Steven Hoffman – Founder & CEO of Founders Space

Episode 208

With enough determination, you can achieve anything! Steven Hoffman shows us this today. Steven is the founder and CEO of Founders Space, one of the leading startup accelerators in the world. He talks about how his passions for filmmaking and gaming started him on his entrepreneurial journey. We’ll also hear about Steven’s amazing new book Surviving a Startup, and his advice for entrepreneurs who are just starting out. Level up your business with this episode of #TheKaraGoldinShow

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Kara Goldin 0:00
I am unwilling to give up that I will start over from scratch as many times as it takes to get where I want to be, I want to just make sure you will get knocked down. But just make sure you don’t get knocked down knocked out. So

your only choice should be go focus on what you can control control control. Hi, everyone, and welcome to the Kara Goldin show, though, join me each week for inspiring conversations with some of the world’s greatest leaders. We’ll talk with founders, entrepreneurs, CEOs, and really some of the most interesting people of our time. Can’t wait to get started. Let’s go. Let’s go. Hi, everyone, it’s Kara Goldin from the Kara Goldin show. And I’m here with my next guest. Very inspirational guest. So Steve Hoffman is the Chairman and CEO of founder space. But he’s also recently written an incredible book, Surviving a startup, which is so so good. So we’re very, very excited to talk to him a little bit about his journey, and a little bit more about founder space, but also about his book. So he started his entrepreneurial journey in the gaming and entertainment industry, where he created his own game bazillionaire, and produce interactive TV shows for that little station called MTV, or I guess we don’t call it a station anymore, totally showing my age here, that little network called MTV. Then in 2010, he started founder space, which is ranked as the number one incubator for overseas startups by Forbes and Entrepreneur Magazine. Very exciting. So Steve has since provided consulting in the art of innovation. And to many of the large companies out there that you have heard of including Intel, Disney, Warner Brothers, NBC and Viacom. And as I mentioned, he’s also the author of surviving a startup and a few other books. He’s a serial author, and sharing lots of knowledge with us all over the years, which is really, really inspiring to me as an author, too. I barely got one out the door, I’m, I’m really, really anxious to hear how he’s able to do the others as well. But this book in particular, was just so incredible, and provides readers with everything they need to know to build a strong, thriving business. So we’re very excited to have Steve here. Welcome, Kara.

Steve Hoffman 2:40
It’s fantastic to be here. Yeah, very,

Kara Goldin 2:42
very excited. So take us back to the beginning, I always ask people a little bit more about who you were as a kid

Steve Hoffman 2:49
who I was as a kid. I was, I was a nerdy kid. So a nerdy kid who loves to create stuff. So I was always making something and my, my passions, were creating games. So but they weren’t computer games. At first, they were board games. So I was creating all sorts of board games and role playing games, like Dungeons and Dragons, but my own versions. And then I also created movies. So I’d get all my friends together. We do. I did over 50 movies. So I was very productive. And I had kind of a mathematical brain because my father is an engineer. And I had an artistic side, my mom’s an artist. So I, those two pieces of genetics fused together to make me and I sort of split between the two. And I wanted when I graduated high school, I really wanted to go to film school. And so because I’d been making all these movies, and I thought I could be the next Steven Spielberg, you never know. And I went to my father, and he said, you know, he’s, he’s an engineer, and he said, Son, computers are going to change the world, you should study computers. So you know, I respected him. And so I put my dream of going to film school on hold. I went and I studied Electrical Computer Engineering. And I did very well in Electrical Computer Engineering, but I wasn’t passionate about it. I just, it wasn’t who I felt I was. And, you know, I had all these job offers coming in. And I just, I said, No, I’m going to pursue my film dream. And I applied to NYU and USC film schools. I got into USC, I went there for graduate school, got my graduate degree. And it was fantastic. It was like the most amazing experience. And then I went on to work in Hollywood. And after that, you know, I’ve done many, many different things.

Kara Goldin 4:48
I love it. So you graduate from I’d love to hear that you followed your passion. And just as you were talking, by the way, what’s so interesting when you looked at the computer industry In the film industry, I think people thought that they were separate paths in many ways. I mean, today, look how that those worlds have just converged in so many ways. And it’s just it’s fascinating to think back, as, you know, people didn’t think and now I mean, as an engineer to you probably, I mean, more and more, it just they really do merge, right?

