I recently heard a podcast with Ben Horowitz and Sharon Chang of venture capital firm Andreessen Horowitz called “Earned Secrets” which provided some insight from Horowitz, the author of the fantastic The Hard Thing About Hard Things (and all sorts of other accolades), on founding startups.
Chang asked (at 6:33) Horowitz about starting a company and said that “lots of people have great ideas. What else does it take?”
Horowitz said something that struck home for me,
We call it an earned secret. You did something in your past and tried to solve some hard problem and learned something about the world that not a lot of other people know. The ones [companies] that work are some kind of earned secret.
Shockingly, I realized that BrightLights is an earned secret. My experience at Merrill Lynch (first as an admin understanding how the wealth management business worked then as a financial advisor understanding how the money’s made) and FINRA (as an investigator then a manager of investigators) led me to understand the conflicts of interest that financial advisors have and the fraudulent conduct they can get away with while understanding the lack of ability and resources and mountains of bureaucracy that impede regulators from stopping these bad advisors.
One Year Down
It’s hard to believe that one year has passed since BrightLights started in July 2017. I still remember the sense of dumbfoundedness I had when I sat down at my computer on day one and thought, “Whoa. What now?”
Imagine you’re standing at the base of a mountain that’s completely undeveloped. You don’t even know if there’s food and water to survive. You have no direction where to go. No streets, road signs, paths, highways, or maps. Just dirt and an idea. But you inherently believe this mountain has treasures no one has ever seen, and you don’t even know the size of the mountain or the treasures. It could be huge! It could be small but plentiful. Or it could be worthless.
How do you even start?
By exploring. You walk blindly trying to tread a path that will lead somewhere. Sometimes you end up at a dead end, frustrated at accomplishing nothing. Every once in a while a path leads to a waterfall or a wider path with even more places to explore. It’s basically an endless journey, one where you plot the map as you go.
My first nine months of exploring felt like I had a blindfold on. Was anything working? There were battles of doubts as emails were sent into the abyss with few responding. There were fantastic meetings that ultimately led nowhere. DOES ANYONE CARE? Little wins were celebrated but frustrations stung deeper.
I was in my own head so much I failed to realize that everyone else had entire jobs to do, and here I was asking them to add another thing on their plate. I inaccurately assumed (“assume” is a very bad word in the world of starting a business) the lack of response as a rejection of me and my business. A failure.
Not only does doubt linger, but I was working alone. It was a very difficult transition going from a corporate job where I interacted with people everyday to one in my apartment with no one around. I was a starved puppy looking for attention.
Selfishness is natural when you start a business because your business is ALL YOU CAN THINK ABOUT, so you assume everyone else should care as much as you do. “Earth to David, the world don’t work that way!”
Despite the many difficulties I faced, I always believed I was doing the right thing, and I remained passionate about my mission. I kept sending emails, making follow-up calls, getting face-to-face meetings, and persevering. The craziest highs came when I was sitting at meetings opposite agents, lawyers, or financial advisors, and they were listening to every word I said about my business. They were interested and curious. They drilled me with questions and concerns, and I confidently had most of the answers.
After nine months, things started to change, my emails were answered, relationships developed, and partnerships made. I then started getting some inbound leads and referrals. I then got my first client! Then my next and so on. In hindsight, it took time and effort, dedication and patience, persistence and belief. And nonstop networking.
This anniversary is a great opportunity to reflect on what I’ve learned for anyone else thinking of starting a business or wondering what this experience has been like.
The Real Start - Before the Launch
The first official day of BrightLights, July 10, 2017, was preceded by more than a year of tinkering, talking, and plotting whether it even made sense to start a business.
I spoke with as many people as I could get connected to (since I knew very few people in the sports industry) to understand:
- Is anyone else doing this?
- Does this service have value?
- Would pro athletes pay for it?
- Do you think this business would work?
I was told that nobody else was providing a service like mine, and the service had value because of the neverending fraud and financial problems surrounding pro athletes. Most people thought athletes would pay for my service if it would prevent them from losing millions of dollars.
One difficult part of this information gathering was that the vast majority believed this business would work. There weren’t a lot of naysayers, and I really tried to seek those people out to get their opinion. It is extremely important to seek that “negative” feedback out because it not only keeps you grounded but can help you see things in ways you were blinded to.
It sounded great that other people thought pro athletes would pay for this, but how do you know for sure? I spoke to current and former professional athletes, and they also thought athletes would pay for the service. Although some people advised me to start making money before I quit my other job, I couldn’t solicit business while I was still working at FINRA due to conflicts of interest.
In addition to talking to people, I researched cases of fraud against pro athletes to understand how these could have been prevented, and this process made me confident that BrightLights would have prevented or extremely reduced the amount of money lost to fraud.
I also ran a lot of numbers to understand the market opportunity. Were you aware that the four major US sports (basketball, baseball, football, and hockey) pay more than $13 billion in salaries to players per year? That’s a staggering amount of money, and one of the main reasons there are so many sharks in the water.
