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Episode Overview:
In this enlightening episode, we're thrilled to bring you an engaging conversation with Steven Hoffman, a globally recognized authority in the startup space. Also known as 'Captain Hoff', Steven is the CEO of Founders Space, one of the world’s leading startup accelerators, an acclaimed author, and an esteemed innovation consultant.
Steven brings his wealth of experience in the startup sector to this episode, shedding light on the pivotal role of people in determining the success of any startup. He elaborates on why an idea, no matter how groundbreaking, is not enough to guarantee success. Instead, it’s the people who execute the idea – the team – that ultimately defines the trajectory of a startup.
Hoffman provides insights into his unique philosophies and tried-and-tested strategies for assembling the right team, fostering a positive and productive culture, and successfully navigating the challenging landscape of startup entrepreneurship. This episode is packed with invaluable advice and takeaways that will benefit both seasoned entrepreneurs and those just starting on their journey.
Additional Resources:
Scott Waldron:
Welcome to another episode of Unlocked. I am Scott, and today I have something for you and his name is Steve Hoffman. Captain Hoff, as they call them in Silicone Valley is a serial entrepreneur and he is the CEO and co-founder of Founder Space, which specializes in saving entrepreneurs from making critical mistakes and building their businesses and eventually possibly losing them. Everybody needs help, someone to help them, coach them and Steve is that person. He is full of energy. You're going to see that in this video. It is so fun interviewing Steven. He has a lot of energy, a lot of knowledge that he brings to the table.
We talk a lot about just the idea of a startup and what is involved in that, but also obviously, the sprinkling of the people aspect of leaders and leading a startup and what not to do. I think we need to be aware of that, things that we should be doing, obviously, in replace of those things that we shouldn't be doing and what can lead us to be a more successful startup.
He is the author of several bestselling books. Make Elephants Fly was one of them. He has a new one called Surviving A Startup that he's about to launch, and he's got an awesome, awesome promo for you at the end of the video. So make sure you pay attention to that. And also, I'll put a link in the show notes. So let's get on with this interview with Steven Hoffman.
Hello Steve Hoffman, AKA Captain Hoff. We are super excited to have you and you have a new book coming out. We're going to talk about that and some other things. How's it going over there?
Steven Hoffman:
I am super, duper excited to be here.
SCOTT WALDRON:
You just one up'd my super excited, Steve.
STEVEN HOFFMAN:
I could go more, super duper, expialidocious.
SCOTT WALDRON:
I'll bet you, you could. I'll bet you, you could. We've had a great conversation leading up to this and I am excited to have you on here. I think you have a wealth of knowledge. You've got some exciting stuff coming out in the future here. And right now, you've got the book coming out and this isn't your first book, but you are strongly, strongly, strongly entrenched in the startup space. Where did that come from, that passion for startups and why do you keep doing it?
STEVEN HOFFMAN:
I ask myself that question every day because it's not easy doing a startup and I am a serial entrepreneur. And even now that I coach startups, fund startups, run Founder Space, which is a global startup incubator and accelerator. It's still a startup, right? I'm still running this crazy business. Only, I'm doing it in partnership with hundreds of entrepreneurs around the world.
I will tell you why, because I am somebody who loves new ideas. I love interacting with people who are inventing, making things like out there with visions of the world, how to shape the world and that's what gets me so excited. So every day I get up, I'm like, what entrepreneur can I talk to? Because they're going to show me amazing things that I would've never thought of, and then if I can help them a little along the way, that makes me feel great.
SCOTT WALDRON:
I call those people the little fish with big dreams, right? There are these people that are going out on a limb, taking out their 401k. They've saved up. They're just ready to roll. They've got this big idea and they just want to make an impact on the world and that is energizing for sure.
