Sam is a CEO coach, interim CEO/CTO/CFO, a Silicon Valley advisor and the author of 21 Secrets of Successful Startups, a book about world-class execution for startups. As a serial entrepreneur, he has been CEO, CTO, or VP Engineering / TechOps for five companies, driving multiple acquisitions. As a hands-on “roll up the sleeves” startup advisor, Sam draws from his 30+ years of successes and failures to train and help entrepreneurs with execution, fundability, fundraising, strategy, product/market fit, product management, finance, operations, legal, talent development and founder wellness.
We Talk About
- When a company is just starting out, how does it plan what it is going to execute, or how should it plan its execution and are there normally problems with this?
- When a company is acquired how should an employee negotiate his new role and benefits with the acquiring company, or does even have that option?
- What is the meaning of “A founder’s wellness is under-appreciated?”
Connect with Sam Wong
Linkedin https://www.linkedin.com/in/sam-wong-startup/
Website https://www.fundablestartups.com/
CONNECT WITH SHAWN
https://linktr.ee/ShawnflynnSV
Shawn Flynn 0:00
You’re listening to the Silicon Valley podcast. On today’s show, we sit down with Sam Wong, who has 30 plus years of successes and failures in the startup ecosystem, which he utilizes to train and help entrepreneurs with execution. findability fundraising strategy, product market fit, Product Management, finance, Operation legal talent development and founder wellness. On today’s show we talked about when a company is just starting out, how does it plan on what to execute? How should it plan? We also talked about when a company is acquired, how should an employee negotiate his new role and benefits with the acquiring company? Or does he even have an option? And what is the meaning behind a founder’s wellness is underappreciated, this and much more today’s episode of the Silicon Valley podcast. Now at the very end, Sam offers a special promo for all our listeners. And don’t forget to share this great information with your network. all right now let’s start the show. Enjoy.
Announcer 1:04
Welcome to the Silicon Valley podcast with your host Shawn Flynn, who interviews famous entrepreneurs, venture capitalists and leaders in tech. Learn their secrets and see tomorrow’s world today.
Shawn Flynn 1:22
Sam, thank you for taking the time today to be on the Silicon Valley podcast. Now I’m extremely excited for today’s episode. A lot of people out there know that great friend of the show, Wendy has introduced some amazing guests in the past, including Alan Tie. And actually, the list goes on and on. Well, she introduced to us today, Sam Wong, who has this extensive background with startups. In fact, they even met at an event where they’re helping startups and entrepreneurs. I just want to go right into it. Can you tell our audience a little bit about your career up into this point?
Sam Wong 1:52
Sure. Glad to be here. I started off many years ago in corporate it after working in corporate it for a little while I went to a nonprofit is a labor of love. It was a great experience where I learned a ton. Then I left that and went into management and technical consulting. It was a fantastic job opportunity. I really enjoyed it because you got to work with great people on great projects. But when my wife and I started a family, I couldn’t do the consulting travel schedule. So, I left that, and I went to a startup for the first time. 22 years ago, I saved myself to travel. But the hours were crazy, the stress level was pretty high. So, I’ve done five startups. One stint as a CEO, one as a CTO three as a technical VP of those five startups, two of them have shut down, and three of them exited. And actually, we went through another experience where one of the startups was about to be acquired, but the acquisition didn’t go through. So that fell through at the 11th hour, we can talk about that a little bit more if you’re interested. Right now, I love coaching and teaching, I have the opportunity to do that. So, I work as a startup CEO, coach and an instructor.
Shawn Flynn 2:59
So, we’re gonna have to dive into everything that you just said, I mean, the fact that you’re at five startups, that’s incredible. Most people don’t even last a few months at one. A lot of people say that they learn more from their failures and their successes. But can we go into the successes? First, let’s hear some of those from those three companies. And then maybe after, can you if you’re okay with it, because I know some people might not be. Tell us about the lessons that you learned from the failures.
Sam Wong 3:27
Absolutely happy to share all that I try to be very transparent, because I think if I can save someone from making the same mistakes I did, I then the world’s a better place. But about the company’s successes, I’m going to probably warn you in advance that I have a lot to share here because I do believe in sharing enough detail to be able to help people to implement. I’ve been in lots of situations where there’s people who teach and train and they tell why or what to do. But don’t tell how I listened to a couple of your podcasts earlier. And I was really inspired. And I thought it was very helpful to hear Ravi Belani and SMRT basically, double clicked on the detail that they were sharing to give people more specific instruction on how to do something, whether it be fundraising or how to target investors and things like that. So, since they set the stage, I hope to follow in their footsteps and do the same.
Shawn Flynn 4:19
Or the fact that you said double click. That proves to me that you’ve listened to these in extent because after Avi, I added that term to my vocab. So please go into as much detail as possible our audience, that’s what they love.