Steve Hoffman 5:23
Yes. All my startups have been at the intersection of technology and entertainment. So, and I was a computer gamer, too. So in high school actually got into coding and I coated my own game, which is the reason I said yes to my father, because I was like, Oh, I like coding. And I could, you know, do this. At a certain point, you know, as I worked my way up in the film industry, to a television development executive pretty quickly, I was very lucky, very fortunate. And when I was at, when I was there, I started, you know, games were just taking off, it was like the 90s. And Sega had just passed Nintendo as the number one video game company in the world. And one of the producers at the company. He, his cousin was the founder of Sega. And he said, You know, I could introduce you to my cousin, he’s the Chairman of Sega. And I said, Do it like, a dream? Yeah, I was working in Hollywood. But I was frustrated, because I wasn’t actually making films or television shows I was a TV development executive. And what they do is they literally look for projects, and Greenlight them, and then take them and sell them to the studios. So that was kind of my job within the organization, within our production company that I was working at. And I thought, you know, I don’t want to do this, like, I want to make something I want to be creative. Again, just like when I was a kid I was talking about, so I was like, send me the game company. And I went and met, the chairman told him all my ideas for games, he said, you’re hired, we want to bring somebody from Hollywood over there. You also have engineering background, we’re taking you to Japan. So I went to Japan, amazing experience, you know, working within a Japanese as the only Gaijin, which is foreigner in my department, and I was a could be creative, coming up with all these ideas working with the Japanese team. And then, you know, again, I’m very fickle. So after a certain amount of time, I was like, you know, I want to do my own company. I don’t want to just work for this big game company, I want to just go out and make my games like what I dream of doing. So I quit, moved back home, which is the San Francisco Bay Area, and started my first company again,

Kara Goldin 7:29
that’s wild. You know, I think so often, I think back on my journey, I never knew that I was never thought I was going to be an entrepreneur. People have asked me for years, did you? Always Were you born that way? Did you always think that you were going to be an entrepreneur, but I think after working for entrepreneurs, either directly or indirectly between Ted Turner and Steve Jobs and Steve Case, I mean, I started to realize that they’re, they’re very normal people, right, that there was just there was this idea. And this drive and this relentlessness that went on. But when I had an idea, I thought I should just go do this, because it’s more frustrating for me to know that it’s not out there yet. And, and I think, you know, that’s what I saw in your story as well, when I did a little bit of research. It’s like people think that it’s courageous, or that you’re a big risk taker? No, it’s just that it’s annoying, that it’s not there, right, this idea that actually go create

Steve Hoffman 8:34
in those are the best ideas, the ones that you know, like this should exist it, why doesn’t it exist? Hey, I could do this. You know, I read your book. It’s fantastic. Like, everybody should read that, by the way, because it’s so inspirational. So but I had many of the same experiences and feelings you did early on in my

Kara Goldin 8:53
career. That’s, that’s awesome. So you went, you went over to Japan, you come back to the US, and what did you decide to do at that point? So

Steve Hoffman 9:03
I decided I’m you instead of working for the man, the big Japanese company, I would come back and start my own game company, I would make the game I wanted to make and I had this vision I wanted to make, there were all these fighting games out there. And I want to make a non violent game. That would be as fun to play as any of the fighting games out there, but would teach people something. And of all things I chose to teach entrepreneurship, which is sort of what I do now with my books and founders phase. So I the game is called gazillionaire. And the game was designed basically to make you an entrepreneur in a really funky playful environment where you go out and you build your business, you hire people, you expand, you advertise you look at supply and demand. And when when I started the game, I didn’t have a lot of money. You know, I just been working a few years out of college. And I just put my own money on the table. I didn’t raise venture capital do any of that stuff. I just like you did at the beginning, I just invested my my sweat, equity and money and I knew how to code. I wasn’t the best coder. But I could code so and I drew the pictures, the artwork and everything. And I just put this game out there. And it was the early days of the internet, like early. And most most people weren’t on the web. It was that early, like so. All you could do people didn’t have websites only like universities and research institutions even had a website. So nobody had those. But they had what were called BBs bulletin boards. And I uploaded my game, to these bulletin boards that focused on shareware games. And then I told people in the game, if they want to buy it, since there was no e commerce, you literally had to send me a check in the mail to become towards cash in the mail to my address, and then I would send you a stack of floppy disks, which are the game. Guess who ordered the first game who a guy called Lord get? That’s like, Lord deck, you can imagine who’s on these bulletin boards, right? And he would he happened I was in San Francisco, he happened to be in the South Bay, which is, you know, only an hour where was this? So I said, this was this is a very early 90s. So what was it was 90, yeah, like 93, or something like that. Right? Very early on. And Lord Gak. So I get my first you know, he sent the cash, I got my first dollar from him literally as an entrepreneur. And then I invited him over for dinner, because I had to meet the first person who bought my product. So he came over for dinner, we’re having dinner, he’s this chubby guy with a goatee, just like you would imagine, you know, Lord get beat. And I didn’t know if I’d make any money on this game, because honestly, the the sales were trickling in from the internet. I mean, there weren’t that many Lord decks out there. So you know, buying games that they downloaded. So I didn’t know what would happen. But it just so happened that the largest computer game company at the time in the world was in the Bay Area. And their QA team, their testers, the guys who test all the games, had gotten a hold of my game, downloaded it from the bulletin board. And they fell in love with it. And so this big game company, MicroProse spectrum Hall byte, came to me and said, We want to publish your game we want to put in every store, you know, we want to put it everywhere. And I said, Great. And then we were off to the races. So they published the game, we negotiated deal, they put it out there, went on and made a whole series of these business simulation games gazillionaire zappitell, ism profit Tanea made them put them out there. They did extremely well. And in fact, they’re still selling today. You know, if you go there, like they haven’t changed

Kara Goldin 13:00
these games, people’s I love it. So this is such

Steve Hoffman 13:03
a go to steam. You can download them. Yeah, they’re they’re they’re really fun for adults. And then the games went on for a whole second life. Like they went into schools. After that they became used in high schools, middle schools, even colleges started using them. And they were even used by the California Correctional Institute institution, whatever that for rehabilitating criminals for teaching them entrepreneurship. So wild story, that was a wild story. Right?

