As a CEO, you are responsible for the overall success of your business.
That said, chances are a vast majority of your responsibilities are brand new to you. In order to help you succeed despite your lack of experience, I sat down with Rudy Prince.
Rudy has been the cofounder and CEO of multiple venture-backed startups including eFax, which he took public. During our discussion, we dug into the 11+ mistakes all founders should be aware of and avoid if they want to be successful.
Have comments, questions, ideas, or feedback? I want to hear it. Tweet me at william_griggs.
Topics Covered In This Episode
- What is the #1 mistake people make with regards to the following topics:
- Business Idea
- Company Formation
- Team Building
- Finance / Fundraising
- Liquidity Events
William Griggs: In this episode, I talk with Rudy Prince. Rudy is a veteran entrepreneur and a cofounder and CEO of multiple venture-backed startups including E Facts which he took public. During our discussion, we dug into the 11 mistakes all founders should be aware of and try their best if they want to be successful. Without further ado, here’s my interview with Rudy Prince of E Facts and Wing Up. Enjoy. All right, Rudy. Thanks for joining us today.
Rudy Prince: Thank you, William. Glad to be on your show.
William Griggs: I really appreciate the time.
Rudy Prince: Yeah. No, it’s sounds like you’ve got a good group of start-up professionals of various kinds that you’re pulling together. I’m really honored to be on your show.
William Griggs: Yeah. So we love to get smart people in so we democratize their knowledge. So we can share it out with the audience and I want – in this episode I want you to help our listeners avoid as many mistakes as possible while they’re watching their business and one of the best places I know to do that and to help the audience is to help them stand of the shoulders of giants like you, people that have come before, people that are currently, people that have had success and to do this, we need to crawl inside of your mind and mine for knowledge nuggets that our audience can take away with them, store in their own minds and leverage, but before we kind of dig in, tell us briefly about your background.
There’s – they heard a little bit in the introduction. Tell them a little bit more about your background and what you’re up to at Wing Up because I really need you to make this a no brainer. It’s one of those things that sometimes there’s times to be humble and sometimes there’s not times to be humble. What I want you to help me do is kind of establish that you’re the right person to listen to so that people don’t turn off the podcast right now. So they keep listening so we can help them be successful.
Rudy Prince: You bet. I’ll give a little background there anyway and yeah, I’m excited about a new app we’re working on at Wing Up, but just by way of background, I’ve been a serial entrepreneur. E Facts was the biggest company. It was as we joke about now a 12 year success story and a lot of twists and turns along the way. We took it public after about 10 years and then had really the most successful pivot; I guess you would call it these days, into internet faxing.
Thereafter we were a public company, but have been in mobile software and various ways and Wi-Fi products and have made a lot of mistakes along the way so I hope to share some of the arrows I’ve gotten in the back from some of these efforts and I’m really excited about a new app we’re working on now for business travelers. We all have our networks of people.
I mean now on LinkedIn I think most people have over 500 connections or that’s an average and the feeling is that people aren’t using these connections enough and so we’ve optimized an app to really organize your existing connections, show you who you might be able to meet with on your trips, pull in your travel itineraries for your future trips and see what other travelers might be at a conference or an event that you’re attending.
So we’re trying to make or leverage the networks that you have and make it an easy tool for somebody traveling to set up more meetings or get together on a casual basis or a more formalized basis and be able to get the most out of our trips so we’re not just sitting there in the hotel room or the hotel bar wasting time when we could be out there networking.
William Griggs: Very cool. So we’ll talk a little bit more about that at the end of the interview, where people can dig in and find about Wing Up. You gave us a little introduction around some of the success you’ve had. You’ve been a serial entrepreneur, multi-time CEO, venture back companies, all sorts of stuff, E Facts, big success. Taking that public something most entrepreneurs never have the opportunity to do so it sounds like you’re a great person to kind of dig into.
