August 29th, 2016 | By: Katie Parrott | Tags: Stories
It’s a war of attrition, it really is. Most entrepreneurs in most industries just give up. So the question is — how long can you last? How long can you survive?
When I ask Derek Andersen about the biggest challenges of building his company, Startup Grind from the ground up, his response is refreshingly blunt: “All of it.”
“We didn’t have any money, so we couldn’t really hire anyone. We worked out of my garage for a year, just to just try to save money and run really really lean. We had no documents or templates or process for onboarding or anything.”
And on top of all those logistical challenges, there was this tiny one: “We didn’t have a brand, so nobody knew who we were or why we should exist.”
Funnily enough, the challenges that Startup Grind was experiencing were exactly the kinds of challenges that Derek had started Startup Grind to help other Founders navigate. Startup Grind is a global network of events and resources — all dedicated to equipping startup teams with the mentorship and education they need to build a company from the ground up.
Today, Startup Grind is in 200 cities around the world. But they started out the way a lot of startups begin — with a bunch of folks in a room, trying to figure out how to do a whole lot with not very much at all.
So how did they do it? How did Startup Grind go from scrappy nobody to a staple of the global startup community?
If you’re expecting a magic bullet, some ground-shaking secret to startup success, get ready to be disappointed, because again, Derek’s answer is pretty upfront: “It just takes time.”
Speaking of time, If you want to understand the roots of Startup Grind, you have to go back farther than the start of that company — or the one Derek started before that, or the one he started before that.
One of our favorite questions to ask at Startups is, “Is ‘Founder’ more of a job description or a personality type?’ — and in Derek’s case, it definitely seems like it’s the latter.
“I think I always knew I wanted to build and create, and I think I always knew I wanted to work for myself,” he says.
From an early age, Derek adds, he was “always trying to hustle something.” Early business ventures included a summer spent spray-painting hopscotch patterns on neighbors’ driveways, and various eBay schemes in college.
None of those early hustles were necessarily earning Derek the title Entrepreneurial Prodigy of the Year. But, Derek says, they taught him some important values that have carried over into his life as a Founder.
“Working for myself, not having someone looking over my shoulder holding me accountable, there was nothing stopping me from taking a long lunch or going do something fun when should be knocking on doors,” Derek remembers.
Nothing, that is, except himself.
A part-time job at his brother’s startup during college gave Derek his first glimpse into a true startup environment. From then on he knew that all roads in the life of Derek Andersen led to Founder-hood.
“I didn’t want to do a startup to do a startup. I didn’t want to invent a problem to solve.”
But as countless would-be Founders can attest, knowing you want to start your own company and knowing what that company is going to be are very different things. And for Derek, it was important that he was sure he was starting his company for the right reasons.
I didn’t want to do a startup to do a startup,” he says. “I didn’t want to invent a problem to solve.
While he waited for The Idea to find him, Derek went to work for gaming giant EA. “I knew that if I went to EA I would have marketable skills that, if worse came to worse, I could always get a job.”
In hindsight, Derek says he questions the wisdom of going to a big organization like EA when he already knew he ultimately wanted to be in a startup. But at the time, the security of having a marketable skill set was important to Derek — especially as a husband and father of a young family. “I wanted to mitigate risk for my family,” he explains. “That’s why I’m doing what i’m doing — to take care of them.
Derek and his wife talked for two years about how they would stay afloat once he made the switch to the startup. Then, in 2009: “I had something that I felt I was ready to jump off and work on, and I felt I had developed enough skills in three years to do it, and to stand out a little bit.”
So finally, after 6-month build-up, Derek handed in his notice at EA and made the jump into running his own business.
And then: “As soon as I left, I fell flat on my face.”
Obviously, failure is a necessary ingredient in any Founder’s journey. But there’s failing for the right reasons, and then there’s failing for the wrong reasons. And with some of his early ventures, Derek says, he was failing for the wrong ones.
“Most of the things that I worked on that ended up failing were things where I wasn’t actually the best person in the world to solve that problem,” he explains.
Case in point: that first company — a truck advertising company he launched with his best friend. “That first company was something I had no business starting in the first place. It really didn’t fit into any of my skills. Forget about being a domain expert — I didn’t have any skills that matched that business.”
At first, Derek said, his lack of expertise didn’t matter as much, because his co-Founder, who had worked for a truck company in the past, brought the expertise to the table. But when it became clear that his co-Founder wasn’t going to be able to leave his job to work on the business full time, “Then it was just me alone, and I was stuck with this business that I didn’t really care about, that I wasn’t the right person to be running.”