STEVEN HOFFMAN:
Totally. It's very energizing. It's also an emotional roller coaster ride for the person who's on it, because I've been on it many times. I did two bootstrapped startups where I did fund everything myself, three venture funded startups. I was in the trenches. I went through highs and lows. There are times there where you've really, as an entrepreneur, in order to succeed, you have to risk everything. You have to risk your relationships with your family and friends because you're working all the time, even a marriage potentially is on the line. You have to risk potentially your life savings, all the money you've saved up. And then you have to go out into the world and it's all on you to make it happen. And so that's a lot of pressure and people deal with it in different ways. So I see part of my job is not just handing the money and not just giving them knowledge that they can use for their business, but also helping them inside with their struggles that all of us have to overcome to actually take on a big challenge.
SCOTT WALDRON:
Yeah, because the stuff you said at the beginning sounds really scary. Why would I want to do that? Why don't I just go get a corporate gig somewhere where they can pay my 401k, and my job, my health care and all this other stuff, and I have to take all those risks of my family? And it's a nine to five, whatever, right? So not that we live in a nine to five world anymore, but you know what I'm saying? That's pretty risky.
Now with that being said, you help these entrepreneurs, you help these startup dreamers come up with a lot of things. You give them a lot of tools, a lot of resources, enabling them to be who they want to be and do what they want to do. I want to talk a little bit about your new book and also the angle of people, and why and how to manage people in a way that helps us all succeed when we're doing a startup, and also the critical mistakes that startups make when involving their people. Is that something you touch on in your book?
STEVEN HOFFMAN:
Absolutely. So in Surviving A Startup, I go really in-depth on different management techniques because the book is based on my personal experiences and all the experiences of the entrepreneurs I work with and the questions they ask me, the pressing questions that will kind of determine their fate. And one thing I've learned when doing a startup is that most entrepreneurs in the beginning spend far too much time obsessing over their idea. Is this the next big idea that will change the world? And I'm like, don't think of that because whatever idea you have in your head, it's fictional. You imagine that. You won't know if that idea works until you actually take it out into the real world.
And what you'll discover along the way is that you're going to have to change that idea. You may have to change it a little if you're lucky, but most entrepreneurs change it completely because they start getting feedback from the real world of what the world actually needs, what reality actually is, and then they have to adapt their vision to that.
So I say, first of all, don't let not having a big idea stop you from being an entrepreneur, because a lot of the best ideas were things people stumbled upon. They didn't even know that it was the big idea. Look at Google. So Google, the founders of Google thought they were doing a non-profit, yet it is one of the most profitable companies in the world because they were making a tool for academics to find research papers online. That's a small idea. YouTube, they thought they were doing a video dating site. Now, look at YouTube, kind of the defacto user generated broadcast network out there.
So when you're starting out, don't spend a lot of time on your idea. And honestly, don't spend a lot of time building product. That is a mistake because your idea is probably wrong. So what you're building is probably not the right thing. What I tell them to do, to get back to your point, is focus on the people. The startups that I succeed, the founder of the startup, the CEO, their top priority and where they put 80% of their time in the beginning, is finding the right people that compliment their skills.
So all of us are good in certain things. And some people, like Steve Jobs or Elon Musk, seem to be able to do everything, but that isn't most of us. And even those that do everything, they don't have time to do everything. Right. Even if you're good at a lot of different things, at the end of the day, your job is to be CEO. And the number one job of a startup CEO is to bring in talent, because if you bring in the right people and you give them a direction to go, it doesn't have to be a specific idea.
It can be just like, we want you to innovate in this area. We think this is going to be a blockchain is going to be a big thing or AI is going to be a big thing. And we want you to innovate in that and food and agriculture. Then these people will actually be the ones who have the time and focus to actually build and figure out what will make your company successful. But if you don't have those people on, and I see solo-preneurs all the time, solo entrepreneurs, they almost always fail because they haven't surrounded themselves with the talent they need to actually build a business.
