The Power Of Coaching with Michael Bungay Stanier
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Episode Summary
The Successful Pitch guest today is Michael Bungay Stanier who wrote a wonderful book called The Coaching Habit. He says, “If you explain too much, you provoke too little.” He said, “The goal is to stay curious longer and rush to advice slower when you’re coaching people on your startup team.” He said, “If you don’t know what your trigger is to break a habit, then you can’t change it.” That, “45% of our waking time is spent on habits.” If you really want to change the way you coach people on your team and get coached by investors, you need to learn to break those automatic responses that you have of trying to fix everything. One key question he talks about is called the AWE question. Find out if that’s literally the most important question you can ask someone on your team.
Listen To The Episode Here
The Power Of Coaching with Michael Bungay Stanier
I’m very excited today because we have Michael Bungay Stanier, who is the founder and senior partner of Box of Crayons, which is a company that helps people and organizations all over the world do less good work and more great work. Box of Crayons is best known for its coaching programs that give busy managers the tools to coach in ten minutes or less. Who doesn’t need that? Michael left Australia 25 years ago to be a road scholar at Oxford University. He fell in love with a Canadian and that’s why he lives in Toronto. He’s also lived in London and Boston. He’s written a number of books. His latest is called The Coaching Habit: Say Less, Ask More & Change the Way You Lead Forever. The book he’s proudest of is, End Malaria, a collection of essays on great work from leading thinkers that literally raised over 400,000 for Malaria No More.
Clearly, Michael knows how to raise money. He knows how to get things done in a short amount of time, and that’s exactly what you need to have a successful pitch. Michael, welcome to the show.
I’m so excited about this. I’ve always thought how the art of a great pitch is as much as anything to provoke curiosity as it is to besiege people with information. My humble and obviously largely ignorant position around this is people often explain too much and provoke too little. I think great questions can provoke something really interesting. I think we’re going to have a great conversation here.
[Tweet “Explain too much and you provoke too little.”]
When you explain too much, you provoke too little. You’re absolutely right. The whole goal of a pitch is to get people to say, “Hmm, that’s interesting. Tell me more.” Not to tell the whole thing in a ten-minute pitch or 90-second elevator pitch. One of the quotes you have in your book, The Coaching Habit, which really stood out to me because I’m a big fan of Jonas Salk. I’ve actually been to the Salk Institute. I got to be friends with his widow, Françoise Gilot, who was with Picasso before she was with Jonas Salk. She’s got quite an interesting life.
That’s a woman who knows how to pitch.
She does indeed. She was interviewed on Charlie Rose and he said, “Look, you have been with two of the most powerful men of the 20th century. What do you attribute that to?” She said, “Lions mate with lions. They don’t mate with mice.” She had a very strong sense of self, which totally ties into that’s what you’re looking for when you pitch an investor. You have to be just as confident. You don’t have to know everything, but you have to be able to have a strong sense of self to get someone to want to fund your idea or your startup.
Jonas’ quote here, which I just love, it’s a great way to open your book and our conversation is, “What people think of as the moment of discovery is really the discovery of the question.” Clearly, that relates to what he did with Polio discovery. Also, it’s very relevant to the concept of pivoting in the startup world. Michael, what made you pull that quote and give it a whole page? I just love that you did.
The heart of the book, the heart of the work we do is actually trying to increase many curiosities in this world. I’ve been talking about training, promoting the power of coaching for a long time. Over the years, my explanation of what coaching is has got simpler and more and more humble. The first thing is I’m not trying to turn anybody into a coach, just trying to have leaders, managers, entrepreneurs be more coach-like, which is different. When people go, “What does that mean? What does more coach-like mean?” It’s about this: How do you stay curious just a little bit longer? How do you rush to action and advice just a little bit slower? We are all so wired to rush into, “Let’s get it done, let’s have the answer, let me tell you what to do.” There can be something so powerful about, how do we stay curious just a little bit longer. It means that where we end up is likely to be a little bit more interesting.
[Tweet “Stay curious longer and rush to advice slower.”]
That’s so fascinating because one of the things investors tell me all the time is, “We want to invest in people that are coachable and not just take our money but let us give them some advice and ideas.” This concept of being coachable and learning how to be a coach to your team is completely intertwined. That is really a very exciting way to look at that that I don’t think I’ve ever heard anybody talking about. That’s why you’re the perfect guest to really bridge that concept of, “If I want to be perceived as someone who’s coachable to an investor when I pitch, I want to be able to coach people on my team to be more productive and feel appreciated so we can impress the investor that we have a good team here.” The topics that you’re going to talk about from your book, The Coaching Habit, is really spot on in my mind.
I think it will be useful for folks.
I was going to ask you, one of the things that really jumped out at me is you talk about 45% of our waking hours is spent in behavior that are just habits. I thought to myself, “Wow, almost half my waking time is just…” I know I have some routines and a little bit of a rut here and there, but even the way I respond to people is a habit, isn’t it?
The Coaching Habit: Say Less, Ask More & Change the Way You Lead Forever
Book by Michael Bungay Stanier
You’re right. There’s a study from Duke University. I came across that first quoted in Charles Duhigg’s book, The Power of Habit, which in a sea of terrible business books, this is actually a pretty good business book. It’s disconcerting when you think about it. On the one hand, part of why we are brilliant as human beings is we’re a habit machines. It’s what allows us to get through the day. Most of what we do is actually run by our unconscious brain because it’s the far more powerful engine, the big part of our brain. It just means that we don’t have to think hard about getting dressed. We don’t have to think hard about going to sleep. We don’t have to think hard about driving into work. We don’t have to think about any of that stuff. It’s kind of an autopilot.
It’s a blessing and a curse. It means that on the other hand, because the brain is all about, “How do I save energy? How do I be efficient?” We get to be efficient with that stuff. On the other hand, it does take us down ruts and pathways of behaving that may no longer serve us. One of the ways to be thinking about this is the building blocks of behavior change are habits. That’s useful for everybody listening and just as individuals, which is if you want to do something, you’ve got to understand the science of habit building.
Knowing that so many people listening in are in start-ups, are in small entrepreneurial companies, the other key thing to takeaway here is that what your organizational culture is, is a collection of habits. It’s the way we do things around here when we’re not really thinking too hard about how we do things around here. Everybody knows that one of the reasons people invest, one of the reasons organizations flourish is your corporate culture. You know the Drucker quote, “Culture eats strategy for breakfast.” If you want to be building a culture that eats strategy for breakfast, in other words that will flourish, in other words that will have impact, in other words that will get investment, you’ve got to be thinking about your culture. If you want to think about your culture, you have to be thinking about your habit. What are your habits? Particularly those as a founding team because the founders’ habits so deeply influence the culture that that organization will have.
The culture is everything. That’s so important, even if you’re a small company, to have a culture that you can then decide if the investor fits that culture or not. If you don’t have that defined, then you really created a disaster for not only creating the right people on your team. One of the habits that you talk about breaking is the habit of trying to fix something when somebody comes to you with their problem that’s on your team. Also, the habit of not being comfortable with silence. Let’s break both of those down.
Let’s first talk about the kick-start question, when you want to start a conversation with one of your employees. It’s a drive by ten-minute check-in as opposed to this formal way of doing things. If you’re the founder of a company, your question, “What’s on your mind?” is really open-ended and it invites people to have the focus beyond them without you saying that you’re going to fix anything.
What’s useful about what you’re pointing at is part of our strong belief is twofold. First is coaching is at its best, not an occasional formal, “Hey John, come into my cubicle because we’re doing our coaching session together.” That just fills everybody with dread. I want people to be thinking about coaching as a way of showing up and being with each other. Every interaction can be a little bit more coach-like. We’re looking to go, coaching is at its best, it’s day-to-day interactions that you’re a little bit more curious and rushing to advice next and just a little bit slower.
The other belief we have is if you can’t coach in ten minutes or less, you just don’t have time for this coaching stuff. You’ve got to be able to get into a real conversation fast. Part of the baggage of coaching is everybody goes, “I don’t have time for this. I don’t have time for this touchy, feely HR stuff. We’ve got to get stuff done.” Of course that’s true, you’ve got to get stuff done. But what you want to do is make sure you’re getting the right stuff done, not just getting stuff done.
“What’s on your mind?” is a way of saying, “Look, your choice.”
To do that, you’ve got to get into the real interesting conversations more quickly. That’s part of the role of the kick-start question, is to ask, “What’s on your mind?” Rather than in most one-to-ones where you just report out on that old stuff that everyone has been doing and honestly everybody’s a bit bored by this conversation. “What’s on your mind” is a way of saying, “Look, your choice. You get to actually do or tell me what you want to talk about, it’s up to you. But let’s go somewhere important, somewhere that’s exciting you or worrying you or consuming you, or filling up your life. Let’s go there, let’s have a real conversation.” That’s the power of the kick-start question.
