Rise and fall: Three Lessons for Entrepreneurs

Thanks to Walker Corporate Law Group, a boutique law firm specializing in the representation of entrepreneurs, for supporting A Smart Bear this month. This post is by Scott Edward Walker, the firm’s founder and CEO.  If you like it, check out Scott’s blog and tweets @ScottEdWalker.  He’s also writes a series on VentureBeat called ”Ask the attorney“.

“The essence of profound insight is simplicity.”
–Jim Collins (Good To Great)

Introduction

This is the story of my father, Burt Walker, a poor kid from Brooklyn who made millions taking the company he founded public — and then lost it all when he left my mother for a younger woman.  I am sharing this personal story to help entrepreneurs.

Setting the stage

My father was raised in Brownsville, a poor section of Brooklyn, New York.  He had an absentee father, a crazy mother and a wild younger brother.  He worked from the time he was 9 or 10 years old, including selling ice-cream sandwiches at the Coney Island beach.

My father’s father, Arnold Walker, was the son of immigrants who arrived in this country with nothing but the shirts on their backs.  Grandpa Arnold was a tough, Golden Gloves boxer, who worked at the local railroad and then opened a hardware store with his brother.

My father’s mother, Goldie Buch, was a High School beauty and then lost her mind somewhat due to medication administered to her during my father’s birth.  Grandma Goldie stayed at home and raised the two boys, but had few tools to cope.  For example, she rarely cleaned the apartment and kept three types of milk in the refrigerator: fresh for my father’s brother; a few days’ old for my father; and sour for my father’s father (who was rarely around in any event).

My father was a good High School student and was accepted for admission at the Brooklyn Polytechnic University, where he studied electrical engineering and paid his way by going ROTC (i.e., by joining the army).  Upon graduation, he married my mother and was stationed at Fort Bragg, North Carolina for two years, where I was born.

Our family then moved back to Brooklyn (where my brother was born) and then to Long Island into a small house my parents purchased with a loan from my mother’s father.  It is here where my father began his 15-year journey from entry-level engineer at Western Union to founder and CEO of Walker Telecommunications Corporation, a NASDAQ-listed public company.

Lesson #1: Work Hard and Be Patient

My father was intensely driven to prove himself.  Deep down, he always felt like “the poor kid with the crazy mother” (as my mother’s mother referred to him when she initially forbade my mother from marrying him).  But his insecurity and drive created in him a powerful work ethic and singular focus to succeed.  Indeed, this is why many CEO’s and other business leaders prefer hiring hungry, working-class guys over the wealthy Ivy-leaguers.

[Editor's note: For me too, "insecurity" and the desire to "prove something" to no one in particular is a primary driver. It also results in Impostor's Syndrome and other undesirable side-effects, but if you're conscious of it you can keep down-sides under control.]

In addition to his strong work ethic, my father had an extraordinary ability to be patient.

My father spent the first 12+ years of his career working his tail off at several different companies.  He even went back to school at night for four years and obtained an MBA-equivalent in electrical engineering.  I remember as a little kid watching him come home from his “day job,” have a quick dinner, and then get back into his car to go to “night school.”  In fact, looking back, it seemed like he had a master plan that he knew from the start was going take many years to execute.

Unfortunately, many entrepreneurs today are looking for the quick home-run — the lottery ticket.  Other than in very rare circumstances, however, it just doesn’t work that way.  You have to grind it out for years to succeed: seven years, ten years — maybe even longer.  Day in and day out — pushing that big rock up the hill, one step at a time.

As David Heinemeier Hansson (the creator of Ruby on Rails and a partner at 37signals) notes in a recent speech to Stanford students:

“Nobody is an overnight success.  Most overnight successes you see have been working at it for ten years.  And that’s exactly how it was for us.” [starting at the 0:12 mark]

Gary Vaynerchuk (the founder of Wine Library TV and the so-called “Social Media Sommelier“) made a similar point in a speech at the Web 2.0 Expo in New York:

“I used to work in a liquor store from seven in the morning until ten at night for seven straight years, and the only days-off I took were to watch the New York Jets.” [starting at the 3:20 mark]

Mark Cuban (billionaire entrepreneur and owner of the Dallas Mavericks) has a similar story, as he discusses in this video:

“I went seven years — literally seven years — without a single vacation.  I didn’t take a day off — I didn’t go anywhere — I didn’t do squat.”  [starting @ the 4:07 mark]

Work hard and be patient.