Kara Goldin 13:30
Wow. That’s just never probably would you have imagined that it would have that would have been your journey, right? You just go start something and and, you know, every day, I didn’t

Steve Hoffman 13:41
know what would happen. But I knew I wanted to create those products. So like you with hint, I just knew I had to do that. I thought and I had a whole vision for it. And I just didn’t stop. I just kept going and that’s what happened.

Kara Goldin 13:57
And so fast forward, I know that you after then you create a love of mine, and spider dance. And so that was sort of the intersection of interactive TV right? At this point. Yeah, I mean,

Steve Hoffman 14:14
so then I thought, well, I should combine my Hollywood background with what I’m doing it with my artistic creative side, and, and my technical side. So I got together with some friends. One of them was a friend from film school. Another one was an engineer who quoted this massively multiuser game engine, literally game engine that he had licensed to Microsoft and they had run a big game on it in the very early days. So we saw an opportunity in the market, the we all got together, and we saw a chance to change the market. But our first idea in this is a lesson to many entrepreneurs like you with my game. Everything worked out perfectly the first time with this company, not not so so First, my first idea that I was passionate about, I said, you know, we should build a platform where anybody wants to make a massively multiplayer game, because all the games are on almost every game except for a tiny sliver of the market. We’re single player. And I said, so anybody wants to make a multiplayer game can come on our platform and just use it. That would be a big play. So I ran around the Bay Area talking to all these game developers, you know, I’ve met at different meetups and things like that, and asking, Will you use our platform? And they all said, I don’t know. Because it was the day when people didn’t use cloud platforms. They just they built it themselves, especially game developers, they built everything themselves, They prided themselves on. But some of them said yes. And the ones who said yes, though, the only one to give us a tiny amount of rev share. And then they wanted a huge amount of customization for their game. So instantly, it became clear, we’re too early for this, like this market isn’t here yet. It’s going to be too tough, we’re not going to get enough of the pie to really make sense. And we had no venture funding. So I was just, you know, living off the money I made from gazillionaire. So we want in my partners, you know, didn’t have as much money. So we all really wanted to get going. So we’ve pivoted, and we decided, wow, the internet was just coming into being like, at this point, it was the, you know, Netscape had taken off as a browser and Mosaic and people were down, you know, surfing the web for the first time and doing stuff. And we said, well, what, you know, the thing people like to do in those days was chat rooms. They had these chat rooms that people would go to chat. We said, what if we combine games with chat. And so people could go into these chat rooms and play board games as they chat it back and forth? Sort of, not really, though, kind of like Words with Friends and things like that, you know, the social games in Medusa very early days. So we made these word games, we put them out there, we call it jabber chat. And we we didn’t for distribution, we just we used JavaScript, JavaScript had just come out this technology that allowed us to embed into any website. So we embedded so basically, instead of having our own site, we went to all these other websites out there, hundreds of them, and got them to embed our chat in there while and we’re like, wow, people are embedding this, we’re getting all these users. But we weren’t making any money. We’re just getting a lot of users. And it was a very early days of the Internet wasn’t crazy. Like, venture capitalists didn’t just fund you. Because you had users and stuff. It was like, people were still figuring out what the internet was. And we go, we have to make money. So we heard that this company, which no longer exists today, had launched an ad network. And it was a totally new idea, like an ad network with banner ads. And we’re like, Oh, my God, that’s a great idea. We got to put those into our application. So we put them into our application. We had it out there. We actually won the South by Southwest contest first prize for interactive, so jabber chat one, and then we put it out there, and we waited a month to get our revenue. Guess what happened? We got our first check. $13.58 wasn’t enough to even like buy pizzas for all of us. We were like, so. So we were like we can’t survive off this ad revenue. There is no money in advertising. In those days, there was nothing. It’s a different world today. So we basically had to ditch that idea. And then we heard that MTV was launching their first interactive TV show. And we said, well, what if we took our engine? All right, we’ve developed and synchronized it to television. And that was the that was the path we went on.

Kara Goldin 18:42
That was the lucky the lucky break. At that point, was it?

Steve Hoffman 18:45
It was crazy. We were like we are entrepreneurs. So we were called literally calling up MTV, like calling them up, leaving voicemail messages for the senior vice president of interactive. We are spider dance, we have your solution.

Kara Goldin 18:58
I remember. He did love this. What did he do?

