A product or start-up sets the world on fire, disrupting markets and promising to transform lives forever. And then…they fizzle. This week’s guest is an expert on the shared patterns of failure in innovation, and his lessons can help any leader or entrepreneur avoid the same mistakes.
Entrepreneurs — From Failure to Success (ft. Lak Ananth)
Why do some ventures succeed and others fail— and why do some succeed and then fail? Find out this week with guest Lak Ananth.
OPENING QUOTE:
“The lesson to draw for even somebody that's working at a large organization is to value their cycle time. Don't spend all your time in aligning, and having the next meeting, and finding a reason to have a next meeting. If you have an idea, and you have tested it and there's some conviction, then the best thing to do is to have the shortest cycle time to actually trying it and then progressing it forward.”
—Lak Ananth
GUEST BIO:
Lak Ananth is a corporate entrepreneur, leveraging industry change and disruption opportunities to bring together innovation strategy, venture investments, acquisitions, and partnerships. At Cisco Systems, Lak enabled acquisitions in excess of $4.5 billion, before moving to Hewlett-Packard to lead their Pathfinder organization. Lak is recognized as one of the Top 30 corporate venturing leaders, and is also the author of Anticipate Failure, an entrepreneur’s guide to avoiding disaster and being successful that has many lessons for the wider organizational world.
Links:
CORE TOPICS + DETAILS:
[13:12] - From Entrepreneur to Executive
The difficult but essential transition
Very few people have the skills and attributes to be an effective entrepreneur and company founder, and even fewer among them have the ability to transition from an innovator to a leader of their company’s day-to-day needs. Those who are able to develop their leadership skills alongside their creative innovating skills are the ones who create companies with longevity.
[23:16] - The Dangers of “Alignment”
The double-edged sword of getting on the same page
Lak discusses the dangers of waiting for ‘alignment’ on a direction or project within an organization. Everybody wants to be aligned— taking an idea, seeing whether it’s worth pursuing, brainstorming, developing pages of PowerPoints, etc. But if you’re not careful, you can spend so much time and resources discussing a path forward that you never actually take a step in any direction.
[28:59] - Study Failure to Find Success
Discussing the inspiration behind Lak’s book, Anticipate Failure
While countless business books have been centered around how to ensure success, fewer focus on what causes companies to fail. According to Lak, the teams that are ultimately successful are the ones that can instinctively identify potential points of failure and diagnose them before they derail a company’s growth.
[34:45] - Making Big Companies Small
What’s lost and gained when a company grows
When a company moves from a small startup to a larger enterprise, one thing that is lost is the instant feedback, honesty, and intellectual trust between close-knit teams. But if that can be protected, fostered, and ensured in a large company, imagine what you can accomplish? Maintaining a sense of personal ownership can help avoid ‘armchair quarterbacks’ and keep people actively engaged in finding solutions.
[41:29] - There is No Five-Year Plan
Want to prepare for the future? Prepare for change.
While every company wants to lock-in the perfect long-term strategy, the world is simply too volatile to predict what will work five or even two years from now. So the key is to focus on making your company agile and adaptable, not slotting it into a trajectory that feels good now but may not make sense down the road and will be difficult to extricate your company from until it’s too late.
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CREDITS:
Lak Ananth:
And the lesson to draw for even somebody that's working a large organization is to value their cycle time. Don't spend all your time in aligning, and having the next meeting, and finding a reason to have a next meeting. If you have an idea, and you have tested it and there's some conviction, then the best thing to do is to have the shortest cycle time actually trying it and then progressing it forward.
Chris Roebuck:
Welcome to Perspectives From the Top. I'm Chris Roebuck, global keynote speaker with unique leadership experience from military, business and government, bestselling author, and your guide to greater success. Together, we'll discover powerful insights from the world's leading thinkers, doers, and trailblazers. Their must no trends, thought provoking revelations and practical actions you can use immediately. This is your exclusive and personal shop of insight and inspiration to help you get to the top. Welcome to you and all of our Perspectives From the Top listeners around the world. And I do mean around the world, because now Perspectives From the Top is being listened to in 38 countries, and growing. That shows how much benefit we are giving to you, and to all of those other listeners across that vast area of this planet. And it's really great just to share the insights of such successful people with you, and all of those others, listening to help you get to where you want to be.
