As the famous boxer Mike Tyson said, “Everyone has a strategy until they get punched in the face.” If you are an entrepreneur, be prepared for that proverbial experience many times over in your entrepreneurial journey.
Successful entrepreneurs come in all shapes, sizes, nationalities, socio-economic backgrounds, colors, genders, and sexual orientations. Based on observing and studying lots of successful people, and reflecting upon my own experience, I have come to the conclusion that there is no single factor that determines entrepreneurial success. However, every entrepreneurial journey starts with how you were raised and the choices you made as a young adult. So I will start there.
Lesson 1: I think a huge part of entrepreneurial success is determined by your willingness to take educated risks, think thoughtfully about problems, make tough decisions, be willing to constantly adjust in a chaotic and uncertain environment, and deal productively with adversity.
How and Where I Grew Up
I was born on December 8, 1962, at the very tail end of the Baby Boomer generation. I grew-up in the suburbs of St. Louis, Missouri, in a town called Normandy. It is right next to the now infamous Ferguson, Missouri, where all the racial issues have had so much coverage on television and in the news recently. Despite what you see and read in the media, it is a nice town with lots of nice people.
I grew-up in a two-bedroom, one-bathroom house with my parents, my older sister, and my two younger brothers. My siblings and I shared a bedroom until my sister turned 12, when my dad “built-out” the basement so that my sis could have her own bedroom.
Neither of my parents graduated from college, but they are both high school graduates, and were hard working middle class Americans throughout their careers. They both have an incredible work ethic and deep love for each other, their families, and their kids. Growing up, we never had a lot, but we never didn’t have enough.
My dad was from a family of five sisters and two brothers. He grew-up in the wake of the Great Depression, and his family was poor. He enlisted in the US Marine Corps out of high school, and he served four years in the Marines. Afterward, he worked for 40 years in a blue-collar union position at Union Electric (now Ameren), the electrical power company in St. Louis where there are very harsh weather conditions with lots of heat and humidity in the summer, and snow, ice, and bitter cold in the winter. My dad worked a lot of overtime to make ends-meet.
Since my father was in a labor union, he would occasionally go on strike. There were times when his union was on strike that he had to go out of town for work for extended periods of time. On one particularly long strike, my family was on food stamps. Growing-up we only knew what we knew. Everything seemed “normal” to us.
Lesson 2: Don’t forget where you came from, but don’t let that hold you back from accomplishing your dreams and goals. Work hard, stay in school, and don’t give up. Be kind to others, and stand for something.
My dad is a very charismatic man, and although he had a blue-collar job, he was very politically active and politically savvy. He worked on a number of congressional, senatorial and gubernatorial campaigns as a volunteer, was a labor representative in his union and eventually the president of his labor union, IBEW 1394, the International Brotherhood of Electrical Workers. He was also a city councilman in Normandy for over 15 years. My dad was the disciplinarian. He was tough and wanted his kids to grow-up as respectful and responsible adults.
My mom worked for the telephone company, and then became a stay-at-home mom and housewife once she had kids. When my youngest brother turned 10, my mom, then in her late 30s, got a job at a department store. She worked there for 10 years, then worked at a doctor’s office for another 15 years before retiring. My mom was the nurturer. She was always very complementary and encouraging of me, and my academic accomplishments.
Both of my parents are in their early 80’s and still alive and married to each other.
Lesson 3: Hard work alone does not result in career success or wealth creation.
Early Education and Work Experience
I spent my elementary, junior high, and high school years in public schooling.
I was an introvert as a young child, but always very inquisitive. I was shy, and pretty awkward. In elementary school, I created my own code language to write notes with my friends. I spent a lot of time in the woods near my home building clubhouses out of scrap materials and wood.
I remember playing baseball when I was about 8 years old. I hated it, and wanted to quit about halfway through the season. My father wouldn’t let me. He told me that I had to finish what I started, and once the season was over, if I didn’t want to play baseball anymore, then I wouldn’t have to the following season. It was an important lesson that has been very beneficial in my life.
One of my earliest entrepreneurial experiences was running a 50/50 lottery on my junior high school bus. It wasn’t long before competition moved in. Clearly, there were low barriers to entry and the product was not highly differentiated!
As a kid I also worked mowing lawns, shoveling snow, and selling Muchie Mix and road Atlas’ as a Boy Scout. At around 12 years old I started as a caddy at Norwood Hills Country Club, and worked at the same country club as a lifeguard in my mid-teens. I also worked as a cook at a steakhouse and at a pizza parlor in my late teens.