Steve Hoffman 19:01
He never called us back? No, never. But my partner, she’s an amazing person. She got invited because of her previous job that she had before this to speak at CES. So she didn’t turn that down. So she kept that speaking engagement, went to CES was on a panel. And then she started to talk about what we dreamed of doing. We hadn’t built it yet, but that we were going to build this interactive TV platform that synchronized broadcast television to online, you know, interactive games and other things. After her talk, this guy comes running up from the audience pushes past everybody looks at her and says you have exactly what I need. I am the Senior Vice President of MTV,

Kara Goldin 19:46
and he didn’t realize that you guys had been calling. I mean, it’s

Steve Hoffman 19:50
she looked at me. She goes, she goes I know we’ve been leaving voicemail messages for the past three weeks. Oh my gosh, that’s literally we had a deal signed. Within a few weeks, and $350,000 in the bank, and that’s how we actually got

Kara Goldin 20:05
going, well, it’s a story of you just keep going right and figuring out a way, like, what can you do? As I always say, you know, yeah, no way, I think that you just, that’s the key to great entrepreneurial stories is that they just didn’t give up. Right? They, they tried to figure out other ways to get people to

Steve Hoffman 20:27
always you’re always coming up against some obstacle, it’s always something you don’t expect, like out of the blue, what was the chance he would be in the audience like this guy we haven’t. We had been stalking and not being able to get through it was in the audience, and then we could do a deal. But if you’re not, if you don’t go to those things, if you don’t, if you don’t try, you’ll never get there. So you just have to try every possibility. And you know, I did that. I did that company, I did two more venture funded companies. And then I launched what I’m doing today, which is founder space.

Kara Goldin 20:57
So tell us about founder space, she launched it in 2010. For those people who are not familiar with it, tell people about founder space.

Steve Hoffman 21:04
So founder space, is a startup incubator and accelerator and I really was just, I launched it also, again, kind of as an accident. I was taking a break from all these startups I had done being a serial entrepreneur, and all my friends started to come to me and my gamer handle is Captain Hoff. That’s my nickname. And they’re like, tapped in off, can you? Can you help me? How did you raise money? How did you do this? How did you put together an investor deck? So I started to help them. And I found that they all had very similar questions for most entrepreneurs. So I created a blog. I called it founder space, and I started to post the answers. As soon as I did, that, more entrepreneurs started to reach out to me and contact me ones I didn’t know who weren’t my friends. So I, so I said, Okay, let’s have roundtables. So we go to a cafe in San Francisco, get the entrepreneurs together, get some lawyers, some angel investors all of us together, and we help the entrepreneurs. And that was the birth. after that. The entrepreneurs told me what do you have a space, I’m like, I don’t have a space. You know, this is over a decade ago in San Francisco. It’s really expensive to rent stuff. And you know, I was just doing it for fun. But I knew one of my friends. He was running a co working space in the city. And I went over to him and I went down to his basement. And it was just packed with junk. But it was huge, like enormous basement, like right in the heart of Soma, which is the startup startup district of San Francisco, right? And I was like, Can you clear out this junk? And we can open founder space here? Like, can you do that? He said, Sure. We’ll have it out in a month. Boom, that’s that’s then it became real.

Kara Goldin 22:47
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Steve Hoffman 26:04
there is. So zero, well, if you’re a serial entrepreneur, and you’ve gone through all the pain, and mistakes, then you’ve learned a lot. And hopefully you don’t make the same mistakes again, but for first time entrepreneurs, they, a lot of them haven’t. And so they unless they do their homework, and get really good advisors, read a lot absorb a lot of information, you know, it’s very easy to make mistakes. And this is why the majority of startups just don’t succeed at its, and I will tell you the top three reasons that top three mistakes that entrepreneurs make. So number one mistake is that, it seems counterintuitive, but a lot of them stick with their idea too long. And you know, in your book, like hint, you stuck with it. And it worked, right. But a lot of times what is in people’s head, and what’s in reality, are not the same. So they believe something can work when there’s and they literally I’ve seen entrepreneurs who spent years, either developing amazing technology, or building a perfect product like bug free like pristine product, but they go into the marketplace and there’s nobody cares, like nobody really needs it. They thought they needed it, but they don’t really care. They were like, Oh, that’s a nice, you know, go away, you know, we don’t really need that. And so what entrepreneurs need to do is like with your, in your case, you knew you wanted it like you were the customer. So if you are the customer, a lot of times your intuition is right, because you if there’s a lot of people like you, there’s a market there and you’re passionate about it, they’re passionate about, there’s something there. But if you’re not the customer, you really need to get out into the immerse yourself with the customer and figure out what’s in their head, it doesn’t like I have a rule, I like to say, it doesn’t matter how much you love your product, that doesn’t matter, it really doesn’t matter. It matters how much they love it, like whoever your customer is, they have to love it. So if they’re not totally, like if you go to your customers, and they they all tell you oh, that’s that’s a good product, you know, you go to 100 customers and they go off. That’s a good product, I would tell you, you’re gonna probably fail. And you’re like, why everybody said it was good? Well, the reason I think you’ll fail, is because nobody gave you the reaction you really need. And the reaction you really need is not it’s good. It’s Oh my God, I want that. I want that. Now, I want to try it. Can I have it? How can I get it? You know, it doesn’t have to be every person in the world that you talk to, but there have to be enough of them. Who give you like, can you know? Can you sign me up for the beta? Can you give me a sample of that hint, drink? I want to try it like I’ve been looking for something like that. So true.