Within that, you talk about the three Ps, the Project side, the People side and Patterns that you might see that could get in your way. That’s to help people if they say, “I don’t have anything on my mind.” Because some people, especially younger people, I don’t want to pick on any younger people, but the go-to response to “What’s going on” is, “Nothing.” One word answers. Even though you ask, “What’s on your mind?” they say, “Nothing.” Then you’re like, “What’s going on this project? What’s going on with your coworkers? What’s going on with this pattern of having trouble getting your projects done on time?” or something.
You can always frame context around it. “Hey, I know you’re working on this, this is your key deliverable this month. In terms of hitting it out of your park, because that’s my expectations for you, that you’re going to be brilliant in 30 days’ time. Let me just check in with you. What’s on your mind here?” If they’re like, “Nothing,” probably they have got this totally under control and it’s awesome, or they don’t know what’s going on, in which case maybe I need some sort of intervention. It actually leads us to the next question, which is number three in the book.
In the book we just say, “Look, if you have seven good questions, you can go a long way down the path to be a more effective leader and more effective manager.” Question number three is the focus question. When they come back to you and say, “Okay. John, here’s what’s on my mind. Blah blah blah …” What this is going to do to most people is trigger the advice monster. “Here’s my challenge.” They’re like, “Good. I’m about to add value here by telling you what to do, how to fix it, how to solve it, what your opinion is.” Here’s the problem, you’re probably solving the wrong problem because the first challenge that shows up is almost never the real challenge.
The second thing you’re doing is you’re effectively disempowering this person. This is a perfect opportunity for them to figure some stuff out for themselves, to expand their own level of confidence and experience and trying to do that, all in the meantime supported by you. You snuff the moment out. You step in to fill the void with your ideas and your solutions. That’s why the focus question is so powerful, because the focus question is, “Okay, if that’s what’s on your mind, what’s the real challenge here for you?” That is when we start getting into an interesting conversation.
Let’s back up one second within that focus question, because you’ve tapped on something that is so valuable. Investors are going to ask you when you’re pitching a question either during your pitch to see how you respond to that interruption or if you get defensive or not. Secondly, they’re definitely going to ask you questions after the pitch. One of the big problems I see, time and again that I coach my clients on not making, is make sure when you get asked a question by an investor, that you rephrase it to make sure you understood the question right. Because if you don’t answer their question, they’re going to think you’re avoiding something and not invest in you because they don’t trust you.
This whole concept of answering the wrong problem just because someone says what’s on their mind without being comfortable with silence enough to say, “I just want to make sure I understood your question to me.” After you answer it, really clarifying, “Did that answer your question?” I think that skillset you talk about of really getting people honed in on, “Is this what we’re focusing on? Are we complete now? Or do you still have more questions based on my answer?” That is what a good experience is for anyone.
That focus question, “What’s the real challenge here?” can be extremely powerful as a way of testing your own pitch.
You know this better than I do, I don’t have a whole lot of experience in Silicon Valley VC investment and that pitch process, I know a little bit but not a whole lot. Here’s my guess. If I’m an investor, I want you to make sure that whatever you’re building is actually solving a real problem. That’s the point of this thing. If you’re fixing something that doesn’t actually have a need, then there’s not going to have a big audience base for that. What’s the real issue that you’re trying to get to the heart of here? That focus question, “What’s the real challenge here?” can be extremely powerful as a way of testing your own pitch, your own proposal to say, “Yes, there’s a real need that we’re answering here.” If you don’t feel like you’ve hit the essence of what the real challenge is here, then maybe your pitch isn’t quite ready to go yet because you’re not going to hook some investor’s interest if you’re not really clear on the problem you’re solving.
That’s so true. In fact, the investors tell me, “The more you can show me that you understand the problem better than anybody else, the more I assume you have the solution better than anyone else.”
Exactly.
Let’s go to question number two. I love acronyms. Your acronym is AWE. You would be asking someone, “What’s on your mind?” Then they tell you, and then you can follow that up, and you said it’s a lazy way to continue a conversation, which is intriguing to most people because they’re like, “What? I’m not lazy.” But just having this prepared really keeps the doors open. Tell us what AWE stands for.
We make a proud boast in the book that this is in fact the best coaching question in the world. AWE stands for, “And What Else?” There’s always that moment of slight anticlimax where you make the announcement “And What Else?” is the best coaching question in the world. Everybody goes, “Oh.” I was hoping for something shinier and louder and brighter than that. “And What Else?” has a double impact.
First is, you can know for sure that the first answer to a question is never their only answer. If I’m on the other side of the table and I’m an investor, and I’m asking you a question of somebody and I go, “So, what is the blah blah blah?” Whatever they say, I’m not going to be interested in what they say. I’m actually going to ask, “And what else is going on here?” It’s when you ask, “And what else?” you get into often the better answer, the real answer, or you find gaps in people’s knowledge. What else can be a really powerful as a way of going, there’s always more, the first answer is never the only answer.
[Tweet “A.W.E.- And What Else?”]
In therapy, when someone comes in and says, “I’m here because my spouse and I are always fighting about who does the dishes.” You go, “Okay, and what else is the problem?” “The real problem is …” It’s never about the dishes.
The other thing that’s powerful about the “And What Else?” question is, it’s a self-management tool. When we train people and organizations to be more coach-like, one of the key things we’re changing is this difficult but simple behavior change. Stay curious a little bit longer. Rush to action and advice just a little bit slower. The problem is that that habit runs deep for many people. One of the powers of “And What Else?” is that when you ask that, you’re actually staying curious a little bit longer. You’re actually self-managing your own desire to rush and fix it, solve it and sort it out. It can be really powerful for that reason as well. That’s why we think it’s got this one-two blow that makes it such a powerful coaching question.
It’s that breaking that habit of, “Just let me answer that presenting problem and then move on.” You usually try to ask that question three times, no more than five. That’s going to take some practice to break out of that habit, before you come up with your advice.
It feels just a whole lot better to be telling people what to do. Somebody comes into your office, your cubicle, on the phone, whatever, and goes, “How do I …?” You puff up a bit inside like, “Awesome. I get to be smart. I get to be in control of the conversation and I get to add value. I get to assert my seniority. I get to show off how brilliant I am.” It’s awesome giving people advice. The only downside is this, A) nobody really follows our advice. They just don’t. They listen, they nod along. They act on it far less frequently than you think. In part, that’s because you are solving the wrong problem. You’re trying to fix the first thing that shows up rather than the real thing.
Thirdly, your advice actually just isn’t as good as you think it is. You’re pretty confident, but honestly it’s not that great. It might be sometimes, but often it’s not that great. Even though it feels better to give advice, in yourself, “I feel in control here,” it actually doesn’t play the bigger game. Asking a question is harder because it’s ambiguous. It’s uncertain. You’re empowering the other person. You’re handing control to them with the conversation. It’s less comfortable to sit in but often has a far more impact.
I’m a big fan of storytelling and using stories to really hammer home a point. You did a great job in your book talking about the AWE question when you talk about the three year olds being told not to play with a toy. Can you tell us that story?
It’s a great story about self-control. The way I remember it being told is, it’s either with toys or with marshmallows, but it’s basically to say to kids, “Here’s a simple task for you.” Either don’t eat the marshmallow or don’t look at the toy. If you can do that for like two or three minutes, you get a prize. You get another toy, you get another marshmallow. You get something that’s great. If you can’t resist, then you miss out on the toy or the marshmallow or whatever it might be. Three year olds find that incredibly difficult. There’s a really interesting correlation between the kids that manage to resist temptation as two or three year olds, ones that grew up with a greater sense of self control and therefore success in their future lives, rather than the ones that didn’t have that and maybe didn’t succeed to the same extent.
I remember with this story you’re telling in the book about the toy is even after some of them said, “I didn’t look at it.” You just ask the next question, “What does the toy look like?” Then they’re busted because they describe what the toy is. Asking that additional question really gets to the truth of the matter, which is my big favorite takeaway from that.
You have three things in here about being successful coaching yourself, being coachable: be lazy, be curious and be often. We’ve touched on the “be lazy” by the AWE question. We’ve certainly talked about “be curious” longer than you are willing to take action. Just this concept of “be often,” can you expand on that one?
Let’s go back to “be lazy” just a little bit because that’s such a provocative thing to say. We know that people in startups are working like crazy weasels. Nobody’s sitting and lying around on a hammock. You might be in one of those places where you’ve got hammocks and bean bags and stuff where it looks like you’re relaxing, but everyone knows you’re putting in hours and hours and hours. “Be lazy” is such an anathema to what most people are used to hearing or assuming that requires success.
“Be lazy” is about stopping rushing in to do the work for other people.
