“I like money,” one founder said to me bluntly, in response to my question about what motivates him. I ask every founder this question. Some of them say things such as “to provide for my kids,” or “I want financial security.” One 24-year-old software engineer said, “I want to have a jet,” and after a pause, “and an island.” I’m not saying I agree with the conclusion, but I admire his honesty.
Another answer I often get is, “I like building things.” I like this answer. One software engineer who I’ve worked with at three different companies over the course of the last decade adds, “Building stuff is fun.” This perspective is common among experienced, successful entrepreneurs. Roughly half of the entrepreneurs I work with are “repeaters” building their second, third or fourth company. The financial success of many of these entrepreneurs has put them in a position where they don’t need to keep working, yet they are driven by a passion to build.
I’m a partner at Cooley LLP, where we are just one of many helping hands in the building process—the entrepreneurs and the investors do all the work and take all the risk—but I like to think of myself as part of the company. I often get asked to quit my job as a lawyer and to join client companies. I love the compliment but I always tell them the truth: I’m not brave enough to be an entrepreneur. I usually get a laugh from this, especially from the ones who know that I do things like race motorcycles. I remind them that I am a really slow motorcycle racer and that being an entrepreneur is really hard and really risky. The ability to assess risk and take decisive action is one of the things that separates great entrepreneurs, boards and investors from those that are average. I have a deep appreciation for the art of calculated risk.
I spent a lot of time learning how to be a better rider. Learning to go fast can be painful–literally. I have broken bones and trashed thousands of dollars in leathers and motorcycle parts in the process. In doing so I have dropped many seconds off my laptimes and improved tremendously, but the learning process could have been easier. As I matured as a rider, I learned that riding with input from my team (mechanics, coaches, sponsors and mentors) is eminently easier (and safer) than trying to learn racecraft on my own. If I had my team in place from the start, it would have saved me time, expense and broken bones.
The members of the team who are racers and ex-racers are uniquely valuable because they have actually raced a motorcycle. They tell me how they attack turns, passes and lines–how certain entry lines link up to certain exit lines and how to link them together with a plan. Out on the racetrack there are no coaches, mentors or sponsors, but being prepared with data from them is invaluable. The difference between winning and losing (sometimes the difference between finishing and crashing) is often simply preparing and executing the plan.
Entrepreneurs must make their own decisions, but data they receive from experienced advisors and mentors can make the difference between winning and losing in the startup race. John Steuart, who is an MD with Claremont Creek Ventures, is one of those types of advisors who enjoys hands-on mentoring of his companies. John has first-hand experience running a business. I remember him dialing in to acquisition conference calls for a company we sold a few years ago—he would run up hills outside of Yellowstone Park during his family vacation, try to find cell phone coverage while his wife pumped gas with three noisy young kids in the back of a mini-van. John was the perfect foil for the CEO, playing the “bad guy” in negotiations. The company was able to increase the original offer by millions of dollars.
Recently I started working with SmartZip, another Claremont Creek company in the predictive analytics space where there is lots of hands-on counsel. SmartZip combines data about home ownership, home value, demographics, and sociographics with online behavior data to predict what a consumer will want, before the consumer wants it. It can predict which consumers are most likely to buy solar panels in the next few months, list their home for sale, make home improvements or want a new loan. Claremont Creek is betting that the company will soon be a significant data analytics and on-line marketing player. It is easy to see how the data they collect and process could be extremely valuable for driving decisions.
Building, funding, buying and selling companies is what we do as attorneys. It’s why we always strive to give clients a boost in their race to the finish line.
Samuel S. Coates is a partner at Cooley and has a corporate law practice with an emphasis in the representation of emerging technology and life science companies.