The key habits of starting up

Reid Hoffman said it once starting up is like jumping off a cliff and trying to assemble an airplane on the way down.   In order to deal with uncertainties, we must first have the right habits.  Oftentimes in starting up, we focus frantically on building, but not enough on testing, code review, or organization.   Stephen Covey spoke about the seven habits and Charles Duhigg brought up the concept of anchoring habits.  The same holds true for starting up.   If we want to be ready for any uncertainty, we need to be certain by having the right set of habits.

Nothing matters but habits!
Key habits is one of those things that are not often talked about in Silicon Valley.  It is one of those implicit assumptions that every engineer must already know.  In starting up, before product-market fit and before product, the only thing that matters is pace.  None of the other things like idea, product, or market really matters until we are able to get to a certain speed.   Without the proper airspeed, nothing will ever take off even with the best vision in mind.

Based on my experience from working with some of the best engineers from Transmeta, Linux, Stanford engineering graduate school, and StartX community, we know when we are working with an Elon Musk or Jack Dorsey type.    There is something intense about their personality and the way they work.  We can certainly learn a lot from these great entrepreneurs and their habits.

When it comes to habits, I am not referring to the Type A alpha male personality epitomized by Harvard MBAs.  Myer Friedman did an interesting study on Type A personality back in the 1950s.  As a cardiologist, he was noticing Type A is more prone to heart disease than Type B and got him thinking whether Type A is a necessary condition for success.   From his findings, Type B is not necessary less intelligent or less ambitious.  In fact, Type B also has a considerable amount of drive, but the way they look at life gives them confidence and security, instead of being irritated or infuriated as projected by Type A personality.

If there is one lesson we can learn from the Alibaba story with 18 cofounders, anyone with any background can become the ultimate startup team.  The founders are not necessary superhumans as projected by the stereotype.  If anything, thinking we are superhumans is precisely the problem that creates the fixed mindset.   Instead, we are ordinary people that can grow to develop extraordinary skills.  And, I surmise that there is a set of habits that we can cultivate, as individuals and as a team.   While everyone tends to focus on building products right away, I think it is more important to focus on preparation as the first step of the entrepreneurial journey.

How do we help ordinary people to develop extraordinary habits?  Dave Logan stated it eloquently in his book called Tribal Leadership.  One of the keys behind successful organizations is to help move people from stage 3 to stage 4 and beyond.  The superhuman founders of the past is the stereotypical Type A personality with stage 3 characteristics.  Everything they do is about “me”.   We now know how limiting this type of founder could be as the organization grows.   Stage 3 entrepreneurs tend to be competitive, non-collaborative, and non-giving.    Ironically, stage 3 entrepreneurs often feel like everyone owns them.   They are the takers who would squeeze and borrow from everyone around them for their own goods.  Whereas stage 4 is about “we”.  It is about learning, collaboration, and sharing.  If you hear someone often uses the word “I” instead of “we”, that saids it all.

With this in mind, let’s start with the right habits now.

Continuous learning and improvement

“Knowing is not enough; we must apply.  Willing is not enough; we must do.”  Bruce Lee

We need to be learning at every level.   From a company perspective, are we making improvements to the process and infrastructure every week?   From a product perspective, are we making incremental improvements weekly?   From an individual perspective, are we learning something valuable every week?   If we can spend one day out of the week for learning something new and if we can spend time weekly on cross training, the resulting output over time would be enormous.

Building for iterating speed
From our own experience in starting up, we learned a few painful lessons in going super fast without the proper infrastructure in place.   The code would break every time we tried rushing out to the market.

We recently came across a very useful blog by Edmond Lau, a former lead engineer at Quora and Google, which summarizes this problem the best.  Optimizing for iteration speed means:

  • Building out continuous deployment with a fast deployment process.
  • High test coverage to reduce build and site breakages.
  • Fast unit tests.
  • Fast and incremental compiles and reloads to reduce development time.

Automate wherever we can
While it might feel like we are saving time by not developing automated tests, we actually end up spending more time and energy doing more manual testing.  I know this might sound obvious.  But, in a startup environment when everyone feels the pressure to ship rapidly, it is very tempting to take shortcuts at the expense of others. Automated testing is a must for making continuous deployment as different people work on the same codebase.