I’m sure most people have already figured out why we’re saying “be lazy,” which is about stopping rushing in to do the work for the other people. Not only does that leave you overwhelmed, exhausted, frustrated, too much work on your plate, a bottleneck for your team. But it also dis-empowers those around you. You’ve hired these brilliant people and then you don’t trust them because you rush in to doing the work for them. You diminish their potential. You diminish their impact while leaving you overwhelmed.
I’m not saying never be helpful. I’m not saying never give anybody advice anymore. That would be ridiculous. I’m saying, can you slow down the rush to move to action, the rush to move to advice? That’s the whole piece around “be lazy,” which is if you can just hold back for a minute or two. Let’s make it a challenge, 120 seconds. Can you go two minutes without telling people what to do, without giving them advice? Just see how that shifts the dynamic of work.
Being curious, we’ve talked about it. Our basic stand is that people are advice-giving maniacs. They don’t even know what the problem is, but they’ve got some initial ideas on how to fix it. How do you move to questions? In the book we say, seven good questions are all you need to really elevate your leadership game.
Being often connects to this piece we’ve talked a little bit about before, which is just to say, “Let’s not make a big deal about coaching.” This isn’t some sort of a formal conversation where you take off your normal clothes and you put on your coaching outfit, like, “Okay, I’m coaching you now and we’re going to do active listening and wear pastel colored clothes, whiff perfume in the air.” It’s merely saying, every interaction with somebody, be it one-to-one meeting, team meeting, email, chat, any of that stuff, you can lead with a little more curiosity.
The metaphor we use is if you’re looking to have impact in the way that you manage and lead, and the way you have impact is you help people have new insights about themselves and about the situation. You help them change their behavior so they’re doing things differently. Then you help them, through that, have increased positive impact. What you need to do is be lazy, be curious and be often. The metaphor we use is, “Drip irrigation always beats a flush flood.” Little interactions are far more effective in driving behavior change than one occasional big push, one big wave.
The same thing is true about expressing your feelings too. If you let it go like a fire hydrant as opposed to the drip system, then people go, “Where did that come from?” You have to keep it all going. You’ve really touched on the importance of breaking this habit of feeling like we need to fix everything right away. You have a formula that I’d love you to go through: when this happens, instead of, and the 60 seconds. Can you touch on those?
This is a new habit formula. You’ve heard me say that there are seven good questions in the book. Actually, the very first chapter is so focused on this habit building piece. If you don’t understand how to change you behavior through creating new habits, you’re always going to be struggling. You’re always going to be behind the 8-ball. I’m no original researcher here. I’m standing on the shoulders of giants. People like Charles Duhigg, BJ Fogg, who is very well-known in Silicon Valley. He’s got a great website called TinyHabits.com. Leo Babauta, also based in California, ZenHabits.net, and a bunch of other people have all thought long and hard about the signs of behavior change and habit building.
We’ve taken what we think is the best to make a simple formula. When this happens, instead of, I will. It’s got three parts to it, I’ll break those down for you. The first part is, when this happens. What this is all about is articulating what the trigger is. The trigger is the context or the situation or the occasion, the moment that starts the old behavior that doesn’t serve you so well. It’s that moment. If you don’t know what your triggers are, it’s always impossible to change a habit, so figure out your trigger.
It’s why you end up going, “Oh man, I said I was going to stop eating a pint of ice cream at 11:00 at night and here I am holding a pint of ice cream and I’m half way through eating it. How did I get here again?” That’s because you’re not sure what your trigger is, so you’re not aware of that thing that sets you down that path.
[Tweet “If you don’t know what your trigger is, you can’t change it.”]
The second part is “instead of” and that’s where you get really clear on what the behavior is that you want to change. If you don’t really crisp on that, it’s very hard to think of an alternative. When this happens, part one, the trigger, instead of the old behavior. In that context, we’re talking about, “I tell people what to do,” would be the broad summary of what that’s going to look like.
Part three is you define the new habit in a way that takes 60 seconds or less to complete. That 60 seconds piece is part of BJ Fogg’s contribution to this work. It’s got great insight. If you define a habit that takes more than a minute to do, your big brain will basically find a way to hack the system and get you back to doing the old way. There’s always a reason not to spend more than a minute. Who has time for that?
The story he tells us, which is a great one, is trying to get to floss more often. We’ve all had that moment where we go to the dental assistant and she’s cleaning her teeth and she goes, “How the flossing going?” We confess to going, “I’ve flossed six times in the last 48 hours” to make up because I haven’t flossed at all up to now. Here’s the whole piece of 60 seconds or less. His commitment to flossing was, “After I’ve cleaned my teeth, I commit to flossing just one tooth.” Because he knows that if you floss one tooth, you’ve got this micro habit defined so that you’re set up now. You’re like, “I might as well finish off the job, because why wouldn’t I?”
So it is with the habit piece, the coaching piece, which is around, “How do you use this to build a coaching habit?” For instance, it could sound something like this. When I have my weekly one-to-one meeting with John and he goes, as he always does, “Michael, how do I …?” That’s part one. Instead of sighing deeply inside and then going, “John, let me tell you again how you do this, blah blah blah …” and explain it.
Part three. I will ask him, “John, let me ask you, what’s the real challenge here for you?” Now, you’re walking away not with an abstract commitment to be more coach-like, because that’s noble but largely useless. What you’re walking away with is a really specific way to use one of these coaching questions that can be so powerful. When I’m on my one-to one-meeting with John and as he always does, he asks me, “Tell me what to do?” instead of telling him what to do, which is what I’ve done for the last two years, I’ll ask him, “What’s the real challenge here for you, John?” Now, you’re into a completely different conversation and I get to practice being lazy, being curious, being often.
This whole 60-second flossing one tooth, the same thing is too in the analogy of, if I know I get triggered and want to eat a pint of ice cream at 11:00 at night when I start stressing out about my money, that’s my trigger. When that trigger happens, I’m now going to go outside no matter what the weather, and for 60 seconds, just walk. Then if I still want the ice cream, I’ll have it. You’ve broken the pattern, the habit of, “I get triggered by fears of money and then I eat. By just going for 60 seconds, I’m taking a walk.” If you can just get through that 60-second anxiety and then the fear is lowered, and you probably won’t need to eat the whole pint of ice cream then.
If pints of ice cream are your problem, there are all sorts of great alternative things you can do. You drink two pints of water. You call up your ice cream friend and go, “I want to eat ice cream, talk me out of it.” There are a lot of things. The secret thing is disrupting the mindless step towards the freezer to pull out the Ben and Jerry’s. You’ve given us lots of great examples on how to do that.
I just want to sum up how you were so resilient and use your sense of humor, two great qualities that investors look for in someone they want to fund. Let’s face it, people like to give money to people that they like and are fun to be around. It’s not suddenly you have to be a standup comic, you have to be authentic. When you were trying to get your book published, you realize that the team was the key factor between getting a yes and getting a no. Let me tell you that that’s the key factor in getting a yes or no with a startup. Any last thoughts of what people can do to show their resilience and possibly even sprinkle in some bits of humor into their personality?
One of the things that we talk about in the book is the TERA model. That’s at the heart of the newest science of engagement. Here’s what you need to know. This is happening in the moment when you are pitching. As the investors are sitting across the table from you, your brain and their brain, everybody’s brain is scanning the room and going, “Is it safe here? Or is it dangerous?” If the brains thinks it is a dangerous situation then it moves into a fight or flight mode. What does that mean? What does that look like? You’re in the defensive. Everything is black and white. You assume it’s you versus them. You assume that things are going badly rather than going well. It’s actually not a great place to be because it’s all about protecting you at all cost. If things are going well, if it feels safe, if it feels like a place of reward, you’re more generous, you’re more subtle, you’re nuanced, you hear better. You are able to be more agile in the way that you think. A better version of yourself shows up.
What does TERA stands for? Tribe, Expectation, Rank and Autonomy.
You can guess that when you are in a pitch mode, your brain is freaking out. You’re like, “It’s dangerous here. It’s not safe at all.” Honestly, that could be happening with your investors as well. It behooves you to do whatever you can to make it feel like a place of reward for you and for them when you’re in this pitch mode.
There are four key driving factors that influence that. We call it The TERA model. It’s another acronym. What does TERA stands for? Tribe, Expectation, Rank and Autonomy. Tribe-ness, the basic question the brain is asking you is, “Are you with me or are you against me?” Expectation, the brain is going, “Do I know it’s about to happen here or do I not know?” Rank is basically saying, “Are you more or less important than me?” Autonomy is saying, “Do I get to have some choices here or are you making all the choices for me?” That’s actually a really powerful insight to go, “How do I have a pitch session where the TERA quotient is high rather than low? Because that’s going to help me and it’s going to help my investors like me more. I’m going to like them. They’re going to like me. If they like me, they’re going to give me money.”