So you’ve been around the block. You’ve made your own mistakes. You’ve seen your good share of mistakes that have been made by others. So let’s kind of just dig in. Let’s look at like business ideas, for example. What is like the one mistake people make with regards to even thinking up or thinking through their business idea?
Rudy Prince: Well, I’m involved with the capital factory here in town and have talked to a lot of entrepreneurs there and other places and one of the things I see is that the business idea itself is not large enough or there’s not enough of a market opportunity there. Some of these are very nichey which are fine if you’re planning a lifestyle business or something.
This – you might be able to it up to $1 million or $2 million or something, but to be able to expand that and really attract investors, it’s got to be a bigger idea than that and – so I think one of the things about the business idea is to really ask yourself if this something that I can scale? Is it something that customers are willing to pay for and is it unique enough? Are there 20 other competitors and I’ve made my mistakes with that before, not realizing how many competitors there might be in a given market.
William Griggs: Yeah. No. That’s an interesting piece. I was just talking with an entrepreneur the other day who kept saying I keep getting this feedback that my market is too small and I said there’s two ways to look at that, like you were talking about. It’s either one, you kind of create that more bootstrap lifestyle entrepreneurship venture and if that’s the case you don’t go and talk to investors that are going to tell you it’s too small.
You work on selling the product. You work on building the product versus if you’re trying to go more the venture capital route or venture backed route, like if you’re saying my market’s got to be pretty big so the exit can be pretty big so they can return to their LPs, that type of stuff and so some of my advice to him was if you’re interested in keeping it small, there’s some interesting people like Rob Walling who has a podcast called startups for the rest of us who thinks that, who thinks through being a single founder, watching a self-funded bootstrap company.
And how to do that versus prescribing something or watching that may be on the YouTube channel of tech starts which is going to tell you go after a big market and raise money and that type of stuff. Does that sound right – sound like what you’re saying?
Rudy Prince: Yeah. You really need to decide what type of company you’re trying to pursue here, but I think the moment accepting outside investment, whether it be from institutional investors or angel investors that you don’t know outside of your immediate friend and family kind of circle then you’ve really got to have some upside to it and I think those type of investors are looking for something bigger than just a small niche idea.
William Griggs: Yeah. Perfect. So we dug into the business idea. That’s one big mistake that people make. Next in order of operations, like starting the companies you start to form the company. So you might get cofounders. You might start taking on investors. What’s a big mistake in kind of the company formation that people make?
Rudy Prince: Well, certainly when cash is tight on the front end and everything, don’t over-lawyer the thing. I have seen this and I’ve been guilty of that in the past by getting some lawyers that really wanted to nail down every – cross every T and dot every I and it begins an expensive proposition. You may not to set up a C corporation to start with depending on your type of investors. You could get by with an LLC as an example.
These days convertible notes are seen as an easy structure. They’ve got pretty standard terms. You can negotiate on some of those, but it’s not as complicated as it needs to be as you proceed down the route toward more of an institutional type of funding.
William Griggs: Yeah. So I mean I’m not a lawyer. I’m not a CPA, but I’ve always been given the advice of you can work on this business for a really long time before you actually need to button it up like that. You can get some formal agreements in place with your cofounders where you don’t necessarily have to incorporate and do all the rigmarole there. If you’re just in the validation phase of the business, people kind of get hooked up on – or caught up on that.
They spend lots of money and then they end up folding the business or the business doesn’t really pan out the way they thought it would be in terms of like oh the market’s not there. The idea’s not there. So I’ve seen people place thousands of dollars and months at a time to try to button up so that’s an interesting point like you were saying.
Rudy Prince: Yeah and I mean lawyers can sometimes be the deal preventers and even keep people from starting a business because it looks too complicated. It doesn’t need to be that complicated is my main point.
William Griggs: Got it. That’s a perfect point to drive home. What about as far as we’re getting past some of the legal setups and some of the stuff. What about team building as we’re trying to hire some people on? What are some common mistakes or kind of mistake that people make the most?