Testing should be done by the original code authors when the code is still fresh in minds.  Otherwise, it would take enormous amount of time for someone else to test and validate months later without knowing the logic behind it.    Each coder needs to be responsible for validating his/her code through strong unit testing. When this happens, this encourages good engineering practice since it is ultimately the responsibility of the code authors to write quality code.

Code review and documentation
From the perspective of continuous learning, we should encourage code review and documentation.   It is perhaps one of the best ways to learn from others by exchanging best coding practice.  In addition, it would help us reduce the technical debt incurred from quick hacks and untested codes.  Code review forces us to have the discipline to pay off the technical debt periodically before it becomes unmaintainable.

We need to write Pseudo code and use it for our code documentation.  We need to have an internal wiki and document design processes (system level, backend, frontend, how to write css, how to handle exceptions, how to make database schema changes, etc).

Improve Code Quality and Organization

  1. We must have a clear organization of models, common methods operating on models, business logic, presentations, etc. For example, looking at one url on the site, we know exactly where to look for views and tests.
  2. We must have high standards code to increase maintainability by different people.

  3. We must have unit tests for common and essential codes, crud operations on models, and business logic.

Open Discussion
By no means this is meant to be a comprehensive list of successful habits. Instead, we hope this helps to get people thinking about it in preparation for starting up.

This was written in collaboration with Michael Zhang.   We invite you to share your thoughts about habits and starting up.

 

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My Favorites from the Stanford StartX’s Demo Day Summer 2012

It has been great seeing many great ventures at its infancy coming out of StartX.   I believe what we are seeing here today is analogous to what Bill Draper saw when he invested into the country’s first defibrillator company back in the early 60s.   As we know now, defibrillator is one of the life changing technology that helped to save many millions of life around the world.   And, it is possible because of innovative startups.   Here, at StartX, I believe we are seeing the next wave of innovative startups focusing on many interesting problems.   And, it is possible because of the community, culture, and environment being created by StartX.  

Lawgives
“Find legal help you can trust.” Started by Stanford law graduates, in association with the Stanford Center for Legal Informatics, is building a platform to make law accessible to everyone.

Why is it interesting
First, Tony Lai and Pieter Gunst have assembled an amazing team of people, including legal, technology,  and design.   As with any venture, the most important factor is the team behind it.  Second, is it solving a real customer need?    Lawgives is pursuing a great mission in helping many people in need of finding legal help they can trust.   At the same time, it is creating a platform to help lawyers to discover clients, who might not seek legal help otherwise.   Lawgives is on its path to do something really interesting in the legal industry.   Check them out!

Clear Ear
“Cost-effective total ear care system that seeks to improve quality of ear care for the over 350M patients in need worldwide.”

Why is it interesting
I was sold the moment Lily Truong started speaking.  It was perhaps one of the most persuasive and entertaining presentations I heard that evening.   The market data is certainly compelling.  But, the most impressive of which is how Lily turned a seemingly mundane problem (ear wax cleaning) into something exciting.   After her pitch, I felt the immediate itch to try her system out.    I am now convinced Lily can sell anything.   Every venture can use Lily’s help to do the pitch!

Dermlink.md
“Secure web/mobile app enabling remote diagnosis of dermatology issues.”

Why is it interesting
It is a clever use of mobile technology to solve the common problem of finding dermatologists when we need them the most.   It is just mind-boggling how long it takes to make an appointment with any physician in US.   While the dermatologists are aware of the problem, it takes someone like Victor Gane, with a design thinking approach, to solve the problem by looking at the whole process.   Dermlink.md will make an immediate impact on how we seek medical help!  I am signing up!

NuMedii
“Predictive Big Data technology to discover and enable successful development of effective new drugs.”

Why is it interesting
I am a believer in big data and predictive analytics.  If use probably, I believe it can deliver amazing insights.   Apparently, NuMedii has figured out a way to discover new drugs with much higher success rate than traditional approach.  This could be huge!

I like many others as well including XOLA, Roominate, Pixlee, Arc, and others who didn’t present at the demo day.

Let me know what you like!

