Developing Entrepreneurs and Startup Ecosystems
To help one person a day. That’s a wonderful mission and purpose. Paul had a chance to sit with Ramin Jahedi, CEO and founder of OpticTour, in studio, exploring the impact of culture and media in developing entrepreneurial ecosystems.
This is not gonna work. You deal with a lot with those people. I’m sure you heard a lot of pitches, you hear a lot of pitches when they come over there [to the United States]. What is the one mistake all startup founders or the product people they make when they come to you to pitch?
Tune in and read on for some highlights
Austin has just grown like a weed. I got here a good decade after you, as I recall. Austin was probably this <-> big. And now, now forget it, it’s nearly the size of Texas.
R: And you came from Michigan?
I did. I grew up in Michigan, went to Arizona, and went through Silicon Valley. I’ve kind of done the circular tour of the United States as I grew up until I found my home here in Texas.
R: When did you find out that you are a through hardcore entrepreneur?
That’s really kind of an interesting and wonderful question because I do think, and if I were to look back at my past and myself, I probably realized it as a kid. I’m a hardcore Lego geek. And artist, and I love geek movies, like Star Trek and, and Star Wars, and you put all those kinds of things together. Someone who likes to build and be creative and write. And I studied music history and I feel like those were all characteristics of what an entrepreneur embodies. It was in high school. When I get stuck in a very programmatic designed curriculum meant to produce the ideal working professional that I realized that I was not cut from the same cloth and so I made my way through high school and in college I found myself building websites because I just looked at traditional career paths and thought “I do not see myself in this direction in any way that the university is trying to steer me what the, what an earth am I gonna do?”, and I think that’s what entrepreneurs think and go through.
R: Well, these days as you know, You know, being an entrepreneur, I am an entrepreneur, I’m in technologies, or I love technology. It’s a very sexy word. And a lot of people, to be honest with you, they think they’re business owners, but they think they’re entrepreneurs, but there’s a big difference between those two. As you know, if somebody comes to you and says, Hey, I want to be an entrepreneur, Paul. What would you say? Because you get that a lot. I promise you.
Oh gosh, dozens say “I am an entrepreneur.” Dozens of times a day. Actually Rami, that distinction you just made, is what’s important. Is the person coming to you saying I would like to be an entrepreneur or are they coming to you saying I am an entrepreneur and I think there’s a subtle distinction in the way that people think about that question.
An entrepreneur is a personality trait, it’s not a job. You can get a college degree in entrepreneurship, but there is no job title. There is no career path as an entrepreneur, it doesn’t exist. I think it’s this enthusiasm, this excitement that people have for entrepreneurs has been encouraged and bolstered by society lately. Thanks to movies and television shows and magazines, such as wired magazines and Fast Company, everybody wants to be on the cover of a magazine as an entrepreneur. And it’s really sort of done society a disservice because we can look at and study and know how to start a business. That’s a business owner, and entrepreneurs tend not to be able to work that way.
Entrepreneurs tend to seek out problems and almost have this fixation with doing something about those problems. They’re not necessarily as easily guided to start something successful, rather, they’re the kind of people who tackle problems and take on risks and suffer all the ills and challenges that come with that personality and suffer all of the financial struggles and opposition and criticism and judgment of ‘why can’t you just focus? Why can’t just, just do what those customers want and make money? Well, that’s not what an entrepreneur does. They are different people.
I try to tell folks and write about, and talk about that as much as I can because I think we could do a great service to the economy by helping people better understand what kind of working professional they are. What kind of personality they have for this, whether or not they are an engineer or a business owner or, or a startup founder or, or an entrepreneur, or if they’re just somebody who maybe is better for working in startups or working for businesses.
R: But if somebody comes to you right now and says, Hey, Paul, I’m a small business owner and I really want to quit my job, or I want to be an entrepreneur. What kind of advice would you give that guy?
Do not quit your job.
That’s what, that’s what I hear all the time.
Do not quit your job. Put that on repeat. And during the commercial break, play it again. Do not quit your job. Truly that is some of the worst advice we see in the startup ecosystem is when people say we’re goings to go all in and quit.