One person never builds a business. Elon Musk by himself is not getting us to Mars. He is getting us to Mars on the backs of thousands and thousands of incredibly talented people. So that is my first rule when doing a startup and be selective. Don't get the people you necessarily can get. A lot of us say, oh, I happened to know this free program, or they're not ideal, but I'll bring them on the team because that's the only coder I know, or I know this designer, they're not the greatest in the world, but they'll do it for free or they'll do it for equity. Don't do that. You have to say, if they aren't super talented, if I can't work with them in a really collaborative fashion, then don't bring them on your team and don't start charging ahead trying to raise money, trying to build a product, trying to do all these other things, reach customers. No, find your people first.
SCOTT WALDRON:
So smart. I think we have almost a little bit of a scarcity mentality in starting these things up. And we're like, well, how am I going to pay for that? And how am I going to pay for that? I'm just going to do it all myself. And this whole mentality kicks in, which can be a real big problem. Then we bring people on and then we have some kind of loose agreement, or maybe it is equity, or maybe it is a cousin of a neighbor or something like that and we kind of build these relationships.
And then communication things start kicking in and then they leave, and then we have turnover and then we're burning time and money and all these efforts and trying to organize what's going on. And so that causes a real problem, but you mentioned something interesting I read about avoiding telling people what to do. So you're bringing people on. My first instinct is to say, well, if you don't tell them what to do, how do they understand what they're supposed to do? And how do you set expectations? How does that all work within the dynamics of a company culture and a startup culture?
STEVEN HOFFMAN:
Okay. So first of all, I want to address your first piece and I can see you've done this before.
SCOTT WALDRON:
A couple of times. I've probably done it a couple times.
STEVEN HOFFMAN:
What every entrepreneur who's trying to kind of do it alone and do it on a budget, almost invariably goes through at the beginning and there are a lot of pitfalls for that. You're asking me, there are a lot of mistakes entrepreneurs make, and you just pointed out one of the biggest ones and that is trying to do it all yourself and also bring on the people too late, because what happens is the more you put into your company alone, the more you feel like they're not really the owner of it.
You have suffered. You have suffered for six months or a year on this project. You have invested a lot of time and money, and now they're just hopping on. You can't make them an equal partner. You don't even want to give them a lot of equity because it's not their idea. They didn't start it and they feel the same way. It's not really my idea. Why should I work for free? So you get this thing where you're kind of loose connection. You're paying them a little money, giving them a little equity, but it's not enough. You're not really making them your partner at the beginning.
That's why I tell people, don't even wed yourself to an idea because the idea should be all of your idea. When you find the right people, all of you should come together because I will tell you, what binds people to your company, what keeps them motivated and passionate is that they feel it's their company too. They're not just on working for your success. They own it. They're working for their own success.
And when you engage them, if you can spend more time at the beginning, find the right people, give them substantial ownership, and then together iterate on a plan and ideas in the space to make it successful, suddenly you bond and you become this super unit. And this is what you see amongst great early stage startups, where they have an incredibly talented team and they all feel they own it and they will all do anything to make it succeed. So it's not one person trying to keep other people on board and they're dropping off. As soon as you're in that position, I actually tell entrepreneurs, scrap it, start over. You're doing it the wrong way. You're going down the wrong path. You're not going to build a big company that way, most likely, unless you get super lucky.
And then your other question was how do you manage people without telling them everything they should do? Because think about it. You want a really innovative nucleus in your first team. Your team, your core team is the one that is supposed to break through with an idea that changes everything in your sector, in your industry. That's not easy to do. Let's face it. If it was easy to do, everybody would do it. Everybody would be the next Jack Dorsey or Elon Musk. We would all do it. It's really, really hard to do. To innovate, it's really hard to do.