Rudy Prince: I think people need to hire the type of people that really complement them and not – that have other skill sets than theirs. Sometimes people hire people that look like themselves and they end up with this whole company of great marketing and sales guys and then the engineering team kind of fell by the wayside or the other way around.
Engineers hire other engineers and they end up with nothing on the marketing and sales side and so I think a balanced type of team is really the goal and to figure out where your weaknesses lie and to find the type of people that really plug holes and gaps in the skill set that you need to go after a given market.
William Griggs: So as far as thinking through weaknesses or should our audience think through all the different functions of their business, basically put a check next to things they feel confident at and things without a check they should try to fill that with another person?
Rudy Prince: Well, we all wear lots of hats. I mean in the startup world, you’re essentially all doing lots of different things, but you want to make sure the core skills and the personality types of so forth are a good blend that kind of meet both the sales marketing side, dealing with the customers, support is all the way through the development and engineering side.
William Griggs: So that’s another good piece of advice. As far as we’re starting to build up the team in this narrative and we sort of build it out and maybe it’s now time to raise some money. Is there – are there any mistakes or what’s that one mistake that you would try to drive home to help people avoid?
Rudy Prince: Well, I think the reality if you’re going after a new market opportunity that needs a reasonable amount of capital on the front end is you can never spend too much time on the fundraising. I have seen it be put to the back burner and this is not often the case, but the fundraising is just an ongoing process that should involve anywhere from 30 to 50 percent of the CEO’s time as well as a reasonable amount of the team’s time and there’s lots of aspects to fundraising.
Having some customer contacts, some diligence kind of things, the right pitch, the right strategy and so forth and involves talking to a lot of people, but it involves a lot of time spent to be able to present the story and get funding whether it be from angels, institutional or otherwise.
William Griggs: Yeah. So it seems like what you’re saying, it takes a lot of time. They should be – they should expect it’s taking a lot of time. They could still get frustrated that it’s taking a lot of time, but as long as you’re choosing this route, it’s kind of game you have to play around getting your pitch right, getting your references and all that different stuff for the due diligence, and then networking so you can get in touch with these people and then kind of continuing the communication cadence and have your ping strategies so you’re staying in touch and updating.
Rudy Prince: Yeah and I think one of the most useful pieces of advice I got very early on is all these types of startups take longer than you think and take a lot more money than you think. Never turn down money and just set it as a very high priority and try to make sure your investors are the type of people that you’ve like to have on the team for a longer time than you think.
William Griggs: Yeah. So as far getting investors, it seems like a lot of things that help get the investors are some of the things we’re going to talk about next which is sales and marketing. So let’s start with sales. What is the number one mistake that you have on the top of your head that we could help our audience with?
Rudy Prince: Well, I think the key thing is really understanding the customer, understanding exactly what you’re doing to improve the customer experience or that really adds value to the customer and being able to quantify what that customer value is. That being said, I haven’t seen many startups that really end up having a success in the exact same business that they started out with.
They may be in the same market and they may twist and turn a bit, but especially here in Austin I see a lot of consumer-focused firms that may start focusing on business or they started as a product company and then they focus on services because the money may be easier there. There’s a lot of twists and turns in all that, but being close to the customer is probably the number one piece of that is just having good conversations and making sure that you’re not developing in a vacuum.
William Griggs: Yeah. So it seems like having those conversations, seeming the themes, seeing the trends as you’re talking with the people to see what are the levers or the buttons that you should push that you should kind of elicit the response that you want and kind of buildup that bigger story that you were talking about, kind of the fundraising piece, right?
Rudy Prince: Yeah and let me mention a number two is I have seen companies that are developing a very cool product and the engineers are going at it and they bring on sales and marketing types too early and there’s nothing for those people to do in many cases while waiting on the development to finish. So I think you really can wait until pretty late in the process.
