur magazines. He's also the author of surviving a startup practical strategies for starting a business overcoming obstacles and coming out on top. So Steve, welcome to,

Steve Hoffman (01:18): It's fantastic to be here. Thank you for having me.

John Jantsch (01:20): So I have to admit surviving a startup doesn't really make starting a startup. Very appealing. Does it?

Steve Hoffman (01:28): Well, the truth is that the majority of startups fail and right, what every entrepreneur wants is to succeed. And so that book, the book is designed to give entrepreneurs really practical and concrete advice on how to avoid all the pitfalls of doing a startup and act and come out on top. So I'm super optimistic and I believe entrepreneurs, if they are educated, if they know the right things, they can succeed. But I, what I wanna do in the a book is tell entrepreneurs, you can't just dive into it. You have to prepare.

John Jantsch (02:08): Yeah. Yeah. I, I mean, that's obviously that's the real message is this is not a walk in the park. I mean, this is something you have to take very seriously.

Steve Hoffman (02:15): Yeah. We read about all these unicorns and people being successful, but you don't hear about the hundreds and hundreds of entrepreneurs who hit dead ends, who, you know, fell off a cliff who, where it didn't go as they planned.

John Jantsch (02:29): So I'm curious, how did you get into the business of advising startups? Well,

Steve Hoffman (02:34): First of all, I did three venture funded startups in Silicon valley and two bootstrap startups. So I know what it's like. I was, I've been in the trenches, I've been two doing this my whole life. And you know, after my third venture funded startup, my friends started to come to me and my nickname is captain H. So they're like, captain, can you help me? You know, how do you raise capital? How do you put together an investor deck? You know, could you look at my business plan? See if the business model works, all these questions. And I started to get these entrepreneurs together in groups. We called them founder space, round tables, and we'd meet, I'd introduce 'em to angel investors and marketing experts and lawyers, and really try to help them get off the ground. And after that, we decided we'd get our own space. So we got a space in San Francisco, we launched the founders space accelerator, and it just spread from there. Now we're like all over the world, working with entrepreneurs.

John Jantsch (03:32): I I'm cur this is probably more of a personal curiosity question to hear your answer to this. There's obviously a lot of buzz about startups. A lot of people start businesses. The term startup seems to apply to a certain approach or kind of business. I'm curious, how, how would you define the difference between a startup and somebody starting a business?

Steve Hoffman (03:52): So they're different types of ways to be an entrepreneur. They're all entre, they're all entrepreneurial. So it doesn't matter if you're starting a local restaurant, a laundromat, you know, the next Google or Facebook, you are starting a business. It's a lot of work. So a lot of the basics are the same, but the big difference between what would be, you know, a local business, as opposed to a potentially global international business is growth. Potential. How big is your vision? Can, what you're starting grow? Do you have something unique? And it doesn't have to be technology. It could be like Lululemon. They didn't have a lot of technology. It was a unique approach at a specific time to target the yoga market, which other big players were overlooking. And they targeted it did a really good job and they are, they grew enormously. So it really doesn't matter could be a restaurant, but are you going to franchise it? Do you have big plans? How are you gonna grow this chain? Or are you happy to run just the local restaurant that is differentiator.

John Jantsch (05:03): So in the beginning though, even with the bigger vision, are there different challenges

Steve Hoffman (05:09): There are. And there are, I often tell entrepreneurs it's as much work, time, effort, and risk to run a small business as it is to run a potentially incredibly large business. And that's because you're just operating on different scales and you need to focus on different things. So if you're running a small business, usually what you're doing, if it's a consulting business or any type of business, you are doing something similar to what other people have done in the past. So you are your, your business model. Isn't gonna be totally innovative. You aren't taking technology and using it to solve problems in a new way that other people aren't, but you are just focused on building your business and the challenges there are, it's a competitive world. You have to compete against all these other people. And if you, for example, open a store and it's in the wrong location, really tough to succeed.