In 5th and 6th grade I was fortunate enough to be in a class that was team-taught by two women and a man. These three teachers made a huge impact on my desire to learn and work hard in school. I was a bright kid, but had attention issues, and I thought a lot of things were boring. These three wonderful teachers really turned it around for me. Pretty much from that time forward, I became very goal-oriented.
Lesson 4: In order to accomplish worthwhile things, you need to set, measure, and meet goals. You need to persevere through adversity.
Initially academically, then as I entered high school, I grew out of my introverted and awkward phase and became a pretty good athlete where I played three varsity sports: football, wrestling, and track & field. I applied my work ethic, and combined with goals, results came to me.
In my early teens, I had a dream of becoming an architect and wanted to build things. However, I was really good at math, and my teachers and mentors encouraged me to become an engineer. So I made the decision to apply to the best engineering schools I could think of. I applied to four schools and was fortunate to get accepted to my number one choice, Georgia Tech, so I moved to Atlanta, GA.
College and Early Career
I went to Georgia Tech to study engineering, but during my college years I learned so much more. I joined a fraternity, Sigma Phi Epsilon, in my freshman year and it was one of the most revolutionary things that helped me develop as a leader. Involvement in sports in high school had played a part in the past, but at “Tech” I was someone totally new, in a new city, and could make my own way.
Although I loved Georgia Tech, at the end of my freshman year I had a difficult conversation with my father about continuing to go to Tech. Out-of-State tuition was really expensive, and even with student loans, grants, a partial scholarship, and lots of help from my parents, I could not afford to go to the college that I wanted to continue to attend. It was a real turning point for me.
Lesson 5: When there is no apparent path to achieving your goal, stay calm and work hard to find a path.
Leaving Tech was not an option for me. Thus, my options were to join the ROTC or to become a Co-Op student to help pay for college. I decided to become a Co-Op student. The Co-Op program is where you alternate working and school during your sophomore and junior years, so it takes five years instead of four years to graduate.
Like most students, I changed majors once and ended up receiving a degree in engineering science & mechanics with a minor in computer engineering. At the time, there was no major in computer engineering. All of my electives were in the electrical engineering department, primarily in computer hardware and software.
Lesson 6: There is no substitute for planning and doing your homework. I like the idea of working smart, but there is no substitute for hard work, even if you work smart. This is as true in a business setting as it is academically. Always be learning.
During undergrad, I worked as a co-op student for McDonnell-Douglas Corp (now Boeing), which turned-out to be one of the best things that ever happened to me. I was very fortunate that my uncle Frank was able to refer me to the head of the Co-Op program there at “Mac.”
Lesson 7: You know the old saying: “It’s not just what you know, it’s who you know. “ However, it’s not just who you know; it’s how your leverage your network.
I learned so much about the practical aspects of working as an engineer in a large corporation. I knew that I didn’t want to do that! So, I thought to myself, “What should I do?” Although I graduated at the top of my engineering class at Georgia Tech, I disappointed my professors by making the decision to focus on the business side of technology.
Lesson 8: Cultivate mentors and advisors, and listen to them. Seek council from those that you admire and respect. At the end of the day, it is your life, and you need to make the choices that you think will make you happy in the long run.
Early Professional Career
Out of Tech, I did an on-campus interview with Dow Corning Corporation in technical sales. I was fortunate that a guy one year ahead of me from Tech who was already in the Dow sales training program was able to tell the recruiting team a little bit about me and my academic accomplishments. After a series of on-site interviews at Dow headquarters in Midland, Michigan, I was offered a position, and I accepted.
Although I had professional experience working for McDonnell-Douglas prior to Dow, I was very sheltered as a Co-Op. Working at Dow was a whole new level of learning, pressure and politics. For the first time in my academic or career life, people interaction and politics became just as important, if not more important, as intelligence, hard work, and knowledge. I had experienced some level of politics in athletics, but this was a whole new level. It was another major turning point and learning experience in my career.
Lesson 9: There will be politics in the workplace. If you think there are not, then you are naïve. You will need to navigate through political situations in the workplace, even if you are working for a startup or an emerging growth company.
After six months at Dow corporate headquarters in Midland, Michigan, and six months as a field sales intern in New Jersey, I was fortunate enough to get a full time position in Southern California working for the High Tech division of Dow, where I was calling on aerospace, defense, and electronics companies.
Lesson 10: Sales skills are critical to success as a CEO. If you don’t have a sales background, you will still need to develop these skills, and you will need to have the courage to use them.
I worked at Dow for just over four years before returning to college to get my graduate degree. Since I was living in Los Angeles, I decided to go to the University of Southern California (USC) for my MBA.
