Have we entered an age of make-believe entrepreneurs?
It’s a sobering question, and it arose time and again as Gary Vaynerchuk delivered a frank, high-energy talk to launch Techtoberfest 2015 at Waterloo Region’s Communitech Hub on Wednesday.
Vaynerchuk, the Belarus-born, New Jersey-raised businessman, investor and Internet personality, served up a spirited blend of wisdom, humour and ego as he recounted his own entrepreneurial journey for a sold-out crowd of 250.
“We have never seen more fake entrepreneurs than we have right now,” said Vaynerchuk, 39, whose early Internet success came via WineLibrary.com – a site that transformed his father’s bricks-and-mortar liquor store into an online juggernaut in the late 1990s.
Raised in a crowded immigrant household, where grit and ambition were placeholders for financial security that would come later, Vaynerchuk told the audience how, by age 12, he was earning $1,000 a weekend selling baseball cards. Yet, as a lousy student, he was marked as a future loser by teachers at his school, though they made less money than he did.
The tale underscored the popular wisdom around entrepreneurs: that the best ones are often misfits, and rarely fit the mould by which society defines success.
And yet, countless young people are jumping into starting companies, often bankrolled by family and friends, without a thought to whether entrepreneurship suits their strengths, Vaynerchuk said.
Unaccustomed to its gruelling demands, many burn through early funding by splurging on fancy offices, furniture and too many employees, while avoiding the long hours required to build a real business.
“The biggest reason we’re going to have so many failures is because people can’t deal with adversity,” said Vaynerchuk, an investor in 150 companies, one of which he singled out as an example, though not by name.
“I’m very close to a company right now that I really like…but their burn [rate] is through the roof and they’re not raising fast enough…[and they have] all these luxuries, and people going home at 6 and 7,” he said.
Vaynerchuk asked the audience, “How many people are startups in this room?” and after a show of hands, said: “If you’re literally not working until 10, 11 or 12 at night every day, you’re full of shit. I mean that.”
At the same time, “We’ve never had more opportunity as entrepreneurs in this room, to make money and build actual businesses,” he said, “yet the makeup of the founders of these companies has never been more different.”
Vaynerchuk urged the entrepreneurs in the room to take a step back, think about what they’re really good at and place their bets accordingly.
“The companies that I’ve seen succeed have been built and predicated on entrepreneurs betting on their strengths, and going completely all in,” he said. “And not checking the boxes of what they think the founders, seed investors, their parents, or the articles written by me or Tim Ferriss or Mark Cuban tell them to do.”
The key to being able to make such bets is self-awareness, Vaynerchuk said, citing Uber co-founder Travis Kalanick as an example. Despite Uber’s skyrocketing value, Kalanick has drawn negative press for the company’s win-at-all-costs approach in displacing the taxi industry, and fighting municipal regulations in several countries.
“He knows who he is,” said Vaynerchuk, himself an Uber investor. “There is no other CEO that I know who could have built that company, because most of us – me included – [are not] willing to fight city hall in every city in the world.”
The afternoon led off with a discussion on venture capital and crowdfunding, featuring Nikhil Kalghatgi, partner at early-stage fund Vast Ventures; Kurtis McBride, CEO of Waterloo Region-based Miovision; Ilana Ben-Ari, CEO of Twenty One Toys, in Toronto; and Allen Lau, CEO of Wattpad, also in Toronto.
Kalghatgi dispensed insights into the VC’s mindset and advice for entrepreneurs who are fundraising, such as having a compelling vision, and being able to capitalize on “deal momentum” – that is, conveying that “this ship is sailing with or without the investor,” so that there is a sense of urgency for the VC.
“The best fundraisers I’ve ever met emote control” over their businesses, Kalghatgi said.
Ben-Ari, a Winnipegger by birth, turned to Kickstarter to fund her company’s Empathy Toy, which helps students of any age to learn compassion by collaborating to assemble the toy’s specially designed pieces while blindfolded.
Despite advice to avoid crowdfunding due to the potential for a very public failure, Ben-Ari and her team launched a modest Kickstarter campaign and surpassed their target, earning valuable publicity and gathering crucial market feedback in the process.
McBride spoke about the $30-million Series B funding round Miovision raised earlier this year, and how all of it came from Canadian investors, which he said belies the “myth in Canada that there’s no money out there” for venture investment.
With a per-capita GDP comparable to that of Americans, Canadians have the money, but “the infrastructure that links those guys to the [startup] ecosystem is nonexistent,” said McBride, whose company’s technology is used to gather traffic data at intersections and reduce gridlock.
At the same time, productivity in Canada has fallen relative to that in the U.S. since the early 1970s, highlighting a deficit in risk-taking culture north of the border, he said.
Lau, whose online storytelling platform now counts 40 million monthly users, offered a compelling story of his own as he described the long and arduous journey Wattpad has taken since he conceived the idea in the early 2000s.
So slow was Wattpad’s uptake early on that he started another company, FeedM8, just to pay the bills. When that company was acquired in 2008, just before the global financial crisis hit, it gave Lau time to develop Wattpad apps for iPhone and BlackBerry, and gain a foothold in the market.
Lau has yet to sell the company for $1 billion, as he told his wife would happen way back in 2006, but the company has raised more than $66 million in venture financing and continues to grow its user base quickly. Perhaps more meaningfully to Lau, it has given people in impoverished countries, where books are scarce, a tool to build basic literacy and escape poverty.
Techtoberfest wrapped up with a traditional
Oktoberfest keg-tapping. (Communitech photo: Trish Crompton)
The afternoon wrapped up with a keynote talk by Ken Rutkowski, whose L.A.-based radio show, Business Rockstars, has a daily audience in the millions. In addition to an assessment of the current business landscape, marked by large-scale disruption and the marketing of people to advertisers via social platforms, Rutkowski offered a series of “hacks” for entrepreneurs, from how to get cheaper wifi and first-class seats on airplanes, to building local networks of mutually supportive people through casual weekly breakfast meetings.
Rutkowski also drew some of the day’s biggest laughs when he highlighted the need for people with high IQs – who often struggle to connect with others – to partner with people with lower IQs but high emotional intelligence, to build successful businesses.
“I know you guys are really smart and you have a lot of engineers here,” he said, “but if you’re not paired off with an idiot, you’re not going to make it.”
The crowd was then treated to a traditional Oktoberfest keg-tapping – the annual nine-day Bavarian festival in Waterloo Region now under way is the world’s second-largest – and unwound with beer, German fare and music.
Techtoberfest, Communitech's annual startup festival, included private meetings between investors and startups on Tuesday afternoon. Hear from some of the participating companies in the below video.