Chris Roebuck:
Now today's guest is Lack Ananth, corporate entrepreneur, leveraging industry change and disruption opportunities to bring together innovation strategy, venture investments, acquisitions and partnerships. For example, at Cisco Systems, he enabled acquisitions in excess of 4.5 billion, then moved to Hewlett-Packard to leave their Pathfinder organization, and now he heads up Siemens Next47 corporate venturing unit funding, the best founders and entrepreneurs across the world with an investment of $1 billion from Siemens. Lak is recognized as being one of the top 30 global corporate venturing leaders. He's also an author and his book Anticipate Failure is an entrepreneur's guide to avoiding disaster and being successful that actually has lessons for the wider organizational world. Welcome Lak. One of the things our listeners really like to hear about is who has inspired guests to get them to where they are now. Is either a friend, a mentor, a teacher, someone that's trusted them? Did you have anybody like that? Or a couple of, of people like that in your career that were special, and really helped you get to where you are now?
Lak Ananth:
Yeah, I think there were some of family members, like my father, my uncles, all of them worked in the public sector in India where I grew up and also teachers at my school in India. And you know, the inspiration that they gave me was that, it wasn't like there was big financial upside or anything like that, but the quality and the professionalism with which they approached their jobs and the effort that they put in, whether it's teaching a student, taking real interest in them, in their career, and really taking pride in the work is something that left a very deep impression on me. So throughout my career, I've kind of taken that approach to say, "Set everything else aside, just do the role, the task ahead of you to the best possible for professional standards, and try to be the best at doing it." So I think that it was from their humble roots, but their professionalism is kind of has inspired and continues to inspire me to this day, which is,
Chris Roebuck:
Which is interesting, is that with your family being in, in particular, in government, in the India, it's that public service ethos, it's that professionalism that's rubbed off on you, but made you successful in the private sector doing a sort of non-governmental job.
Lak Ananth:
And it's interestingly enough, venture capital is the most extreme side of capitalism, right? Because as you're taking a enormous amount of risk and trying to create something new, if you are successful, the upsides are amazing, and if you're not successful, you get to dust yourself off and try again. So, it's the opposite end of a service public sector job, and the risk and rewards are extraordinarily different. But I think that the commonality that I take across the two is that I see founders and, to many founders, many people think it's the financial upside or anything like that, but it's just the intrinsic love for what they're doing and the professionalism, with which they try to do, the quality of people that they try to bring in. I see that commonality across [inaudible 00:04:58].
Chris Roebuck:
Chris and I think it's also really interesting having sort of spoken in India, and spent time in India, that actually in India, you have that beautiful juxtaposition of the really traditional public service, and the really entrepreneurial within feet of each other, which you often don't get in other parts of the world, so much.
Lak Ananth:
Yeah. I think we are fortunate in the US and some of the other Western countries that we live in this because, I mean, sometimes we undervalue the public services here because they all work 100% of the time, and you don't have to worry about whether you get electricity, or whether you get a driver's license or whatever it is. And it's almost transparent, and we undervalue it. But yeah, I mean, and as you rightly pointed out, if you were in India, you would actually see it right next to each other. And here, all we see is the private sector here in these advanced economies.
Chris Roebuck:
Yeah. It's just fascinating. And linked to that, as a result of coming from India, and the organizations you've worked with, your own VC firm, you understand about startups, but you've also seen leaders in larger organizations. And I think it's interesting that again, that juxtaposition back to your family, and public service, and entrepreneurs, do you think that there is a fundamentally different mindset to the leader that is in the sort of corporate world, the corporate executive, and the startup mindset, the entrepreneurial mindset, and can people move between the two?
Lak Ananth:
It's a very interesting question, which will always be... Whatever answer I give is going to be proven wrong by the exceptions that exist.
Chris Roebuck:
Well, we have seen entrepreneurs who have actually been thrown off the boards of their own companies eventually so. But on other, in other occasions, it seems to have worked. So, I think it depends on the individual, doesn't it?
Lak Ananth:
Yeah. I think it depends a lot on the individual. And particularly, when we are thinking about the corporate world and the startup world, there are two things I like to think about, about the individuals themselves, because often you are in a position where you may have to hire for somebody from the large company world to come, and bring their experience into the startup world. The first thing is generally, when you are in a large company, you are trained to think in increments of to 2%, 5%, 10%, because that's what changes every year. Whereas, if you truly are in a real growth environment, you're going from 1 million to 10 million, or 10 million to 100 million in revenue. And the number of people, you go from 10 to 100, from 100, to 1000. So you're really talking about orders of magnitude changes that can happen in a startup, as opposed to in a large company.
