Three Pieces of Advice for Solo Entrepreneurs Getting Started

1. Find an area of the world that you are instinctively excited and curious about. Even better if it is a unique intersection of interests that you and your team share. Music analytics was not something people were asking about or searching for several years ago, we were creating a new market.

Each day at Next Big Sound, rather than getting more routine, it gets more interesting as we go down the rabbit hole gathering more data, signing on more customers, understanding their questions better, and providing answers which lead to more questions. This is only possible because of our innate curiosity and excitement about finding the Truth in this arena.

2. Start talking with as many other people as you possibly can about your idea and the part of the world you are most interested in. You never know who has a cousin/friend/classmate who shares a similar fascination and you want to expose yourself to as much serendipity as humanly possible. The famous saying is “it’s not what you know, it’s who you know.” I don’t think that’s entirely right. I think it’s more about who knows you. If you are the guy or gal always talking about bitcoin 10 years before it’s all over Techcrunch or the person obsessed with photography 5 years before Instagram’s sale makes headlines, opportunities will find you.

3. Once you’ve found the sector and others who share your enthusiasm it is time to run as fast as you possibly can. This means real validated learning with customers and users. In the early days don’t be too obsessed with A/B testing (since you have no users this will take weeks to run and provide questionable data) – build product, put it in front of people, get their feedback, rinse and repeat. At Next Big Sound we are 25 people and still trying to speed these cycles up no matter the cost. We moved the entire company from Boulder to New York City to be able to put new product in front of end customers in the music industry in half the time from when we were in Boulder. These cycles can never be fast enough.

Luck and Timing

Incredibly hard work is a given. A 24/7 obsession with your problem area and your business is table stakes. Yet for some reason the outsized role of luck and timing is not discussed as a major element of “success.” I think it’s because the acknowledgement of chance runs opposite to the narrative of entrepreneurs who bring their product or service into the world through sheer force of will and personal agency and charisma.

Whenever this topic comes up in entrepreneurial circles someone will quickly say “you make your own luck” and the group will move onto another topic. I think this does a disservice to all entrepreneurs in recognizing how they can set themselves up for lady luck to join them as they build their company. No company has ever succeeded without her visiting at least once or twice.

To pick out a few of the lucky breaks we got along the way:

A. Samir was not originally planning to join the entrepreneurship class where we shaped the original idea for Next Big Sound. He ran into a friend at the library who convinced him to come checkout the first pre-class orientation session.

B. We were going to shut the company down if we did not get into Techstars in 2009. I got connected to Jason Mendelson through a long daisy chain of random connections and he stuck his neck out for us to join the program with him as our lead mentor.

C. There was at least 45 days in between our lease in Boulder running out and the close of our Seed financing. My aunt had happened to move to Boulder a year or two earlier and David, Samir and I moved in with her and her boyfriend (now husband) for 2-3 months. If we’d had to sign a lease or pay rent in that time we would definitely have spent the remainder of our cash.

D. We got connected to a senior major label executive who had just left the company. Due to his tax and financial situation he did not want to be paid cash but in equity during that first year as our head of sales (which we could afford). His former employer had just shelved an internal initiative to build a centralized analytics dashboard and established a committee to review existing products in the market. The chairman of that committee had been hired by our head of sales and we thus had access to feedback on what they were looking for just as we were building our premium product.

E. One of our early customers moved to a major book publisher, we kept in touch, and ultimately signed a large 3 year agreement with them. This allowed us to continue to capitalize the company through revenue and avoid a dilutive financing.

F. In January of 2015 our last direct competitor was acquired by Apple and we were named Most Innovative Company in the music industry by Fast Company. Interest in acquisition heated up and by March we had multiple parties interested in acquiring the business. Pandora had just opened up their data to artists for the first time in October 2014, and just hired their first VP of Corporate Development, we were Pandora’s first ever acquisition.

Luck and timing. Timing and luck. A little more background on each of these lucky breaks and how we set ourselves up to recognize and be exposed to them. Of course this is easy to do in hindsight but impossible to recognize in real time.

1. I knew Samir through A&O Productions, the largest student group on campus, and we could have connected outside of the course.

2. We had applied to Techstars the year before, gotten rejected, but managed to survive another year and reapply etc.

3. We each could have moved home and in with our parents. Or worked with our investors to advance enough money to pay rent. In either case we would have lost a lot of momentum.

4. We were connected to hundreds of people leaving the music industry but this person was flagged by David, connected to me, and we hit it off immediately. After our first phone call I was sent the longest email ever with tons of thoughtful feedback on our product and business and that started the positive working relationship.

