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2 posts from May 2011

May 13, 2011

5 Lessons Entrepreneurs Can Learn From the Navy SEALs

There has been a surge in interest with the world of the Navy SEALs since the Osama bin Laden action (this piece in the WSJ was a particularly good profile) and I confess to being caught up in it myself.  One of my portfolio company CEOs, Will Tumulty of Ready Financial, is a former Navy SEAL (1990-1995).  Will was kind enough to introduce me to a SEAL classmate of his, Brendan Rogers (SEAL 1990-2000), who joined me and 20 NYC CEOs/founders from the tech scene last night to talk about the SEALs - the training, the planning and the operations behind their combat operations - as well as draw out some relevant lessons for entrepreneurs.  Brendan went on to HBS and McKinsey after the SEALs and then started his own hedge fund with a partner, so he had an interesting, multi-faceted perspective.

The discussion was wide-ranging and entertaining.  The five key lessons Brendan highlighted were as follows:

  • What's hard is good.  SEALs go through an intensive 6 month training program called Basic Underwater Demolition/SEAL training (BUD/S).  That training program is designed to test a candidate's physical and mental limits.  Traditionally, by the time of SEAL graduation, the attrition rate is as high as 70%.  SEALs quickly learn that the punishment and pain of training hardens their minds and bodies and adapt to embrace the tough environs.  Brendan pointed out that start-up executives who go through hard times should learn to relish them, recognizing that the hard times will toughen the team and train them properly for "battle".
  • 80% training, 20% execution.  SEALs are incredibly well-trained and when they are not on acutal combat deployments, they are spending the vast majority of their time training for a number of different types of missions.  In contrast, at start-ups, executives typically spend 100% of their time executing and 0% of their time training.  Brendan emphasized the importance of training and practice in all areas - employee onboarding, management practices, etc.  He commented on the importance of training for unexpected situations.  The simultaneous shooting of three Somali pirates at sea as part of a hostage rescue two years ago was an example of the kind of outcome possible when  SEALs train under all possible conditions.  The CEOs in the room had wide eyes and were certainly thinking hard about their training regimens and scenario planning after that example.
  • Every seat counts.  Brendan pointed out the price of settling for mediocrity, even in a big organization.  Every SEAL needs to know with 100% confidence that the man behind them will be able to save their life and get them out of a bad situation.  The CEOs in the room were asked if they could say the same about their management teams and if those management teams, in turn, could say that about their lieutenants.  One CEO objected that he had 1000 employees in his company and couldn't possibly hire all "A's".  Brendan replied by citing the example of DDay.  Eisenhower planned DDay with a small number of subordinates who he turned to and said, select 12 men underneath you who can trust with your life to execute this mission.  Each of those men did the same.  And so on and so on.  That cascading effect resulted in the successful employment and combat engagement of over a 2 million troops throughout Europe.  The lesson?  Don't let a large organization be an excuse for mediocrity.
  • Everyone is expendable.  The SEALs are trained in a nearly identical manner and no one SEAL is indispensible to the unit or the mission. The nature of combat is that anyone can be lost at any time.  Entrepreneurial companies have a harder time executing on this philosophy since there are specialists and superstars, but Brendan's message was to make sure contingency plans were thought through for any set of personnel circumstances.
  • You never know the measure of a person until they are tested.  As mentioned earlier, the SEALs training program weeds out 70% of participants.  Brendan conveyed that the people he thought would never drop out did while others proved to be more resilient and tougher than imagined.  Until your people are really tested (see "what is hard is good"), you can never be sure who will step up and who will falter.  One sure sign, based on pattern recognition, is that those that talk tough and are full of bluster are predictably those that are the first to blanche in the face of adversity.  Quiet strength and determination in a start-up are invaluable.  When you see it in your people, bottle it.

Everyone left with a great appreciate for those brave men who serve our country so ably, and the system behind it that produces such a consistent, excellent "product".  Brendan is also the co-founder of the Navy SEALs Foundation, a non-profit that helps take care of the families of SEALs when things don't go as smoothly as they did in Pakistan a few weeks ago.  I was inspired to make a donation to the organization immediately after the dinner.  You can read more about them here.