Lak Ananth:
So, that's one dimension to look at; whether the person can really think in orders of magnitude, or can they only operate in small increments of percentages. And you look for examples where they've kind of done something, even inside a large company, you get examples where you're part of something that grows that fast, and to look for people who have had that experience, so they can grow over to the other side. The other dimension is really around, is this person successful in the role because of their intrinsic abilities, or because of the brand and the system that they're underneath? And very often, it's hard to decipher, so you might work for a very large company and a brand name, and you might be a Rainmaker within that sales team. But if you don't have that brand name, can you come into a startup, and convince the most elite Bluetooth customers to buy something from the startup without that big brand name to kind of give you that air cover. And that's the kind of thing, or you don't have all the tools and resources you have in a large company to build a launch of product. Can you do it on a shoestring budget and get something out the door? Or do you need 50 people, 5 million and five years to do anything? You know what I mean?
Lak Ananth:
So I think those are the kinds of things that we kind of look about from the large corporate to the startup world. I do think that founders themselves, some say it's about one in 10 that kind of has the founder gene in them. Many of them have a hard time working for others. That's the reason, to some degree, they become founders. So, I've been able to experience this through acquisition. So, no matter what conditions you kind of create post-acquisition, founders get the itch to kind of go do something new, and they're just not it and kind of repeating the same old thing for the next 10 years. And so, before being on the investor side, being on the acquisition side, I was very much able to see the best acquisitions are when you buy a company, they have a future product roadmap, the founder does come along to make sure the acquisition sits inside the large company, but really if you can retain 80% of the people in the company that came along, but the founder has to move on after two or three years, that to me seems very normal because, it is just special DNA; you want to create something from scratch, you don't those have those things in a large company, and it's actually appropriate that they move on.
Lak Ananth:
So, I do find the short answer to your question is, it just seems like they're fundamentally two different kinds of people.
Chris Roebuck:
That's interesting, but we've seen in a number of cases where somebody has started their career within a corporate environment, but then because maybe they have that entrepreneurial spark, and the corporate environment has frustrated that, that they then make a leap.
Lak Ananth:
Yes, they do. And it's a very good point, Chris. And I think many of the founders that I've had the pleasure working with, the benefit that they get from working in a great company is that it provides them calibration. And sometimes founders who have never had that experience, struggle with it. They don't know what a great executive looks or behaves like. They don't know how to really come across in a fantastic way in front of a customer. They don't really know what great product development team looks like. So, one of the advantages of working in a larger company, which is actually very good at what it does is, you, as a founder, get to see what really good, excellent looks like. You also get to see what big and bureaucratic looks like, but you also get to see what excellent looks like.
Lak Ananth:
And I do believe there's a huge benefit to that because, when you come out and you start your company, you are calibrated. As a founder, as you know, the challenges, you've got to learn many things. You might have a superpower in product, or you might be, you have a superpower in some technology, but you are still learning the other aspects of the business, right? And so, if you are really looking and learning in a large company experience, what good looks like, then that can help you do a better job in building your own company.
Chris Roebuck:
Well, I think, it's also potential lead, not only the perspective issues around that. It's also maybe some of the simple, practical issues that, if you are a founder and you start to grow, that you need to have, for example, just the simple ability to delegate, and not control everything, which you would've learned in the corporate to be able to do your job. But having spoken entrepreneurial conferences, entrepreneurs have said to me that, even it's something simple, it's something so simple, like actually delegating to people, and letting them do stuff rather than me wanting to do it all.
Lak Ananth:
Totally amazing point. And I find that the founders that actually end up creating really amazing and large companies, going beyond just a great idea, and a great proving out of a concept, to actually building a valuable and, and scalable business very quickly learn to make that transition. And if you don't, it becomes huge bottleneck, because when you have 10 engineers, then you as a founder can manage them. But when you have 100 engineers, you've never managed 100 engineers, but you've hired a professional VP of Engineering who is better than you, frankly, at running 100 person engineering team, knowing how to work with that VP of Engineering and helping them scale, and not constantly getting in their way, this delegation that you're talking about, is very important. Because as we touched upon earlier, you're going very much from 1 million to 10 million, to 100 million in a hyper growth environment. And as a founder, you're bringing in people, you're constantly upgrading the talent. People who can manage bigger and bigger, and you need to upgrade yourself to trust them, to build a team where the people that you hire are going to be better and different than you in the dimension you hired them for.
Lak Ananth:
If you are the person you hired somebody to run your supply chain, they better know how to run a supply chain at scale, right? And you can't be poking your head in every day, and managing every detail of which component showed up in the supply chain, right? And so I think it's a very essential skill that's kind of part of not failing, but rather, learning how to kind of scale, and create something meaningful.