Lesson #2: Build Strong Relationships with Key People in Your Industry

When I was about 14 years old, my father quit Comtech Telecommunications Corp. (“Comtech”), a small public company in Long Island where he was the Director of Marketing, and launched his own consulting firm.  This was the beginning of something big — very big.  While at Comtech, my father had developed strong relationships with a few key senior executives at Nissho Iwai Corporation, a huge Japanese trading company.  They now wanted to retain his services to help them sell satellite earth stations and other telecommunications equipment to US-based companies.

This relationship with Nissho Iwai would become the foundation of Walker Telecommunications Corporation — and it took years for my father to nuture and grow.  I remember him reading book after book about the Japanese culture and customs, and I remember his many trips to Japan — when my mother, brother and I wouldn’t see him for weeks at a time.  Indeed, I still have a few of his postcards in my childhood scrapbook.

And this is lesson #2 for entrepreneurs: build strong relationships with key people in your industry.

Many entrepreneurs don’t understand the importance of building strong relationships — or even understand what a strong relationship is.  Building a strong relationship requires time and effort and usually requires providing the other party with some kind of value.  Yes, give and you shall receive.

Strong relationships aren’t built overnight.  Nor are they built by merely following someone on Twitter or friending someone on Facebook.  Perhaps that’s a start, but that’s all it is.  The same way passing-out business cards at an event is just a start.

Indeed, building a strong relationship takes time because the other party must learn to trust and respect you.  That’s why college or business school is often a good place to build relationships.  You are spending years with your fellow classmates; you are developing friendships and trust; and you are working on projects/schoolwork together.

A job is also a great place to build strong relationships — with your boss, your co-workers and/or your customers.  How?  By working hard, by producing, by acting with integrity and by being likeable.

As Tina Seelig, Executive Director for the Stanford Technology Ventures Program, explains in this video clip:

“It is a very small world… You are going to bump into the same people again and again and again… You need to make sure that the relationships you build now and as you move forward are ones that you’re proud of … and are not going to come back and bite you in the behind.”

Gagan Biyani, the Co-Founder and President of Udemy, discusses in this video interview with Andrew Warner of Mixergy.com how his initial fundraising failed because he did not have any strong relationships:

[N]one of these people knew us. … We’d show up at the pitch meeting, and we were some random guy who came in through an introduction.  It was really hard to convince them that we were worth their time.

So what I did for the next six months after that, after we had failed and closed down the fundraising process, . . . I spent the entire time meeting as many people as possible.  So I’d go to tons of Silicon Valley events.  At night when I was dead tired from working all day, I would get myself up and get in the car and drive over to San Francisco or drive over to Palo Alto and attend an event and give out my business card and get business cards.  And that was super important because I got to know a lot of these investors.  Like Dave McClure definitely saw me 15 times before he invested in my company.  He met me at conferences, he met me at dinners.  I attended his events.  I was friends with all of his friends. . . . So when I go to raise money, he’s like, “Oh, I kind of know this guy.” [starting at the 35:39 mark]

Lesson #3: Don’t Mix Business with Pleasure

My father was very successful in his consulting position and was instrumental in a number of significant sales of earth stations and satellite equipment.  Accordingly, Nissho Iwai developed so much confidence in my father that they offered him the exclusive right to sell in the United States high-tech business telephones manufactured by a top Japanese company.  As a result, Walker Telecommunications Corporation was born.  This licensing agreement was indeed so valuable that my father was able to sell the story to Wall Street and go public, raising millions of dollars to scale his new company.

From there, the company’s growth was extraordinary — with expansion into other markets, including car phones, cell phones, fiber optic networks and other telecommunications equipment, and offices in New York, San Francisco and Toronto.  In fact, by the time I was a freshman in college, Inc. magazine named Walker Telecommunications Corporation one of the nation’s fastest-growing companies.

But then it all came crashing down about five years later.  Why?  Probably a few different reasons, but the one that stands-out above all others is my father’s relationship with the wife of a company employee, the head of sales on the West coast, whom he eventually married (and then divorced).  She was also a headhunter, and my father started utilizing her firm to hire key executives at the company.  Needless to say, this was the beginning of the end — and the third and final lesson for entrepreneurs: Do not mix business with pleasure.

Now, no matter how many times entrepreneurs hear this basic advice, there will always be a handful who will ignore it.  “What’s the big deal?”  “Who’s going to find out?”  “Why should anyone care?”

Folks: It doesn’t work!  Do not mix business with pleasure!  You have to separate your company (and running a business) with your personal life.  Just ask Mark Hurd, the former CEO of Hewlett-Packard, who was terminated as a result of his relationship with Jodie Fisher [shown at right], an actress and reality-show contestant hired as a contractor for HP.