Sam Wong 4:32
Great. So, I will say this and the first thing I think about lessons learned on the successes is talent matters. The funny thing is, is that everybody says that and pays it lip service, but very few people actually invest to create a good talent infrastructure for their startup. I’ve been in industry for over 30 years. I can say from tons of personal experience, successes and failures, that great talent can make a mediocre business succeed. But mediocre talent can make a great business fail. So talent matters, we see the impact of talent all around us. But in the startup space, we don’t seem to apply the lessons learned that we have all around us. I think it’s important to me to recognize the role of game changing talent versus just players on the court. Maybe I can kind of give a couple of specific examples. One would be Hollywood, unfortunately. But I’m a big fan of the movie, The Imitation Game. It’s a movie about Alan Turing. And Turing was a computer scientist, basically, back in the world war two timeframe in England. And he was charged with, he’s famous now for having built what most historians consider to be the very first computer. That computer was used to break the German Enigma encryption machine. It was like largely thought to be unbreakable at the time. And I love this movie, because about seven minutes into the movie, Alan Turing classic research academic, goes into interview with a commander Denniston from the British Royal Navy, who’s running this project. And they don’t really hit it off. Turing’s not really very personable, and he’s got some social challenges. And in two minutes, Manor, Dennison says, you’ve just set the record for the shortest interview in military history, and is about to walk them out the door. But Turing actually reveals that he knows a lot about what’s going on, he ended up getting the job anyway, Alan Turing, if you watch the movie, you see, he built a machine that was able to break the Enigma encryption code. And by having the detail plans of what the enemy was going to do, they were able to respond in advance. And he’s largely credited with playing a major role in winning the war against fascism. So that’s one clear example of how one person who’s an amazing talent is able to make a difference in actually achieving success. Let’s look at the business world. I’m going to go back to another company I was at which I don’t really count as a startup because I joined when it was 900 employees. And that’s the consulting company that I mentioned. But here in the Bay Area, there were only 20. I remember at that project, I was brought in as a mid-level manager and associate director. And one of my first projects was to do a telecom project there. The consulting company was an amazing company, Cambridge, technology partners, we hired some of the best and the brightest from MIT, Harvard, Stanford, engineering grads, these were phenomenally talented people. I look back from some of the CTP alumni, they’re all CEOs and VPS, all across the US and across the world. But I was just cutting my teeth. This telecom project was amazing, because we were competing to do some work for a telco, telco for regulatory reasons, I couldn’t take what was being done, that their information systems on the local side could not be used for what they were trying to do enter the long business to business. So they had to rebuild all of the applications. Well, it turns out that on the local side, they had a team of 200 people and outsource team of 200 people working for two years at a cost of $140 million to build what they had. We with an excellent talent that we had did 50% of the work with 40 people in seven months. So if you do the math on that, our cost was $11 million versus 140. If you do the math and say okay, we only did 50% of the work. So 22 million, that’s about still six and a half times more productivity than the other team achieve. We were able to one we were severely under the gun because we had phenomenal talent just have a lot of productivity. And that skill set and willingness to work hard got us over a ton of humps, another situation for the first startup. We were rushing to launch the website. It was an e commerce site. And there were some problems on the back end and the code just wasn’t working right. I remember leaving one-night kind of wondering if we need to slip the deadline. Well, I come in the next day and they’re my coworker is still there. His name’s Bobby. He had spent all night working and he said everything’s fixed. It’s working now. I looked at him said what? We thought we were gonna miss the deadline. He just pulled an all-nighter, okay, went home about 11am and such an after he went home, all the co-workers are sitting there looking at is like, you just saved our bacon. So that’s just another example of how talent scrape skill really does. When the day I had another project, I can go on. So stop me if you’re bored. Yeah, so there was another situation where we were implementing a global network for a client and it involves deploying like 25 individual points of presence across the data centers all across the world. So we had to deploy a bunch of firewalls. And we had a client was going to go with a bunch of Cisco gear, they were used to checkpoint firewalls. Unfortunately, when they tested it in their testing environment, their application broke when we installed the Cisco firewalls, so they didn’t know what’s going on Cisco tech support, couldn’t figure it out. I happen to do a lot of troubleshooting. So I went in there to inspect, we captured the packets across the network. And we looked at it. And since I was a firewall specialist, I knew how the Cisco firewall work in the packet processing pipeline, I was able to identify, it’s probably in step five or Step six of the packet processing pipeline, I called up my friend who happened to be a product manager at Cisco and said, Hey, we got a problem, we got a large deal that’s going to be that’s that we’re going to lose if we don’t solve this problem. That was a Friday night at about nine o’clock, Saturday night at 12:30am. I get a phone call from a Cisco engineer. And he says, Hey, I heard about this, tell me what’s going on. So I spent the next hour and a half explaining to him what’s going on. I sent him the packet traces and such, he says, I see exactly what’s happening. Cisco happened to implement a protocol slightly differently than checkpoint did. Cisco made it a little bit more strict, checkpoint was a little bit more loose. And he had his team build an on off switch that said, turn off that extra checking and allow this packet to pass. So we were able to salvage a half million dollar project. Because over our course of one weekend, we were able to go in and see exactly what had happened and solve the exact problems.
Shawn Flynn 11:35
Incredible. All right now, is there more successes, or can we talk about the failures, what you learn there?