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Recommended Reading – Toward Entrepreneurship by Milton Chang

I ran into Milton Chang recently.   He is very generous in sharing his nuggets of wisdom based on his experience in starting up many successful companies.   Previously, he was President/CEO of Newport Corporation and New Focus, Inc.  He served on the boards of Uniphase and 11 other startups.   His experience and successes are certainly impressive.  His latest book, Toward Entrepreneurship, offers many practical advice and wisdom.   At university, we often gravitate towards hard science.  As engineers, we want to know the mechanics of how to build the next Facebook.   We want instant knowledge.   But, building a company is far more than just building a product.

I enjoyed reading Milton’s latest book, not because of the hard science of starting up.   I get to learn more about Milton as a person, an entrepreneur, and a leader.    The most intriguing of which is his personal story starting from his childhood in Hong Kong.    Not only did he thrive under extreme adverse condition growing up.  At one point, he lived in a shack without running water or electricity.   His parents were determined to send him to United States for the best education.   They borrow just enough money for a one-way ticket on an ocean liner.   He landed at the University of Hawaii first.  Before long, he managed to transfer to University of Illinois in Champaign-Urbana and graduated with highest honors.   Subsequently, he was accepted by MIT but rejected by Caltech for graduate study.   Instead of settling, he contested to Caltech on the grounds that he had to work half time.  Against all odds, the decision was reversed and the rest is history.    The same drive and intensity since his childhood would carry with him through his ventures.

Being an immigrant from Hong Kong, I can identify with Milton’s experience.   I can also identify with the experience from many immigrants in Silicon Valley.   We didn’t have much growing up.   But, we were always happy with whatever we have.   At the age of 14, my father took extraordinary risk going to Hong Kong from mainland China in search of freedom and opportunity.  At that time, he didn’t know what might lie ahead.   I remember the story of James McGregor moving his family to China with only two suitcases.  In the case for my father, he didn’t even have any carry-on.   Can you imagine what life must be like dealing with that level of uncertainty?   My father never had the luxury of a high school education.   But, yet, through hard work and determination, he managed to build his business and raised the family.   Because of him, I got the opportunity to come to United States in search of opportunity at the age of 14.   As immigrants in Silicon Valley, I feel we all share similar experience.   We all have our personal story of how we came a long way just to be in United States.   When things seem very difficult, I always remember how much more difficult it is for the previous generation.   Without their sacrifices, we wouldn’t have the opportunity here.   We should really make the best out of it!

Thank you to Milton for sharing his book of wisdom!

Check out his book here!   The important insights are sometimes in between the lines.

 

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Steve Jobs, 1955-2011

Steve Jobs at Stanford


Steve Jobs’ Stanford Commencement Address

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Inside the Tornado: The Transmeta Story (Part 3)

This is the third of a four-part post “Inside the Tornado”.  Read Part 1 and Part II first.  The previous posts cover the story, culture, and product.   Follow me on Twitter: @bxian3.  Thanks for reading.

 

What about the people?
Conventional wisdom tells us that A attracts A, B attracts B, and whose knows what C attracts.   It is obvious that everyone wants A players.   But, who are the right people for innovative ventures?   At Transmeta, we were able to create one of the most innovative products, when the right technology and the right people came together just at the right time.  The resulting product was an engineering marvel.  Before us, no one would have thought of the possibility to build a software-based microprocessor that completely redefined the boundary between hardware and software.    If we had only A-type conventional thinkers, would we have been able to innovate? Or, perhaps we would have simply built a faster horse based on the experience of these A-type horse builder.  (A reference to a quote from Henry Ford)  

The entrepreneurial team
The learning and discovery nature of startups is very different from established business.   It is this very mindset that would drive any VP of Sales or VP of Monetization crazy.  As we went through the transition phase to a medium-sized company, the challenge came when we had two very distinct types of people working in the same organization.   One set of people were very opportunistic (constant flow of new ideas) while the other demanded certainty.  It became even more visible when we brought in different CEOs from the outside.   We did hired the best CEO we could find.  All of them have great track record running successful businesses previously.   While all of them were very experienced, however, it is quite a different experience from the discovery process (see my previous blog post on characteristics).   One possibility is to have one of the entrepreneurial founding members running the company with support from an experienced executive, similar to Sheryl Sandberg and Marc Zurkerberg at Facebook.  In the case of Facebook, it is an obvious choice since social network is a nascent market.    In the case of microprocessor, it is less obvious and just more reassuring to get an experienced executive from another microprocessor company to run it.   What would you do?  Should we go after existing market or create a new market for software microprocessor?