The question about humor, one of the most powerful ways to increase a sense of tribe-ness is to have people laugh together. If there is way of making people laugh early on, so much the better. One of the greatest ways of doing that is through self-deprecation because what that does is it shows how confident you are in yourself, that you can be a little self-deprecating. That’s not to mean you’re apologetic. It’s different. You don’t want to be apologetic.
For instance, sometimes when I’m introduced to giving a keynote speech or something like that, I’ve got a bunch of things in my bio that are status building, makes me sound more important than I am. I’m a road scholar. I was the first Canadian Coach of the Year. I’ve just been chosen as the number two coaching guru in the world. It’s all great. But also in my bio it says, “Michael was sued by his law school lecturer for defamation. He was banned from his high school graduation for something known as the balloon incident. His first piece of writing was Mills & Boone short story. He knocked himself unconscious while being at labor by hitting himself on the head with a shovel while trying to dig a hole.”
There’s a way that this makes the audience laugh at me. I’m fine with that because what that does is it increases their status, their rank, and diminishes mine slightly. I do that in service of a better experience. I know that if I’ve increased their rank, they’re more engaged with what I’m about to say.
I can see why you won Coach of the Year. I have the build you back up. What’s the best way for people to follow you on social media and your website and all that good stuff?
If you’re interested in the book, there are seven good questions and the secret to habit, the best place to go is TheCoachingHabit.com. Even if you don’t want to pick up the book, there’s a ton of downloads, videos, audiobooks, all sort of stuff that you can pillage there. If you happen to be interested in our programs at Box of Crayons, BoxofCrayons.biz. In terms of social media, I’m on Twitter @BoxOfCrayons and LinkedIn is the other social media place I hang out at. I’m actually the only Michael Bungay Stanier in the entire universe, so you should be able to find me.
Congratulations on that. Not many people can have a unique name like that. Michael, it’s been a pleasure. I can’t thank you enough for sharing your insights on the AWE question and the TERA model too, so we can bond with people and get over our fear of pitching in front of anybody with some unique tactics here. Thanks again.
It’s been a real pleasure, John. Thank you for having me.
My pleasure.
Links Mentioned
- J Robinett Enterprises
- John Livesay Funding Strategist
- The Coaching Habit
- Box of Crayons
- End Malaria
- Malaria No More
- Charles Duhigg
- TinyHabits.com
- Zenhabits.net
- BJ Fogg
- Michael Bungay Stanier LinkedIn
- @BoxOfCrayons
- TheCoachingHabit.com
Crack The Funding Code!
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Toxic Workplace with Mitch Kusy
Posted by John Livesay in podcast | 0 comments
Episode Summary
Welcome to The Successful Pitch. Today’s guest is Mitch Kusy, who’s the author of the Toxic Workplace. He said, “Toxic people only thrive in a toxic system.” He has a great way of identifying who’s toxic. He said they tend to be people who kiss up or kick down and that there’s three different ways of being a toxic person without even knowing it.
One is you humiliate or shame somebody. The other is you sabotage them through passive – aggressive behavior. The third way is you just are a mean person, who doesn’t seem to care. It’s all about, is your intent to prove the person right or is it your intent to get that person to improve? It’s really a fascinating look at how important it is as a startup to make sure you don’t have a toxic person in your workplace because it spreads, also that you don’t take on an investor who is toxic.
Listen To The Episode Here
Toxic Workplace with Mitch Kusy
Hello and welcome to The Successful Pitch. Today’s guest is Dr. Mitch Kusy, who is the co-author of a book called Toxic Workplace. I am very excited to have him share his expertise because he’s had over 25 years’ experience in organization development. He’s a 2005 Fulbright scholar in International Organization Development and a registered Organization Development Consultant, a full professor in a PhD program at Antioch. A distinguish visiting professor down in New Zealand. He consults literally around the world. Mitch, welcome to the show.
Thank you so much, John. It’s really a pleasure to be here.
I’m thrilled to have you. One of the key things that investors look for when they’re deciding which startup they’re going to fund is, who’s on the team? How well does the team get along? Does the team handle stress well? Who better than you, to talk about the dangers and ways to avoid creating a toxic workplace. That’s why I’m so excited to have you here. Before we get into all your years of experience, can you tell me how you got to be an expert in organization development?
Like many people in their career, in a circuitous route, I was a psychotherapist for about eight or nine years doing individual, family and group therapy. As I was doing that, I started discovering I actually liked much more helping organizations and teams figure out problems. Helping them resolve those issues. I started applying the strategies that I’ve learned in individual and group therapy to organizations. Then, went back to graduate school and got a few more degrees and here I am.
I love it. That really gives you the expertise, doesn’t it? Because, sure the dynamics are just bigger in companies, but especially small startups. It’s almost like a small family dynamic, where somebody’s got the favorite and somebody always has a hot button that gets pushed, I’m imagining.
A toxic person is anyone who demonstrates counter-productive work behavior that influences the organization.
You’re absolutely right, John. Interestingly, it is no different from a small organization to a large organization. In the research study that Dr. Elizabeth Holloway, my co-research and co-author, we found with over 400 participants in our study that 94% of people said they work with a toxic individual.
We defined a toxic person as anyone who demonstrates counter-productive work behavior that influences the individual, the team or the organization. Bottom line here, three categories. People who shame people. The second is people who sabotage the team. Third is passive hostility. Any one, two, or three of those will classify you as a toxic person.
Let’s take a deep dive into that. With the shame, that’s the same, as you mentioned in the book as humiliating someone, correct?
Yes. Actually, interesting about that, what we’ve discovered is that shaming or humiliation could be one-on-one. Only one person experiences it with no one witnessing it, to teams or the entire organization. It doesn’t matter really what the context is, one-on-one or team shaming, is shaming is humiliation.
Interesting. A lot of people say, “I don’t mind if you say something to me or have negative feedback, but don’t do it in front of other people.” What I hear you saying is you still have to be really careful even if it isn’t in front of their peers, to not humiliate somebody. Just say, “Look this was a mistake and it can’t happen again without humiliating them.” Is that accurate?
That’s absolutely true. What’s interesting is, shaming is not negative feedback. We all need at times negative constructive feedback. But what I say to people when I’m coaching them is, “What’s the intent of your feedback? Is the intent to help them improve or is the intent to prove you are right? If you are proving you are right. There’s a high probability you are engaging in shaming behavior.”
[Tweet “Is your intent to prove you’re right or is your intent to prove that you want this person to improve?”]
That’s fantastic. We’re going to tweet that out, “Is your intent to prove you’re right or is your intent to prove that you want this person to improve?” For example, I could see somebody totally losing it on a small thing. A big no-no, obviously, is when you have a pitch deck that has a typo in it. I’m imagining a scenario where somebody gets up in front of an investor, pitches and the investor says, “Hey, you have a good idea, but we’re really sticklers for details. If you can’t get your pitch deck accurate, we’re not going to fund you.” That founder is humiliated by the investor. Then, they take it out on the person who created the deck, even though they were supposed to proof it themselves.
Interesting about that scenario. If I were an investor and an individual made a mistake like that and that person said, “I take total responsibility for that.” In our book, we talked about The Four Step Apology. Framing your mistake in the past, “Yes, I made that mistake.” Two, how it impacted the other individual, saying, “You might have less trust in me as your consultant in this situation.” Third, to apologize. “I apologize.” Fourth, “In the future I’m going to do a better job of proofing this before giving it to you.” People are very forgiving with that four-step apology.
The first thing is the apology. Second is, to be toxic, it needs to be a pattern of these behaviors. John, we’re all a little uncivil at times. I might get rattled. I’m also a professor and I’m working with a doctoral student. I might treat him or her at times, maybe be a little short because I am rushed. If you acknowledge that, you know how to apologize appropriately for that. Third, if it’s not a pattern.
One of the key things to look for is if it becomes a pattern. If you’re working with an investor and you have a pattern of not being prepared like that then your investor is probably asking very good questions and will probably leave. If it’s not a pattern and you do something like that then an effective apology, there’s a high probability you’re going to rectify the situation.
Let’s just go over that because it’s really gold here, everybody. The Four Step Apology. The first step is the past?
First of all, frame it in the past. I’ve been running late for meetings. I’ve been running late for meetings for the past two months. Second, how that behavior affected the other individual?
Impact. I love what you said there Mitch, that it could impact that you’re going to trust me less. That’s really so important because when I coach people on what’s important to an investor is their credibility. The minute they don’t trust you, the minute they catch you in a lie about something in due diligence, the deal is off. I would love to have you give your insights on how can people improve their trust factor with people they’re just meeting? Any ideas on that?
First of all, the way you improve your trust factor is to empathize with the situation that they’re in. The best way to empathize is to talk about how you might have a similar experience. “The last time, when I was in your shoes, this is the way I felt.” A sense of empathy is extremely powerful.
If people no longer have trust in you, there’s a high probability you are not going to recover that.