“Not being successful as quickly as you expect, things taking a lot longer than you would ever anticipate them to take — it’s an adjustment.”
In addition to the fact that that company was just flat out the wrong business for Derek to be starting, there were other challenges as well. “I didn’t pay myself for the first three years, and that was something I didn’t expect,” Derek remembers.
A lot of Founders can probably relate to what Derek realized next: “Not being successful as quickly as you expect, things taking a lot longer than you would ever anticipate them to take — it’s an adjustment,” he observes. “A lot of people give up when they come to that realization.”
Derek, though, was not one of those people. Why?
“Once I had the freedom of running my own company, it was worth the problems,” he says.
The reason, Derek says: because the kinds of problems you’re facing when it’s the company you started on the line are completely different than the ones you face when you’re one of hundreds or even thousands at a large corporation.
“At your typical 9 to 5, you have little to no real say in the final product, minimal actual decision making powers, little impact in the grand scheme of the business,” Derek explains. In other words, nothing that you’re doing is likely to sink the company, but it’s not exactly helping it soar either.
When you’re running the show, on the other hand, “You’re dealing with problems like figuring out how to sustain yourself, then your team, starting from zero with no brand and no reputation, having no believers in the beginning, the panic that if you don’t find something to kill you will not get to eat,” Derek explains.
In short, the kinds of problems you’re running into when you’re the one in charge are way more life-threatening, for you and for your company. But, Derek says, with greater risk comes greater reward: “Tackling those problems leads to fast decisions, more creative outcomes, and being the master of your domain.”
And when you’re master of your domain, the losses may be all on you. But so are the victories.
Another thing about failure, Derek says — it doesn’t have to be this all-consuming, soul-destroying thing.
“Your startup will surely fail but your life doesn’t have to,” he explains. “Hopefully you’ll spend enough time and energy cultivating other parts of your life while you’re doing your startup, so that when your startup fails — because it will fail — you have something else that you’ve been building that you can fall back on.”
Funnily enough, for Derek — one of the “other parts” of his life he spent time cultivating paved the way to what turned out to be his greatest opportunity yet.
By this point, Derek had moved on from his first venture to a new project, social-mobile software company Vaporware Labs. While he and his team worked away on Vaporware during the day, in the evenings, Derek and a friend started inviting other Founders and startup folks from around the Silicon Valley area to Derek’s office to hang out and talk about their experiences launching a company.
The best thing about those early meetings, Derek says, was how effortless the conversations were, how genuinely interested people were in just helping each other out. “It was really simple. It was just about helping each other,” Derek remembers. “There were no grand intentions. It was like most great movements, that way, in that it started with just a few renegade entrepreneurs trying to help each other out and be the change they hoped to see in the world. And it just happened to turn out that there were a lot of other people that had similar problems as us, so we helped them fix it.”
“We weren’t keeping lists, we weren’t even really trying to market it. We were just putting it out there, and people were coming.”
Week by week, and month by month, the attendance at Derek’s small casual gatherings started to grow.
“It kind of started small and ebbed and flowed, and eventually we were getting hundreds of people attending these events,” Derek remembers. “We weren’t keeping lists, we weren’t even really trying to market it. We were just putting it out there and people were coming.”
Then, the spillover moment: “I started getting people attending the events in Silicon Valley and then coming up to me afterward and saying, ‘Hey, I love the brand, I love the community, I love the values. We need this in my city.'”
At first, Derek says, he couldn’t believe it. “I just said, ‘Well that doesn’t make any sense to me at all, why would you ever want to do this in your city? Surely you must have something just like this.’ And they said, ‘No, we don’t. We need this.’ So we tested it in a few cities and it worked, so we expanded it from there to a few more and it continued to work.”
As time went on, and the event that was becoming Startup Grind picked up steam, Derek started noticing something strange happening: “People were spending one day a month working on Startup Grind and 29 days working on something else, but they liked Startup Grind way more than they liked the other thing we were working on,” he says. “It was smaller, but the passion was much higher.”
Finally, Derek and his team made the decision to listen to what the universe was telling them. “We sold the technology we were working on and focused totally on Startup Grind.”
The obvious question at this point in the story of Startup Grind is: what worked? What was the secret ingredient that caused Startup Grind to take off so naturally, when Derek and his team had spent months and years grinding away on other projects without a fraction of the success?
Derek says it goes back to the very beginning — to the problem you decide to solve.
“There’s so much you gain from solving one of your own problems, as opposed to trying to solve a problem that somebody else has,” he says. “Because you’re usually wrong about other people’s problems. If you’re honest you can be spot-on about your own problems.”