Sam Wong 11:41
Ultimately, the lots of stories about how much talent matters, okay? It’s important to have a strong talent infrastructure where you hire well develop well recognize well and retain well, I would say there’s several other things that are part of the successes. So if you if it’s okay, maybe continue a little bit more, I would say preparation matters as well. Bobby Unser is a three-time winner of the Indianapolis 500. And he made a quote a while back that said, success is where preparation and opportunity meet. When you look at it and break this down, there’s two ingredients preparation and opportunity. I think it’s really important to assess who has done great preparation. And sometimes when we look for talent to be able to join our companies, we just look for people who’ve achieved certain outcomes. And that’s, of course, one important evaluation criteria. But you have to look deeper and see that they achieve that outcome because the environment was strong, or because they were particularly good themselves. If you are a stock market investor during a wild bull market, you can look like you’re a phenomenal moneymaker. But I don’t think it’s really, you missed the actual capability, because everybody’s making money during the big bull market. Can you make money, when it’s a bear market, I look at these things and see that I think preparation matters a ton. As well, people who’ve built the raw skills to be able to when their name is called, really execute and deliver, I’d say another thing would be metrics matter. And that’s boring people like, Okay, this is a back-office dashboard type thing. But the fundamental principle that I encourage lots of startups to apply is, in order to manage it, you have to measure it, you measure it to improve it, you report it to accelerate it. So metrics can be just basic blocking and tackling, but it should be baked into your business, whether it be if you’re building software, into your software platform to be able to gather the low-level data that you can pump into an analytics engine to give you high low dashboard numbers. In essence, I would say CEOs are pilots of an airplane and pilots need instruments to be able to guide what they’re where they’re going, especially if there’s inclement weather. So if you don’t have good metrics, you won’t be able to really make a good assessment of where you’re at. I know that metrics enable you to show instead of just tell, and I think in investing, that’s very, very important because modern day investors oftentimes look to see where are your metrics, it’s easy to say, to tell someone, I’m going to go climb Mount Everest, but metrics or detail would be more convincing. You say, I’m going to go climb Mount Everest. But here’s the inventory of all my climbing gear that I’ve acquired. Here’s the name and contact of all my climbing team, including my Sherpa. Here’s the list of the teams that this Sherpa has successfully led to the top of the mountain. And here are my photos from Basecamp at 17,000 feet. I haven’t made it to the top of the mountain yet but Mr. Investor, we are making very good progress. Would you invest in us because you see this this progress proven by these metrics that I’ve shown you? So I think metrics really strengthen your case and in fact, Andrew Chen general partner Andreessen Horowitz pretty much said the same thing back in 2019. He said for pre seed companies, you bet on the entrepreneur, for seed stage, you bet on the team, series A, you bet on the traction Series B, you bet on revenue. Series C you bet on the unit economics, series A, B, and C, traction revenue and unit economics. Those are all based on metrics. You can’t show traction, you can’t show revenue or unit economics without a low level of traction. We know that metrics are very important and important to have a strong focus on it. So in our coaching and training, we focus on giving pools ready to use frameworks for people to implement their own metrics for stuff like investor pipeline tracking or sales, pipeline tracking. And then we also do the same thing with financial modeling you had, I think it was Brett Sharenow. We talked about the importance of financial models, I was loving that, we have this set of tools, where we have this gigantic revenue model, this gigantic financial model that Brett was talking about. So the all of his advice, we already built it. So this is a model that took $500 in four years to build. So it’s a color by numbers tool that allows you to do bottoms up monthly analysis with a hiring plan tied to a revenue model with assumptions base parameters, that you can just turn the knob and it, you know, dials up or dials down the amount of gasoline that you have to beat the engine. With growth assumptions, you can say, what if I have conservative to aggressive growth, all that stuff, and then it kicks out pro forma income statement, cash flow, charts, instant visibility and fast management decisions.
Shawn Flynn 16:39
I mean, we’ll definitely talk more about the tools and the resources and your company later on. But let’s get back to your history. Let’s get back to your stories of your experiences that you can share. Now, I also remember when we were talking before, that one of the companies that you entered into, was run by just a group of engineers, and you were an outsider stepping into this kind of already established ecosystem. Can you talk about an outsider coming into a company coming into a startup? How they can influence change, adapt? How can they add value and move that company forward?
Sam Wong 17:19
Yeah, that is a huge challenge, because I think even Robbie mentioned that when in his work over at Stanford, a lot of the academic focus tends to be on the innovative, the tech, where the maybe the more boring content like sales operations, it tends to get a backseat. Engineers tend to overvalue their skill set. I’m an engineer, I understand I’m guilty of the same thing. I remember one of my former mentors’ way back when he pounded it into my head, you don’t want to build the best technology, you want to build the technology that works best. And that was actually something that was very hard to be able to learn how to apply. But there’s lots of stories about how the best technology didn’t win. Whether it be the Betamax versus VHS videotape battle way back in the day, Betamax was a better format, but VHS won the day, or the Motorola 68,000 versus the Intel 8086. Any party who tried to actually program these chips in assembly level 68,000 family was easier. Okay. I remember trying to learn the Intel assembly language, it was tough. The other thing I would say here is trying to install that type of culture, where it’s not just about the engineering, it’s about the marketing, it’s about the sales, that can be challenging. In an engineering driven company. Season sales guys matter as well. It was tough, because there have been lots of situations where the engineers tried to run sales, and it just didn’t work well. And there’s one company where the engineer kept highlighting the beauty of their solution. It was a hardware solution. So they kept talking about how fast the lights blink, and how much switching fabric within the backplane of that device. It didn’t really matter so much. What mattered was, was this going to be a risk managed solution? If the customer decided to buy this newfangled solution, would they potentially lose their job? How are you going to alleviate that risk and concern was much more important than how fast the light blink on the device. Installing that is challenging, but it’s important to kind of go back to some of this is basic business blocking and tackling. But that really matters and human help the founders understand that engineering is important. But it’s not sufficient. It’s necessary, but it’s not sufficient, then I think a company will be stronger if you can kind of get it over that hump.
Shawn Flynn 19:46
So that’s very interested in how engineers or people might be focusing on the wrong thing. And that kind of leads me to another question. A lot of startups right into this show they asked me about tips for fundraising. Past guests Ravi Belani, from alchemist’s accelerator. I know you’re familiar with him, he gave some amazing information on this in Episode 51. But as we’re talking right now, I, I have to thank the founders that are asking me these questions on fundraising. Are they asking me the right questions? Are they focusing on the right thing for your expert opinion?