So what you need to do is, here's my rule for innovators and how to manage them. When you bring your team on, it's tempting because you kind of started the thing and you're the boss, technically, you're the CEO, to come in and say, do this, you do that. No, no, no, no, don't do it that way. Do it this way. But the more you do that, the more they stop thinking for themselves and wait for you to tell them what to do. If they are waiting for you to tell them what to do, they're turning off their own brains and all the responsibility now to come up with the plan of action, what to do next, how to do it is on you. That sucks your time away. It also is one brain, as opposed to maybe two, three, four, or five brains ideating on this together, which is much exponentially more powerful.
So what I have my golden rule is ask, don't tell. It's the best form of management. And I don't care if you're a startup, a small startup or in a big organization, a big company. If you want your employees to own it and innovate, don't tell them what to do every day. When you walk into your office or you're on a zoom call with them, instead just make a rule. I'm not going to tell anybody to do anything for the next two weeks. Try it to everybody you work with. Instead, you can get better results by asking them.
So as soon as you meet them. Okay, how's the project going? What are you working on? What are the next steps? And then if you don't agree with a decision they're making, why did you decide to do that? By asking them why, first of all, you're getting them to think, self-reflect. Why did I decide to do that? And you're learning from them what they're thought process is. Maybe they had an idea that was better than yours. You think you know it all, but they might've come up with a way of doing it that initially sounds not right, because you've never done it that way, but it's actually going to yield better results.
And then you could say, what proof do you have that that will work? How do you know that will work? And so you don't have to say no to them. Don't do that. You just question them deeply. And then you can say, is it possible to do more research in this area before we make that decision to make sure? Is there a way to run a small test so we can get some data back before we invest the next month and building this out? You didn't say no. They still own it.
And when they are pushing for it, when they own it, they become so much more passionate, because they need to prove to you. If they say this is going to work, trust me, I know you've done it this way for the past 20 years, but if we use this new technology and use this new platform and do it this way, it's going to be so much better. And you're like, then it's on them to show you. You're not forced. You don't have to force them to say, I want the best ever, the most innovative ever. They're going to want to prove it to you and prove it to their peers. And they'll keep innovating until they come up with something. That is what you want in a startup and it's what you want in any innovation organization.
SCOTT WALDRON:
And that goes back to what you said before about finding the right people that feel ownership. So how are you supposed to help them feel ownership if you're dictating all the time, if they're not allowed to think for themselves. So being inquisitive, not to the point that you're putting them in interrogation chamber, but that you're allowing them to think and process and evaluate their next steps of why am I doing this and what's our next steps, gives them ownership, gives them responsibility, gives them both the task delegation, but also the authority to feel empowered in that position and that's what's fantastic.
And I always call it, giving them enough support and enough challenge to help them feel liberated because there's a lot of leaders out there that offer a ton of support all day. I'm here for you. I'm here for you. I'm here for you, but they never hold them accountable.
STEVEN HOFFMAN:
Yes.
SCOTT WALDRON:
Then they get frustrated that nothing's ever getting done. Or you have the other leader that just dominates. It's just challenge, challenge, challenge all the time. When's this getting done? When this going to be done? When this going to be done? But offers no support. And then they don't feel any trust. And so there's this thing that pulls right there. And so what you're talking about is empowering these individuals through, hey, you've got the tools and the resources, but why are we doing this? Can we push this further? Can we do some more research? Can we understand what the next steps are? So is that what you're saying?
STEVEN HOFFMAN:
I am seeing exactly that. And you're also, in addition to everything you said, creating a culture of questioning, of interest in the other people. When you ask somebody something, you're interested in them, and you're creating a dialogue between you, where you're listening to them. Simply by forcing yourself to ask questions and not tell, you start listening, you are sucking up information. The really amazing innovation CEO's out there, they'll walk around their company and they will constantly be asking all the people, all their key people they need questions, because they want to know. The questions get them to think, get them information and insight into what's happening in their organization. And then they also force the other people to be really on the ball because they know every time the CEO's coming, they're asking questions.