Lesson 11: Sometimes doing what you believe to be the right thing is unpopular and risky. If you are an entrepreneur, you will need to get comfortable with collecting as much information as you can in a finite period of time, following your gut, and making decisions where the outcome is uncertain.
Business school was an academic “cakewalk” for me after the grueling academic engineering training at Tech, and the people skills part of things turned-out to be just as important as being smart in “B-School.” One very cool part about business school was that I was able to do so many more extracurricular activities since the academic challenges were not as demanding as Tech. I graduated at the top of my class with my MBA from USC with concentration in finance and strategy in 1992. It was a very low point of an economic recession, and definitely not a great time to be looking for work. There were almost no jobs for graduating MBA students in LA.
Lesson 12: You can be the best and the brightest and still not find a job immediately. There are recessions and things can get really tough in a severe one. You need to treat finding a job as your job, and you will need to build and work your network. There is no substitute for maintaining persistence and perseverance in these circumstances. These skills will be invaluable as you are building an entrepreneurial venture.
The Move to Silicon Valley
In graduate school, there is a major charity event held every year where all the major MBA schools on the West Coast participate called Challenge for Charity. When I was in business school, it was hosted at Stanford University every year. Fortunately for me, Advanced Micro Devices (AMD) in Silicon Valley was hiring MBA students, and I was able to interview with AMD through a campus recruiting effort during the Challenge for Charity.
After grad school, I moved to Silicon Valley to work in marketing for Advanced Micro Devices (AMD). It was during the x86 wars between Intel and AMD, and a fun time to be working in tech in Silicon Valley. AMD was known for having a party culture, and it didn’t disappoint. We had Rod Stewart as the entertainment for the company’s 25th Anniversary Party. Founder and CEO, Jerry Sanders, was in rare form at the party. Although my career was progressing at AMD, I wanted more, and I wanted it faster than it was available at AMD. I worked for AMD for four years, and this is where I had my first “line management” position.
Lesson 13: You will make mistakes in hiring. You should rectify them ASAP. You can’t hire 100 people and not make a mistake. Second level managers that say they have zero low performers either do not know how to do performance assessment, or they don’t know their teams on a detailed enough level. If you are in a position to hire people, PLEASE make sure you really need someone for the long term before hiring them.
Lesson 14: One of the toughest things you will do as a manager is performance management. It is hard, but it is worth it. In times of a storm you will need to determine who is cargo and who is crew. Low performers are a drag on the organization and make high performers sub-optimal. If a company is struggling financially, you need to make layoffs to protect the wellbeing of the company and the employees that remain with the firm. There may be other creative ways to avoid layoffs, but sometimes they must be done.
Lesson 15: Your best employees are your biggest assets. Treat them like gold. Be reasonably flexible with them. They are the heart and soul of your enterprise.
After AMD, I moved to a “startup venture” inside of a large Korean conglomerate, Hyundai Electronics (now SK Hynix). I moved to this company since I knew people there and it was a promotional opportunity. All that I can say is that working for a foreign national company is not my “cup of tea.” In my experience, it was all about teaching your overseas bosses the right things to do, so that they can tell you the right things to do. Pretty frustrating to say the least!
Lesson 16: If you are taking risks, you will make career mistakes. When you see that you made a mistake, course correct as soon as practical and possible. If you’re not having fun for a prolonged period of time, you need to make a change. Don’t use this an excuse to job hop, but find ways to recreate yourself where you are. If you are honest with yourself, you will know the difference.
Luckily for me, I had a business school friend who had become a Wall Street analyst, and there was an opening at C-Cube Microsystems for a director of corporate strategy. In fact, every professional job that I have in my career has been based on a networking contact.
When I started the interview process with C-Cube, I was already in a lengthy and protracted interview process with another company since I wanted to get out of Hyundai. However, I was super impressed with the people, including Alex Balkanski, the co-founder & CEO, and the decision making process at C-Cube. When I got two offers, it was an easy decision for me to join C-Cube.
Lesson 17: When making a decision about what company to join, look at the people and the culture. When starting a company, make a conscious decision about what kind of culture you want to have. Think about what culture you want very early in the company. Be conscious about this when you are building the early team.
At C-Cube my career really started to blossom. C-Cube was a Wall Street darling stock that had fallen on difficult times. They had acquired a system company and had a chip business as well. They had grown so fast that it was a highly unorganized and chaotic environment filled with lots of opportunity. I would say my five years at C-Cube is what solidified in my mind that I would one day run a startup company.
Lesson 18: Get used to the idea that your to-do list will never be “finished”.