You may need one, maybe two people or something to help you with the product itself along the way, sales and marketing types, but I’ve seen too many cases and I’ve been guilty of that before, too, where you bring on people ahead of the development and the development slips by three months and you’ve got a big bill that you’re paying for people that you don’t need at the time.
William Griggs: Right. Yeah. Scaling prematurely it sounds like a big problem. What about on the marketing side of things? Are there any – what mistakes would you help our audience avoid?
Rudy Prince: Again, marketing is a large expense. It can be a large expense as you turn on advertising or turn on some type of promotional activity and again, don’t do it too early. Make sure you’ve got the kinks worked out of your system, the product is good. You’ve got good feedback. Then you can turn it on really quickly, especially these days in the online marketing. You can just blast it out the moment you’re really ready, but make sure you’re ready for it.
William Griggs: Yeah. It seems like one the quotes floating around on the internet these days is great marketing helps a terrible product fail faster. So you’ve got to be careful with that. I’ve bought – I purchased a product recently from a company that had recently rebranded because their product was so bad in the market.
They had to rebrand the entire company for their second generation product which thankfully much better, but at the same time I think they came out with a crummy product, but a lot of press behind it. They got terrible reviews on all the sites, on all – and people were just blaming up in arms. So they had to go through and had to rebrand the whole company which worked for them this time, but is not the way that you would want to go.
Rudy Prince: Exactly.
William Griggs: All right. We’re doing rapid fire so I hope people in the audience can keep up with us. Now we’re to the support functionality which for me is something I learned with a couple recent companies I’ve been working with. It’s so important to retention. It’s so important to a lot of different stuff. The customer support – what have you learned or what mistakes have you made or seen others make around support and supporting customers?
Rudy Prince: Well, again, this is a case of don’t outsource support too early. I mean you never know how much support you’re going to need until after the product is launched and I think in many cases the principals themselves should handle support and support calls and all that as long as they possibly can because it’s a great place to interact with customers and when you do it, you find out, oh my gosh, we’ve got a product issue we’ve got to deal with here or other things.
I mean if your product is really good, you shouldn’t need much support in many cases. It depends on the type of market you’re in, but I think the principals in the company should really be the ones handling the support and then only when they’re buried and swamped and you kind of know what kind of support issues and they can be taught to support people is when you might consider outsourcing work, even bringing on people just to handle that aspect.
William Griggs: Yeah. It makes sense. It seems like if you’re on the frontlines taking those support calls or spotting those support emails, you’re going to probably change priorities a little bit once you see a theme or see some trends. You’re going to try to fix these issues to reduce the number of support inquiries because the reason is because they’re not necessarily happy or they can’t figure it out.
So it’s [inaudible] [00:17:51], maybe it’s a documentation or what have you to make it more self-service support so that makes a lot of sense to kind of have not just hire and outsource and have somebody in the corner doing support, but kind of make it a big critical piece of the company.
Rudy Prince: Yes. It’s the first place you really run into your customers and it’s a great place to engage and find out where the product’s working, where it’s not and adjusting quickly.
William Griggs: Yeah and then I guess the next piece is we’ve got a lot of founders in the audience. They’re thinking building their team. They’re thinking through company formation, adding sales, adding marketing support. A big thing that kind of reigns along all of those is management. So what kind of mistakes can you help our audience avoid around managing people and managing the company?
Rudy Prince: Right. So early on everybody’s wearing lots of hats and you general have certain roles that you know where things fit into which bucket, who’s handling what and all, and I think the main thing is just communicating well. Now fortunately this latest startup, I’m doing everybody is in Austin which is a huge benefit I do think having people in the same place, but not to say that virtual companies can’t be very effective and it’s just not quite as efficient when you’re doing these virtual meetings and so forth and certainly more of that and I’ve certainly done my share of that, but it’s really all about communication.