Sam Wong 20:21
When I go to startup events, and founders or entrepreneurs learn that I’m a startup CEO, coach, they immediately asked me, can you help me with my pitch? And the answer is, yes, I could. But I think that’s getting the cart before the horse. Because I do think that Robbie’s comments and everything he said, were phenomenal. They’re wonderful, they’re exactly spot on, very valuable. The challenge, though, is that fungibility matters more than fundraising. And I would advise that startups should look at funding strategies, rather than funding tactics of that I was I clear enough in the pitch or whatever else, when you focus on building a fundable company, then it’s easier to raise money becomes faster, and the terms are better. And the terms matter a lot, because a lot of founders can get over fixated on the valuation of their startup when they get a term sheet. Of course, that’s important. But I think even see more, it mentioned that she values terms more than she does the valuation that’s more important. In fact, there’s a situation with fanduel. Fanduel, is a UK based company that got acquired for 460 $5 million. Sounds like a phenomenal outcome. I mean, you’re a founder, you work your tail off, and you sell your company for half a billion dollars, almost. But it turns out those founders got zero. So what happened was that when they had signed some of their fundraising agreements, they gave some of their investors one liquidation preference, which means basically, that the investors get head of line privileges they eat first. So after they’re done eating, then you can pick through whatever’s left. The other thing that the investors had was drag along rights, those rights allowed a few members of the investment team to say, we’re going to go down this direction, and you can’t stop me. So because the liquidation preference and the drag along rights were granted, they were able to force the sale of the company to benefit the investors. But the founders got nothing. And they ended up filing a lawsuit as a result and such. So I think the focus on funding and pitching I understand why that’s there. I would encourage people to focus on building a healthy fundable company first.
Shawn Flynn 22:36
with that, focusing on a fundable company, what should they be discussing? planning? How should they be going about what they want to execute? How should they plan this? And what are the normal problems that they might run into?
Sam Wong 22:53
execution is very hard. In fact, I think execution matters a ton. So it’s very good that you’re asking this question. In fact, if you look back, Bill Gross, the chairman of idea labs did an analysis of 200 startups. And he concluded from his, his methodology, his research analysis, that the number one thing that affected the success of the startup was timing. But right behind it was team and execution. I would put before you that most founders can’t control the timing that much. The founders of zoom could not have predicted that the pandemic would come in 2020, which resulted in their service taken off like wildfire. What you can control is your team and your execution. When it comes to execution. I would say this is there’s no secret recipe. You can’t go out, say there go out and execute well, right? That’s not an actionable statement. execution is about doing lots of things. Well, there’s no secret recipe. And the analogy I might give is that execution is kind of like being the chef or a royal court. You’re not just charged with preparing one meal, and that one meal can’t just be a single course, you’re doing multi course meals multiple times throughout the year. So you almost need more of a cookbook. If you have a cookbook, and you’re not a great chef, it can be daunting because there’s so many recipes you have to do. I remember when I was trying to impress my wife with my cooking skills when I was dating her so I got this book joy of cooking, and I made this huge mess in the kitchen and it was funny I guess the food turned out okay because she married me or she maybe she was just didn’t have very good taste buds or something. I remember that. I needed a lot of help and I was really hard. Bring on the day today of the advent of meal kits, HelloFresh Gobble, Blue Apron, etc. They’ve had their ups and downs, but the concept is helpful, in that they give you everything that you need to be able to execute well with a simple cookbook and recipe. So I would say execution itself. Look for frameworks, look for a model on to be able to do things and trust people to find an interest capable people to run each component of the startup function.
Shawn Flynn 25:09
So wait, Sam, you’re a startup CEO coach. And this is coming to my mind right now, while we’re talking about executing and planning, a lot of startups with mentors, when it’s a simple problem, no big issue, they faced it before they have an answer for it. But when it gets a little bit more complicated, a little bit more of a superficial problem, things just break down. Why is it when the problem gets tough? The mentor and may not be there? Why is it that complex problems are a challenge?
Sam Wong 25:42
I faced this myself, I was a first time CEO was startup number four. And quite honestly, I didn’t really know what I was doing. So I was learning for the first time and I made lots of mistakes. I ran into tons of problems. And my friends, I had a very strong support network tried to help me a ton. I got introduced to various advisors, etc. Many of those conversations went something like, tell me about your problems. Tell me what you need. They’d asked one or two questions, it would go five minutes, and then I proceed to get 30 to 60 minutes worth of feedback. The challenge was, these guys didn’t have the chance to prepare, nor did they ask for any preparation in advance. They didn’t really dig deep. So some of my problems weren’t simple. The soundbite advice was not something that was going to solve it. What made the difference for me was when I ran into another person who was very different in his approach, we spent two hours together talking and he asked, obviously, if 10 20 questions and went back and forth. After the two hours were done, then and only then did he start giving advice. And it made a huge difference because he understands the detail, then I could actually work with him together. And what I found was that the soundbite advice I’d gotten was pretty much worthless because either I had it re tried it. It wasn’t applicable in our situation, or there was something else wrong with it. When I sat with this other mentor who spent the time to really learn what was going on, that’s what made the difference. And that’s what I really tried to do. Because many startup mentors today spend just five hours a month with their startup. If it’s only five hours a month, you might be able to do a meeting every other week, and then some follow up outside of the meeting. I think relationship by itself limits how much those mentors can do. They can be very good at what they do. But the structure of the relationship, I think, is flawed in many situations. If you have an a phenomenally great founder, who would you just tell them climb Mount Everest, and they figured out they can do it? rate? that’s sufficient. But I find that most founders need a little bit more help. And just by Mount Everest, stay safe, bring one close.