Lesson 19: If you are entrepreneurial in nature, you will embrace chaos and unstructured environments instead of complaining about them. They provide an opportunity for you to establish the process and the structure and make it your own.
Through four companies and over eight years in Silicon Valley, my career progressed from individual contributor to manager to director to VP to SVP. At C-Cube, I moved back-and-forth from line and staff positions and learned a lot about influence management. I spent a lot of time working in executive management, being a general manager and “the strategy guy” for two different CEOs. Over the last 18 months at C-Cube, we had sold our system business, DiviCom, to Harmonic, and our chip business to LSI Logic (now part of Broadcom LTD). I worked for a little under a year at LSI, enduring the endless bureaucracy of a large company before getting my first opportunity to run a startup company.
Becoming a CEO
Lesson 20: There are three ways to become a CEO: (1) Get promoted into the job at your current company, (2) Get hired as a CEO by another company, or (3) Start your own company.
Don’t start a company unless you are passionate about it, and don’t join a pre-revenue and pre-product company as the CEO unless you have that same passion, and an ability to work closely and collaboratively with the founders. It is too hard, and you won’t make it without that passion. I’ve seen this mistake all too often in companies. You cannot have great entrepreneurial success without a passion to win and a hate to lose attitude. The status quo in your industry will not want to be disrupted, and your competitors will try to kill you (figuratively, of course!)
Lesson 21: You can’t let fear prevent you from trying new things or doing the right things. This is especially important around major strategic issues and issues surrounding your personal integrity. Don’t do things that are strategically stupid, even if they are popular, and don’t compromise your integrity under any circumstances. There will be temptation. Stay true to yourself.
I joined my first startup company at the age of 38 as the CEO. I’ve run three different startup product companies: shut-down one, sold one, and took the third through an initial public offering on NASDAQ in 2007. My team and I navigated Entropic Communications through the “great recession,” reached a $1 billion market cap, did a few acquisitions, and eventually sold the company in early 2014. My team and I grew Entropic from zero to big. We navigated through various phases of growth, economic turmoil, changes in management and the board of directors, a few acquisitions & integrations of other companies, and some personal and company controversy. It was quite a ride to say the least!
Over the course of my career, I’ve had some amazing opportunities, great bosses, horrible bosses, good mentors, many highs and lows, two personal divorces and five children. I’ve been falsely accused of things, called the worst names in the book, and been asked to do things that are unethical that I refused to do. I’ve raised over $200 million in equity capital for my companies, and been directly involved in over $2 billion in M&A transactions in my career. I have made many of the investors and employees of my companies’ millions of dollars. I’ve hired hundreds of people, and created thousands of jobs. I’ve had to do layoffs, and had to let people go. I’ve held a number of jobs, and even been let go myself, but so was Steve Jobs! I have received many awards and recognitions as a CEO, including winning the Ernst and Young Entrepreneur of the Year Award in 2008, and taking a company public on NASDAQ. I’ve made a lot of mistakes, and done an order of magnitude more things right. I’ve been honest and always worked hard to do the right things. Through it all, I have maintained my personal integrity, and that is one of the most important accomplishment of all for me.
Lesson 22: There will be times of company and personal adversity. You’ll be surprised who does and doesn’t stick by you in times of adversity. Don’t let it destroy you. In a crisis, shorten your focus on one step at a time, while keeping the big picture vision in the back of your mind.
Other Key Lessons for Entrepreneurs
I don’t know if I have a comprehensive list of things to do when you are starting or running an emerging growth company. In fact, I know that I still have a ton to learn. However, I thought this list would at least be some food for thought for the startup founders, CEOs, and aspiring entrepreneurs out there.
Lesson 23: Learn everything you can about your customers’ business and how you can be helpful to solving problems and making money for them. Spend time with your customers. Learn everything you can about key influencers at your customers. Add value when you meet with them. Some may become close acquaintances, allies, or even friends.
Lesson 24: You need to know when to shut-up and listen. Especially with employees and customers.
Lesson 25: Be careful who you bring into your inner circle. Balance this without being overly paranoid. You need to learn to share information selectively while at the same time not being divisive.
Lesson 26: You are never as smart as your advocates say you are, but, fortunately, you are never as much of an idiot as your critics say you are either. Advocates can become critics in a nanosecond, especially if they work on Wall Street or in the press.
Lesson 27: You have to make decisions. By not making a decision, you are effectively making a decision. A bias toward action is a good thing as long is it is thoughtful action. You need to remain sensitive to a changing environment. Admit it when you are wrong, and course-correct when necessary.