Chris Roebuck:
And I think it's accepting that as the founder to accept, look, your supply chain guy is not a great entrepreneur, but he's better at supply chains than you are.
Lak Ananth:
Completely. Completely. And I've seen the opposite happen sometimes. And when we speak to founders and we tell them, founders by nature are very curious, and they really want to be really excellent at what they do, but then they hire somebody that's a world class marketer, and then they try to get into all the weeds of, "Why are you doing this? Why are you doing that?" As opposed to stepping back. Sometimes when you hire somebody that's excellent, you even have to learn how to manage them from them. "What outcomes should I manage you on?" Is a question that you should be humble enough to ask. And then of course, you have to manage them to those outcomes, and make sure that they kind of deliver, but not get underneath that, and really get in the way of progress, because if the goal is to kind of create an amazing new company, then you absolutely have to hire people who are not founders. Because if you have a company full of founders, it's going to be a huge problem. It'd be chaos all day long.
Chris Roebuck:
Yeah. But interestingly, for listeners, I think your point about, you need to ask the technician, the specialist, how they can help you not make assumptions. I actually think for listeners, that's a really valid point, not just for the startup, but I think that's a valid point for any leader within a corporate environment, who is working with professionals in another area, be it risk, be it HR, be it IT, because you don't even know how they can help you.
Lak Ananth:
That's right. Completely. And to be fair in a large company environment, in some of the good companies, the iconic companies, you learn some of this. Because you see when you work with colleagues in another area who are really excellent with what they do, you really see how really good or great looks like, and how the collaboration can really be excellent in driving outcomes, that there's no way that you acting on your own could have done it. But because you have this world class professional you're working with, whether it's a product launch, or as you say, a lawyer, even working on IT matters, or a supply chain expert, you can see the outcome. And if you are then have the good sense to observe, to learn and to even ask them how they think about their business and how they push what outcomes they're pushing for, I think there's a lot to learn from that, and to learn to scale yourself.
Chris Roebuck:
So as managing partner and CEO of Next47, which Siemens has invested over $1 billion dollars in to fund next generation B2B enterprises, just give us a little bit of a flavor of how you see the VC landscape at the moment, what you are investing in, why, and how do you sort of manage that complexity and try and keep it simple?
Lak Ananth:
Yeah, I think the great news for listeners is that it's never been a better time to be a founder in terms of access to capital. Because I think that, even when I started in Silicon Valley in the '90s, venture capital,, and entrepreneurship and access to capital and expertise, it was very limited to maybe Silicon valley and Boston. But now I have the pleasure of working with founders all over the world, whether it's Berlin, Beijing, or Bangalore, or Boston. And it's amazing to me how much the if a founder or a founding team has a great idea that how much capital is available, how much expertise is kind of very widely spread now about each step of kind of creating a company and progressing it to the next stage, if you just reach out, and reach out to the ecosystem, how broadly spread it's going to become.
Lak Ananth:
So I think I really enjoyed that part of seeing this ecosystem at this level of maturity, and therefore working with founders who are more ambitious than ever, who are really looking to create businesses with the level of freedom and big ambitions, that is really fantastic to see. So, it's a great time in terms of access to capital globally. The way we approach things is to say, "What are the areas that we have conviction in that are going to change?" And if you look across the B2B landscape, whether it's the adoption of SaaS and software enterprises, the use of data to make better decisions. And the beauty of it is that all the tech startups will be found on B2B, they're not just selling into the IT or the technology organization, right? It's selling into every industry, across every function.
Lak Ananth:
And as some industry leaders have observed, COVID has really accelerated this transformation to being technology driven. It's accelerated, in two years, things that would've taken a decade to happen have started happening, how you can use software, how you can use data, how you can empower people to be productive, wherever they want to be. And I think this trend, we are very excited about it, whether it's industry vertical software, whether it's horizontal software, whether it's developer tools and data tools that can really help drive productivity inside the business. It certainly comes with that, the challenges of cybersecurity, and managing cloud, and connected devices and so on. So, we just see a whole lot of areas that we can invest in.
Lak Ananth:
There's also the burgeoning area of crypto, Web 3.0 and the way which the new software for Web 3.0 is being built as we speak, or the infrastructure, every layer of the infrastructure is the being built as we speak. So we're seeing a lot of different areas. And the way we work is we try to get deep into an area, we get to know the founders that are kind of at the early stages of kind of creating a company, and try to build a relationship. And the point in which we invest is when they have a product, and they kind of have an initial customer, and we really try to get involved and partner with founders at that stage because we have customer relationships. We very much know the steps to go from, "Hey, I have an idea that I validated," to how do you really start making it a company and actually scaling the company? So, that's really what we focus on at Next47.
