Any business leader (along with the venture capitalist who invests in them) knows that there’s no defined skill-set to success — no formula. That said, over course of my career, I’ve noticed shared habits of successful leaders designing incredibly innovative hardware solutions. Cortex spoke with some of those leaders, both on the entrepreneurial side and on the venture capitalist team, to chart some of these golden characteristics.
“The entrepreneur is more important than anything else,” explains Zack Schildhorn, investment partner at Lux Capital, the New York and Silicon Valley-based firm funding everything from nuclear waste clean-up to surgical robotics to self-driving vehicles to new drugs and medical devices.
“There’s definitely a gut reaction element to judging entrepreneurs and it’s very hard to define,” he explains. “In some ways I’m looking for someone who tells me something or makes me believe something that I’ve never thought about before. There has to be a big, ambitious vision that is driving them.”
Investor Alex Baker of Toronto and Silicon Valley’s Relay Ventures echoes this idea. They’re the company behind such hardware ventures as Chargespot, and VanHawks. “It’s often difficult to assess the product itself since it may be in a very early phase of development. We’re generally investing behind the entrepreneurs themselves, and the idea that they have. We’re investing in the person, number one.”
Know what you’re good at, ask for what you need
While the hardware entrepreneur often has to be an everyman — sales director, human resources lead, idea man, accountant, designer, and more — knowing your skillset and filling the gaps is something I’ve noticed that most successful entrepreneurs do really well.
This could be as big picture as finding the right partner. It can be as fragmental as making sure you have someone solid running your social media or answering your phones.
And it’s not just about assembling a team to fill your own skill gaps. It’s also about knowing where you’re doing well and where you need some help. Trust me, people might say ‘no’ when you reach out, but that can’t deter you. Finding the right people and resources to fill any holes in your business model is absolutely crucial.
“One of the things that holds a lot of entrepreneurs back in general is you don’t feel like you can ask people for what you need,” says Robert Kaul, CEO of Cloud DX. Cortex partnered with Cloud DX on their Vitaliti tricorder, and I was always inspired by Robert’s approach to entrepreneurship and leading his team. “That might be asking people to work for you or asking people to invest in you, or asking people to buy from you. If you can’t ask and face the rejection of someone saying ‘no,’ you’re not going to make it.”
Don’t sell smoke
People overselling an undeveloped product happens more often than you’d think. This might be because of the ferociousness of your confidence in your product. You may think you’re good at presenting your product as what you know it can be in six months, or a year, with a little help — but in my experience, it’s fairly obvious when you’re selling smoke.
“People talk about that rock bottom confidence that you’re onto something,” says Robert Kaul. “But it has to be more than your gut instincts. We all have gut instincts and we’ve all watched those instincts be wrong. I think you have to constantly be interrogating your gut. It’s not enough to say “I’m right, listen to me. You have to articulate why you’re right.”
According to Alex Baker: “It’s very easy to identify when somebody doesn’t have the answer. That’s the first thing that comes out. Our best CEOs, before they develop a product, have consulted with 100 to 200 people to ask them if it’s something they can use. They can demonstrate that they started at Point A and have gotten to Point G based on feedback from a network.”
Zack Schildhorn echoes this idea. “Not only can (the entrepreneur) answer all of your questions but they’ve thought of answers to questions you haven’t even considered…We’re looking for people who come in and in some ways tear our own ideas apart and show us how much better they could be.”
This advice stays good well into the production phase. Obstacles are the norm — it’s really important to recognize that bringing your idea into physical form will be anything but smooth sailing. Ken Miller, an engineering director based out of Cincinnati who has made a lifelong career out of leading product development teams, explains that not involving the project’s stakeholders in setbacks can be a problematic strategy. “If you have problems, I don’t want you to hide them. If I’m only getting get news, I’m probably not hearing everything. If you talk to me about it, I share in the risk. If you don’t, that’s on you, and that’s on your cost and your time.”
Have a clear, calm vision of what success means to you for a specific project
Anyone who’s tried to develop an idea from its seedling state knows how the possibilities can mushroom very quickly – leaving you with a nebula of possible pathways forward. This can be the detriment of success, opposed to developing and committing to a very specific scope for your project. Do you want a buyer or a partner? Fundraise $5 million or $50 million? Move to market in two years, or five years? Manufacture locally or overseas? The statement of vision can be as simplistic or detailed as you need, the important thing is how helpful this will be once communicated to your team. In the early phases you’re often making dozens of important but fast decisions every day; let this vision guide those decisions. Getting excited about a possible manufacturing method, new attribute you’ve dreamt up, or new pathway that has revealed itself? Ask yourself: is this attribute of this project important for its success?
This may sound counter-intuitive to innovation – but I am speaking very specifically within the realm of hardware design, where small design decisions can greatly impact the end product. “Hardware is hard for a number of reasons,” explains Zack Schildhorn. “You can iterate software very quickly, whereas with hardware, you need to make plans months in advance of shipping a product. That timing gap, particularly in the world of startups, is a real challenge. You need really important decisions before you’ve been able to ship anything and get true customer feedback. There’s a real strategy in making sure you really understand your customers, and the problems you’re solving for them, before you go about building your dream product.”
Developing a clear scope also helps in making sure your product will fit into the right corner of the market – a necessity for its commercial success. “Many inventions have failed and it’s not because they’re not clever, and it’s not because they don’t do what they’re supposed to do,” says Robert Kaul. Sometimes they fail because they’re a solution looking for a problem. Many entrepreneurs don’t realize the enormous power of inertia in the market. If the “old way” of doing something works “enough” for enough people, the momentum for change may not exist.
Be a leader people feel they can rally behind
“Sports analogies are really useful in venture,” explains Alex Baker. “(As an entrepreneur) you need to know how to be a captain, a coach, a general manager, and an owner. There’s a lot of great ideas out there… but it really doesn’t matter without the right person at the helm, because execution on those ideas is everything. Execution isn’t just ‘can you build it’ but also, can you attract the right team.”
“It’s about that entrepreneur’s ability to motivate people and get people around them excited about what they’re doing,” he says. That’s true, and although a lot of entrepreneurs are fans of the group pep talks rooted in themes of strong leadership and teamwork, as Ken Miller points out, motivation isn’t usually established through just talk. “You do that through your actions, too.” Here’s a key one: Solve problems, don’t assign blame. “When you fail,” he says, “you need to fail together.”
Always be prepared for luck to strike
Recognizing there are universal forces we can’t control and which might catch us by surprise is just good practice for anyone who’s trying to climb any ladder. You’re sure to face lots of failure and adversity as an entrepreneur, but once in a while, the universe throws you a bone too – you’ve just got to be ready to catch it.
“Luck is when chance meets the prepared mind,” says Robert Kaul. “Luck is being able to recognize that there’s an opportunity in front of you and being able to grab it — being in the right place at the right time with the right story.”