In addition, you set an example. Your management style becomes an example for them in how they should manage their teams. If you're just telling them what to do, they're going to be telling their teams what to do. It goes down the line. So it's very important in innovation organizations of which startups are and big companies should be, the really great companies like Amazon are, to start at the very beginning with this. It's not a top-down structure.
It's a structure where if you're truly, like you said, going to support your employees, you need to understand what they're doing and what their problems really are. You need to give them guidance, but in a way that gets them to think for themselves and act independently. If you're asking them questions, they implicitly understand that you're looking to them to take the initiative. You're not forcing them to do it. You're waiting for them to tell you, when is this going to be done? How can we speed up the process? What more can we add to this? It's a great way to manage teams.
SCOTT WALDRON:
And this also creates more cohesion in teams, right?
STEVEN HOFFMAN:
Absolutely.
SCOTT WALDRON:
They create more unity in that team and that idea and the comradery that's happening. So creating a culture of cohesion is really interesting too.
STEVEN HOFFMAN:
And you brought up trust, which was a really important thing. If you trust somebody, you can speak your mind. If you don't trust them, you're always going to be guarded that you're going to slip up. And then you don't speak your mind and the truth doesn't get out there and problems go unaddressed and people try to cover up. That is not what we want in any organization.
So one thing is, if you ask somebody questions and aren't yelling at them or telling them they made mistakes, but probing to find out why something happened, you in its essence are saying you trust them. You wouldn't ask somebody to give you the answer who you didn't trust. And they feel that trust. Also, you don't want these meetings where people are ganging up against each other or somebody's saying, no, I think we should do it this way. No, I think we should do it this way. Those aren't productive meetings where you're all on the team together asking questions. How can we all make this better? Not my idea is better than your idea. It's like, we just want to focus on what needs to be done. We don't want to focus on who gets credit for this. That isn't the type of environment you want in your startup or in your big company. It doesn't matter.
SCOTT WALDRON:
And when we are talking about this individual starting up and you're talking about the mentality of this entrepreneur, this person has this big idea. They're starting to take the risk. They're going out on a limb, taken out, investing capital, possibly breaking relationships and destroying their lives potentially to live out this dream, to do something they believe in. There's a tendency to want a lot of control, and that's where this dictating every single little bit comes in, but they tend to want control. And you say, it's not about control. It's about results.
STEVEN HOFFMAN:
Yes. Now, this is a big thing. A lot of times when you're beginning a company, it's your money at stake. You put in your own money, you put your own reputation on the line. You are risking so much to make this company go that you feel it's spinning out of control, because startups in the early stages are always out of control and they could careen off the cliff any time. It doesn't take a lot for a startup to just tank. This is why over 95% of startups fail.
And I call my book Surviving A Startup because it's really a survival game. 95% fail, but even of the 5% that succeed, only a fraction of those become the big companies we're all talking about, the unicorns. So it's a small fraction of all the startups out there. So what I tell people is you are going to be taking big risks. You have to accept this, and you have to know yourself. Going into a startup, it's like a marathon that you have to train for. It isn't something you can just jump in from a day job to a start.
Now, certain people are natural entrepreneurs. They are risk tolerant. They have a very high tolerance for risk. They have a high tolerance for stress. They thrive on it. It just doesn't affect them. Other people freak out. This is too much for me. So it's very important when you're going into it to put yourself in a frame of mind that you cannot control everything. There is so much in a startup that is out of your control. The economy could change overnight. One of your key engineers that holds the keys to your entire platform could become ill and literally drop out. There can be a fight. There could be a million things that end up kind of hampering you.
So one of the tactics that I use is don't try to control it. You really have to just accept what happens calmly, and then work with your team, not against them, to solve it. You have to point it out and say, guys, how can we get over this hurdle? We only have this much cash flow. Instead of hiding how little cash you have or worrying about it or trying to control what they spend, let them know. This is how much cash is left and it's going to be a while before we see any revenue. So what can we do to make this go further?