I had enough confidence that it was time to start my business. My decision prompted me to resign from a great job with great benefits and a very stable income and career trajectory all for a job that starts with a $0 salary, no benefits, and no career trajectory. That’s why so few people can take the jump, it’s REALLY hard to lose all those great things in life, particularly when kids and mortgages get involved (which luckily at the time, I had neither of). But I have an amazing and super supportive wife who spent countless hours with me talking about BrightLights before it even had a name. She has always had my back, and I really don’t think I would have ever started this without her.
Podcast, Books, Simon Sinek's "Why," and Other Research
The first six to nine months I was craving information and education that could help me become a better business owner and create a better startup. I listened to a ton of NPR’s “How I Built This” with Guy Raz on NPR and a number of other entrepreneurial podcasts and books. I’d like to say this stuff helped me, but honestly, it made me feel worse.
I was frustrated that so few of the people talked about how shitty starting a company by yourself was. You’re completely alone in your home after years of being surrounded by people and communities. You bludgeon your psyche into pieces. You can see the look of concern on your wife’s face. You don’t know what to do, and you can’t really talk to anybody because how are they going to really empathize with this?
But there were are always lights at the end of the tunnel. I had a friend who was a founder/co-founder at a number of startups and had a ton of experience in that world. He would consistently check up on me and give me words of encouragement.
I remember watching a TED talk from Simon Sinek explaining how great leaders inspire action. His main point was that leaders inspire action by explaining “Why” they do what they do.
As Sinek says at 01:56,
But very, very few people or organizations know why they do what they do. And by "why" I don't mean "to make a profit." That's a result. It's always a result. By "why," I mean: What's your purpose? What's your cause? What's your belief? Why does your organization exist? Why do you get out of bed in the morning? And why should anyone care? As a result, the way we think, we act, the way we communicate is from the outside in, it's obvious. We go from the clearest thing to the fuzziest thing. But the inspired leaders and the inspired organizations -- regardless of their size, regardless of their industry -- all think, act and communicate from the inside out.
I was happy because I knew BrightLights “Why,” and I communicated it to everyone that I pitched my company to: BrightLights wants to end fraud in professional sports. I realized over time that my “Why” was very unique and persuasive, and it was one of the main reasons I was able to open a ton of doors I wouldn’t dream would open with my unique “Why.”
I also had a profound realization when Sinek spoke of the “Diffusion of Innovation” at 10:59:
The first 2.5% of our population are our innovators. The next 13.5% of our population are our early adopters. The next 34% are your early majority, your late majority and your laggards. The only reason these people buy touch-tone phones is because you can't buy rotary phones anymore.
We all sit at various places at various times on this scale, but what the law of diffusion of innovation tells us is that if you want mass-market success or mass-market acceptance of an idea, you cannot have it until you achieve this tipping point between 15 and 18 percent market penetration, and then the system tips. I love asking businesses, "What's your conversion on new business?" They love to tell you, "It's about 10 percent," proudly. Well, you can trip over 10% of the customers. We all have about 10% who just "get it." That's how we describe them, right? That's like that gut feeling, "Oh, they just get it."
The Diffusion of Innovation looks like this:
I had to find that 2.5% of people for this company to succeed. Then the rest would follow. While that may come as a daunting task, it made me realize that everyone isn’t going to sign up for BrightLights right off the bat even if they love the business. Those people could be early adopters waiting for the innovators to first try me out. Maybe they’re the laggards that don’t change until everyone’s done it.
Once I got my first partnership with a sports agency, I was able to leverage that partnership to get more meetings with other agencies and people within the sports industry. I realized that the more people can vouch for you, the more doors start to open. Seems obvious, right? What I failed to understand is it’s not about you. People like when decisions are easier. What do you think is easier: Saying yes to a meeting to someone you’ve never met or saying yes to a meeting to someone who just signed a partnership with a competitor? I never thought of business like that until I started to see it play out. People don’t like to be left behind, but they all wait until the time is right for them. That’s why you have to be consistently knocking on their door, reminding them you’re outside.
You’ve probably heard the saying, “Once you get a few clients then the ball will start rolling for you,” or some variation about the first few clients being the toughest to get. In essence, these sayings encompass the diffusion of innovation, and the idea boosted my morale and perseverance to keep working for that 2.5%.
Patience Is a Virtue
Another incredibly helpful piece of advice I got from someone had to do with time. This guy was a former boss of mine that I immensely respected, and he went on to start his own consulting firm. He talked me through a lot of the initial ups and downs that he went through, and then he said one of the most helpful pieces of advice he got when starting his business was that you will know if your consulting company has what it takes within 1.5 years from the start.
When three months passed then six months and so on, I told myself that I still had plenty of time. I had to take progress week-by-week and month-by-month but never day-by-day. I told myself that either way this ended up, I just had to work my ass off and keep my head down, and I would know within about 1.5 years if BrightLights would work.
Amazingly, my first client gave me all the reason I needed to know that BrightLights has value and the ability to save someone from financial disaster. I’ve already seen the positive impact BrightLights can have. When a mother of an NBA player says she’s going to tell the families of other NBA players about BrightLights or the father of a highly recruited college player tells me that no matter where his son ends up, he will use BrightLights, I can see the momentum building.
I’m still working with the 2.5%, the innovators, but I can see the mountain now. I can see some roads and even a few potential highways. I still don’t know how big this mountain is, but it’s better than dirt.
Let’s keep building this thing.