Shawn Flynn 27:52
That’s speaking of problems that founders might run into. to that first question. We talked about your five companies that three were successful in two wars that had problems. We never really dived into those two that weren’t successful. Can we circle back? And can you go into a little bit more detail about the problems that as a founder or the team might have come across in those startups and what you learned from it?
Sam Wong 28:16
I think one key lesson was from startup number two, we had a technology platform that allowed two enterprise applications to integrate very easily. It was an early version of what Zapier does today. We were based on web services, technology and UDDI, it was the rage of the day back in the 2000 timeframe. But for whatever reason, we had chosen not to highlight that, in fact, we downplayed that, because I think some of the logic was we didn’t want Microsoft to crush us, because that’s what they were doing. So we went and took this under the radar marketing approach. And it ended up not working out. There were some problems where when we saw one of our competitors make some of the same decisions. We went and said, Hey, they’re doing that it we must be on the right path. Problem was both of us were lost. Okay, so they shut down. And we ended up shutting down. And the sad thing was, is this great technology, one of the larger companies in the space B E A acquired our competitor company named cross game for $30 million. Unfortunately, cross game had no shipping product, no customers, and a lawsuit pending with Microsoft because they had tons of Microsoft employees. B E A was local here in the Bay Area and cross game was in Seattle. So they also had a distance issue in integrating the companies. We were local, we had a shipping product, we had revenue, we had no lawsuit, and we were right down the street. But since we didn’t really highlight that we were in this space, this company didn’t think of us as potential acquisition candidates. So we made a mistake in the marketing approach. I think, in addition, I would say experience matters. There was one startup that had four Harvard grads, including three that were Harvard MBAs, one MIT grad to Stanford folks. But almost everybody, including myself was early in career. These were folks who with a little time and a little seasoning would be phenomenal contributors, and many of them have become that. Many have gone on to be VPS at name brand startups. That was only my second time as a VP, I thought I knew what I was doing. But now looking back as like I didn’t, I still had a lot to learn. So the experience matters, because the talent that you have encapsulate that experience, the talent again, matters. And we had a number of startups, not just this one that had some talent problems. Were as one startup where we had a techie who go back, there’s a couple situations. One was a techie one was a sales guy, and one was a sales executive. For the situation with a techie, he was charged with running the database, and he was still learning his trade. And he just wasn’t a good fit. HR was very hesitant to part ways because there’s the attorney said, hey, there’s tons of risk. Well, we built a case that says, hey, this is not a good fit. It wasn’t very objective. It wasn’t personal. We weren’t mean to the guy, we let the guy down, gently gave him a package took care of them, made sure he had health care coverage for his family. And we parted ways. That was the right thing to do. Because the he just wasn’t a good fit. There was another situation where we had a sales guy who wasn’t passing muster. When we let him go, our sales went up, even though we were down one player. So because everybody was taking time to help this guy out, they weren’t doing their own jobs. And there was another situation where we had a sales executive. That wasn’t a good fit. He had some good talent, but not in a startup space because he didn’t have startup skills. He had big company skills. The senior team was afraid of letting them go. Because we were in the middle of fundraising. They thought it would look bad if we lost a VP level person while we’re fundraising. I challenged that notion because yeah, we lost a guy. But if anybody of investors ask, we say, well, we had a person who wasn’t a good fit. And we made the super difficult decision to amicably part ways. Being a CEO is all about being willing to make the hard decisions in life, not run from them. Yes, there would have been some eyebrows raised, some of the investors say, Hey, what happened? The clear and truthful explanation was, he wasn’t a good fit, we decided to amicably part ways, he was the highest paid person in the company. Alright, so that was a drain on resources as well. But when you realize, okay, this isn’t good, I’m going to clean up my own mess. And those are the hard decisions that comes into play. Because ultimately, these people who are playing the roles, their judgment matters, I can’t tell you how many times key decisions were made in a various startups or consulting projects that ended up crippling the company. If you make enough crippling decisions, the company will die. If you make enough good decisions, the company has a strong chance of success. And those decisions are made by the people and the judgment that these people have.
Shawn Flynn 33:16
So you had made the comment. And it really resonated with me, the team of Harvard MBAs, Stanford MBA, all these people that were early in your career. And on your website, when you go to the homepage, it does say in that video, it takes more than a single success to really learn the ropes in the startup space. Now, can you dive more into that sentence? that comment?
Sam Wong 33:41
I absolutely believe it because there are many situations where somebody has some good fortune and has a phenomenal exit. There are stories of many founders, who because they got a billion dollar exits suddenly are celebrity, but they’ve done it one time and only one time, there was an instance where a founder had two successful exits. But company number three and number four ended up dying horribly, because he’d only known success. He didn’t know he didn’t taste the mistakes, and he hadn’t had an opportunity to learn from them. So there was another situation where a company got a big fat exit, and he got a lot of visibility, because congratulations, you got a billion-dollar exit. But that founders second venture, I heard about what they were doing, I immediately saw that’s not going to work. Because they had this problem, this problem, this problem, this problem. But six months later, they had this major pivot laid off half their staff, and they went in a completely different direction. It’s not just about what I would say, being lucky one time, because a lot of times, it’s really, maybe you just happen to buy the right stock and your portfolio goes through the roof. But can you do that, especially in a bear market, and not just in a bull market? Those are the things that I think it matters a lot when you’ve lost money, and you realize, Oh, don’t do that again. I certainly made a ton of those mistakes. And you know, my checkbooks chosen as well.