And have them come to you with some sort of plan for how you're going to spend that money. Then they start to think of your cash as their cash or the investor's cash is their cash, which is really what you want. You don't want to police them. You want them to police themselves and they'll do a much better job and feel better about it, because when they tell themselves, no, I don't really need that expensive computer that they might've wanted to buy because it wasn't their money, the latest computer. When they tell themselves they don't need it, they feel much better than you telling them, no, you can't have it. And they were like, oh, I really wanted that computer with the latest processor. And you're telling me I have to get a two year old computer for the time being? That's the kind of environment and the psychology that really works.
SCOTT WALDRON:
So smart. I think there's a lot that we can unpack in all of this. So your new books launching. You've got a promo that you wanted to announce to all the listeners, everybody watching this. What is that promo?
STEVEN HOFFMAN:
So I have a special promotion. The book is being published by Harper Collins. It just went on sale on Amazon and all the online stores. It'll be in bookstores soon. If you pre-order the book now, you can get our complete online startup program, which is a series of, if you like this talk, it's a whole online series where I'm giving really detailed advice. You can get the complete online startup program free for two years, which costs more than the book itself, but we're doing that for your audience at this special time. So just go to Foundersspace.com, Foundersspace.com with two S's and then slash promo and you can find out all about it.
SCOTT WALDRON:
Wow. That is awesome. I know what it's like to generate a ton of content and then for you to do that and then give it away as a add-on benefit of the book is amazing. That's really, really great.
STEVEN HOFFMAN:
I personally love working with and helping entrepreneurs. I mean, I think you could tell I'm a passionate guy.
SCOTT WALDRON:
No. It actually sounds like you just want to go get a day job.
STEVEN HOFFMAN:
That's the last thing I want. I've done this my whole life and I can't go back, but I love working with entrepreneurs. Also, reach out to me. You can find me on every social network if you search for Founders Space. I'm even now on Clubhouse, if you search for Founders Space and follow me, and I love to engage. So I'm always doing talks and communication and other stuff. Let's go there and you can message me like on Instagram or whatever, and you can communicate.
SCOTT WALDRON:
Fantastic. Steven, thank you so much. You have been a value add, I think, for my audience and I really appreciate the words of wisdom.
STEVEN HOFFMAN:
Well, I love your podcast. I love your style and also your enthusiasm. I think we share that, and I look forward to coming back in the future and talk some more.
SCOTT WALDRON:
Woo wee. I am on fire after that. Did you hear the energy from that guy? So exciting. And what you didn't hear is that he is going to be leaving San Francisco and going out on the road. He spends a ton of time out on the road and internationally visiting incubators and startup communities, and speaking and working with those communities. So he's going to be doing that here in the future. So keep track of Stephen. See if you can interact with them in your city.
If you're in the startup world, connect with this guy, just connect with him. There's some powerful words of advice in here. Ask, don't tell. Ask those questions, help people feel invested and involved in the company. You want people to believe what you believe, but you also want to help foster growth and energy and helping them invest in you. And how are they going to want to invest in you is by feeling invested in the things that they're doing. And how do they feel that way is by you empowering them, you enabling that growth and investment to happen.
So as a leader, be mindful of that and bring in good talent. We know that we're all scrapping. As an entrepreneur, I am an entrepreneur. We have this scrappy mentality and what's important is that, yes, we understand that there's costs and there's risks and there's other things, but don't cheap out on certain aspects, especially the people. The people need to be important and they need to be talented and growth-minded in order to get you to where you need to be, which is exploding, not sinking.
So thank you Steven, for doing this show with us. And I really appreciate you and the knowledge. Good luck with the book. If anybody else out there wants to find out more about my show, you can go to Scottwaldron.com. Go to YouTube, search me there, like, subscribe and comment in that area. Share with everybody you know. I would love to get more of this out there to other individuals that need it. So thank you again. I will see you next time on Unlocked.
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