As the Wall Street Journal aptly points out in their post, “When Workplace Flirtations Go Bad“:

[T]he [Hurd] fracas serves as a reminder that office relationships can be fraught with landmines.  Even strong flirtations among co-workers that don’t culminate into full-blown affairs can have real and serious consequences — and can change the mood and equilibrium of the office.  For one, it can be tough for other co-workers to concentrate when two colleagues are engaging in flirty banter or making googly eyes at each other.  And if feelings change or aren’t fully reciprocated within the couple, then office tensions can run high.

David Letterman also learned the hard way about office affairs and discussed this issue and the related alleged extortion on The Late Show about a year ago.

Conclusion

The foregoing lessons are simple: (i) work hard and be patient; (ii) build relationships with key people; and (iii) don’t mix business with pleasure.  Like anything else, however, it’s the execution which is so difficult.  Good luck.

Do these lessons resonate with you? Will you do anything differently as a result? Have your own stories? Let’s continue the discussion in the comments.

© 2010 Scott Edward Walker. All rights reserved.

Thanks to Walker Corporate Law Group, a boutique law firm specializing in the representation of entrepreneurs, for supporting A Smart Bear this month.  This post is by Scott Edward Walker, the firm’s founder and CEO.  If you like it, check out Scott’s blog and tweets @ScottEdWalker.  He’s also writes a series on VentureBeat called ”Ask the attorney“.

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  • http://www.friendlydingo.com Ryan

    I’m not sure if the author will be around to answer comments…but what are your feelings on people already in relationships starting businesses together? Naturally it can also go sour, and often does. However anecdotally my parents have run a company together for the last 14 years and made it work pretty well. I think a large part of their success is due to them learning how to separate their work lives from their personal lives, even though they work together. For instance they often go out together and set a ground rule of “no talking about work”. That way if they had a disagreement in the “office”(aka basement) it doesn’t flow into their marriage.

    • http://feeds.feedburner.com/printfectionblog Casey Schorr

      Ryan, I think it depends. My parents have also been running a business together for the last 20 years. It’s a small residential remodeling company. However, a small, family-run business might differ from a high-growth technology company. I know the way they look at their business and their aspirations for growth are much different than how I look at my business. But then again, there are tech companies founded by couples. I don’t think there is any one rule which guarantees success. There’s always someone who’s broke “the rule” and been wildly successful.

    • http://blog.printfection.com Casey Schorr

      Ryan, my parents have also been working together for 20 years on their business– a small residential remodeling company. However, I’m not sure if there’s a difference between a small “mom & pop” style business vs. a high-growth technology company? I know the way I look at my business is much different than how they look at theirs. I want higher growth, higher $$ sales, etc. However, with any rule there’s always an example of someone who’s broken the rule and ended up wildly successful. There really aren’t any hard rules to business in my opinion.

      • http://www.friendlydingo.com Ryan

        Good point. My parents are also more “mom & pop”(ironic?) with their business. No intentions of growing nor are they in a high growth industry. I suppose this is probably an exception to #3.

  • http://blog.esimplestudios.com Gabriele Maidecchi

    Very valuable tips, I especially approve #3, I have personal experiences of people mixing pleasure with business with results often destructive.
    The worse part of it, it’s not a slow, predictable route, it all comes down at some point, all of a sudden, when you least expect it.

    • http://www.walkercorporatelaw.com Scott Edward Walker

      Agreed Gabriele – “all of a sudden, when you least expect it”

  • http://blog.printfection.com Casey Schorr

    I keep coming back to my rule of thumb: it takes 10 years to become an “overnight success”. When you take out the outliers, most successful people I admire have been at it for 10+ years. This helps me remain patient. Thanks for the wonderful article, reaffirming many of my beliefs, especially #1.

    • http://www.walkercorporatelaw.com Scott Edward Walker

      Thanks Casey. Yes, patience is key.

  • http://www.michaelgugel.com Michael Gugel

    You stuck to 3 main points, just how James Chartrand over at CopyBlogger recommended in today’s post :)

    • http://www.walkercorporatelaw.com Scott Edward Walker

      Excellent – thx

  • http://www.dochstader.com mark dochstader

    This post is well constructed, but it just doesn’t ring true to me.
    #1 work hard – we love to hear this because it provides a morally superior blue-print for success: plug away as a hard-working barber and you’ll retire a millionaire. Sure, this is a good way to live your life, but it’s pretty thin as entrepreneurial advice.
    #2 build strong relationships with key people – OK, I agree that it’s ultimately a relationship game, but what’s a key relationship? If I’m pushing a revolutionary mind-shift, that “key” contact is probably the wrong person. How can I identify the key person without the power of hindsight?
    #3 don’t mix business and pleasure – there are lots of people playing this game precisely for the pleasure. Joel Spolsky set out to create the type of company where he would want to spend his time; I hope he finds it pleasurable. If the author means “don’t destroy all your gains with stupid decisions” that’s fine, but it has nothing to do with pleasure. My success is to enjoy myself so much that traditional measures of success are irrelevant. Those Romans had a pretty good run with a pleasure-centric strategy too.