What’s also interesting about trust, I did a research study with another colleague, Dr. Louellen Essex, some time ago that lead to our book, Breaking the Code of Silence. The subtitle is Prominent Leaders Reveal How They Rebounded from Seven Critical Mistakes. I’m not going to go over the seven mistakes here that are recoverable, but we found two mistakes that are likely not to be recovered. One is, a corroboration of trust. If people no longer have trust in you, there’s a high probability you are not going to recover that.
Now, if you make a mistake like the one that you were saying, something was wrong with one part of the document, I don’t really know if that’s trust. People might be saying, “I don’t know. Would he or she handle my portfolio properly?” If there’s a continuation of those errors, then there’s a high probability that trust is going to be an issue. The second thing we discovered is once someone doesn’t trust you, it is very difficult to regain that trust.
Absolutely. This is something that’s happened in the past. There’s an impact. You apologized. Then in the future, you’re going to make sure it doesn’t happen again. Let’s do a deep dive here, if we can, on how do you determine, because a founder creates a culture for his or her startup. They decide what kind of people they want to have working for them. They have an offer, or two if they’re fortunate and strategic, to get two different investors who want to give them the same amount of money. Everything else seems equal. Then they have to decide, who’s going to fit in to our culture better? Maybe they’ve talked to other people that that particular investor has given money too. What are the warning signs that they should be looking for or asking to see if that investor is suddenly going to turn toxic on them, maybe a year into the relationship or the first sign of a problem?
One of the ways to do this is to, first of all understand the four aspects of a culture since that’s what we’re talking about here. There are four basic aspects. One is the values, in terms of what I regard as important. With that, one of the first thing the individual is looking for, “Does this person value the same kinds of things that I do?”
First is values. Second, beliefs. Why are these values important? Third, norms. What are the unwritten rules the way we do things around here? Maybe one of the unwritten rules is, “In order to get what I want, I’m going to kick the table leg and I’m going to run people ragged.” With those norms, you have to decide, “Do I want to do business with the person like that?” Norms is the third. The fourth is underlying assumptions. What are the assumptions that people operate? I operate by treating people with respect. I operate when I make a mistake. I own it and share that with others. Subsequently, in terms of the culture, since that’s what you brought up John, those are the first pieces.
That’s great. Let’s just recap that really quick. Your value, your beliefs, your unwritten rules and your underlying assumptions. All of those four things, as someone who’s starting a company, you should think about because it’s so important to define the culture. It doesn’t just haphazardly happen and you can create a team to fit that culture you want. I love that.
This whole concept of unwritten rules. I remember working with a startup. Their unwritten rule was nobody picks up the phone. Everyone sends each other messages via Skype not text, not a phone call. That’s how they all communicated. Until you figured that out you’re like, “What’s going on? Why is nobody talking to each other? Why is nobody is answering my emails?” It’s like, “We don’t communicate that way.” “What a weird culture but okay. How is someone supposed to figure that out?” “They just do.” I’m like, “Jeez.”
One of the things, when I’m working with a client first time around and they’re looking at, “How do I introduce people to the organization,” I asked individuals, “What are the norms?” They fend for themselves. I’ll take two hours with them or I’ll put them through a one day program, at the end of that day, they still don’t know where they hang their hats at the end of the day. They’ve been riddled with one human resource form after another. I say, “Be sensitive. Help people become adjusted to the norms in your organization.” You can change norms. That’s the good news. If you have some norms that are not particularly welcoming those are easy to change.
[Tweet “Toxic people only thrive in a toxic system.”]
One of my favorite quotes from your book, Toxic Workplace is that, “Toxic people only thrive in a toxic system.” We’re going to tweet that out, as well, which I think really goes to what we’re just talking about. It’s the culture.
Absolutely. It’s the culture. Interesting, when we are working with organizations to help them change their culture to be a culture of everyday civility. What we help them understand is it is, first of all, very difficult without a systems approach to give feedback to a toxic individual.
Let me give you classic example. You’re trying to give feedback to an individual who’s shaming other people in public. You give them this feedback. The first thing that we discovered is most toxic people are clueless about the impact of their behavior on others.
Subsequently, if they’re clueless, they’re not going to accept your feedback very well. You try giving feedback in the most respectful way and they come back with, “I’m the only individual who has the guts to say something. All the rest of you individuals, you’re just sitting there doing nothing. I’m the one who’s carrying this team.” Highly narcissistic behavior, by the way.
Without the organization sanctioning that you, as a leader, can do this, you’re going to be talking to the wind because they know you’re going to do nothing.
Here’s where the system comes into place. You give this person the same feedback and now you say, “I understand you don’t agree with this feedback. However, I’m not asking you to agree with it. If you don’t agree with it and if you’re behavior doesn’t change, here’s the first thing that’s going to happen. Here’s the second. Ultimately, you could be fired.” Now, without a systems approach for this and without the organization sanctioning that you, as a leader, can do this, you’re going to be talking to the wind because he or she knows you’re going to do nothing.
Subsequently, we say to individuals, you really have to have systems in place. Let me give you an example from health care. Health care is the one industry John, that has done more than any other industry in changing the face of respectful engagement. Here’s some statistics that are going to astound you and astound your listeners. This is one study after another. Essentially, 60 to 80% of the medical errors are due to disruptive individuals. People not communicating with each other. 60% to 80%.
I was doing a keynote address one time to a large non-health care group. I reported this, 500 people in the room. A gentleman raised his hand and says, “Mitch, this is unbelievable. Just last night, my wife, who is a nurse, reported that she could not read the medication order. Rather than go to a physician who she knew was going to shame her, she went to four to five other individuals to interpret that order.”
[Tweet “Everyday civility is a key to productivity.”]
What a waste of time? Someone’s waiting for the medicine. It’s just shocking, isn’t it?
Absolutely. Here’s a follow-up. I related the story to a group of health care leaders. There was a surgeon in the room. The surgeon said, “Mitch, I don’t agree with you. I need to do this because I need to have perfection.” The surgeon, she said to me that, “Mitch, do you want to go to a non-perfect surgeon?” I said, “Doctor, I want to go to a surgeon. When he or she is about to make a mistake, someone is calling them on that.”
Because it’s safe enough to raise their hand without getting their head chopped off.
Exactly. You’ve got it.
You talked about in your book, this toxic workplace typically, just the tip of the iceberg. What’s below the ice? What’s below the surface usually?
What’s below the surface are number of things. One that’s below the surface is the impact this has on others. Health care gave you an example. Another impact, we found that 51% of people who are targets of instability, reported that they are likely to quit the organization. Turnover is something you typically don’t see. Secondly, the reason we don’t see it, is many toxic individuals are chameleons. They’re very capable of kissing up to their boss and kicking down to people below them.
What happens is, the boss says, “I know she’s a little bit hard on individuals as the leader of her team, but man, is she bringing the money into the organization. She’s highly productive.” Underneath the iceberg, that leader, the boss, is not aware of the individuals who are leaving, the individuals who are not doing as effective job as they could because they’re not committed to the organization and to that team.
You just mentioned something really key there, which is the cost of turnover, especially in a startup with someone who has so much valuable experience and intellectual property in their head. They will go someplace else that’s not so toxic. To start all over again and have to find somebody who is expensive and a waste of productivity, over and above whether it’s a small or big company. I think that’s something that people really don’t typically measure as the cause of having a toxic workplace.
They typically don’t, a few studies have. First, of all we’ve measured this and we found that 51% reported to us are likely to leave. Other human resource metrics have found that the cost of replacing an individual depending upon their level in the organization and their level of expertise is anywhere from 150% to 400% times their salary. You have some highly sophisticated, wise individuals in that organization, and they leave because of this. They may not tell you why they’re leaving. The cost of replacing them, retraining them, the cost of recruiting 150% to 400% of their salary.
Now, you also talked about in your book, Toxic Workplace, that if you let this go, it literally spreads like that whole analogy of one bad apple. Can you talk a little about warning signs that it’s spreading?
First of all, the warning signs it’s spreading is look at turnover on your team. That’s one of the high pieces. Secondly, if people won’t tell you what’s going on in the organization, you can’t get to the bottom of it. Those are two critical dimensions to figure out what’s going on. The other strategy that we talked about in our book is called the Skip Level Discussion. If most of your listeners are familiar with 360 degree feedback, where you get anonymous feedback from everybody around you, that’s in some kind of a survey. What we’re talking about with the Skip Level Discussion is a way to keep your ear to the ground as the leader.
I learned these years and years ago in an organization that I was head of leadership development. It goes something like this. The leader says, “I really want to hear what’s going on positively and negatively in my group.” Let’s just say you’re a vice-president. I’m going to go two levels down, to people who are reporting to the person reporting to me or the people reporting to me. Twice a year, I’m going to spend 15 to 30 minutes asking you, “What’s going right? What’s going wrong? Are you getting the kind of leadership you need?”