Kara Goldin 28:54
Yeah, yeah. No, it’s so true. Because I think also, you know, as I always say, family and friends are the worst, right? Like, they’re, they don’t, they’re, they don’t want you to take the risk. But they also want to be nice, right? And so, like absolute worth it, I would definitely do it. And they’re not really, you know, that’s what I always It’s funny, when I’m listening to you talk about this, people would say, Oh, that’s so great that you started a new company. And I didn’t even really think of it as a company until I got it on the shelf at Whole Foods. That’s when I started to say, Okay, now the rubber hits the road and I’ll see people who don’t know that I’m starting this company, whether or not they buy it, and what happens. And so one of the things that we did, that really wasn’t done in the beverage industry 16 years ago, but was done in the gaming industry in the tech industry was we put a customer service, email and phone number on our bottle. And peach is so unusual in those days. Yeah, people call this and they and I mean We just were like, oh, that’s what we knew to do in tech, but people started calling us and we could hear, we could read their, their, you know, engagement with this with this product. And, and then the other piece of it was, why they liked it. Because that’s the other thing that I, I’m, I’m sure you’ve done a million focus groups over the years, I’ve just found like, you know, you can trick these focus groups, right, and but when you ask people, when they like your product, and then you ask them why they like your product, what I started hearing over and over again, was the healthy Halo. And that we were solving a problem for them. That was hard. So type two diabetes weight, they never enjoyed water, whatever it was, that was all kind of health. And that’s what got me so interested. And that’s what made me confident. Now I had now the problem was, I need to go find more of those people. So I mean, not that really was the key thing. But go back to your two and three,

Steve Hoffman 31:06
it’s like with him, it’s better to have fewer totally passionate users who are just crazy about it, then lots of people who are like, Oh, that’s pretty good. You know, those people, we only buy what we really care about at the end of the day, like, if so, your advice. And what you did is exactly what I tell entrepreneurs, I’ll give you some of the other Yeah, I love it entrepreneurs. So another mistake entrepreneurs make is, when they go, Well, let me fix this, I’m going to switch gears. So first, the first thing you should do, even before you go to the customer, this is the first thing I tell entrepreneurs, and they usually don’t do this, they get so excited by their idea, they just dive in, what they don’t do is spend enough time building their team, like having great partners. So I found that it’s so important, if you just take anybody who happens to be there, it it can really cripple your company. And because execution is such a hard thing. And I looked, I look at the entrepreneurs, the ones who spend, you know, I tell them spend 80% of your time right up front, trying to find the people you need to carry out this vision, like whatever you need to get to the next level, get those people on board, it doesn’t have to be the complete team to take you all the way to IPO. I’m just talking, you know, the next six months year, who are those people you need, get them on board first, and put them get them in the get them thinking with you, not you telling them what to do, but going out into the marketplace with you. And I also say just don’t even you know, you don’t even have to have an idea. A lot of great companies are born by people who know there’s a problem out there, but they don’t know quite what the solution is. But when they start to engage, it becomes apparent, the solution becomes clear. So that’s the next piece of advice. And I’ll give you the third 1/3. One really important is what is your business model. So there are different types of businesses. And some businesses can grow really fast. And those are the ones like a founder space we focus on we’re tech, we’re in Silicon Valley, we focus on those entrepreneurs. There’s other businesses that are more slow growth, which is fine. But you really have to understand what you’re going what you’re doing, I get approached by entrepreneurs all the time, who a lot of them are doing like a consultancy business, and they want to raise venture capital. And I’m like, it’s just not gonna happen. Don’t spend your time trying to raise money for this. Because these businesses grow slow. You have to find talented people with certain skill sets to be your Coast consultants, you have to retain them, you know, these companies can take decades to grow. That’s not the model doesn’t fit the model for investors, they want to get their money out fast, you know, 10 years or less if they can. So don’t do that. The other thing I say, if you want to build one of these hyper growth companies, one of these unicorns, everybody dreams of having, what you need to do, is don’t do a business, which is a big mistake, where you get a customer, you sell to them once, and they go away and you never see them again. Such a hard business. Because there’s a lot of people make these gadgets, they put them up on Kickstarter and stuff, they think it’s going to be a big business so hard that people come they buy their cool gadget, they have nothing else to sell them, they disappear. And then they have to spend money to acquire a new customer. And the biggest cost for any company or using the employees and the customer acquisition costs, like those are really expensive for companies. So if you can get a customer in, hold on, like, give that customer continual value over and over and over. It’s so that customer sticks with you. Then even if they’re giving you a little bit of money, like one bottle of hint every time they engage with you, right you’re making a little money over their lifetime. It can add up to a lot of money, which is the sign Have a great business. So like with him, you know, your core customers, the ones are the repeat customers, I’m sure like the ones who buy over and over and over. And once you get them and you’ve like expanded your flavor lines, you know, to keep them engaged and you know, appeal to a broader set. That is so important in in technology. When you get into technology, it’s even more important. Yeah, because if you look at all the big winners out there like that the companies like the Google’s the Microsoft’s, the Facebook’s, the Twitter’s, it doesn’t matter what they are the Ubers, all these big winners, they have one thing in common, that’s first of all, they get a customer. Second, they have a recurring revenue, they walk away, they basically get that customer give them money, and they give them value. And the third thing is really important, this is what makes a company hugely, not just profitable, but dominant in the market, where nobody can displace them in that is, when they bring in a customer, that customer, the more of the customer engages with them, the more value they create, not only for themselves, but for everybody in the network. So everybody involved. So if you look at like Amazon, which is dominating right now, it has these these ingredients. Exactly. So number one, when it when I shop on Amazon, like I like to shop there, not for the price, they don’t always have the lowest price, but for the reviews, so I can know I’m buying the product I want. If you look customers are making those reviews, right. So the more customers engage and review, the more valuable Amazon becomes for all the customers. Number two, they have a two sided marketplace. So they have they have buyers and sellers. So the more buyers there are, the more sellers come in, the more sellers come, the more competition and variety and price competition for the buyer. So they create value for each other. The this combination is really, really important. And if you look at other companies out there, they have the same sort of dynamics,