Discovery vs execution
Once we had our first working product, the pressure for sales accelerates.    The focus shifts rapidly from discovery to execution.   Under this pressure, we had to go after known markets and known customers.   Guess what, majority of our customers  did ask for a faster horse.   The message was clear: “build a faster processor if we want design wins”.  Because of this, we decided on a dual strategy: Efficeon for performance and Solo for emerging markets.  The tremendous pressure for revenue would eventually forced us to stop the Solo program.   First, it was very difficult to focus on two distinct products with limited resources.  Second, it was difficult to see the revenue potential for Solo even though it would enable some innovative designs.  And, from the sales team perspective, they simply don’t want to hear about explorations.   Rightly so, they were there to execute, not to experiment.   While the experimental nature of founder types is needed to discover new markets, the executional nature of sales is needed to scale business.

What type of people do we need then?   It really depends on whether you are going after the horse market or the automobile market.   I think Steve Blank explains it the best in Four Steps to Epiphany and in his blog.  Check him out!

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Stanford @StartX Demo Day

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Congratulations to @SSE Labs and presenting companies for a great demo day!  Check out the best of the best from Stanford including Qwispr, ClearEar, 6Dot, WifiSlam, Leglytics, Juntos, PredictiveEdge, Game Closure, and Kitchit. As George Zachary puts it, “Besides Ycombinator … Continue reading

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The bubble of higher education

Whether we agree with him or not, Peter Thiel is making us thinking deeper about higher education in a recent Techcrunch article. What is the purpose of higher education after all? If the best education is only available at the very few schools, why not make it available to the masses? Peter thinks “it’s fundamentally wrong for a society to pin people’s best hope for a better life on something that is by definition exclusionary”. It got me thinking about our education system in US as well as overseas.

Democratizing education
We often put so much emphasize on these prestigious schools that we forget about the individuals. We assume that these people are extraordinary just because they have been selected by these exclusive schools. As we know, there are many great people who never went to top universities. The message here is not telling people to stop going to the top schools. On the contrary, everyone should strive for the best. But, instead, how do we make these highly valuable education available to more people? Similar to innovations which can happen anywhere, great people can also come from any school around the world. If we make knowledge widely available, I believe it will benefit the society as a whole and more innovations will happen. MIT has taken a great step towards this direction by putting some of the course materials online available to anyone who has the passion to learn.

Are we using the right metrics?
If we are not able to make the best education like Harvard available to the world, then we really should examine whether the right metrics are used to measure students coming out of these exclusive schools. A good lesson is Enron. Without a doubt, Harvard is able to attract some of the smartest people in the world. But, IQ is only one dimension of intelligence. How do we measure the other important dimensions like EQ and social intelligence? I understand these are difficult questions. And, more importantly, how do we teach AND measure ethics? This should be a very important topic for exclusive schools like Harvard, especially since the very few who gets admitted will most likely be in positions of leadership with great responsibility for many others. I believe the best universities of the future will not only measure IQ, but also measure people based on leadership and social quality. It is a tough problem but we have to start somewhere.

The Silicon Valley Innovation Lab
While higher education might be in a bubble, I think there is hope for people who seeks to get a better life through education. I call this the Silicon Valley Innovation Lab. Not too many places in the world where you have the highest density of intelligent, knowledgeable, and motivated people who are changing the world (some right from their garages if they can afford a house). For those who are not lucky enough to get into Harvard, they can come to Silicon Valley and work side by side with these really smart people instead of spending a quarter of a million dollar on education. Check out the 19 year old, Aaron Levie, who started Box.net. Anything is possible in Silicon Valley. It is up to us how we want to invest our life.

Let me know what you thought of Peter Thiel’s article.

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How Nitendo disrupted the market with Wii

First of all, our heart goes to our friends in Japan.

I really like the Nitendo case because it shows how disruption can work beautifully under very competitive environment. It was so effective that Microsoft and Sony, with all of their financial and people resources, they still couldn’t do much to counter it but to watch Wii became one of the most successful game console (over 84 million units shipped today) outselling both Xbox and Playstation.