Chris Roebuck:
Mm-hmm (affirmative). And you, you made the point the way the world has changed both in terms of A, the ability of anybody anywhere now to be an entrepreneur, because of just the digital world as such, and also the impact of COVID in terms of speeding up that transition. For people listening who have been glued to their laptop screen over COVID on Zoom calls, it's really interesting before COVID, organizations were in a position where they didn't like this sort of stuff; people had to meet to face-to-face. And it's interesting, the fact that COVID has forced transitions into six months to a year that would've taken 10 years, exactly as you were saying.
Chris Roebuck:
Interestingly, when we spoke earlier you were talking about the breadth of organizations that you might consider investing in. And one of things we talked about was the cycle time between the idea and the action that is a critical factor in how organizations can grow and develop. Just give us some insights into how you apply that in terms of looking at the organizations that you are considering across the world, and the sort of benchmarks you want to achieve?
Lak Ananth:
Yeah, Chris, it's one of the most undervalued things, you're putting your finger on one of the most undervalued things, I think, in business in general, but particularly in startups, and when you're in endeavor to create something new, which is to of time between having an idea,, to actually implementing it and seeing whether it works or seeing whether you can take it to kind of the next level, or you want to discontinue it. And I think a weakness in large organizations is a word that is often used, which is called, "Alignment." Everybody wants to be aligned with everything, and so, spending time, taking an idea, and seeing what it's even worthwhile pursuing, implementing it in such a way, either in operations and software, or building a product that can be shipped to a customer, months, and years, and pages of PowerPoint are spent on just discussing it.
Lak Ananth:
And when we as investors, we get to know the founders, and they get to know us before we really formalize the partnership it with an investment and a long term relationship post-investment. One of the things we look for in founders is, from the first conversation, and maybe it's a few months later, or the second conversation, or third conversation, how much of what they said they would do in the first conversation, have they done, tested, and actually proven out, have not proven out over that time period? My partner, [TJ 00:24:48] calls it like the cycle time. We really get to get a feel for, and it is really, he found again and again, a pattern of success is founders where the cycle time is really short. And particularly in this day and age, where it's very easy for many people to have the same idea, and when the time is right, and the idea is right, the team that actually executes that idea learns really fast and kind of keeps building on it is the one that's going to eventually win.
Lak Ananth:
So we are really big believers in this cycle time. And the lesson to draw for even somebody that's working a large organization is to value this cycle time. Don't spend all your time in aligning, and having the next meeting, and finding a reason to have a next meeting. If you have an idea and you have tested it, and there's some conviction, then the best thing to do is to have the shortest cycle time to actually trying it and then progressing it forward.
Chris Roebuck:
That links back, interestingly, I think to the point we discussed earlier, which is those who become founders having left the corporate world because of a soul crushing, lack of thought to action time, because they are restricted by in an internal bureaucracy in getting their ideas to work. And that's why they just walk. But, I think for listeners who are in any organization as a leader, or C-suite or whatever, just that concept that you have given us on that fundamental question, "What is your cycle time? How quickly can you move from a sensible, practical idea to that implementation?" And you should be doing all you can to keep that minimal.
Lak Ananth:
Completely. And I think one of the examples we haven't yet started talking about the book, but one of the examples that I give in the book is the cycle time that Amazon had from seeing that their parcels were delayed because UPS and FedEx were crushed, to them actually standing up, completely on their own, an end-to-end logistics system from their warehouse to the end customer. And companies like UPS have existed for decades, and same with FedEx, which of course famously started with a business school paper, and them being in that cycle time to say, "We cannot disappoint our customers during the most important time of the year, during the holiday season." To then having trucks on the road, people delivering it, planes, ships, and software, that's connecting this whole logistic supply chain.
Lak Ananth:
They did this, or at least they started to have the initial results in less than a couple of years. And within five years, they are starting to ship as many parcels as UPS and FedEx in the US. And they have a hub airport in Memphis, they're renting containers. My point is, the cycle time, Amazon is proven that even at a large company, if you keep your focus on the cycle time and the problem that you're solving, it is possible to have outcomes. And I think that that should be on everybody's mind when you're kind of competing. Is that, "How do I take this idea, and how do I make it a reality and how fast can I do it?"
Chris Roebuck:
And I think that is a perfect sort of set of ideas that, that all leaders should think about whenever they're doing anything. "How can I keep the cycle time slick?" Which brings us perfectly onto the book, because in Anticipate Failure, you set out a number of areas where organizations have failed, and why, and what are the patterns, the precursors that you can start seeing, which might be red lights and flashing bells. So, can you give us some insights into an overview of the book, and some of the key points that sort of emphasize why actually the book is so important?