So, you can be a startup owner, are you crazy? No, you do not quit. You do not focus. You do not go full time. You do not go all in on a startup or as an entrepreneur. Why? Because the odds are so great that you’re going to fail. Why on earth would you toss away some stability and some security and some income and. And even income is an important piece of the puzzle to appreciate because no investor in the world ever funds you to start something. They fund you once you’ve built something of value. So how are you going to pay to get this new thing off the ground? You absolutely should continue working and do it on the side, build a bit of what you have in mind, find some partners or co-founders. And, and when you get to the point where you can make the leap, that’s when you quit.
R: Yeah. But you know, the problem is I have seen it many times. This guy came to me and said, “hey, I want a really cool job.” I told him the same thing, “Don’t quit your job”. Just work on the side, just start chipping away and just working it. But the problem is really some people don’t wanna pay the price.
Like he comes home at eight to 5 or 6 or 7 PM. Just go and, you know, eat, go walk the dog, talk to your wife and then go to town after nine to one, you got so many hours, but you can’t have both. You gotta pay that price. The difference between us, I think, is we went through that. I went up and down. I work on the side, I did this, but we paid the freaking price. It was tough, man.
That too Rami, that too is one of the best ways I’ve found to distinguish the people who are more likely to be successful from the people who are likely to struggle or indeed even just fail as an entrepreneur or as a startup founder. And it’s that I don’t perceive a difference between work and life. We talk about work, life balance. I don’t perceive a difference. I do what I love, but part of my job is part of my life. I don’t see myself as having a nine to five and at five o’clock I go home because that’s what we do in society. And I walk the dog and I play with the kids. And I have dinner. And then I go to bed.
My hobbies, my passion, when I wake up in the morning, my brain is bubbling around ideas for my next article to write about, about entrepreneurship, that the people who find success and you could look at the really successful startup founders in the world, Bill Gates and Warren buffet, if that’s the direction you aspire to, or the founders at Bumble, they live what they do. They’re just constantly talking about it. There’s no vacation time. There’s no mornings and evenings that are breaks. That, if you’re fixated about something, if you’re passionate about something, you’re determined to fix it, whether it takes two years or five years or 10 years, you’re likely to be successful, you’re likely to be successful. If you think being a startup fan, an entrepreneur is a nine to five, and you’re going to get paid and you’re going to get paid well, and then you can go home and go on vacation. You’re probably not going to be successful.
R: Yeah. I always tell these people that having a job is totally different because a job is a job. You can’t scale it. And if you can’t scale it, then you don’t have a startup. If you don’t have an idea, the ideas are out there, but if you can’t scale it, you can’t just constantly work on it and take it to the next level.
As you said, with the help of others. If you can find a good co-founder, in finance, whatever technology you are, get a good co-founder that knows the freaking numbers. And then you can work with that founder because you can’t really do it all yourself. And you have to understand that. In order to achieve what you’re trying to achieve. You gotta surround yourself with the people that they believe, what you believe, as you said. And you know, they understand that philosophy on entrepreneurship that we talk about, even your loved ones.
Well, I could even, I could even maybe challenge just thinking about your last point. Whether or not they understand entrepreneurship. It isn’t necessarily what’s important as is your first point, that it astounds me how many people want to start their own venture. And they want to do it themselves. And “This going be my company and my startup” and that’s mind boggling because trust me, you cannot survive. Doing this kind of work on your own, you don’t have the skillset for it. You don’t have the experience for it. You can’t be a sales professional and an accounting professional and know how to build a website. And it’s just inconceivable. Right?
And so, yes the very first thing that we teach folks, the first thing that we talk about is finding partners.
Find a co-founder and it’s even a little mind boggling how in many cities and many startup ecosystems, the advice given is poor. You’ll hear people tell startup founders to focus on customers. Focus on customers. First focus on revenue. First focus on validation of your idea first. No, No, No, No, No, No, No, No. Find other people who want to do the same thing. Find people who validate what you have in mind, simply because they agree. And they too will put the risk in to help you start something. Those co-founders, they may not be entrepreneurs.
