Lance Cottrell AMA: 10 Lessons from 25 Years as a Startup Founder, Angel Investor, and Advisor
Lance Cottrell has been at the cutting edge of Internet privacy, anonymity, and security for 25 years, having founded Anonymizer Inc. in 1995, and take it to a very successful exit in 2008. Before that, he designed and wrote Mixmaster, an open source anonymous email platform.
Since exiting his company Anonymizer, Lance has increasingly focused his time on advising as well as investing in other technology businesses, and has been a Board Member of the North Bay Angels since 2015. Today he is an active angel investor, having invested in companies including Scollar, Luma Therapeutics, Phyllom BioProducts, Shyft, CloudCath, Credder, and more. In addition to being a global Entrepreneur in Residence for Founder Institute, Lance Cottrell is also the CEO of free startup advice and strategy website FeelTheBoot.com, where he providesin-depth content via video, podcast and written blog articles, covering everything from startup bootstrapping to fundraising to sales to interviews with other CEOs, and much in between.
In September 2021, Lance Cottrell joined Founder Institute Alumni for a private event and AMA session - leaving the tactical and operational details to FeelTheBoot, Lance instead focused his talk on the biggest insights and realizations from across his career as a startup founder, advisor, and angel investor.
1. Validate Early, Validate Often - Before You Build
“We often tend to think that, especially if we’re solving a problem for someone like ourselves, that we are a good model for our customers [but this is a false assumption]… Anything that you can validate from your customers - what they want, how they’ll use it, what their interests are in the platform… before you build it - will save you a huge amount of time."
2. It is Almost Impossible to Over-Communicate as an Entrepreneur
“For employees especially, this is really where this came up for me, you may think that you are sharing the vision and people all understand the context, and that everyone should be pulling in the same direction because everyone has the same understanding of what the business is trying to do… but my experience is that's not true at all. People have all sorts of misunderstandings of what's going on… So continuously communicating and re-communicating is utterly important… People make bad assumptions when they have uncertainties—so never stop talking about the big vision and the tactics, and what you're trying to accomplish."
3. The Founder’s Speech & Opinions are Over-Amplified to Employees
"However when you're talking, the next thing is that as the founder, especially once you get beyond just the co-founders and you have employees, everything you say comes out like it's shouted through a megaphone. You think you're having a quiet conversation with someone with not much emotional intensity, and to them it’s coming down the thundering voice of god from the sky. This is one of the reasons why it's often hard to get honest information as a founder—you want candid feedback, you want to hear about when there's problems—but there's this sort of positional amplification that takes place because of your role, and people can be afraid of feedback. So it's incredibly important to under-power your communications, particularly one-on-one when you’re giving feedback or interacting with someone… making sure you give room for everyone else to talk first, and present things as hypotheses—it’s all about trying to reduce that inherent effect, so you can get the candid useful feedback from the people you've hired, since that's why you hired them."
4. Real Networking ≠ Schmoozing
"I think a lot of us have the same picture of networking, which is you’re standing around in a room with d'oeuvres and a glass of wine, and you’re trying to pass out business cards to everyone and make small talk chit-chat, and it's deeply uncomfortable for most of us… That really isn't networking, that’s a schmoozing, and it’s fine… but fundamentally, the key to building a network is to be doing it all the time, with everyone. There should be no filters about this—so whenever you're engaging, honestly let people know what you’re doing and what it is that you need from the universe at that point. ‘I need to find angel investors, I need to find a technical co-founder, I need to find a graphic artist to help me with my logo,’ whatever it is at that time just be putting that out there all the time, and then receiving it from the people you’re talking to, so that if someone else needs help, you’re also actively helping the people that you're engaging with. People respond to that kind of genuine reciprocity."
5. CEO with Sales Aversion? Get Over It - Selling is the CEO’s Job.
"Along the lines of what I think a lot of particularly technical founders find uncomfortable, is selling, and the idea of selling things, or sales especially in movies kinds of gets a really bad rap; but this is something that, if that’s some thought that you have, it's critical to get over it. Because selling is, to my mind, really the core job of the CEO. Once you get past the earliest days when you’re sitting and coding yourself and building things, you’re selling all the time: you're selling your employees on the vision of the company, you're selling potential investors on the upside of investing in the company, you're selling customers on the value of adopting your product, you're selling media on the value of running a story on you for PR. You're constantly selling your vision and the company to someone, and learning to embrace that, to be passionate to be able to put out that positive vibe and communicate clearly about what it is your company does, is of the essence to being a successful CEO."