Kara Goldin 36:57
I love it. So I feel like that’s another thing that you guys are doing and your crowd crowdsourcing exactly how others have done it, you’re not just all about one company to I mean, one thing that I think I’ve learned over the years to and where I’ve gotten the greatest thinking is actually to be around other companies, not just sit in my own company, right and talk to each other about what we’re doing, but also see what others are doing. I think it’s a very important time for people to kind of see what are the other revenue models? What are the mistakes they’ve made? What are you know, how have they grown their business, all of those things? So can you speak to that a little bit?

Steve Hoffman 37:38
Yes. So this is exactly the value that like I would provide and founder space, as an accelerator would provide is that first of all, I’ve done my own companies. So I’ve been in the trenches. I’ve you know, I know what it’s like, I’ve learned a lot there. But I’ve learned even more working with all these other entrepreneurs in different fields with different problems, you start to see patterns, you start to see things like I’ve been describing to you a few of them that really click and make sense. And then you can look at another startup a new startup and say, Hey, if you just tweaked it, and went this direction with what you’re doing, you, you could be on a really good path to growing your company. But if you go in this other direction, I’ve seen seven other companies do it. And and it’s just a dead end. So that type of value from me, from the other instructors, we have a founder space, but also from the other entrepreneurs, like criticizing each other’s helping each other’s learning together. And that community is so important because like you did it and you’re alone, like in your book, you’re, you’re like kind of on your own. And I was on my own to that, you know, these were the early days that weren’t really all these incubators and stuff. So it it was emotionally, it can be kind of hard like you can you can be at a point where you think, Oh, this will you know, every company I did, at a certain point, I was sure it wouldn’t work. I was absolutely sure. So when entrepreneurs hit that point, I tell them, You’re gonna hit that point, like there’ll be a point where you, you’re sure it won’t work. But trust me, you can figure it out.

Kara Goldin 39:09
Yeah, absolutely. There was a few different areas in your book, which I really loved a lot. One, you talk about doubling the productivity of your employees. Can you speak a little bit about this?

Steve Hoffman 39:20
So I, and I think this is a section you’re talking about, I have a rule. And it’s like how to manage employees like how to get employees to be more innovative, how to get employees to be more engaged, you know, all these entrepreneurs asked me how can I make the employees as passionate as I am, I’m the founder like I want them to care as much as I do. Like, you know, every founder wants this like you want your employees to be on fire. So you don’t get it by telling them what to do. Honestly, like work harder. Do this focus on that. No, no, no, don’t do that. Don’t. If you are constantly telling them what to do. What you’re doing is you’re turning them into Robots, like they are literally waiting for you. Well, if my boss really knows what my boss wants to do, so I want to please my boss, so I’ll wait for my boss to tell me. So I don’t do the wrong things, I do it the right way. So I do. And the more controlling you are that way, the more robotic they become, they literally just conform to what you want. What you really want to do. And this is my rule, I call it ask, don’t tell. So if you want to double the productivity of your employees, for one week, I want to challenge all your listeners care, all of them out there. If you’re in a company, you could be a manager, it could be your own company, you know, even a corporation doesn’t matter. For one week, try this. Don’t tell a single person who reports to you or collaborates with you what to do. It’s really hard, like, so hard to do it. It’s so hard like because you know what needs to be done. And you don’t want to, you know, waste time, you just want to tell them get it done. But this is how you do it. So everything can be phrased as a question. So you can go up to your your your employee and say, what are you working on now? And you can say, oh, is is that your top priority? And if you think it’s not, you could say well, why isn’t that your why is that your top priority? Then you get them thinking, you know, what, why have you thought about this, in in the process of doing this by not telling them it might take a little longer. But first of all, you are saying? Well, you’re learning something, you’re learning why they chose to do that, like you might not know that there’s something important that there they think needs to get done that you didn’t even weren’t even aware of, and maybe it is a bigger priority than what you were about to tell them to do. And you’re getting them to think, you know, going up to them and saying what should our top priority be, you know, our overall goals? Where should we go? Where would you go? If you’re, you know, let’s say producing an event, instead of telling them how to produce an event that you’ve produced? 100 times you say, how do you think we could make a better event? What would you do? You know, that would would make this event really stand out? Boom, you just hit you know, all their neurons are firing, my boss just asked me how to make this event better than everything anything we’ve done before, instead of telling me, You know what to do after