Now, the first response when I teach this to organizations, “People aren’t going to tell the truth.” However, if people are really dissatisfied, they may. The other thing that I say to individuals is the leaders saying this to the organization, “I want you to come and tell me what’s going on. If you feel threatened, feel free to come with two or three individuals together.” A leader is not going to fire three people for having problems with his or her boss. That’s another strategy that we talk about in our book, the Skip Level Discussion.
Fascinating. I’m also interested to see, with your experience, do you get feedback from someone saying, “I don’t know if they’re humiliating me or shaming me, but they’re always condescending.” Is that part of being in a toxic environment?
The condescending comes under the second and passive hostility. You get your anger out in crooked ways.
The condescending comes under the second and passive hostility. You get your anger out in crooked ways. It comes out in a condescending way. If that’s how an individual is giving feedback, there’s a high probability that individual is toxic. I bet they’ve heard this before, too. They may be clueless about the impact of that behavior on others. What we’re saying about cluelessness is they may understand, “Yes, I’m rough and at times I’m really hard on people.” But they may not truly understand the amount of sleepless nights that individual is having as a target of that. They may not understand how much that individual has reduced their work effort. They may not understand how hard that individual is trying to find another job. They may not understand the sick leave that that individual is taking.
If it’s not turnover, then a lot of people will call in sick because you made them so sick with stress or just the dread of having to interact with you. We’ve talked about shaming and humiliating, being the difference in the intent. We just talked now about this passive feedback through condescension. Let’s talk about that second part you talked about of the types of toxic behavior, which is all about sabotage. What does that look like in the story?
Here’s a scenario that happened recently. This one individual who was highly toxic ended up, because he was not getting the kind of kudos that he wanted on the team and from the team, decided to sabotage some of their efforts. Actually, changed some protocols etc. to steer the team the wrong way.
Another interesting thing about what happens with teams is, it’s a process that Elizabeth Holloway and I, Elizabeth, again is my co-author, we call it secondary gain. If you will, imagine you’re on a team and you’re not the toxic individual and the team is constantly looking at the antics of this toxic individual. They start talking about, “Can you believe the way she just talked to the CEO of this company? Can you believe the way he talked to this potential investor?” What happens is this gossiping turns into secondary gain. They get a lot of gain out of talking about, “Ain’t it awful?” Then an interesting dynamic occurs. If for some reason that toxic individual is fired or he or she leaves the organization, they often don’t know how to relate positively to each other because what was the cohesive glue was talking about the toxic person.
One of the things that we do when we’re doing team development with a team that has engaged in that, now that toxic individual is gone, we allow them a certain period of time to talk about how ‘ain’t it awful’ and ‘can you believe what he or she did.’ Then they cannot talk about it anymore. They now have to move on because that person is no longer part of the team.
Really, really great. Is there any final bit of advice you have for us Mitch, On what we can do to try and prevent getting in bed, so to speak, hiring, taking money from investor that might be toxic? Besides just doing your due diligence, is there other signs that we could really avoid?
Here’s one, and we call it the Recruiting Cue Sheet. Let me start by first telling you a story that an individual was being hired in an organization. The hiring manager could not be there immediately at the airport. The administrative assistant went to the airport to greet this candidate. The administrative assistant was trying to be cordial, engaging. The person who is coming in for the interview was just answering questions in a monosyllabic way. The administrative assistant said, “She’s probably nervous. It’s a high level position.” Until the hiring manager showed up. Then, this individual was absolutely brilliant, exuberant, asking one great question after another. The administrative assistant was looking to himself saying, “What did I do?” He didn’t do anything.
Remember when I talked about earlier John, that many of these individuals are chameleons. They’re very capable of kissing up and kicking down. I would not hire that individual because there’s a high probability that this person coming in is going to kiss up and kick down. What do you do about it? We have a process that we call the Recruiting Cue Sheet.
[Tweet “Avoid people who kiss up or kick down.”]
I understand that we should have some team interviews and one-on-one and bringing the team together, as well. There are number of individuals, like the administrative assistant, that this investor is going to interact with even for a minute or two. Here’s the strategy, you as the individual thinking about this investor, whether or not you want to work with him or her, you go around to the individuals who are likely to interact with that individual. Maybe it’s the administrative assistant. Maybe it’s the cafeteria people. It could be maintenance people.
You go up to them and say, “You may or may not have an opportunity to interact with this individual, but if you do, I’d like you to answer these three questions on this form.” I’ll make that up off the top of my head now. One question is, “Did the person give you eye contact?” Second, “Did the person engage you in conversation?” Third, “Does this person look like the kind of person that we want to work with?” Ask those individuals. If you get a different story from what you have perceived, just have your red flag go up and say, “This may be the individual that we don’t want to work with.
Nice, fantastic. Mitch, this has been great. How can people follow you on social media?
One is, first of all, my website www.MitchellKusy.com is one arena. I guess that would be the primary one because that’s how I use that as my primary vehicle for people to get in touch with me. They could read some of the latest work that I’ve done in the area. That would be a great resource for them.
Fantastic. Thanks again for sharing all the secrets on how to avoid creating or staying in a toxic workplace.
Thank you, John. I enjoyed it.
Me too.
Links Mentioned
- J Robinett Enterprises
- John Livesay Funding Strategist
- Mitch Kusy
- Toxic Workplace – book
- Dr. Elizabeth Holloway
- Dr. Louellen Essex
- Breaking the Code of Silence – book
- www.MitchellKusy.com
Crack The Funding Code!
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Unleash Your Inner Company with John Chisholm
Posted by John Livesay in podcast | 0 comments
Episode Summary
Today’s guest on The Successful Pitch is John Chisholm, the author of Unleash Your Inner Company. He has such an impressive background from MIT and Harvard and has coached thousands of entrepreneurs on how to be successful. He shares those secrets with us today. In fact, he said, “Passion is an attitude but perseverance is a behavior.” He does a deep dive into the psychology of growing your mind from the inside out. He really shares what he looks for when he hears a pitch as an investor. I think you’re going to get a lot of value into learning what it takes to reduce the risk by hitting certain milestones and showing an upside potential so that your pitch becomes irresistible. Enjoy the episode.
Listen To The Episode Here
Unleash Your Inner Company with John Chisholm
I am thrilled to have John Chisholm today as my special guest. John has an amazing background. He went to MIT. In fact, he’s now president of the MIT Alumni Association. From there, he went to Harvard. He was one of the early employees at Hewlett-Packard and Silicon Valley. He has an amazing book called Unleash Your Inner Company. He has also founded two companies. He co-founded a third. He sold a fourth company. He’s advised literally thousands of entrepreneurs across five continents. John, welcome to the show.
John, thanks so much for having me.
I have so much respect and insight for what you’re doing. You have such an amazing career and journey. Let’s start with this whole concept of you’ve been both an entrepreneur and an angel investor. Let’s just dive right in. What do you listen for when you hear a pitch?
Unleash Your Inner Company: Use Passion and Perseverance to Build Your Ideal Business
I think it’s helpful to have been an entrepreneur, when you’re both evaluating pitches and trying to be helpful to entrepreneurs, I listen very closely for a real unsatisfied customer need. Until I hear one, it’s hard for me to get very excited or to be very focused on the opportunity. So many entrepreneurs focus on their really cool technology rather than a real customer need. I like to say, I started my first company with a really cool technology for which there was no customer need. It took me six to nine months to let go of that cool technology and swap it in favor of something for which there was a real customer need, namely doing surveys on the internet.
My first company which I founded in 1992 was Decisive Technology which published the first software for automated surveys via email and later via the internet. Start with a real customer need, that way you know that your business will be addressing a real customer need. It’s okay to use your resources, including your technologies if you have some, to suggest real customer needs, but make certain that you’re satisfying one. In the book, I talk about ways to come up with a potentially infinite number of unsatisfied customer needs even just in the areas you’re passionate about and to test them and to confirm that they’re real.
How do you suggest somebody test that the problem is real? Do you have any ideas on that?
Yes. First of all, let me talk about how you come up with unsatisfied customer needs. Start with any product or service in an area that you’re passionate about. For example, you’re passionate about running. One of the products and services we runners use are running shoes. Then ask yourself, what are the limitations of that product or service? I can think of three for my running shoes. Number one, they start to smell after I’ve worn them too many times. Two, if I want to change the shoelaces to match the color of my outfit, it’s a hassle to thread and re-thread them every time, two laces of different colors. Three, the shoes don’t tell me how far I’ve run or how fast I’ve run and they should know that, shouldn’t they? Those are three possible customer needs.