    I look around and see lots of (1) hard-working (2) relationship builders who (3) separate their work from the pleasure – they’re all solid, 9-5 employees. Maybe there are no successful, lazy introverts, but if you could do it that way doesn’t it sound like more fun?

    • http://www.walkercorporatelaw.com Scott Edward Walker

      Mark – Sorry my post “doesn’t ring true” to you. First, I frankly haven’t met a “hard-working” 9-5 guy. Indeed, I think you’re missing my point. There are a lot of dreamers and talkers who simply aren’t willing to work 16+ hours/day for seven years; and that’s what it generally takes to succeed.

      You need to figure out “key relationships” that will work for you. Maybe it’s an investor in your space; maybe it’s a talented hacker; maybe it’s a future customer.

      Finally, “don’t mix business with pleasure” is referring specifically to sleeping (and/or having relationships) with your employees. Surprised you would argue with that one as well.

      Good luck, bro.

      • A-ron

        Maybe #4 could be “don’t get offended when someone challenges your ethos or your way of thinking about and doing things.”

        I guess I missed the part where your dad sleeping with then marrying (stupid) an employee = his failure. Guys get in trouble when they fixate on some chic (i.e. do stupid things to get a woman’s attention in the ever increasing sterile work environment), not when they bone a few here and there (mostly).

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  • http://www.johnstonsearch.com/blog Brian Kevin Johnston

    Great Article… Must have been painful to relive this, however sharing the story make you “real”, and quite honestly it is touching… The “poor” mindset was still present, when your father fell for huckster!

    • http://www.walkercorporatelaw.com Scott Edward Walker

      Thank you. Yes, it was painful to relive, particularly in light of the fact that my mother was so deeply hurt and recently passed away.

      • http://nabillionaire.se Nabil

        Ouch. That doesn’t sound good at all. I’m terribly sorry.

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  • http://www.miconcept.de Sebastian

    very valuable tipps. i agree 100% with lesson #1. seems like all the twitter and facebook stories let people think that there is a shortcut to success.

  • http://benhebert.com Ben Hebert

    Couldn’t agree with this post more. All of the lessons are true and you did a really good job of including examples ie Mark Cuban saying he didn’t take a vacation for 7 years.

    Sure there’s a lot of glory in entrepreneurship and nice stories like the Facebook movie, but people need to understand that this business / lifestyle is an absolute grind.

    Something that I would have included is that, before you start a business get a degree & some experience. Your start-up isn’t going to go huge like facebook and you need a fall back plan.

    Looking forward to following this blog now.

    Ben

  • http://www.RentalHawk.com Robert

    Great article. Thanks so much.

    • http://makingmoneyexpo.com Joey

      I always fail at the being patient part. Thanks for the post.

  • http://www.lifestylentrepreneurs.com Jeff

    I’m sure your father’s work ethic puts alot of us to shame. I was also shocked to hear on TWIST about the hours Seth Priebatsch puts in at SCVNGR. You definitely motivated me to step up my game.

  • http://ezinearticles.com/?London-Stock-Market-Investing:-Understanding-Basics-to-Investing&id=5410258 suh

    i completly agree with lesson no.2, building relationships is the key, it was einstein that said what ever you want to be succesfull in you must hang around with successfull people in that field.

    you need relationships and center yourself as a key person of influence in your field

  • Anonymous

    excellent post to remind us all and reinforce what seems common sense, but it appears to have been forgotten in today’s world.

    i would just add to work smart as well in addition to working hard. patience goes without saying, as anything worthwhile takes time to develop and manifest

    as far as networking, it is STILL the most underestimated and undervalued aspect of our lives. human beings are social beings, but despite then, it’s surprising to see so many fail at this.

    • http://www.dubai-information-site.com Sunil from The Extra Money Blog

      excellent post to remind us all and reinforce what seems common sense, but it appears to have been forgotten in today’s world.

      i would just add to work smart as well in addition to working hard. patience goes without saying, as anything worthwhile takes time to develop and manifest

      as far as networking, it is STILL the most underestimated and undervalued aspect of our lives. human beings are social beings, but despite then, it’s surprising to see so many fail at this.

      as for mixing business and pleasure, this is inevitable and we will continue to see this. i agree with the results, but i don’t think there is a solution to this. human tendencies i tell ya