Lesson 28: It is better to be respected than to be liked. It is impossible to get everyone to like you, but if you try, it is likely that no one will respect you. If you spend all your time trying to be liked, you’ll be completely ineffective. This doesn’t mean you need to go out of your way to be disliked. The most important thing is to be true to yourself and focus on what’s right for the business.
Lesson 29: Occasional anger is good. Full time anger is totally ineffective. If you get angry occasionally, it shows the team that you are displeased. If you are angry all the time, then you will be ineffective and the team will just see you as a pissed-off individual that they are powerless to help. On top of this, a big part of leadership is being calm in the storm. The founding CEO of Entropic, Itzhak Gurantz, grew-up in Israel. He did his mandatory military service to his country before entering industry. He used to tell me a story about a great leader in the army who completely fell apart in a military outbreak. In business, just as in war, how you react in “combat situations” is very important.
Lesson 30: You need to take time to recharge your batteries, but not too much time. In the startup world, balance is the brief time when you are swinging from one extreme to the other.
Lesson 31: There is an element of enlightened dictatorship in a successful startup. Enlightenment comes from working with your team, doing the proper market and customer research, and taking time to think. Dictatorship deals with making decisions in a timely fashion. People will not always agree with your decisions, and you should sell them to get as many key people as you can on-board with the big decisions. Some people will get mad at you. Get used to it, and don’t be a baby.
Lesson 32: As a CEO, you should never delegate strategy. It is important to get broad input from the best and brightest people about the strategy, but do not delegate it. Build a management team, not just a group of superstar individuals. At the right time, hire a great General Counsel. He or she will pay for himself or herself many times over. There is no substitute for a good operations person. Hire people smarter than you in their area of specialization. Play to your strengths and hire for your weaknesses. Never let investors dictate the strategy of the company, especially Wall Street investors.
Lesson 33: You need to celebrate your successes, but never rest on your laurels. The more success you have, the more you will be disliked. People can be really mean when they can be anonymous, like on Yahoo Chat Boards. Don’t get your News from Yahoo Chat Boards and similar sources. At the same time, be sensitive to constructive feedback. It can be a valuable part of learning and growing as an individual and a leader.
Lesson 34: Set goals and measure results for yourself, your team members, and the company. Hold people accountable, but give them some grace.
Lesson 35: Over communicate, especially the vision and the strategy. Don’t expect your team to do this for you. They will try, but they usually can’t. Manage by walking around.
Lesson 36: Be transparent with your board of directors, but come up with solutions to problems. Don’t surprise board members at a board meeting. Talk with each one-on-one before board meetings. Bring domain experts onto your board of directors.
Lesson 37: The proverbial shit will eventually hit the fan. It does with ALL companies. When it does, you want people on your board that have relevant domain and technical expertise and experience, not just finance guys and investors.
Lesson 38: Success has many fathers, but failure is an orphan. As the CEO of a company, remember when President Harry S. Truman said, “The buck stops here.”
Lesson 39: If you do an outside funding round, raise a little more money than you think you will need. Be frugal with the money that you raise. Don’t be penny wise and pound-foolish.
Lesson 40: Admit when you are wrong. Say you’re sorry. Take an interest in the people that work for you. Realize that everyone is watching you and judging you every day. Protect your personal brand.
Lesson 41: Trees don’t grow to the sky. In other words, stock price will not always rise…with ANY company. Make a personal decision about how much money is enough for you and your family. Take that “off the table” when it makes sense to do so. Don’t get greedy about this. Give back of your time and your money.
Lesson 42: When you raise outside money as a founder or join a company as a CEO, get an employment agreement. Hire a good employment attorney for yourself.
Lesson 43: Pay a little bit more for the best expert advice from lawyers, bankers and accountants. You won’t regret it, and it will save you money in the long term.
Lesson 44: There are the proverbial “taking out the garbage and cleaning the toilets” part of every job. Do those parts of the job with joy instead of constantly complaining about it. No one cares. Lead by example. Be a “servant leader”. Be kind to everyone from the janitor to the Chairman of the Board.
My New Entrepreneurial Journey
Today, I run QuestFusion, a strategic advisory company focused on helping startups and emerging growth companies. It is very gratifying since I get to apply all of my experience to helping other entrepreneurs. I am constantly learning about new technologies and business ideas. If you are an entrepreneur that can use some guidance and mentorship from someone who has been there and done that, more than once, I’d by happy to have a discussion with you and see if I can be of assistance to you!
This is Patrick Henry, CEO of QuestFusion, with The Real Deal…What Matters.
This article originally appeared in QuestFusion.