Whether or not they are, they may not be entrepreneurs because they may just be so passionate about the same problem or the same solution or so passionate about building something that maybe they end up being your head of technology or head of sales. They really do need to find themselves in a more distinct role, and they aren’t as entrepreneurial, but when you find those people who are committed to what it is that you’re committed to, you’ve got the start of something that is incredible and is likely to work.
R: And most of the time, I have, I’m sure you have seen some divorces between founders. Hey I was thinking this, you’re thinking that, we’re gonna go this way. You’re gonna go that way. I’ve seen it. The partners split and the whole venture is going to fail.
The leading causes of startup failures
The two leading causes of startup failures? Number one, the absolute leading cause of startup failure is not doing marketing. Which is a wonderful conversation in and of itself to have, because most people think marketing is advertising and it’s not that startup founders don’t do marketing and they’re then a host of reasons they failed.
The second reason is what you’re talking about. The second reason is the team, the co-founders, they may share a hope. They may share an idea of “wouldn’t it be great if we could build this or wouldn’t it be great if we could make money on this”, but they don’t share a vision. They don’t share values. They don’t share a mission. If you think about it really like a marriage, you get divorced like marriage, you really think about it like a marriage, if you don’t share the same commitment for life, you’re probably going to split up at some point.
And that’s unfortunate, but you can’t start a company with founders with unclear expectations of when you want to have kids and how you’re going to pay for college and all of these things. What happens when one of you gets cancer, you really need to have that heartfelt conversation about life and, and the future. And if you can’t or don’t, or won’t get on the same page, you’re just a team and maybe you’ll be successful, but odds are, you’re going to get in a startup divorce.
R: Yeah. I had a partner that when I said, “Hey, it’s time for us to go international”, he said, “no, no, we gotta stay just local”. And I said, man, there’s the opportunity out there. We can nail it. And we end up just AIAN. Now we are very strong, internationally. It was a totally different vision to how I see it and how he sees it. But it’s just that different vision is very important.
And then I’m gonna go back and touch up the market. You just said it because I was talking to a founder, like a startup and they didn’t really know the value of marketing. And that was my argument. I said, if you have the best platform, if you have the best technology, but nobody knows about it, how are you gonna scale that? How are you actually, how are you going to attract visitors?
What I love to share is the notion that still escapes way too many founders. We see a lot of founders that come into our programs, our incubators, and they have a product, they have an MVP, or they’re certain of what they want it to be. I see too many founders that have been led to believe that you start with the product and you bring the product to market, and then you do the marketing to create awareness, demand, or interest in it. And it’s frustrating because that’s backwards.
Before you even incorporate a company, before you sign an agreement with a potential partner or a co-founder, you should have done marketing. Marketing is studying the market. Marketing is knowing who the competitors are. Who are the potential investors, knowing what’s been tried in the past and failed, knowing what’s been tried and worked, marketing is understanding the potential customers. Marketing, it’s in the freaking word. Marketing is the work of the market. And, and if you’re going to invest in building anything, any product to bring to market, wouldn’t, wouldn’t you figure out what the market is first and, and then do that.
R: You’re absolutely right, that, that subtle point of, of, you know, they come to you with the best product, but how’s anybody gonna love the best product. If, if they’re not aware of it, How do you know you have the best product, if you haven’t first done marketing, right? You don’t, you don’t build a product without first validating and confirming and understanding whether or not what you build is in fact, or could in fact be the best. And then you build it.
You start with marketing. Most don’t, or won’t. And that that’s, that’s why it’s the number one cause of startup failure. That when you look at the studies about startup failure, you see wrong product market fit, or misunderstood the customers or didn’t know where to find customers or didn’t know what kind of team we needed.
Those are all market-based considerations. Competitors put you out of business. Those are all market-based considerations. And so, none of those things should occur. None of those things should occur if you indeed do the work first. To figure out who the customers might be to figure out what’s been done before to figure out whether or not competitors are going to put you out of business.