I have to confirm that they’re real and unsatisfied. Real means that other people besides just me have the need that means talking to people, going online seeing if other people seem to have the need, doing interviews. Also, I have to confirm that they’re unsatisfied, which means that another product or service isn’t already satisfying them. That means seeing what products and services are currently available, going to shoe stores. If I can satisfy myself that they are real and unsatisfied, great. That’s an opportunity for me to come up with a possible solution to that need. Let’s say, I can’t find anyone who addresses the problem of changing shoelaces easily to match the color of my outfit. That’s an opportunity to be creative and maybe I can think of a way to let a set of shoelaces to snap on or off. For the other needs, the shoes that smell and the shoes that don’t tell me how far or fast I’ve run, there are obviously solutions for those footpads and sprays and so forth.
Then ask yourself, what are the limitations of those solutions? Sprays have to be done every day. Footpads have to be changed frequently. What if there were a way to go for weeks or months without having to use the spray or change the footpads? That would have some advantages over the current product. Now, I have a new potential customer need that is the leftover need from the original need that’s not fully satisfied by the product or service currently available. Similarly, for the shoes that don’t tell me how far or fast I’ve run, there are solutions to those. There are Fitbits, there are odometers and so forth that you can wear while you’re running, but those I have to put on and take off. What if there was a way to have it built into the shoes so that I didn’t have to worry about putting it on or taking it off? Then that’s another potential need.
You can see I started out with a single product or service in an area that I’m passionate about. It blossoms into a tree of potential unsatisfied customer needs that I can consider evaluating. That’s how you can get a potentially infinite number of unsatisfied customer needs from even just one product or service in an area that you’re passionate about.
Unleash Your Inner Company: Come up with unsatisfied customer needs.
That’s so helpful. I’m always telling everybody: when you pitch, paint a picture. You just did that for us, John. You talked about it blossoming into a tree and you showed us how each branch leads to another branch by this logical way of exploring what the problem is. You’re really getting into the head of a potential customer’s problem that they may not have even thought about. “Yeah, my shoes smell.” They accept it. If you can really figure out a way to prevent that, they would love it. That’s really helpful.
John, sometimes I hear from budding entrepreneurs, “What if my areas that I’m passionate about aren’t very business oriented?” Let’s say I’m passionate about long hot baths, kittens and comic books. None of these sound very businesslike, do they? But even in these areas, there are potentially an infinite number of unsatisfied customer needs.
Warm hot baths. People like to read, listen to music, talk on the phone when they’re in the tub. How about a floating waterproof case for my iPad or iPhone that lets me do those things when I’m in the tub? Kittens. They lose a lot of their cuddliness when they grow up to be cats, don’t they? What about a diet or genetic therapy that allowed a kitten to stay a kitten its entire life? There would be a lot of demand for that, wouldn’t there? Comic books. The hugely successful and popular tradeshow Comic Con in San Diego attracts about 150,000 people. Hugely profitable, people sign up, attend dressed up as their favorite comic book character. No matter what your passion is, even if they don’t seem very businesslike, like those three, there will be unsatisfied customer needs in those areas. You just need to find them.
I love that. I’ve actually been to Comic Con. Talk about finding people who are passionate. This enthusiasm, whether it’s somebody who rides a Harley and they get that tattooed or the Nike people that get the swish tattooed. If you’re that passionate and there’s a whole other group of people that are equally passionate about what you’re doing, that’s great advice, is to focus on solving that problem and you’ll solve other people’s problems. In your book John, you talk about using passion and perseverance as a positive feedback loop, which is just the very beginning of Unleash Your Inner Company. I would love to have you talk about, how we can get a positive feedback loop going in our own head?
What do we mean by positive feedback loop? I mean people or things that reinforce each other. Passion is an attitude, perseverance is a behavior. In many aspects of our lives, our attitudes and behaviors reinforce each other. If I deeply love an activity, you know how the hours can go by like minutes when I’m engaged in that activity. It’s easy to persevere in those circumstances. That’s an example of passion driving perseverance. Similarly, if I just stick with an activity long enough so I start to get good at it and then get better at it and then start to like it and then start to love it, that’s an example of perseverance driving passion.
If you can think of any aspect of your life where you’ve experienced this positive feedback between passion and perseverance, that’s probably a really good area to consider starting a new business. It could be in any realm of life. It could be in family, sports, some area of scholarship, travel. You name it.
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You talk about the psychology of entrepreneurship, and certainly passion and perseverance is a big part of that. Is there anything else that you want to share with us about the importance of the psychology of entrepreneurship?
I have an entire chapter in the book called Growing Your Mind from the Inside Out. It’s really hard to start a business. You’ll run up against lots of obstacles. I talk about many of the obstacles I’ve run up against in the last 25 years starting businesses. I’ve had to lay off people, cut back salaries, factor receivables so I had enough cash to make payroll. At one point I reduced my salary to minimum wage. We had to move to smaller more modest offices. All of these are hard and humbling steps to take. You have to be very deliberate about building your own self confidence to be successful as an entrepreneur in my experience, or at least it’s helpful to do so.
In this chapter, Growing Your Mind from the Inside Out, I offer a number of techniques. One of the techniques I offer is this: If there is some aspect of yourself that you genuinely can’t change, find a way to view it as an asset. I use myself as an example. When I was in my early 30’s, I accepted the fact that I’m gay. Most people wouldn’t view that as an asset, at least from a business standpoint. I disagree. For me, it’s been an asset for at least five different reasons.
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One, when you are growing up gay, you know unambiguously with absolute certainty that at least some of the world’s routine assumptions aren’t wrong. People routinely assume that guys are attracted to girls and vice versa. You know that it’s not universally correct. I think growing up gay has helped me not necessarily accept the status quo, think outside the box. That’s made me a better entrepreneur and executive. Two, it wasn’t socially acceptable to be openly gay when I was growing up and so at least some of the energy I might’ve put into dating, I put into sports, studying and career instead. 30 years later, I’m hugely enjoying the benefit of that early investment. Maybe I wouldn’t have gone to MIT if I hadn’t been gay.
Three, I’m not a minority in any sense that I can think of other than being gay, so it has sensitized me to what it’s like to be a minority. Four, when people see that I’m not trying to hide my sexual orientation, they can see I’m being honest with them and that helps build trust between us. Five, I think it further conveys that I have strength and reserve if I can be open about the fact that I’m gay.
Similarly, if there’s some aspect of yourself that you genuinely can’t change, find a way to view it as an asset. Set the bar very high. Don’t use this as an excuse to accept some aspect of yourself that you can change and would like to change. If you genuinely can’t change it, if you can find a way to view it as an asset, it’ll be hugely empowering for you as it was for me. That aspect of yourself will become one of your strengths.
A few years ago, I was telling this exact same story to a group of undergraduates in Guatemala in an auditorium. About half way back in the auditorium, a young man was sitting. As I spoke, he slowly made a fist and gently moved it up to his chest and pressed it against his chest. At first I thought it was a small gesture of agreement or support for what I was saying. Then, when I looked again, I could see he wasn’t making a fist at all. His hand had no fingers on it. I imagine he was saying, “This I cannot change. This is my strength.”
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How moving. I love what you said so much. I personally relate to it as I’m also gay. I know that before I was comfortable talking about that, it was always a secret that you’re keeping. In order for anybody to trust you, I’m a big believer that before anybody wants to work with you, hire you, invest in you, they have to trust you. The best way to be trustworthy is to be authentically who you are, because otherwise people feel like you’re hiding something and they can’t put their finger on it. If you’re comfortable with who you are, more times out of not then other people are too. They pick up your energy, whether you like yourself or not. Thank you for sharing that so much. It’s so great.
One of the questions I always get asked by people I’m helping with their pitch is, “Is this the right time for me to be looking for money? Do I have to have a lot of traction or can I get funded with just an idea and a minimum viable product?” What are your thoughts on that?
Unleash Your Inner Company: I definitely think there are right times in a startup’s life to raise money.
I definitely think there are right times in a startup’s life to raise money. They’re not when you’re running out of cash. Then you have no credibility or negotiating leverage at all. They’re not even when you’re about to run out of money. I would say that the right times are when you either, A) significantly in reduced risk or B) significantly increase your upside potential as perceived by the investor. Let me say a word or two about both of those.
First of all, significantly reduced risk as perceived by the investor. What do I mean by that? Each time your company reaches a milestone, such as a positive cash flow of revenue, your first customer, your first working prototype, each time you reach one of those milestones, you have eliminated a risk in the business. If you have positive cash flow, you’ve eliminated the risk that you can get revenue. If you have revenue, you’ve eliminated the risk that you can get customers. If you have customers, you’ve eliminated the risk that the market will accept your product. If your market is accepting the product, that eliminates the risk that your prototype works, and so forth. Each time you can reach one of those milestones you have significantly eliminated or reduced a risk to the investor.