Lak Ananth:
Totally. Thank you for the opportunity to talk a bit about that. My inspiration was to kind of buck the trend on the regular business book, which is almost all business books are written from a perspective that this is what was successful. Either I was successful, I observed some other people being successful. You go from there to saying, "Okay, here's the five things that they did," or, "Here's the several things that they did that cost the success." And there's a lot of bias in that, because in the real world, in my experiences, it's not like somebody did one or two things well, or a few things well, and therefore that's why they were successful more often than not, the path to building a really new, amazing business, or success in a endeavor of that nature usually comes down to seeing a lot of little failure points that can manifest themselves along the way. Your initial product is not exactly right, or you are a little bit early ahead of the customers really sensing a need for the product, or you've got the technology working, but there are a few other people along the way that have to buy into the technology before the customer can get a benefit.
Lak Ananth:
So, you come across these little points where you could possibly fail, and I think in experience, the success between eventual success and failure, or catastrophic failure is usually the teams, and the founders that are very quick at recognizing, "Hey, there's a potential point of failure here. Let's diagnose this. Let's figure out how do we get around this? And what are the tools and techniques we can use to get around it? And then, how do we then keep building upon it for eventual success?" So it's not just having a playbook, and following the five things, but being cognizant of potential failure points, navigating around them, and then really building up the success. And to help kind of organize the thoughts around where failures might occur, I talk about a few different areas, and that it's broadly seven areas that talk about, but it's not intended to be again, a prescriptive set of seven, because these are broad areas to help founders organize their thinking around.
Chris Roebuck:
Well, having looked at the book, I think, although you say it's designed for founders, there are many points in the book that actually leaders in any organization should pay attention to. And I think if you look at some of the biggest corporate disasters, or not necessarily just corporate disasters, disasters full stop, it is a chain of little things that build up, bit by bit, to then create the ability for a perfect storm to occur, and I think you can apply that to the corporate world, to any number of things. Okay, Kodak is an example where over a period of time, it built to a perfect storm, but equally, if you look at what happened in Gulf of Mexico, that was a number of little things that all compounded, and compounded, and compounded, and then... So I think it's really interesting that you can say that the perfect storm doesn't hit without there being warning signs.
Lak Ananth:
Completely. Completely. And I think that people are surprised when there's kind of a catastrophic failure, but more often than not, what I've observed is, when you're working in, and kind of building a new business, there are warning signs, right? Okay, you built a product, you've taken it to customers, and they're kind of a bit underwhelmed, or they give you all the good feedback, but they're not willing to pay money, because either it doesn't solve the problem, it solves a problem, but that's not their most important problem, or it's too early for them to kind of address it. The technology's not quite perfect, so the value proposition of actually... One of the examples that I use is, for example, the Apple Newton was a great product, but it was too early, because a lot of other supporting things like eCommerce and 3G networking, and really nice touchscreens were not really available. And without these pieces, no matter how much you're tried, you couldn't make the Apple Newton successful, so you are up against many things that are not working in a favor. So, I think that this perfect storm that you're talking about, Chris, is really a confluence of many different things going right. At the same time, avoiding these many little pitfalls of along the way so that they don't kind of become traps through which you fall through. And then, that's kind of the art of building a new business
Chris Roebuck:
Linked to that, though, in terms of the avoidance of this failure, the identification of those small points that are starting to build up, surely one of the critical elements is within any organization of any size, the ability for people who see things that might not be going quite right, to speak out, and not to be blamed for speaking out and there to be a culture of open and honest conversation. It sort of Peter Wuffli, ex-CEO of UBS who worked in McKinsey, so one of the key things in McKinsey was the obligation that you had to dissent if you felt that things could be done better, as part of your responsibility.
Lak Ananth:
Absolutely right, Chris and I think we're going all the way back to the initial point of our conversation; the difference between a large company environment, and a small company environment very much comes forward in the early days of the formation of a new company, is that everybody in the team, if you've done it right, is doing what they're supposed to do. And if things are not getting done, then they are kind of speaking out, or there's enough trust and intellectual honesty within that group to make sure any flaws or kind of surfaced, or any major issues or roadblocks are surfaced, people talk about it, and there's a collective action to kind of get through and get across that action. And I think, the people often misunderstand within a large company, I do find that the speaking up takes a different tone, which is for every idea, there are a group of armchair quarterbacks, or Monday morning quarterbacks, whatever you want to call it, will give you the 100 reasons why it does not work.
