Hard Knock MBA (Personal MBA)
Hard Knock MBA (Personal MBA)
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Hard Knock MBA (Personal MBA)
Hard Knock MBA (Personal MBA)
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Silence is Golden

Posted by Al Doan under Gaining Experience, techstars


Hard Knock MBA (Personal MBA)

I couldn’t decide if this should be called “Silence is Golden” or “You Talk to Much” but this is another lesson that has been highlighted through my experience at TechStars, namely that you need to know when to quit talking.

One of the things you pick up on really quickly as you observe people who have achieved real / meaningful success is that they can state a question and wait for an answer, and if an answer doesn’t come, they wait longer and at most offer to explain the question if it’s not understood, then wait longer.  They are not afraid of silence.

New entrepreneurs or up and coming professionals out of college (or a lot of other business folk) have a tendency to fear silence.  So in a similar situation, where they ask a question, before they even let people answer it, they’ll explain it again, then one more time, then wait for an answer, and if the answer doesn’t come, they fill that space with more explaining.  Your audience will learn if they just hold out, you’ll give them the answer you want from them.  If you’re afraid of the awkward space where no one is talking you are forfeiting one of the greatest tools in business in my opinion – silence.

The thought here is often your audience may not realize you’re asking a question, particularly in a presentation where the tendency is to zone out, so the pause is imperative to snap people out of that.  Also it exudes confidence in your question, but this only works if you are confident that you are asking good, well thought-out questions.

I’ve also noticed that we are victim to the same insecurities when we are answering questions – we talk too much.  I once ran an exercise where we sat around a table, I would ask a question and then stop people as soon as they reached an answer.  It was funny because often the answer would come in their “warm up”.  Particularly in entrepreneurship, we feel like no one can understand our ideas, so we should answer, then restate the answer, then bring those two answers together, then finish with a cute cliché phrase, then be done.  Imagine stopping after you give the first answer then letting the person asking the question dig deeper and ask more specific questions.  It portrays a confidence in your answer when you only have to state your answer one way, it’s short, concise, and people will love you for it.  The rolling the eyes bit in meetings, I know for me that mostly comes when a simple question is asked –

“What did you have for breakfast?”

And someone answers

“I had lucky charms… you know the ‘magically delicious’ lucky charms…. It’s the cereal with the marshmallows AND the crunchy cereal bits…. It’s from General Mills it think… so lucky charms cereal…  yup, that’s what I had…. I had cereal”

They could have stopped with any one of those iterations of an answer but they went through all of them, sure that to be properly understood, everyone should listen to them talk around the fact that they had cereal.  It changes the tone of the meeting completely when you can answer “I had cereal” or at most “I had lucky charms cereal” then if they want to know more they can ask, and it’s those questions that give you real data about the person asking them.  What are they interested in, how technical do they want to get, etc.  You forfeit all of that data when you fill the space yourself.

So one of the things I do with the companies here at TechStars is I sit in on mentor meetings with them and take notes.  My notes have 3 parts, and the first part is “Questions following your pitch” and I’ll make a list of normally 6-10 questions they answer, with the intent that they can go back and build concise answers to each question that they regularly get from people.  It takes you from excited entrepreneur who maybe has a good idea | to guy who knows his stuff and has already done the research.  Plus here, a mentor can certainly appreciate someone who can give a direct answer and not waste time – because time is a scarce commodity here.


1)      Don’t be afraid of silence.  Think of your questions before you go into a meeting, ask them, and let people answer.  Often we’re just thinking of what we want to say, so give us a minute.

2)      Don’t speak around the answer, just give the answer.  Practice with a partner, have them ask you a question, then let you explain it back and have them stop you once you get to an answer.  Then have your business partner start kicking your leg in meetings when you hit that same point.

If you do this, your meetings will be better, your contacts and network will respect you more, and gosh darnit people will like you.

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Hard Knock MBA (Personal MBA)
Hard Knock MBA (Personal MBA)

Suster on “Earn or Learn”

Posted by Al Doan under Online Media Reviews, Reactions to Mentors


Hard Knock MBA (Personal MBA)

Just read this post called “Earn or Learn” by Mark Suster that I’d had open in my reading browser for a while.  I found it worth sharing for one reason; it removes the ambiguity around startup earnings.  He addresses the situation that young people often stumble into – “I’m going to work at company X and they’re giving me stock!”  Suster dives right in –

Yet I often hear people asking about these types of opportunities express their questions to me whether I think this company is going to be a big hit.  It’s clear to me that many people confuse learn with earn.  I will do a simple calculation for them that goes like this.  OK, you would own 0.25% of the stock.  They raised $5 million in their B round.  Let’s assume that the company raised it at a normal VC valuation, which means it gave up 33% of the company and thus $5 million / 33% = $15 million post-money valuation.  If you never raise another round of venture capital (a big if) and if your company is sold for the normal venture exit ($50 million on average for 200 or so annually that get sold) then what is your stake?  $125,000.  Yup.  Simple math would have solved that but people rarely do the calculations or think about it.

And let’s say that it took 4 years to exit – that’s $31,250 / year.  Now … these are stock options and not restricted stock so you’ll likely be taxed at a short-term capital gains rate (see comments section for why).  In California that averages around 42.5% so in my state after tax you’d make an extra $18,000 / year and that’s in a positive scenario!  BTW, this ignores liquidation preferences which actually mean you’ll earn less.

I had a friend get a job offer with a startup recently that had received some funding , they explained that they paid a slightly lower salary but that he got stock options with the company, his question to me was how do I know if it’s a good idea?  I thought about for a minute, and I didn’t exactly know how to decipher the startup charade into an actual number either.  We ended up just asking the CEO directly, but knew there had to be a simpler breakdown of what was actually going on in such a situation.  Mark does a great job of doing just that.  Give it a read, and don’t be intimidated by the intentionally confusing chaos.

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Hard Knock MBA (Personal MBA)
Hard Knock MBA (Personal MBA)
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