If you’re about to achieve one of those milestones, that’s a particularly good time to raise money, both before and after. Let’s say you’re very confident that you’ll achieve one those milestones in the next 60 to 90 days, schedule a time to visit the investor. Layout your value-add, the customer need that you satisfy, your solution, your team, your track record and so forth. Say to them that in the next 60 to 90 days, you will achieve this milestone. Then, ask if you can come back 60 to 90 days later after you’ve done so. Then go ahead, achieve that milestone, go back and talk to the investor again. That starts building your credibility with the investor even before they become an investor.
I love that. You said two things that I really want people to have as a big take away. One, don’t wait until you’re running out of money to seek money because you’re desperate. Just like in dating, nobody wants to date someone who’s “desperate.” What you just said here is just so important. Investors invest in who you are, your integrity and how you think. John just laid out for you step by step what to do, to prove that you have integrity, that you do what you say you’re going to do because you have thought through something. That your word means something because then they know if they invest in you going forward and you say you’re going to deliver a milestone, odds are you will because you’ve already proven it to them.
Beautiful, John. Thank you so much. They may or may not invest in that round but they’ll remember, “Those were the guys who said that they were going to do X and who did X.” You’ve made a positive impression, they could well be investors on the subsequent round. That’s one set of times when it is a good time to raise money, in my experience. A second set of times are the converse of reducing risk, which is right after you increase upside potential.
One of the things I talk about in the book, Unleash Your Inner Company, is the bowling pin model. Think of the growth of your business over the next three to five years as a series of bowling pins. You knock down the first bowling pin, that bowling pin helps you knock down the next bowling pin, the next, and next and so forth. Each of the bowling pins is a customer or market opportunity. It could be a city. It could be a vertical market.
Let’s say you’re located in San Francisco. Your first bowling pin might be the region of San Francisco, where you live. Your next bowling pin might be the city of San Francisco. Then the next bowling pin might be Oakland, which is a nearby city, then Sacramento, then San Jose, then Los Angeles. Establishing a market presence and awareness and customer base in each of those cities will help you further penetrate the next city. These bowling pins could be vertical markets instead. If you’re in IT, maybe it’s accounting as an application for your software. Maybe it’s supply chain management, maybe it’s customer relationship management and so forth. You could grow that way.
Unleash Your Inner Company: What builds confidence in the investor’s mind that your company has upside potential is when it’s really credible.
What builds confidence in the investor’s mind that your company has upside potential is when it’s really credible, that by knocking down one bowling pin, it will indeed help you knock down the next bowling pin, the next and so forth. One way that you can help build that credibility is by showing that you’ve knocked down one bowling pin and it is helping you already start to knock down the next bowling pin. I’ve got a set of customers in one vertical market, maybe the markets are like retail, maybe they’re B2B customers in retail financial services, telecom and so forth. Maybe your initial set of customers is in financial services and you are expanding from that base into retail or into telecom or vice versa. The first few customers that you get in the telecom space or whatever the next bowling pin is, that builds the credibility that it really is true that by knocking down one bowling pin you can knock down many bowling pins.
Again, another really good time to raise money right before and after, when you’re very confident that the first customer or cluster of customers in the adjacent vertical market or whatever the market is will be knocked down. Let your potential investors know that you’ll be achieving that within 60 to 90 days. Go out and do it, then come back to them 60 to 90 days later and show them that you’ve done it. This technique is like a two-edge sword. If you succeed in doing what you set out to do and said you’re going to do, it is a huge win. If you fall significantly short of doing what you said you were going to do, that’s a big negative. You want to be very confident that you are going to achieve whatever it is you’re going to achieve in the next 60 to 90 days. If you need to wait a little bit longer to make absolutely certain that you’re going to do it, that is something you might well consider. All of this raises the question, how would I fund my business in the interim until I’m at a point to raise money?
In the book, I laid out three different ways to fund your business in the interim until you’re at a point where you can attract outside investment. They are, number one, living frugally yourself. In the book, I offered the example of my friend, Nick Winter, a successful entrepreneur here in San Francisco, who has reduced his physical possessions to exactly 99 things. He has one laptop, one cellphone, two pairs of jeans, one wedding ring and so forth. My list on 99 things is in the book. This is an extreme case of minimalist living, which seems to me is an emerging trend.
I know that I have experienced downsizing from a big spacious three-story town house in Menlo Park to a compact town house in the town of San Francisco seven years ago. When I did, I had a whole new sense of freedom from having to take care of day to day maintenance on my house. When I clean out a closet or my kitchen and free up space in the closets, I have a new set of freedom and spaciousness. I haven’t gone to the extreme that Nick has but I can certainly empathize with how simplifying your life and minimalist living frees up mindshare and money to invest in your business. In the book, I talk about how skipping Starbucks can save you $1,250 a year, which is enough to buy a very nice coffee machine with gourmet coffee for several employees for the first few months that you’re in business. Living frugally is one technique, and freeing up mind share, resources and cash to invest in your business.
Two is providing services. If there is some skill that you are uniquely skilled at and expert at, then potentially you can offer those services as a way to generate revenue to fund your business. For my second company, which was in enterprise feedback management, which means automating the customer feedback and surveys for corporations, we had learned about that field from my first company, Decisive. The second company was called CustomerSat, the website is still CustomerSat.com. We had early experience in doing surveys. For my second company, we used the product of my first company to do large scale surveys for corporations and used the earnings that we made from those services to fund the development of our platform for the second company.
Unleash Your Inner Company: Use whatever skills you have to generate cash to fund the development of your new technology.
You can do the same. Use whatever skills you have to generate cash to fund the development of your new technology. If the skills that you’re providing or the services you’re providing relate to the new business, so much the better. In fact, that’s the ideal case because there you’re not only generating funds, but you’re building customer relationships, you’re learning about customer requirements and all of that. You can fold it into the new company that you’re starting.
The third way is friends and family. If your friends and family see that you’re living frugally, see that you’re serious enough about your venture to provide services to fund it, then that will show them how serious you are about that new venture and make them receptive to consider investing in your new venture or lending to you for your new venture. Those are three techniques that you could use before you reach the point where you’re ready to either get crowd funding, angel investing or approach a venture capital firm.
That’s so helpful. Live frugally so that investors feel like you’re going to be good stewards of their money. Provide a service as a way to generate additional revenue for yourself in the interim. Especially if, let’s say, you’re really great at tech and that’s what you’re bringing to your start up, then you could probably get hired as a tech consultant. Those people that are hiring you could even become customers. I always like to say, if you really hit the jackpot, you come up with a startup idea that a customer becomes an investor because they love what you’re doing so much. Have you ever seen that or experienced that yourself, John?
Absolutely. The company I co-founded two and a half years ago, Pyze.com, their largest investor came to them directly through one of their customers. Incidentally,if any of your listeners are developing mobile apps, they should check out Pyze.com because the applet gives their mobile app a ton of customer intelligence, free of charge in the basic version of the product.
That’s great. Unleash Your Inner Company has received over 85 five star reviews on Amazon, soon to be 86 when I get on there. How did you come up with the name of your book? I’m always interested in that story of origin.
The catalyst for writing the book was a TED Talk. After I sold my last company in 2009, I was invited to talk to young entrepreneurs in Silicon Valley. I started out with a 30-minute talk and then a 90-minute talk, then a half-day workshop, and a full-day workshop. Then I was invited to give a TEDx Talk, which meant cutting it back to eighteen minutes. I had a full day of material. I had to figure out what was the most important for the eighteen minutes. That process of deciding what was most important and distilling the most important parts to eighteen minutes was so clarifying. I realized for the first time after I’ve done that I could turn this into a book. That TED Talk is a TEDxUFM, University of San Francisco Marroquin in Guatemala.
That was 2011, I already had a great deal of material to work with. Originally, the name of the talk was Release Your Inner Company but then I changed it to Unleash Your Inner Company because that seemed more powerful. I spent about a day a week in 2011, two days a week 2012. It was a full time activity by 2014. I finally submitted the book to my publisher in 2015. It was five years in the making. A labor of love. Probably on average about a half time activity over that five years. The book came out in October 2015. It’s now been out for almost a year and a half.
What’s the best way for people to follow you? Obviously, we’re going to put the link to buy Unleash Your Inner Company on Amazon. You have a wonderful website called JohnChisholmVentures.com. Your Twitter handle is just your name?
It’s @johndchisholm. The website for the book is www.UnleashYourInnerCompany.com. The website for my consultancy in angel investing practice is www.JohnChisholmVentures.com.
John, I can’t thank you enough for sharing your wisdom, your insight, your passion and your expertise on how we can all learn to unleash our inner company and make it happen with the passion and perseverance that you’ve clearly shown and continue to show in the way that you live your life.
John, it’s been a pleasure. Thanks so much for having me.
My pleasure.
Links Mentioned
- J Robinett Enterprises
- John Livesay Funding Strategist
- Unleash Your Inner Company – book
- CustomerSat.com
- Pyze.com
- Unleash Your Inner Company – book on Amazon
- JohnChisholmVentures.com
- John Chisholm TEDxUFM
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