[skipped a bit]
R: They, they don’t do the marketing. I remember I was in a restaurant too, for so many years. And I was a consultant for Jack in the Box. And then I always told these guys a couple of things. You know, I had chefs there would come to me and said, “my food is great. I want to open a restaurant and everything.”
That’s good for you, but do you know marketing? Do you know how you’re going to run your labor? Do you know how you’re gonna schedule? Do you know how these events is? You don’t know and you need this. Oh, get the front house manager. I said that doesn’t work, man. The front house manager. It’ not gonna do what you’re trying to do. You need a good founder or somebody that knows operation. And if, you know, then vice versa, I had a guy, he was a great, you know, guy in the front, but he didn’t know his food cost back there. He didn’t know his labor costs. And he said, what? I said, you have a tilapia sitting, your freaking walk in cooler for two weeks. Look at your POS. How many you sold last two months, why are you keeping it? They don’t get all that.
Exactly. Like a technology too, you know the guy’s a programmer and he says, “I want a program.” This, no, you need somebody that knows how to market that thing.
That’s exactly right. That, that your chef. Who is a great chef of course, is that product person. Yes?
And it’s a wonderful product but if it’s in the wrong place or, or it misunderstands what people want you open a fish restaurant. But it’s in the heart of region of the city that is just looking for another burger joint or a diner. You’re going to fail.
It doesn’t matter how good your product; and that’s the importance of that distinction between starting with a product, starting with an MVP versus starting with marketing. That it’s true of the chef. It’s true of a residential real estate developer, right? If, you put the wrong kind of house or too expensive, a home, or too inexpensive a home in the wrong place, in the wrong market, you’re going have a mismatch. It’s not as simple as standing something up, standing up a product and then advertising and promoting it that the market fit is the most important thing.
R: It is not gonna work. But I think going back with all this stuff, you know, the startup that you deal with a lot with those people. I’m sure you heard a lot of pitches, you know, you hear a lot of pitches when they come over there. What is the one? Mistake is all like a startup founders or, you know, the product people they make when you come to the pitches.
Ooh. The one mistake?
Here’s the most frustrating one, and it’s frustrating because it’s astounding that we still hear founders who say we don’t have any competition. Or what we’re doing is unique or what we’re doing is original bull.
R: Hmm it is bullshit guys.
That is, it is absolutely never, ever, ever, ever, ever, ever, ever true. And I could add more Evers to that. I’ve even put challenges out there on some big social media sites where I’ve said, “If you can prove to me one company in the world ever that is completely original…” and no one can ever do it.
No, no one can ever convince me of something that’s truly original. And it’s just frustrating because it’s the first red flag that right, okay: You clearly haven’t studied the market. You didn’t do your homework because here’s a whole bunch of stuff. Just off the top of my head, that’s similar to what you’re doing.
Therefore, I immediately know just in the 30 seconds that you’ve spoken to me, I know that you’re going to fail. I know that you’re going to waste a lot of time. I know that it’s going to be frustrating for you. I know that you’re going to get disappointed and angry with the advisor community and the venture capital community, because we’re all going to tell you stuff that you don’t want to hear.
You’re going to be so fixated on the fact that what you’re doing is brilliant and unique and original that, but people don’t understand well, you know why they don’t understand because you’re wrong. you’re wrong. It’s not original.
R: I hear this a lot too. I ask them why their product or software is different. Or, and after I find something like it and I show it to ’em and they say, “oh, I have a better, uh, user interface.” I said, “are you serious?” You know, like you have a better user interface and that’s gonna differentiate you.
What is, as you said, what is that unique? What is that differentiation point that I switch from this software? Like you see so many communication, internal communication platforms, that’s out there. From a slack from this, from that, but what is gonna make them unique that you’re gonna switch to another one, as you said, you know, there’s a lot of competition out there.
An endless amount of competition and, and one of the best differentiators, since you pointed that out, one of the best differentiators (which is why I wrestled with the biggest mistake that I see in pitches) is because the second biggest mistake is the team which we were just talking about.