Shawn Flynn 35:06
Now, you just mentioned something about someone having a billion-dollar exit, but then their third or fourth company maybe not doing so good. Well, I mean, when I travel outside of Silicon Valley, and I tell people I’m from here, I work in tech, people just automatically assume it’s all glory. Do you have any experience that you can share that maybe to elaborate on that, that maybe what people hear in the news and reality, maybe aren’t really as aligned as some people might think?
Sam Wong 35:35
Yeah, it’s the sad truth of the matter is, even though I love being in the startup space, it’s actually very, very hard and pretty risky is 95% of startups either fail or dramatically Miss expectations. There is actually an analysis done. In fact, we could do the simple math ourselves. The average salary for a senior staff engineer here in the Bay Area, according to LinkedIn survey is $194,000. So it’s just under 200. k, in five years’ time, if you were a at that level, you’ll get a million dollars in salary just from doing a decent job and not getting fired. Well, a lot of people chase that carrot on the end of the stick. And they think that, oh, if I left my job, I can become a startup success. bazillionaire when the math really doesn’t demonstrate that you actually have to be very lucky. And the moons almost have to align. And you have to have just the right team to execute Well, the reality is that startups are hard. And I know that when I was doing startup number four, again, I was a first time CEO, I was pouring all sorts of my own time, energy and money, because it felt like every month, I had to give a pint of blood and a pound of flesh. I remember one time where we had a situation. We had a customer project where a customer just didn’t pay us, they owed us a quarter million dollars. They just didn’t pay us. There were no complaints. There were no issues. They were just growing so fast. Fast that they changed accounting systems lost our bill and it took months for us for them to find the pace. Five months later, we finally got our check. So that really hits you. When you need that quarter million dollars to make payroll. There was another situation where I think I talked about the situation earlier where we were deploying firewalls all across the globe, there was a situation where that project Nash ran into some problems, some of client issues, some of it are issues, I remember, we were trying to deploy some gear into Mexico. And we shipped it down there, but the recipient refused to sign for it. Bad ex shows up at the destination, here’s your packages, but the recipient one side because it had some export paperwork, she wasn’t familiar with. So we refuse to sign it and the shipment didn’t get delivered. The client blamed me, because I was the guy who shipped it, when I could easily point the fingers and whatever, it didn’t matter who was right or wrong. The problem was, the gear wasn’t there, the deployment was delayed. In the top of running the company, I actually had to bend over backwards. That’s like I had a second 40 hour a week job. And the client was threatening to sue us. I had personally guaranteed the finances of the company. So a lot of the bank agreements I’d signed, if the company went down, I would lose my house quite likely. Okay, so my stress level is through the roof. And it was really challenging. I remember what it was like, because in order to solve that problem, I had to call the US consulate in Mexico. And the consulate, I happen to have a staffer there, I don’t even remember his name, a guy dropped everything to help me. He found a friend who ran a company that did copiers. And he said, Okay, this guy will sign for it. So just pay him. So I wired the guy $2,000 he sent a van over to Fed-Ex signed for the paperwork, drives the gear across to the data center across the town, drops it off, and then Problem solved. He makes $2,000 for about an hour’s worth of driving. But in order to get to that point, I mean, I had no idea the US constantly even had this type of services in the Department of State. Thank you so much, you saved my bacon on that project. Now there are other problems I still had to go solve. Those are things where I was fretting like crazy, because I thought we were gonna lose my house, and my kids would not have a place to live. Those are challenges. I mean, I tell you, my wife and I she was concerned. And there were a lot of times we didn’t see things eye to eye. Those are the realities of what happens. And thankfully, we had a strong support network who helped us we got marriage counseling together. But if we didn’t have that, I’m not sure. Honestly, I’m not sure I’d be married. And, sadly, those are decisions that have a much broader impact. I happen to know a number of founders whose wives did leave them. And I can tell you this much. You can have lots of jobs in life, you should only have one family.
Shawn Flynn 39:56
Sam, is there anything about founder’s wellness that we should know more about?