With Startup Grind, Derek says, he’d finally found a problem that was his — one that had tripped him up time and time again since he’d left EA, and one that he was genuinely interested in solving: the problem of getting a startup off the ground at all.
“When you work in a big company, they spend tens of thousands, hundreds of thousands of dollars to train you and educate you and help you grow. When you’re in a startup, nobody cares what you’re working on, except for like, your parents,” Derek explains.
And without that mentorship and guidance, Derek says, he — like a lot of Founders — found himself stranded on a lot of subjects. “At the beginning, I knew next to nothing about company values, about how to motivate and find a great team. I didn’t know how or why really to raise money. What processes led to great product development,” Derek says, running down the list of areas where he himself was most in need of help. “But then by doing these interviews for Startup Grind, I got to learn these things, and learn them from the smartest people in the world.”
As long as I’m solving my own problems, I might have a solution that cost me a lot of money, but at least I’ll have a solution for myself.
In other words: by building Startup Grind and, with it, a community of mentorship and support for startups, Derek was building the solution to that problem — for others, and for himself. And for that reason, he says, even if it hadn’t resonated with others — even if he’d been the only one that ever used it — that would have been okay.
“At the end of the day, I’ve always said, as long as I’m solving my own problems, I might have a solution that cost me a lot of money, but at least I’ll have a solution for myself,” he explains. “But if I build something for a problem that I think someone else has, and then nobody likes it, then I’m stuck with this thing that is completely useless and I have no application for.”
The good news for Derek and Co.: plenty of people have found value in what Startup Grind has built. But none of it came easily, and none of it happened overnight.
That, more than anything, Derek says, is the lesson of the Startup Grind story — play the long game, not the short one. “If we want to be here in ten years, we can’t burn out in three,” Derek explains. “So you’ve got to be careful how you grow if you’re going to do that.”
What does a careful growth plan look like? “I look at growth as year-over-year — I almost don’t like looking at month over month,” Derek says. “Instead, I’ll look at, okay this is where we were at in July 2015, 2014, 2013, and this is where we are today. It’s not about less pressure to grow — we’re always trying to grow. You’re either growing or you’re getting smaller. But I think it’s a more sustainable, long term focus. We take on just as much as we can handle, and if we can’t handle it, then we slow down.”
You’re either growing or you’re getting smaller
That slower, sustained approach to growth is something that Derek says seems to have gone out of fashion in recent years — particularly in an environment where most startups are jostling for attention from VCs that put rapid growth at the top of their list of priorities.
“VCs put this artificial growth trajectory on a lot of startups,” Derek observes. “Sometimes that’s great and it works really well. But other times, if it’s not a good model for the company, but they’re trying to make it work anyway, it can destroy something that is good.”
Derek understands the temptation of thinking of VCs as the solution to all problems — he used to think that way himself.
“Something that I think a lot of early stage founders don’t understand is that that venture capital, or that angel capital, is really a total investment in the team. Investors are saying, ‘Can this group of people go work at Google, go work at Facebook, go work at Twitter? Would they be willing to spend $1M per person to get these people to come?” Derek reflects. “And most people, including me, the answer to that is ‘No, they wouldn’t.’
“I don’t know whether I would have understood it unless I’d gone to pitch a lot of investors and they’d told me ‘no’ and then I had to realize, ‘Wow, I’m having a really hard time raising money, if I want to build a company, I’m probably just going to have to find a way to just do it myself.’ ”
Rejection sucks — there’s no way around that. But, Derek points out, there’s a certain liberation that comes along with accepting that you’re not going to get funding — not yet, anyway.
“All kinds of doors can open up for you. You might realize, “Wow, actually, I can probably just own this with my cofounders and we could all take a bunch of money out every year and we can work for ourselves – and there’s nothing wrong with that,” Derek says. “There’s actually a lot of freedom in that, that taking investment doesn’t provide.”
Derek realizes that building toward something important can take on lots of paths – some involve the “get big quick VC check” route and others are more of a war of attrition. He finds the latter works more toward his style. He’s willing to be patient, unlike many Founders..
“It takes time for people to remember you, it takes time for customers to become aware of you, it takes time for you to convince people to join what you’re doing,” he says. “It’s a war of attrition, it really is. Most entrepreneurs in most industries just give up. So the question is — how long can you last? How long can you survive?”
For Startup Grind, Derek says, the answer is – as long as it takes.
“I always say to my team: We are the ultimate cockroach in our industry, and we will outlast anyone,” he says. “And when the biggest company in our industry, or something with a lot of traction — when the founders of that company give up, or they get tired and they’re not pushing the ball anymore — we’re going to be there.”