Lak Ananth:
And one of our jobs as an investor, and one of the jobs as founders is all to suspend disbelief for a bit and say, "What if we can imagine a world where this is possible, and this actually works?" And I think this kind of space to actually think, and really move the ball forward is also important. It's not just, so to your point, Chris, if you are in a large company trying to change the culture of really risk aversion, it's important that people speak up, and when failures happen, it's better for them to speak up when it's small, as opposed to having, like, "I don't want to hear about failures." It's important to have that, but it's also important to have this suspension of disbelief in the organization, so that you can really think about what possible, and not just get caught up in the Monday morning quarterbacking and saying, "Well, that's not going to work, and let me tell you the 10 reasons why that's not going to work."
Chris Roebuck:
Well, interesting. That was a really, really interesting point that was bought out by Sylvia [inaudible 00:36:53] who started her career in NASA, working on Voyager, because she said, there, you suspend belief, because no one's ever done it before. And as a result of that, you let your brain roll as a team, because you spend belief because there is no precursor way of doing it. There is no legacy.
Lak Ananth:
That's totally right, and I think this is for any leader of any size, and bringing in the talent, and when you have the talent to give them that ability to kind of think, and suspend disbelief, but also to be intellectually honest about failures when they're at the early stages of failure, so you can kind of manage them, get through them, and really convert them into a eventual success. Those two elements, you really have to think. Once you've got the right people on the board, and you're on the right mission, you have to create the space for both of those angles and otherwise, great things are not going to get built.
Chris Roebuck:
Yeah. But when you are working with your entrepreneurs, with your founders, do you find that some of them are much better at getting this idea, and giving people space than others? And do you find yourself effectively being a mentor to these people?
Lak Ananth:
I think that every venture investor likes to think that they're a mentor, and they were the ones that actually cost the success of the company that became successful. I will be honest and say that more often than not, it's me that's learning something new from many of our founders. And of course, we are here as investors to be sounding boards, and when they do have a question, to really convey our experience, or something tangible for them that we can actually do. More often than not, in our best companies, in my best founder relationships, I find myself more like, being there, and being willing to help, as opposed to having any sort of active mentoring, or fiddling with anything. That's kind of been my experience.
Lak Ananth:
If you're in the life of a company and more often than not, a venture investor in the founder relationship, as they say, tongue-in-cheek, last longer than most marriages in the US, it's many years, it's seven years, 10 years, and even beyond. So I found that building that trust and kind of being there for the few moments where the founder needs a sounding board, and somebody they can absolutely trust to make a good decision. Like, "Do I hire this additional board member?" "Do I sell the company?" "Do we launch this product?" "Do I raise money?" And this is not like a executive coach or that kind of relationship, but it's more like trust, being there, and being available to be a sounding board at the most important points in the company's life. And that's really more what I've experienced. And I would like people to think about, like, if you really need an executive coach, you hire one; you don't depend on your investor to be that.
Chris Roebuck:
Yeah. No, that makes sense. So, linked to that, a sort of pulling it together, what advice would you give is out there in terms of them being more entrepreneurial? And what advice would you give somebody who actually wants to start their own, to be a founder?
Lak Ananth:
I think that it's always scary at the beginning, is what I would say. And many of the companies that I've have the pleasure of being involved in the very early days, it's usually one or two people, and they have an idea, and they're sitting out there by themselves. And it's very hard, and scary, and lonely, especially if you are... And there are no go guardrails, right? Because you're out there, but you do have to take that first step, and without that first step, and without that second step, the big thing never happens. So for anybody that wants to go, whether you are starting a new initiative inside a large company or a new organization, or you're going out to start a new endeavor, I would say, it goes back to, have that doer attitude, be cognizant of the cycle time, set yourself a reachable goal, and then just go for it.
Lak Ananth:
Because, I've seen again and again, inside large companies in particular, people want to come up with the gold plated five year plan, and there's no such thing. And the world today moves so fast, if there is an idea whose time has come, and there are really customers for it, the person that gets into the game, makes the first move, gets the first product, gets the customer win, or somebody that's quickly following behind, learning from the first person mistakes, but doing it better, those are the people that are going to make it happen. Everything big starts small, so don't be afraid to start small and kind, kind of keep building on it, is what I would say. And if you are in a large company, don't make the mistake of that gold plated five year plan, because that's never going to see the light of day.