Sam Wong 40:02
Absolutely. This is actually a trending topic in some spaces. What I would say is that mental wellness is very important for every founder because the amount of stress that you go through is very high. I would actually compare it to a professional athlete. They have very demanding schedules and they’re constantly expected to be at the top of their game, but when they’re playing, they go through injuries, small or large. First off, I would say when an athlete gets injured, nobody says you’re allowed the athlete because you got injured. They just say go to the trainer. Get your time to recover. When Kevin Durant ruptured his Achilles tendon. Nobody said, Oh, he’s a lousy basketball player. I don’t think we should conclude that which about founders when they have injuries as well. Okay, the sport that the founders play is startups and business. It’s not an athletics sport, but it is demanding as well. I would say that, if you look at the National Institute of Mental Health, that some of the surveys and statistics say that about 18 to 19% of the population has some type of anxiety or depression, some type of mental need that needs to be addressed. Dr. Michael Freeman at UCSF did a study of entrepreneurs and found that entrepreneurs are 50% more likely to have a mental health condition. If you do the math, that’s like 27% of entrepreneurs can suffer from anxiety or something like that. That’s a large population. And even if you didn’t have a challenge going in the startup is enough to give you that challenge coming out. I think we need to destigmatize and I very much respect. John Zimmer, the CEO of Lyft. He went on with Lois Hart from CNN and talk about depression, the fact that there was a point in time where Uber had raised like 10 times more money than Lyft had. And all the pundits were saying that Lyft was an also ran they may not survive Uber is gonna crush them. He by his own words that he was in a funk for several months. Thankfully, john had one the courage to be transparent and vulnerable to he had, he talks about it, he had a great support system, who helped him through some of those challenges. And I will say, if I look back at some of the situations I’ve been through, when I went through some of the pain was startup number four, the client who wanted to sue us, the customer who didn’t pay just because they lost our bill, or whatever the problem was, or maybe one of our employees made this dramatic mistake. I went through my own challenges. And I was thankful that one of my friends pulled me aside, we went on a walk one day, and he really wondered if I had, I needed to see a therapist. And he remembers, he said that to me, and I bristled, I was quietly offended, because I thought, I don’t need a therapist. That’s for people who are weak, I didn’t want to appear weak. I didn’t want to spend the time because I thought I had some preconceived notions about what it meant to see a therapist. I didn’t think that somebody could help me with some of my challenges. Because the reality was, I was irritated, easily annoyed to the point where it’s affecting all of my relationships. I finally gave and swallowed my pride and said, you know, the potential, what I felt like my shame, of seeing a therapist was not worth the real pain that I felt right now. So I found someone, and it really ended up helping a ton. He helped me even to rethink of our relationship in that. I love sports. I have no problem with people coaching me. What I had to reframe was seeing a therapist was just like seeing a coach, somebody to help me with the challenges that life is hard startups are hard. It made a ton of difference. I ended up getting a diagnosis of obsessive-compulsive personality disorder, which basically means I’m a perfectionist. Some people say, well, that’s not that big of a deal. It is to me, especially if you’re my wife married to me, having this challenge, that I didn’t know how to turn off, I would go to bed, and I’d still be solving problems in my head, I couldn’t sleep, if I didn’t get good sleep, I get headaches, I get headaches, I get irritable, and I’d snap at my wife or my kids. And I didn’t want to live that way. It wasn’t healthy. I had to learn how working with a therapist, how to be able to have tools and to rethink if a project that’s at work wasn’t going well. It was imperfect. But I didn’t need to necessarily make it perfect. If a client just wanted a stick figure, I don’t need to give them a piece of art for the museum. I needed to learn how to redraw boundary lines, reframe what motivated me, as I was talking about earlier, and learn how to have the right balance, because it doesn’t matter if your startup is wildly successful. If you are alone, it’s much better to have your family, your friends around you, we all want connection, I would say that connection is worth 1000 times more than any startup success that people can achieve. So I encourage people, let’s focus on making sure that we help one another as founders, not to run into some of these problems and to learn healthy boundaries, your family, your kids, those are all very precious and important.
Shawn Flynn 45:30
I remember the interview with Ross from Flow water when he was talking about they don’t tell you about how founders will spend Friday Saturday nights by themselves not because they want to but because they have to. And they’ve given up all their friends, their family, everything. And yeah, hearing stories like that. Let’s switch it to something more positive. From my understanding one of your companies was acquired. Yeah. Can you talk about that? How there’s adjustments and roles how that feeling? Was that whole situation?
Sam Wong 46:02
Yeah, I will say this certainly will answer the question. But not all of it is bad if you have the right support network. So I encourage founders, entrepreneurs, get people who don’t just advise you about what business decisions to make. I care about the lives of the people that I help, because to me, people have poured their hearts and lives into me, I want to do the same for others. So back to the question about the experience being acquired. I do remember a couple of situations. One is the importance of due diligence. That is something that most founders have no idea what that’s all about. I’ve gone through due diligence four times, basically due diligence is the process of let me figure out every bad thing about you to see if there’s a reason I shouldn’t acquire you. And it’s important because the acquiring company doesn’t want to potentially take on some surprise risk. Due Diligence is a horribly stressful time, the outcome of the entire company, all the employees can rest on Will you do the six-week due diligence cycle, and it’s a lot of stress a lot of work. When we were going through the acquisition by Cisco, Cisco acquires eight to 10 companies a year, they have an entire team and entire process, they’ve got the integration down to a science, they had 200 people working on the acquisition process, we had seven. So the amount of work that 200 people generate for seven people is just off the chart. And we had to really have our processes clean, and to be able to get through that and such. That was the due diligence cycle itself. But then, after you do get acquired, there’s another adjustment, especially if you get acquired by a larger company, we had to completely change, especially me, I had to change how I approached work. I was used to fast moving nimble startups where decisions are made in an afternoon, and you go run with it. What I didn’t realize going back to a large company for the first time in 15, more or more years, was that working in a large company, it doesn’t move like that. Decisions are more of a lobbying approach. It’s like working through Congress. And I’ll be honest, I didn’t have that skill. I didn’t have that muscle, very well trained. I remember a situation going into Cisco, where we were at an integration meeting, and one of the guys was trying to figure out how do we take the product to market as a Cisco product, not just as the independent product. And what ended up happening is we knew exactly what to do. But it ended up the guy was kind of throwing up all these roadblocks. I didn’t understand why. I remember sitting down and talking to my boss at the time. He mentioned to me, Sam, what you were saying was right. But the unintended consequence of moving so quickly, was that you made him look bad. Oh, okay. And since he looked bad, he was trying to tell you get back in your swim lane. Instead of unfortunately, doing the right thing for the company as a whole, this individual kind of threw up some roadblocks. And we had to take six extra months to get around some of those roadblocks we got around them. But you know, those are things that I had to get adjusted to, I had to learn that, okay, I have to lobby. And that’s not something I was used to.