Steve Hoffman (06:08): If you don't get the right people on board, you know, hire them really hard to succeed, marketing, getting your name out. How do people find you? How do you differentiate yourself? All these things are, if you're running a small business, they're huge challenges. Now, if you're running what we call a high growth startup, usually what you're doing, but not always, like I said, is using technology. You don't have to invent this technology. It can be a mobile app on a phone. You didn't have to invent the iPhone and invent applications. You just have to use the technology in a way that provides value to people that they aren't getting elsewhere. And in addition to that, and this is the really hard part, you have to find a market. An untapped pool of demand is waiting for this to come along now, right? This is why I tell entrepreneurs who wanna run, you know, wanna start the next big Google or next big business.

Steve Hoffman (07:08): Your, your most important task at the beginning is to be a demand hunter to go into the market. It's not to think of some crazy new idea because most is don't work in the real world. They sound good, but you know, you put 'em out there and somebody's already doing them, or they don't work for various reasons. But the hardest thing to figure out is where is the, these pools of demand that are always forming new pools of demand that aren't being met by the marketplace. And if you can identify one of those and tap into it that and provide a solution for that power of that demand will just drive the growth of your business.

John Jantsch (07:45): So as somebody who helps these organizations get funded and grow, I mean, is that kind of your first question is that when somebody comes to you and says, I'm gonna make blah, blah, blah, that is that your first, you know, thing is if we can't figure out where that demand is, then, you know, go away, uh,

Steve Hoffman (08:01): Bottom line for most smart investors. And I'm an investor and I try to be smart. It's yes, it's honestly. Yeah. If so we look at a couple things, one just right off the bat. If we're looking at their concept, their investor deck, we're saying, where is that demand? Show us that demand. Do people really need this? Because you can say anything you want, but if, and you can build the best product you want, you could spend year building like the most perfect product with all the features and no bugs or whatever it is. You put it out there. If there's no demand for it, it just dies like invariable, nobody. So we as investors, most investors, we call it in Silicon valley, but really what it is, it show us that people need this. And are there a lot of them out there, if, if you can prove that to us, and there are a lot of them and nobody else is doing this, or they're not doing it as well as you are, you're using technology to do it in a much better way, a much more efficient way, deliver a lot more value.

Steve Hoffman (08:59): Woo. You got something. Then we get really excited. And the next thing we look at, honestly, after that is the team. Like you can have the best idea and the biggest demand in the world. But if you have a crummy team, like they're not up to par, they can't execute on the idea. You're still go. You're gonna fumble the ball. Somebody else will pick it up and run with it. So you need those two things are the most important thing when it comes to funding high gross startups.

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John Jantsch (10:12): Yeah. Now you kind of answered my next question. I was gonna say, I was gonna ask you, you know, what are are the secrets to raising money, but I think you just answered it right. There have a team that shows the experience that they can pull this off and have a ability to show demand. So you probably get this question. I think a lot of people assume, oh, I wanna go out and get funded. Should everybody

Steve Hoffman (10:30): Get funded? Absolutely not. So, first of all, there are many types of businesses and certain businesses are right for certain people. Like a lot of people, they are naturally not foreign leaders. They don't like it. They don't like managing people. They don't want to hassle with it. They are individual contributors. They tend to be much more happy doing their own thing. And when they step outside of that, who they really are, they, they don't even perform well because they're, it's just not to them.

John Jantsch (10:58): It's a drain.

Steve Hoffman (10:58): Yeah. So I tell those people, pick a, what we call lifestyle business, pick a business, what you can run with you and maybe a few other people or by yourself, and be really happy and earn a good income. You will be much more successful that way. And then other people they really are so that they really have great leadership skills, as well as the love and desire to engage people, to go out into the world, to pull in resources. If that is in your DNA, if that's who you are, then you are in a good position to start one of these high growth businesses that you build, not by yourself because we, the CEO's job. Number one job, you know, is just find the right people and find the right resources. That's all you need to do. Because if you get the right people on the team, they're gonna build your product, the right people on the team, they're gonna market your product. The right, you know, they'll do the right. People will do everything, but the CEO needs to set a vision and then needs to go out and get these people committed. Even when you have no money or very little money, get them committed to you, get investors committed, get customers committed. That is the role of the CEO in an early stage company.