Chris Roebuck:
I think that's a great point, because in terms of even within a large company context, you are talking six month plans, because even within that context, the market externally has changed, potentially the politics internally have changed. It's different people, et cetera, et cetera. So, I think the fundamental point is that people have to understand and embrace transition, change in dynamic environments, and actually use them to their benefit, not try and fight them by trying to impose a five year plan, in a world that's changing every three months.
Lak Ananth:
Exactly. And it's amazing what a group of less than 10 people can do when they're put their mind to it.
Chris Roebuck:
Yeah, absolutely.
Lak Ananth:
And when I was working at Hewlett-Packard we used to do something called Coffee with Meg, where we would, from the investment team, invite two or three founders who would then come to Hewlett-Packard and meet with Meg, and the executive team.
Chris Roebuck:
Sorry, if I should dive in for listeners; Meg is the CEO of Hewlett-Packard.
Lak Ananth:
No, Meg was the CEO of Hewlett-Packard when I was working there. And we used to give the founders 15 minutes each to generally to talk about what is the problem? What are they doing to solve it? What have they built and what, what kind of team, and progress they've made in the time that they've been there. And one of the most enduring comments that Meg used to make in those meetings was nothing at Hewlett-Packard could get done in less than five years. You need 500 people, five years and $50 million. And it was amazing that the founders could do that with five people, five months, and $500,000. You know what I mean? It's amazing what you can do when you kind of take that first step, and you have that focus, and you have that cycle time, and you're kind of going after it, how much you can achieve. And that's what I would encourage everybody to think about, which is, a lot can be done with a lot less than you think.
Chris Roebuck:
But in fact, actually that is a great piece of-
Lak Ananth:
You need to get going.
Chris Roebuck:
That is a great piece of advice, that you can do a lot more than you think, with less than you think, faster than you think if you put your mind to it. That is absolutely brilliant. In terms of how people can learn more about what you do, and your book, any suggestions on how they can find out more?
Lak Ananth:
Totally. I think my book Anticipated Failure is available online from all the different online bookstores. You can get a hard copy, or an electronic copy. Regarding our venture firm Next47, or our website is www.next47.com. We are privileged to be working with some of the most amazing B2B founders in the world, and if you are one such founder, and you would like to talk to us, please reach out to us, and we would love to talk to you.
Chris Roebuck:
That is superb. Some brilliant ideas from the ultra strategic to the ultimately hands-on and practical. Just go for it, to everybody. Thank you so much, there's some great stuff for all our listeners in there. Thank you. Brilliant.
Lak Ananth:
Thank you. Thank you, Chris. Enjoyed the conversation and thanks everybody, thanks to all the listeners.
Chris Roebuck:
Some great insights there on success for the founder and entrepreneur, but what I think you'll agree is fascinating, which you probably gathered from our conversation, is that we shouldn't think about the startup, the small organization, the medium sized organization, and the large organization as environments within which different things have to be done. That analysis might be easier for us to break up the vast range of organizations we see an experience into manageable for our brain, but that then prevents us from realizing the commonalities of what delivers success in any organization. Now, as you've heard, there was so much in our discussion that, whilst critical to the startup, is also important to the larger organization and leaders within these. For example, your idea to action cycle time, the importance of trust to get ideas out and plan action as a committed team, looking out for potential failure points, and dealing with them before they become a perfect storm, and the suspension of disbelief to come up with really great objectives that produce significant, incremental benefit.
Chris Roebuck:
Now that links to what I think you could take away from Lak's insights; simply the importance of a do-it attitude, the importance of minimizing your cycle time, and the importance of having a good goal that you can achieve relatively quickly, to deliver benefits before the world moves on. Have a think about what you can use in terms of some of Lak's ideas to help you get to where you want to be, but that's the purpose of these podcasts.
Chris Roebuck:
Don't forget that in a week, I will give you a more in depth view of the key takeaways from Lak, my insights, and three ideas for action in my Reflections on the Top. Now, if you've used any of the insights you've got from previous Perspectives From the Top guests, and they've helped you, please send me your success stories. I'd really love to hear them.
Chris Roebuck:
Thanks for tuning in, check out the show notes from today's episodes at perspectivesfromthetop.com, where you can not only enjoy additional resources from today show, but all previous ones. If you haven't already, subscribe to the show on Spotify, Apple, or wherever you get your favorite podcast, so you don't miss any. And if you really enjoyed the show, please give us a five star rating and review. Have a question or comment? Let's discuss it. Message me on LinkedIn. Perspectives From the Top is produced in collaboration with Detroit Podcast Studios. So have a successful week, use today's new learnings and actions, and remember, it's onwards and upwards. See you next time on Perspectives From the Top.