6. Focus on Benefits > Features
"Focus on benefits over features, you need to be always framing things not in terms of what your widget does or what capabilities it has, but rather how does this help the user? How does this benefit the person you’re working with? What is there in that person's soul, if there's a hole there that needs to be filled, and it's filled perfectly by some aspect of your product—that’s what you want to be talking about, always in terms of what they need and what will benefit them. Even when you're putting together a pitch deck, I'm not interested in typically, at least the beginning at the pitch phase, what your tech stack is or how your product does what it does—what I care about is why do your customers or potential customers care about your product, and how will this benefit them? And when we're looking at the competition slide, again, it tends to be all features: what i care about is what are the differences in benefits to your customers, that would cause them to choose your product over another one? It's almost never a list of features, it's some way in which it's easier/cheaper/more effective to achieve some goal that they can't achieve otherwise—that's always going to be the way really all of your communications should be framed."
7. Work to Empathize With and Understand the Person Across the Table
"To talk about benefits, you have to understand the person on the other side of the table—the next big realization is how important it is to research and understand your counter-party. So in an angel investment situation, that may be literally the person across the table from you… The same thing's true with sales, where you need to understand what are the customers priorities and concerns and fears and implementation difficulties? The more you can understand about them, the more your communications can speak very specifically to the things they want to know, to make the decision that you’re trying to convince them to make. Because in all of these exchanges, you have some outcome you're trying to achieve—but you can't ever really push it, you need to get them to come to the decision that you want themselves, and that requires that level of insight."
8. Soft Features (Style & Aesthetics) Do Matter
"One of the frustrations for me, and this drove me insane early on, was how important style and aesthetics are to this whole process. I came out of science, and it was all about making good arguments and having data and being able to prove the case that you were trying to prove—and I wanted that to be the case here [as a founder, but] of course that never works… How I dressed, how I presented my vocalization, posture, everything about the experience of interacting with me and my company, colors people's perceptions. Subconsciously and emotionally, that coloring turns out to actually carry more weight in many cases than the words you say. So if you can develop this, where everything feels tight and professional; and it appears that you know what you’re doing; and you're friendly and you’re going to be easy to work with and easy to talk to; and all of your communications are highly comprehensible, then that puts a golden halo around everything you're doing—and even if the actual technology is kind of clunky and hard to work with, and there's some difficulties in the implementation, they’ll give you some more slack, because of this halo around what you’re doing. So as frustrating it was, I learned to focus a lot on those soft features, particularly when pitching, all of those little details matter."
9. Delegation is Very Hard, But Required to Scale
"My experience of being a founder was one of continuous delegation. Unlike typically when you're climbing a corporate ladder, you're trying to take on responsibilities and build your portfolio, as founder you already have all the responsibilities. You are doing literally everything on day one, and the whole point is then handing off responsibilities, because the reality of being a founder is you don’t scale. You cannot grow the company if you're trying to do all the stuff—so you're going to end up bringing someone in, to take over this job that you've been doing; you’re probably doing it, because you're the best at it; that’s why you founded the company, this is your core expertise. So almost inevitably, the people you're bringing in, in many cases will not do what you're doing as well as you're doing it; and even after you spend a lot of time training them, they might still not do it as well as you're doing it now for quite some time. This is not an excuse, unfortunately. You still need to do this… and it feels like this gigantic amount of wasted effort, but you might as well rip the band-aid off early, because you just can't do more—the company doesn't scale because you decide to sleep five hours less. So delegating, even though it hurts, as much and as fast as you can, is the core founder experience from my perspective."
10. Founder Wellness is Critical: Put Yourself First
"One of the key reasons to delegate is, you can't push so hard to sacrifice yourself. To be able to make it over the seven to ten years you're likely to spend building this startup—that is, before you hit an exit; and then potentially many years after if you stay on, depending on the kind of exit you have—you need to be taking care of you. My advice here is find a couple of things for you that are going to make this whole process bearable: you’ve got to enjoy the journey. Frankly, because most startups fail, it’s critical to enjoy the journey, because odds are, you won't have that pot of gold at the end of the rainbow; and you don’t want to look back and say this was an enormous disaster a waste of time. You want to be enjoying the journey, you want to be learning the whole time. For me, I held that I will have dinner with my family every night unless I’m on the road, or the sky is falling. I will get a solid seven hours of sleep a night. That's for me, what I needed to be effective, to be thinking clearly. I could work on less, but then I'm not actually doing as well as I could be… And I needed a physical outlet, mind and body; so I took up kung fu. I found out that the exercise from that helped keep me healthy, and the yelling screaming and hitting things a couple of days a week kept me sane; it allowed me to focus on something other than the business, and get those aggressions out; and then when I was with the company, I could present the kind of demeanor that made the team positive and successful. Because if you're feeling crushed, everyone else will get it, and that will bring down the team; whereas if you can come in with positivity and energy and be calm in the face of the disasters that you're going to be encountering all the time, that reflects again in your employees, and they'll do better."
To learn more startup lessons and insights from Lance Cottrell, check out the vast library of free entrepreneurial resources he has developed at FeelTheBoot.com, where he produces regular blog and video content diving deep into all the nitty-gritty operational and tactical aspects of the founder’s startup journey.