The magic of Nitendo Wii
Prior to Wii, Nitendo was in serious trouble, teetering on the edge of bankruptcy and losing market share rapidly to Sony and Microsoft. All of this seemingly changed overnight with the introduction of Wii. Was it a stroke of genius by Shigeru Miyamoto-san or simply dumb luck? Everything seems to be changing again now with Apple’s success in iPhone and iPad. What’s happening?

Non-Consumers
Nitendo could have chosen to go after the hardcore gaming market. But, that would have been costly since both Sony and Microsoft subsidized these platforms to attract avid gamers with ever increasing need for speed and ultimate gaming experience. With the Playstation 3, Sony went all out and put in latest technology like Blue-Ray. This is a classic razor and blade strategy where Sony and Microsoft are practically paying customers to take the razors with the hope of making it up with selling blades later. Instead of making a better razor, Nitendo deliberately chose to build a different kind of game console for non-consumers. These are consumers who were not into gaming to begin with and care less about speed, performance, or graphics quality. They solved an interesting but hidden problem for the non-consumers with the motion controller by making video games so easy that any 6 years old can play. I didn’t know I wanted a Nitendo game console until I saw the motion controller. Now, it instantly became a must have. On the other hand, I wanted a Sony Playstation 3 because it is a good financial decision to buy a Blue-Ray disc player at below cost. Which strategy do you think works better with the consumers?

A Twist to the Double-Sided Platform Strategy
A second important component as a result of targeting non-consumers is low cost. It is possible that Nitendo couldn’t afford to go after the hard core gaming market anyway, given how expensive each platform is becoming (thanks to Sony and Microsoft). They had to come up with a low cost platform with a unique differentiation – motion control. This also created an interesting twist to the double-sided platform strategy. Traditionally, game console vendors had to subsidize the platforms to attract enough customers in order to attract gaming developers who would pay back in royalty. With a low cost platform, now Nitendo is able to earn money from both consumers and game developers, while the other vendors have to lose money on the platforms. Brilliant!

Why adding motion controller doesn’t work
Even with the addition of motion control, it doesn’t help much for Sony in targeting these non-consumers. It is like adding a Prius mode to BMW. The consumers who are buying BMWs are very different from the consumers buying Prius. The motion controller becomes a must have for all gaming platform once it becomes popular. Sony simply doesn’t have any choice but to provide the same feature set in order to stay competitive. However, in order to compete with Nitendo, Sony would need to develop a different brand focusing on motion control at very low cost. Otherwise, it is like BMW trying to sell a low performance gas efficient vehicle to compete with Prius. It just doesn’t work, even though it will certainly help with increasing sales.

In the case of Microsoft Kinect, they have done a good job in reducing the platform cost substantially. Hence, they are in a better position to go after the high end of the non-consumers that Nitendo is targeting and, simultaneously, give a reason for existing gamers to upgrade. However, for the next generation, how are they going to deliver cutting-edge graphics experience while maintaining a low cost position? This would be interesting to watch.

While Nitendo did very well disrupting the hard core gaming market, let see how well they will do against Apple. The latest Nitendo 3DS seems like an interesting move. What do you think?

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Inside the Tornado from Startup to IPO: The Transmeta Story (Part 2)

Happy Lunar New Year from China!

“According to Roger Schank, humans aren’t actually wired to understand logic; they’re wired to grasp stories.” Jennifer Aaker

I am inspired by Jennifer Aaker at Stanford for her creativity in combining powerful stories along with findings from happiness research to motivate people to take actions. What does this have to do with technology ventures? For those of us who are trained in engineering, we often believe only in logic (q.e.d.). Shouldn’t everyone be logical including customers? But, the reality, as we know it, is not 1s and 0s. Customers are not necessary buying because of logical conclusion. Without a powerful story, it would be very difficult to get customer attention, build momentum, and turn ideas into great ventures.

The Transmeta Story
” Transmeta was conceived in the tradition of Silicon Valley’s legendary firms. Like Intel, Apple, and Sun Microsystems, it aims to build not just a company, but also a technology platform from which thousands of businesses might rise. “With a company like this, you’re trying to create a new industry,” says William Tai, a Transmeta board member and partner at Institutional Venture Partners.