Founders neglect to share their experience. Founders love to say, “Hey, I’m the CEO of such and such.” I don’t care what your title is. Tell me what you’ve done in the past. Tell me why you’re passionate about this. Tell me what experience you have with this. That’s what matters and then share with us the people that are involved as we were talking about earlier on the show, the people that are involved as advisors or co-founders or what have you.
That, I agree with you, fill in the gaps in your own skill set. Pitches neglect to focus on that team. And you see that, unfortunately, because a lot of pitch deck templates put the team at the end of the pitch and it causes founders to think the team, maybe isn’t as important: Let me explain to you what I’m doing first. And then when I wrap up the pitch, I’ll share with you who my team is.
And that too is backwards in my mind that the team is one of the most important things to talk about. You bring it all the way up to the front because it validates that you guys know what you’re doing.
It validates that, that, that you guys have some experience with this. It reassures your audience that, that you’re probably not making things up, that you come from a place of knowledge. Then the rest of your pitch comes across much more meaningfully because I’m more likely to listen to you and pay attention to you and care about what you have to say.
Given the fact that you come from this industry, and you have experience with this industry, and your team is experienced in what it is that you’re trying to solve…
R: Yeah. If you give a million dollars to these people, you wanna know who you are spending on that, right?
That, that they’re not learning on the job. You know that, that they’re not, they’re not taking your money to experiment with everything and figure it out as they go.
R: I had a guy came to me and said, I have a great idea. I said, you know what to do? He said, I will figure it out while I’m doing.
I said, and you’re not going to raise money. Come on. You know this, you hear this stuff.
Especially since the next… In the last 15 years that especially in Austin; Austin is nowadays people say in the second Silicon Valley, whatever they call it, you see a lot of startups coming here and they all think that they’re going to be the next Facebook. They’re gonna be the next Google. They’re not gonna be the next, you know, Bumble, and the common characteristics they have is just that misunderstanding or, you know, they don’t get the whole picture.
Thank you, you observed a very valid point, which is that in the last 15 years, there’s been a lot more of that enthusiasm. And what’s really interesting in the work that I do, or that we do in economic development is, is helping cities understand that what happened in Silicon Valley was an anomaly. It was a unique point in human history when the internet emerged and therefore the greater majority of people there had experience with building a website and how Google functions and, and what, what Facebook does and how it actually works and so forth.
That was a microcosm that will never be repeated. It’s misleading to say Austin is the second Silicon Valley or Miami might be the next one. It’s misleading because you can only have one moment in time where such transformative innovation occurs.
R: I think it’s over. Yeah.
Well, it’s not that it’s over. It’s that you can’t replicate and then do the same thing. You might have something different, but you can’t do the same thing that was done there. For about a 15-year window there, the majority of the experience in the world with the internet was in Northern California.
It just was right. And you had some anomalies like Spotify emerging in Europe and so forth, but for the most part, everything was built there. And so what’s been happening since is actually exciting. What’s been happening since is that the rest of the world is
catching on, right?
The rest of the world is catching up. People are starting to understand how Google works and how Wikipedia works and why Facebook does what Facebook does. It’s important that people understand that because it’s only then that you can start to build new innovations and new companies in different industries, in education or real estate or government political tech, based on that understanding.
You have to know how all of this works in order to build upon it. And that’s that’s why I think it’s misleading or it’s a little dangerous to say someplace might be the next Silicon Valley because it won’t be, it will be something else. It will be something new and better, different.
In our work in media, we get to draw contrasts quite a bit to the arts, to films and the music industry. And one of my favorite examples, the point that we’re making that we can never replicate, is evident in The Beatles.
R: You are absolutely right.
There was nothing like it before and there can’t be something like it since. There absolutely can be bigger artists, more successful artists to make more money; of course, there can be: the market’s bigger, but that was a unique point in history when culture, fashion, and society all changed because of them.
Even just as an example of globalization: the British invasion. Everything changed. In much the same way that you really can’t have another Elvis. It just, it can’t, it can’t happen. You can have other great artists, but you can’t, you can’t recreate that set of circumstances because they’ve already been.
It’s now time to move on to something else. That’s what is exciting about Austin; Austin is better positioned for much more of what’s next: what’s coming in innovation in society.