John Jantsch (12:11): That's interesting. I'm sure there may where, you know, the founder made the thing or, you know, did the tech or knew how to do the tech once I grew about 10 people, they crashed. Yeah. You know, because it was like, you know, that, that became, you know, the real challenge. So

Steve Hoffman (12:24): Yeah, if you can't lead people, organize people, motivate people. You should take another role in the startup. Like if you wanna do a startup and you're really just like, love the coding, do the coding and get somebody else. Who's that superstar in that area.

John Jantsch (12:39): So I know in the book you talk a lot about managing people. And, and in my experience, that's prob I don't care what kind of business. That's the biggest, in many cases, that's the biggest challenge as they grow. So what are some of the secrets to effectively growing a team? So,

Steve Hoffman (12:53): First of all, don't pick second rate people and it's so easy to do because it's so hard to find great people. It's really hard, but especially in the positions where you want them to innovate where you want them to think beyond their job description. And this is true for like startups that really want to grow. So if you have person and all, they have to do sit at the cash register or take, you know, orders, you don't need a super innovator. You could, you know, get, just get a reliable person. But if you are going to have somebody who's developing a product, developing a new technology, designing, or going out into marketing and figuring out new ways to market, you really need a thinker. So that's, so you have to spend a lot of time looking for this person. Like literally when you first start your company, I tell people something counterintuitive.

Steve Hoffman (13:41): I say, don't worry about the idea. Like there are a million ideas out there there's a million ideas you have. They're probably not exactly right. You will figure out your idea later, but what you can't figure out later, what you need to start with is the team. So put 80% of your time into like, who are these amazing technologists, this amazing marketing person, this amazing designer that you can bring on to your team at the beginning. And then as a team, you start to go into the real world and run experiments to try things out. You might have 20 different ideas between all of you and you're gonna try all of them out. And usually you pick a direction. You usually say, you know, we want to remake the restaurant business and we have all these ideas on how we can do this. And with this team, we're gonna go into the restaurant business. We're gonna talk to chefs. We're gonna talk to owners. We're gonna talk to waiters. We're gonna figure out what their problems are. And we're gonna figure out how to do things differently. Use new technology, new business models to, to solve their problems. If you approach it this way, your chance of success is so much higher.

John Jantsch (14:46): So Steve, you, you're still in San

Steve Hoffman (14:47): Francisco, right? I am actually near San Francisco. Now. I used to live here city. Now I live outside this year.

John Jantsch (14:54): So, so you probably occasionally drive by some very large buildings that are at about 10% capacity, you know, because employees are distributed now or not coming back to the office ever again. Do you think that the no headquarters model is going to impact startups going forward or, or is it really just a different form of delivery of, you know, employee services?

Steve Hoffman (15:16): I think it's a positive and a negative. So for some people it's a, you can tap a workforce of talented people who might not be able to come into the office, who can save a lot of time by not doing the commute. But it's also a big disadvantage because having people in the same room, collaborating, talking on their downtime, you know, all these serendipitous moments that you have when you're with a team of people, those don't exist. So I, what we're seeing now in Silicon valley is a lot of startups are itching and big companies to get people back in the office. They wanna get people back in the office. It's hard because people, a lot of people like now, they got used to working remotely. They have control over their time. They have more control over their life. Uh, they don't necessarily want to go back.

Steve Hoffman (16:01): So we're gonna see this push and pull over the next several years. But my gut feeling is that when, you know, barring another pandemic, which we hope hasn't happened, you know, assuming we're, we've gotten over this and now we have vaccines. If that is the case, I think we'll start to revert back to the way it was. Now. It'll never go as far back, like to the point where, you know, we expect almost everybody to be in the office. It will never go there again. We'll always have this blend, but we will see a lot more people being expected to go and, and be there in person.

John Jantsch (16:38): Yeah. Yeah. I know a number of people in San Francisco that I, I know and have spoken with recently, actually left the city.