Kara Goldin 42:14
make it? Yeah, no, I think that’s great advice. No, I absolutely love that. I get asked this question a lot from founders and like, how do you? How do you know which investors to pick? I mean, outside of, you know, get making you unicorn status, and all the things that people think that they want? I mean, what, what’s a good investor? And what is how should an investor support a founder? What are what are sort of your opinions on that, too, for any listener sitting on either side,

Steve Hoffman 42:50
in my career, I’ve had amazing investors, and complete terrorists, like investors who are like, really nightmares. One, I even gave back the money to like, I don’t want your money, like you’re too much of a headache. So first thing you do is investors are becoming your partners. So it’s like getting married, like they are coming into your company. And a lot of them will take a board seat, which means they actually have control over your company a degree of control, maybe full control if they have the majority of the board. So you need to be very, in the same way you would choose an employee. And the same way you would choose a partner for your business, you have to apply that to investors, that means a couple of things. Number one, not just looking at them as a source of money. And I’m not talking about small investors, like if they’re just an angel investor, and they’re not going to be active in your company, and they’re just giving you, that’s fine. You don’t want to take an angel who’s a nightmare. But you know, but I’m talking to bigger investors who have a bigger stake and a bigger say over your future. So especially at the board level. So these investors, you should look into their background, you should ask other entrepreneurs who’ve worked with those investors like say, enter, tell me the companies you’ve worked with. And honestly, it’s in ask them to tell you the companies they’ve invested in that have failed, not the ones that have succeeded. Because the ones who have succeeded, they’ll say nice things because it all turned out, okay. You know, they’ll usually just say nice thing. But then when things go wrong, that’s when people get nasty. The things come out, and they’re really, so you if you can talk to someone, and then you need to read between the lines you need to get when you’re just like when you interview a former boss or co worker of an employee, they’re usually going to say things in very subtle ways, because most people won’t just vent and diss the person, especially if you’re getting the reference from them. So you need to read between the lines very carefully. So if they’re not saying glowing things about this investor, they’re not saying oh, they were amazing. They were so helpful. They did this they did that. If they’re saying yeah, they were okay. You know We had a, you know, our issues but things worked out fine, then you know, it was a nightmare. something subtle like that you’re like, No, that was not good at all. Yeah. And then you try to get people like using LinkedIn or other sources, look at the companies they’ve invested or you know, read old news articles find out, see if you can track down some people they don’t recommend, just like with employees, like the ones that they’re recommending, usually they vetted. So they’re more than likely to give a positive story, but you want to find out the other ones. The next thing really important. Can you talk to this person? Can you communicate? Are you on the same page? About your your company? You know, do you share the same values? Do you see the company developing in the same way? Because if you don’t, those are all big red flags. Like those are gonna come back to haunt you.

Kara Goldin 45:47
And what do you do when you’ve got that situation to? Like, maybe? Right, and you’re, you’re in it. I mean, this is, uh, you know, I’m sure there’s founders out there CEOs that are out there startups, and they’re like, Oh, my God, I had no idea what in this is not what the marriage is, like, seemed like it was gonna be and now it’s now we’re here. What do you do? Yeah, we