One final humorous note - Brendan observed that the spouses of Navy SEALs are as tough as nails themselves and impossible to impress.  They still make their spouses take out the garbage, do the dishes and change diapers - no matter how impressive their accomplishments in the field of battle.  I suspect many start-up executives have similar, appropriately humbling marital arrangements!

May 07, 2011

Washington Report

In addition to my day job as an early-stage venture capitalist, I spend some time on civic activities - I think I must have gotten the social justice gene from my Dad.  One of my passions is my work as co-chair of the Progressive Business Leaders Network (PBLN), a nonpartisan group of business leaders that are committed to pro-business, pro-competitiveness policies that are also sustainable and socially responsible.

Last Thursday, I helped lead a delegation of over one hundred CEOs to Washington DC - our most impressive turnout ever - to advocate for policies consistent with our values.  We met with over a dozen senators, a handful of Members of Congress and a number of executive branch leaders.

There were many highlights, but here were a few:

  • Start-Up Visa. Rep Jared Polis (D-CO), a former entrepreneur, reports that the Start-Up Visa initiative is languishing because there isn't a single Republican in the House that will co-sponsor it.   Sen Kerry (D-MA) and Sen Lugar (R-IN) put forward a bill in the Senate (Start-Up Visa Act of 2011) but it's not moving because of the House.  Rep Polis also shared that he is starting a Congressional Caucus on "Innovation and Entrepreneurship" along with Rep Vern Buchanan (R-FL) - clearly an important movement to focus and coordinate policy efforts.
  • Internet Privacy. Kerry and his staff told us about the recent Internet Privacy Bill he and Sen John McCain (R-AZ) have proposed.  They believe a business-friendly, consumer-friendly version will get passed into law eventually after some negotiations with Sen Jay Rockefeller (D-WV), who is pushing for a more liberal bill that includes a Do Not Track provision.
  • Deficit Reduction. Sen Mark Warner (D-VA) briefed us on his work as part of the "Gang of Six" - the six senators who are trying to develop a bipartisan, deficit-reduction plan.  As everyone knows, the deficit data is scary (I recently read analyst John Maudlin's book Endgame, which is about as scary a book about the global economy as one can imagine).  To take $4 trillion out of the deficit over the next 10 years (the common number focused on by the Ryan Plan, the Obama Plan and the Simpson-Bowles Plan), it is clear that entitlements, taxes and draconian spending cuts are all on the table.  Many insiders believe a proposal will be put forward this week.
  • Investment and Growth Policies. Austan Goolesbee, Chairman of the Council of Economic Advisors and a frequent guest on The Daily Show, provided his views on the economy and the policies required to drive growth.  He seemed less focused on the deficit (scarily, frankly) and more focused on "growing our way out of this".  He highlighted the President's focus on innovation policies and job growth, although when pushed he was squishy on details.  He did observe that the fixing the IPO market malaise needs attention (an issue that is dampening growth - as analyzed extensively by these two Grant Thornton Reports, one titled "A Dysfunctional IPO Market Fuels Unemployment"). 
  • Deregulation.  Will Marshall and Mike Mandel from the Progressive Policy Institute (PPI) briefed us on the need for deregulation.  There is a growing awareness in Washington on the importance  of reducing regulatory burdens on business.  What a pleasure to hear a Democratic group advocate for this!  In fact, Mandel shared a good insight:  governments should apply regulatory policy during business cycles much like they do monetary and fiscal policy - loosen during times of economic weakness, tighten during boom times.  He highlighted Sarbanes Oxley as a huge mistake, just when the economy needed less regulation in the IPO market, not more.  He also railed against regulatory overreach on the part of the FCC.

These were just a few of the many highlights.  The call to action given to us by the elected leaders still resonates.  "We need you.  Keep caring.  Stay engaged." pleaded Senator Warner.  We have only a few months left to achieve a long-term deficit reduction plan and making progress on pro-innovaton policies over the next few months before election fever strikes.  Everyone needs to stay engaged in what happens next.