5. We eventually signed our first major book deal and launched nextbigbook.com but this was after two years of me pinging my contact every six months and checking in if they were looking for a solution like we could provide.

6. Exactly five years prior to the Pandora acquisition announcement I sat down with Tim Westergren and two other top executives to discuss Next Big Sound powering a Pandora artist dashboard. The Apple acquisition and Fast Company recognition were outside of our control but we certainly had initiated data licensing conversations with Pandora as soon as they first released their data via AMP in 2014.

You can go through each one of these events and explain how we set ourselves up in a position to receive these lucky breaks yet there is no denying the importance of luck throughout this process.

For those interested in thinking about this more I just finished an interesting book on this very topic called Success and Luck: Good Fortune and the Myth of Meritocracy.

Momentary Heroes

There are people we come across in our lives that are so extraordinary, so connected, so put together, or just so cool that we can’t help but be impressed. If you had to trade places with someone in your universe tomorrow, who would it be? That’s what I call your momentary hero.

These momentary heroes can often cause jealousy but I prefer to channel this into a declaration that “this person is my momentary hero” and use them as a model to study for myself. What exactly do I like about them? The things they’ve accomplished? People they know? Their organization or intelligence? The way they carry themselves socially? What can I learn and take away and implement myself?

I’ve had many of these people throughout my life. The soccer star and popular kid in high school, the big student leaders on campus, startup founders and venture-backed CEOs, large company executives and many others. The “momentary” part of the title recognizes that we are all humans and sooner or later, if you are close enough to your momentary hero, they will make a mistake or do something you wouldn’t want to emulate.  That doesn’t mean you shouldn’t be on the lookout for these personal heroes and exercise the self-awareness to take their best attributes for yourself.

Writing Your Own Offer Letter

There is a surreal exercise almost every venture-backed founder/CEO goes through at some point along the journey. Writing your own offer letter.

Imagine filling in the following Mad Libs at 22-years-old:

Dear Alexander White, we are pleased to offer you position as CEO of Next Big Sound. Your compensation will be ______ and you have ______ days of PTO per year. Sincerely, Alexander White.

That was me, writing and signing my own offer letter in the Fall of 2009 right after our Seed financing. I remember working with Mike Platt and our law firm, Cooley LLP, on the offer letter template (which we then submitted for board approval).

The idea of getting a salary to work on Next Big Sound was incredibly foreign to me and almost felt like cheating. Especially after the previous year where NBS had only raised $40k total. You mean I will get paid, have equity upside, and get to work on our company?!

It wasn’t until a year or two later that we finally put offer letters in our own NBS letterhead. Offer letters seemed like really serious legal documents at the time and we were afraid of tampering with them at all.

One thing we never got to do was rewrite the offer letters in plain English. We’d still have needed our attorney and PEO to sign off on it but I think it would have set a great tone for new employees and been another touch point of our culture and what’s important to the business. Conveying all the critical legal language while still making it feel like a Next Big Sound experience.

I’d be curious to know if anyone has done this?  

Corporate Tax Rates

One thing that has never come up, in any of the thousands of conversations I’ve had with other entrepreneurs since building Next Big Sound, is tax rates. It could be my age, stage of company, the type of people I meet with around the country, or my naïveté, but not once have I heard anything close to “well I was looking at starting a company but the business tax rates were too burdensome.” Or, “I was deciding between accepting a full time job offer or building my own company and decided to take the full time offer because I’m worried about the projected future corporate tax rates.”

I’ll take a minute to specify that I’m talking about high-growth startups and not small consulting firms, single-location retailers, mom and pop stores, restaurants etc. I haven’t had nearly enough meetings with those entrepreneurs to understand how tax rates factors into their plans. I imagine taxes factor in much more heavily.  

The thing about technology startups is that corporate taxes are a GOOD problem to have. It means you have a profitable business.

Not only that, as venture backed startups you have carry-forward losses meaning that the amount of money you lose each year is totaled up and carried forward to each subsequent year so you only start paying taxes once that number is above zero.

If potential future tax questions are your excuse for not starting a company I can give you several other ones far more likely to derail your business in the fragile, early years: potential employee lawsuits, patent trolls, labor and hiring violations, accounts receivable collections issues, manipulative investors, competitors who don’t play fairly, immigration issues for key employees, inflation, high opportunity cost for you and your co-founders, or depleting all your personal savings and retirement accounts to keep your business alive. I could keep going.

There are hundreds of reasons not to start a company as a first time entrepreneur. The odds are stacked enormously against you, you have no idea what you’re getting into or how to handle most situations you’re about to face.

The good news is that you are confident in yourself, in your team, in your product or idea, and you’ll be able to handle whatever issues get in your way, taxes or otherwise.