R: Where, where are you going in the next, like five to 10 years? What, where are the plans?
I’m very excited in MediaTech Ventures. We’re very excited, frankly, about quite a bit of what we’re talking about, how media and, and marketing are, are somewhat synonymous. That’s evident in what we’re doing here with your show. Weare marketing.
R: Yeah, yes, we are marketing.
Y’all, we’re creating awareness for some stuff, and we’re talking to you; but how are we doing that? We’re doing that
through media. You’ve [Rami] got a crew of great crew of producers here and camera folks and infrastructure here that’s converging.
And as the world realizes Media Innovation (MediaTech) and Market drive the demand and awareness of what everyone is doing, awareness of what’s happening in Ukraine right now, or the innovation in Israel is astounding. By the way. Israel’s just amazing when it comes to innovation, the potential of Spain and Barcelona and what they’re doing there, or what’s going on in Singapore as the world realizes that it’s all dependent on this stuff, the voices and the text and the media and the video as the world catches on and realizes innovation and our workforce and our economies are going to accelerate and thrive to a much greater degree.
Its why Silicon Valley did what Silicon Valley did: Techcrunch and VentureBeat. It built all these MEDIA companies that caused awareness and excitement for what was going on there, creating demand for those changes.
That’s what’s now happening in the world. That’s where we work, where we’re going, and we’re leaning in to help because we know how to enable cities to create demand in innovation; cities throughout the world, not just Austin, but cities throughout the world, like Chicago and even close in Houston, or New York to be sure, but we’re doing a lot with the UK in London and Belgium…
Where people have a little bit more of an orientation to the arts and media, that orientation to the arts and media is enabling those cities to more quickly and effectively and efficiently tell stories because it’s the stories that matter. It’s the stories that create interest in that part of the world has going on there.
Follow the narratives, follow the Startup and Venture Capital influencers because of who they are and what they’re talking about, recognize that in fact *they* are the people there that drive the economy.
R: Yeah. Because as you mentioned, I’m so happy that you guys are doing that because bringing all these, like a video and art to get in and then kind of, uh, you know, raising the bar and, you know, and tell those stories. And a lot of them. Unheard of stories like nobody talked about ’em or maybe we have people that they want to tell their stories and we, we can’t do it, but, you know, merging this all together with the art media and the community across the us. That’s amazing. That’s by itself is a huge project.
It is a huge project, but it’s a project that I passionately believe society and culture can get behind. And, and hopefully our system of education gets behind that. A great many of us have been concerned with the enthusiasm and the encouragement to focus on what’s called STEM education, science, technology, engineering, and math, stem.
Concerned?? Most people hearing me might go, why on earth would be concerned about that? Don’t we need people to know math and engineering?
Yes, we do. But let’s, let’s finish the point… concerned because… AI artificial intelligence and robotics and machine
learning – we’re actually coding software that can code. That replaces engineering jobs. I’m a big fan of what Jack Ma from China and what Mark Cuban of broadcast.com have been saying with recent popularity. They’re cut from the same perspective that I am, that we have to teach the arts. We have to teach history. We have to continue to teach young people sports and competition, because we’re going to create code. We’re creating robots. We’re creating create artificial intelligence that automatically invents the next generation of technology; and it does that without people.
What makes us unique and enables us to innovate? It’s the humanity. It’s the creativity. It’s the culture. It’s our understanding of history. It’s our understanding of competition. It’s Art that keeps us different from robots.
R: Paul, I have so many questions to ask you and a lot of topics in my head from the AI, from entrepreneurship, a startup name it, but I know you have a limited time, but thanks for being here where my audience, they can find you. I know you are very heavy on LinkedIn and I love your articles and I read ’em all the time.
Thank you for that. LinkedIn is Twitter and Facebook and Reddit all rolled into one for, for professionals. And so honestly, everyone should be there heavily. That’s a great place to connect because we connect professionally. I’m pretty easy to
find there. Just Paul O’Brien MediaTech Ventures is a great place to connect with our work with cities and startup programs.