Transmeta’s product is a microprocessor, the brain that controls a computer. But this microprocessor is designed for a new era in which portable devices will supplant desktop PCs as the most common means of connecting to the Internet. These devices will give rise to Internet applications not limited by location or by the PC’s deskbound, document-centric metaphors. Voice and data will be available anywhere and anytime, via handheld computers, cellular phones, and devices not yet invented, changing the way people live and work.” Check out the entire story at: http://www.redherring.com/Home/423

Key Elements of The Transmeta Story

Technology Breakthrough
For the first time in the history of microprocessor, we are able to demonstrate the viability of dynamic binary translation (Code Morphing Software) for running applications in real time while the prevailing industry believe was that the performance will never be good enough. Expectedly, we ran into serious performance hurdle with our early chips, which almost killed the company along with its morale. Luckily, our engineering team, through ingenuity and determination, eventually overcame this complex technical challenge that no one in the world has ever encountered before. And, we learned a lesson in confronting brutal facts, which wasn’t easy since we were denying having performance issues in the very beginning. But, once we recognize the reality of what needed to be done, our engineering team was able to focus and came up with a technical breakthrough, while under pressure.

New Era for Computing
Imagine a future where it is no longer dominated by Intel and Microsoft. More importantly, imagine the amount of innovation that will happen because of open platform. Interestingly, Burgleman from Stanford did an analysis with Andy Grove on vertical integration and came to the conclusion that vertical integration doesn’t make sense for the PC industry at that time because it would stifle innovation at each component level. Ironically, because of the dominance by Microsoft and Intel, it makes it very difficult for innovators to enter the PC market. The only possible challenger to this well-established Win-Tel platform is the close system championed by Apple with rare combination of both engineering prowess and artistic sense. But, for the rest of the system manufacturers (i.e. Sony, HP, Dell, etc), Transmeta’s technology provided the critical component needed for disruption by offering a software-based microprocessor and enabling a new class of mobile platforms (i.e. tablets, netpc, smart phones, ebooks, etc.) that can run Microsoft or any other operating system (What if the Microsoft OS becomes just one of the applications?). Many of these innovative platforms were launched by Japanese manufacturers first. The Japan market gave us an early glimpse of what is to come today because of the Apple iPad. And, because of Apple’s success with close system, I see opportunities for new innovation happening around the open system again. This is ultimately great for consumers.

It wouldn’t have been an interesting story if all we did is just a cheaper Intel replacement. This is one of the fundamental problems facing AMD at the moment. If we look at where we were heading, we had control over the platform from the underlying hardware chip to the software application stack. With Moore’s law, what if we can apply the freemium model where we can give the silicon out for almost free. This might not be as far fetch as we think (What do you think of the arguments made by Chris Anderson: Free! Why $0.00 Is the Future of Business). The possibility is limitless once we reach critical mass. We were really a software company enabled by our proprietary hardware. For that matter, we had all the core competency in house to become an internet/applications company if we chose to pursue them. Look at what Apple is doing in designing their own chip now for their platform strategy. They recognize the importance to control the underlying hardware in order to deliver the ultimate customer experience through software.

What is your story?
Zappos is not really just about selling shoes. It is about delivering happiness through the best customer service. Tony Hsieh has done so well with this story that he didn’t just build a shoes company. He created a new corporate movement around happiness. Because of Tony, selling shoes becomes an interesting business (more parents will now wish their kids pursue a career in selling shoes online). Similarly, Starbuck is not just about selling coffee beans. It is the third place between home and work as Schultz cleverly puts it. That’s why we are happy to spend at least $4 a day on just a cup of coffee. (I have been spending about $80 a month on coffee. They might as well charge a monthly subscription fee to use their facility and give the standard coffee away for free if enough customers are doing this.)

If we look at the story of other interesting companies (examples from Guy Kawasaki):

Federal Express: Peace of mind
Nike: Authentic athletic performance
Target: Democratize design
Mary Kay: Enriching women’s lives

Having a powerful story is important for technology ventures and everything we do. It is possible we might not even recognize the story from the start. The story might become clear, indeed, when we connect the dots looking backwards. So, what’s your story.

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