Shawn Flynn 49:21
So after the company got acquired, it looks like you had to, and probably your whole team had to find a new skill set in that acquisition period itself. How does the employees that are getting acquired in the new company? How do they negotiate kind of their new roles or benefits? their packages? How does that all work?
Sam Wong 49:43
I’ll be honest, I don’t think I’m the expert on this, because I think I did this poorly. So I can at least tell you what some of my mistakes. One of the things that happened during the acquisition was that for various reasons, I didn’t go in with a very high job title. There were lots of folks that who were founders in the company, and they basically got the roles and the titles and such, I didn’t understand what that would mean. And I didn’t understand that when I went in with not a director level title, that my credibility was non-existent. So I had to work extra hard to build that credibility. Before I started saying we should do this when with a non-director job title, just saying I should we should do this. Most people kind of like, okay, there are four directors on the call, and you’re not one of them. So I didn’t realize how much extra work it would take. I think looking back in hindsight, I should have probably made the case that not that I wanted to. The title wasn’t that important. To me. I didn’t realize though, how important it would be to get things done. In hindsight, I was happy that we were acquired. Everybody was celebrating and such. It’s just that post acquisition, it was hard.
Shawn Flynn 50:57
I know a lot of startups have titles like ping pong champion, or captain, get along with everyone or some random things that you’re like, I don’t I don’t know how this relates to anything.
Sam Wong 51:09
I know a guy whose title was jolly good fellow.
Shawn Flynn 51:12
Oh, I want that title. Okay, now you’ve shared with us, I mean, your family, your experience. Share with us right now what you’re working on.
Sam Wong 51:23
I am working on helping founders to be able to succeed. The current mechanism is coaching and training. I’m building training classes that I can basically use the scale because as one person I can only affect so many different startups and founders. So I thought building the premium training classes would help some people ask training lie when there’s so much free content out there. Well, I looked at the training space, and I saw several problems. One was that there’s too many choices. Actually. You do a Google search. You get millions of hits on different pieces of startup advice, and it was disorganized. It’d be almost like getting a business book. In single page increments. out of order, the book is a great book. And if you can figure out how to assemble the pages and make sure you have all the pages, you get the complete story. But a lot of the content is just soundbites and disorganized. The other thing that I saw was non credible sources where sometimes people who have a little bit of success maybe in traditional business, we’ll try to apply some of that to startups, and it just didn’t work. You were successful as a jumbo jet pilot, but a startup needs a motorcycle racer, the speed of decision making is very different. And the level of risk is very different. The other problem that I saw was insufficient depth and a lot of the training, where I’d see founders watch a 20-minute video, and then suddenly feel like they’re ready to make dramatic decisions that affect the next five years of the company. I felt like founders need a complete story. And sometimes, they didn’t realize they knew enough to be dangerous, but not enough to do it. Right. So I felt like there was a gap in how much depth was there. The other thing I saw was some bland content. I’ve seen some dictionary like slides, you know, it’s like, Okay, if I wanted to attend that type of learning experience, I’d curl up with Merriam Webster or something. The other thing I saw as a challenge was non actionable content, where people literally tell you exactly what to do, but not helping you with how to do it. So what I thought, having gone through so many problems and so much pain, having a structured journey, and a structured approach from a seasoned operator who’s willing to go deep, focuses on visual training, because studies have shown that visual aids and priests learning by 400%. In addition, we try to package purpose built ready to use color by numbers, templates, to help people implement the things that we teach in the classes. So that’s our focus at this point.
Shawn Flynn 53:49
And then Sam, if anyone wants to find out more information about you, what’s the best way to go about doing that? And actually, I have to also announce to our audience, Sam has been gracious enough to offer our audience a 40% coupon for anyone that writes a review, or this episode. So go on iTunes, or any other podcast platforms, write a review, take a picture, and email me just so we can verify to you and we’ll send you the promo code. But Sam, tell our audience, how if they want to find out more information about you how to go about doing it?
Sam Wong 54:21
Yeah, so we have our website at fundablestartups.com. You can learn more about us from there. I do tend to focus a lot on LinkedIn for my communications professionally, so you can connect with me on LinkedIn. Those who are interested, I did write a book 21 secrets of successful startups, you can also get a lot more of the stories in detail, the book itself, I do encourage people because I think it’s an easy low cost way for people to just get some of these lessons learned.
Shawn Flynn 54:48
Great, we will have the links for the website and the books on Amazon, I’m guessing
Sam Wong 54:53
it is and you can also get an E book and a quick tip. The Apple eBooks version is much better than all the other ones because Apple just as eBooks better.
Shawn Flynn 55:01
We’ll have those links in the show notes. And Sam once again, I gotta thank you all for taking the time to be on the Silicon Valley podcast. I want to thank Wendy for the great introduction.
Sam Wong 55:10
Thank you.
Announcer 55:12
Thank you for listening to the Silicon Valley podcast. To access our resources, visit us at the Silicon Valley podcast.com and follow our hosts on Twitter, Facebook and LinkedIn at Shawn Flynn SV. This show is for entertainment purposes only and is licensed by the investors Podcast Network. Before making any decisions, consult a professional.