Steve Hoffman 46:11
know people get divorced all the time, you know, people don’t get along. So this happens in companies all the time. So when but when it’s an investor, when they’re on your board, it’s not like an employee, you can see you, you know, you’re fired, if you know, they’re there, and they’re gonna stay there, and what you do. So the first thing is, number one, create the best environment you can with your board of directors. And this is really important. When you engage with your board, I have a rule. And it’s a rule I didn’t in my early startups, I didn’t quite follow because I didn’t really no. So what you don’t want to do is sugarcoat what you you, you tell them, you don’t want to give them news that is better than reality. Like, it’s very tempting, because you’re in sales mode, like you’re the CEO, you want this company to succeed, you are always saying it’s the greatest thing it’s going to work out, we’re going to be successful. So you tend to filter out the negatives. But when you go to your board, these people are helping you steer the company, these people will see what actually happens is six months from now, you know, a year from now. So if you feed them false information, they’re going to be giving you flawed advice based on incorrect data that they’re getting. So if your sales aren’t taking off, don’t pretend like they’re on the verge of exploding, you know, say, Look, we’re having problems with the sales, you know, the customer, the customers aren’t engaging with our product, they’re like leaving to you know, much earlier than we thought were the lifetime value isn’t what we expected, then you go to them with that, first of all, it’s on their radar, they respect you more, you’ve laid it on the table, you’re not covering anything up, you don’t have to be defensive. Secondly, you’re like, how do we solve this problem? Go to them, like, you know, we need we’re in this together, we need to figure this out, like, you know, experts who can come in and help me or advisers? Or do you know, do you have experience with other companies really important to get them working with you not seeing them as adversaries not seeing them or somebody you have to manage their who you know their information and try to control their reaction, you really want them to treat them like they are your partners in the business. If you do this, you can avoid a lot of the problems that actually go on. There are problems that are irreconcilable. Like literally they get to the point where I had an the one of the investors who I gave back the money they are threatening a lawsuit like and I was like, lawsuit like the last thing I want is a loss. Like it’s easier for me to get back the money then like go into that morass. So you know, there’s certain in this person had a history of lawsuits they had like 14 going on at the same time. So I was like, there’s no doubt when they’re threatening a lawsuit if they have 14 other lawsuits in progress that this lawsuit will happen. So I was like, No, so you, I didn’t vet that investor carefully enough. So you it’s really important. When you’re engaging with them, it at a certain point, you have to cut your losses, right. So things aren’t working. You have to figure out a way out. Hopefully you don’t get to that point.

Kara Goldin 49:18
Yeah, no, definitely. And I think there’s also I mean, I’ve heard stories to where there’s different stages of investors as well. So there are some times there’s even early boards mirror, maybe you end up doing buyouts of certain investors. I mean, that stuff happens it doesn’t mean that you’re that you can’t survive as a startup. I’ve also seen that in many, many different industries as well. So I love that advice. That’s so so great. So and so much of this information and inspiration. You say you said like yours is your book is more educational, but I do think it’s there’s a lot of kind of, you know, Some hairy situations and they’re there that I felt like I was thinking, oh, gosh, that stuff could happen along the way. And and, you know, I just I feel like this book kind of is a is a, you know, hopefully it doesn’t happen, but it might sort of thing happening. And it’s really, really good. It’s a quick read to. But it’s one that I’m definitely keeping on my bookshelf as well, because I think it’s, it’s one that I want to share with a lot of startups that are out there to her who were in it. So I absolutely love it surviving a startup and founder space, I think I need to do another startup. So I can come and spend some time and founder space. And

Steve Hoffman 50:42
oh, yes, we’d love to Hi, no, I

Kara Goldin 50:44
absolutely love it. Because there’s so much here and so many, so many things that I think I could probably add some sort of opinion on. But also I love to hear just from you. And and you’re just so wise on on.

Steve Hoffman 51:03
Well, I’d love to have you mentoring startups. Yeah, I’d love to introduce some entrepreneurs to you. Yeah, they can learn a lot. I love

Kara Goldin 51:09
it. So this is so great. So Steve, were two people, obviously surviving a startup at bookstores and Amazon. But where do people find out more about you? And about all of your other books as well? And just overall founder space?

Steve Hoffman 51:24
Yes. So I’m super easy to find founders Just go to founder space, you can contact me there. If you put your other contact form. If you put my name in it, it will go to me, I promise. And I do respond to every email. And there’s also just a ton of educational stuff there. Lots of videos, you know, my own podcast for entrepreneurs, lots of stuff. And if you want to reach out to me personally, you can also go to LinkedIn, I’m on LinkedIn look for Steve Hoffman, founder Space Captain Hoff, you’ll find me

Kara Goldin 51:55
I love it. Well, thank you, everybody, for listening. And thanks, Steve, for sharing so much of your wisdom with us. And definitely thank you everyone for coming and hopefully subscribing to the Kara Goldin show and give this specific podcast five, five stars on Apple or Spotify or your favorite platform. And also follow me on all social channels at Kara Goldin with an AI and hopefully you’ll get a chance to purchase my book on Audible or in any bookstore undaunted, overcoming doubts and doubters and of course pickup a case of hint, as well. We have lots of yummy flavors in many tech offices across America. And thank you so much for listening. And thanks again, Steve. Goodbye for now, everyone. Before we sign off, I want to talk to you about fear. People like to talk about fearless leaders. But achieving big goals isn’t about fearlessness. Successful leaders recognize their fears and decide to deal with them head on in order to move forward. This is where my new book undaunted comes in. This book is designed for anyone who wants to succeed in the face of fear, overcome doubts and live a little undaunted. Order your copy today at undaunted, the book calm and learn how to look your doubts and doubters in the eye and achieve your dreams. For a limited time. You’ll also receive a free case of hint water. Do you have a question for me or want to nominate an innovator to spotlight send me a tweet at Kara Goldin and let me know and if you like what you heard, please leave me a review on Apple podcasts. You can also follow along with me on Facebook, Instagram, Twitter and LinkedIn at Kara Goldin. Thanks for listening