Steve Hoffman (16:45): It's a little harder for those people. And that's what I mean. It's never gonna go totally back, but, and they'll be compromises or they'll have to make compromise this, but I will tell you, you know, some, a lot of startups I work with, we, we wanna see people face to face. It's just not the same when you're distributed and talking remotely.

John Jantsch (17:05): If, if you were gonna have every potential founder or founder come before you ask for money and they could give you all of the standardized personal personality tests that they've taken. Are there any traits that you would look for that, that you think need to, that make somebody more likely to succeed as

Steve Hoffman (17:20): A starter? Yeah, I will tell you, so when you are faced with a real challenging problem, even something that seems impossible, hopeless, like it's just like, it, it, at a certain point, everybody says you can't do it. It's not possible. You believe actually what might not be possible, but the entrepreneurs who just dig their heels in and just go at it, like they just go at it relentlessly. Those are the ones who tend to break through it. And if you have that type of dogged determination in your personality, there's a good chance. You'll make it. You might not succeed on your first try or your second try, but you will get there.

John Jantsch (18:01): Yeah. You won't give up, tell us a little bit about the founder's space, how it operates. Does it, you, the typical incubator, or do you feel like you have, uh, some innovations that you've brought to this?

Steve Hoffman (18:13): Yeah, so we're a little different, we're not, we have evolved actually through the pandemic. We used to be much more like a typical incubator. We were early on in the ecosystem in San Francisco. We grew really fast internationally. Now we're more like a distributed innovation hub. So we work with other incubators all over the world with different governments, with different, uh, tech, technological companies, big tech companies. And what we do is we are really into education. So we run programs all over the globe, both online and offline. Uh, we used to do a lot more offline and we plan to do that again. Now that we'll be traveling much more where right,

John Jantsch (18:54): We,

Steve Hoffman (18:55): Uh, really focus on giving entrepreneurs the, what they need to know to kind of break through and helping them in detail, like analyzing what they're doing, where they're running into problems and getting those we're less focused on running a traditional accelerator program where we have take equity. We have demo days. We do all these things. Those our programs tend to be. They're not like you have to be in them three months or whatever, and then have a demo day. Our programs tend to be more compact, really try to, uh, focus today. What are your problems today? Let's see in, in, in a week, if we can get through over the major hurdles, if we can have some breakthroughs for you, new ideas, things that will take you to the next level, and then you can go on and run your business.

John Jantsch (19:43): So it's almost like a more of a sprint model in some ways,

Steve Hoffman (19:46): Yes. As sprint at just the right time when entrepreneurs need that help the most. So they come to us, you know, we hit this roadblock or we, we can't get beyond this point. What can we do? What, you know, since we've worked with hundreds of companies, we start to see patterns. We start to see things, oh, well, you're, you don't have this on your team or you're headed in this direction. Or you haven't really validated your model. You think you have, or you wanna believe you have, but this is what you need to do to really know if this is gonna work. And if it's not, we need to pivot. We need to, uh, go a new direction.

John Jantsch (20:20): Steve tell people where they can find out about your programs and obviously the books and everything else that said that you've, uh, got yourself

Steve Hoffman (20:27): Into. Great. And so if you wanna reach me for any reason, just go to founders, space.com. So it's founders based.com. I'm there all my books, surviving a startup. I have a number of other books. They're all there. And you can contact me at founder space. You can also reach out to me on virtually any of the social networks, just search for Steve Hoffman or founder space. A good one is LinkedIn. I respond to everything. So reach out and get in touch.

John Jantsch (20:54): Awesome. Well, thanks for taking some time to stop by the duct tape marketing podcast. And hopefully we'll run into you. Uh, one of these days out there on the record.

Steve Hoffman (21:00): Thank you. It's been wonderful.

John Jantsch (21:02): All right. So that wraps up another episode. I wanna thank you so much for tuning in and you know, we love those reviews and comments. And just generally tell me what you think also did you know that you could offer the duct tape marketing system, our system to your clients, and build a complete marketing consulting coaching business, or maybe level up an agency with some additional services. That's right. Check out the duct tape marketing consultant network. You can find it at duct tape, marketing.com and just scroll down a little and find that offer our system to your client's tab.

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