Make sure you’ve got lots of good flow of communication, the right communication tools. Maybe whether it’s a daily or a biweekly meeting or setup some standard meetings and make sure everybody’s on the same page all the time because things happen really quickly in startups and you don’t want to let things go by the wayside because you didn’t communicate.
William Griggs: Yeah. It seems like that’s a huge piece. A lot of the companies I’ve worked for have done pretty dang good job of that and it seems like if you’re trying to make it actionable, like you were saying, you structure it so you put it on the calendar. If it needs to move, it will move, but you put it on the calendar as far as quarterly planning session, that weekly one on one, that biweekly team meetings so we’re all on the same page. Everyone is kind of sharing things that they’re learning that can help each other do their piece of the job better.
Rudy Prince: Exactly.
William Griggs: And then as far as management goes, there’s a lot of – a lot of what management that the actual individuals have to deal with is the actual strategy of the company and thinking about what direction they’re taking it and the market and the competitors and the board. What can you talk to us about and share with us about strategy?
Rudy Prince: Right. I think one of the dangers is focusing on the internet and gathering lots of data and saying oh well this is the right strategy and so forth. I think there’s no substitute for talking to advisors who know the business or know something that’s complementary to the business and can really give good advice as well as customers, and so I think being out there communicating one on one or getting a strong group of advisors that have kind of been through some of these things.
I mean I’m hopefully offering some of those – some of that kind of advice to the capital factory companies where I’m a mentor, but I think you – when you’re a young company and you’re trying to figure out what should be the strategy here, you can get overwhelmed with data on the internet when you could probably talk to some others. Maybe pick a handful of really good people that might understand your business and take their advice and look for the strategy that way as well as from your customers.
William Griggs: Yeah. No, that makes a lot of sense as you’re thinking through that, that advice and you’re digging into the internet and all the stats you could see. It seems like lots of times when I do that research or when I think about that research, it’s kind of a flat representation versus kind of a more dynamic representation which would be going to the advisor who kind of lived through a certain period of time or had an experience with a certain period of time or something in the market that’s similar to what you’re facing.
So it seems like you’re getting more of the three-dimensional experience where you can’t ask the website or the webpage questions about the data, but you could with an individual and it seems like as you’re getting more – as the audience is getting more of this data in from – or data points in from the different advisors and the different online resources, one blog post came to mind that I’ll share with them is just at a website called both sides of the table, the gentleman who runs it had a blog post very specifically on how do you deal with conflicting advice?
How do you deal with it? How do you make sense of it? And he walks people through a pretty interesting thought process shown as below.
Rudy Prince: I was going to mention that. Even in the last week, we’ve had totally conflicting advice. One person saying one thing about it should be a paid product. Another one says it should be a free product, these kind of things and that’s a big part of the strategy and you have to – so there you really have to see where the advisors are coming from and make the choice about which ones to trust.
William Griggs: Yeah. For sure and then as far as we talked a little bit about leadership at a management level. Is there anything else you wanted to touch on kind of leadership as a function, as a role for people listening to this podcast?
Rudy Prince: Well, yeah, there’s shelves and shelves of books on leadership and how you should lead and so forth and I’m a firm believer in leading by example and digging into the trenches. I mean Steve Jobs had a lot of faults, but one thing he did is get really hands on with the product itself and the customer experience, the user interface, all of those kind of things.
And I think that’s what made him a good leader in the sense of developing great products and I think sometimes management can remove themselves from the product too far and what you want to do is really be right there in the trenches, understand what the engineering issues are, what the sales issues are, the marketing issues. You’ve got to be right there in it and leading the way.
William Griggs: Yeah, it seems like as the founder or the CEO you’ve got to have that vision. You’ve got to share that vision like we talked about. Management communicating – you have to come up with the vision. It’s sort of the strategy that would help with that and then with the leadership, it seems like what she’s saying is you’re tying it all together to a certain extent.
You’re going to be in the trenches so you’re going to know what issues are being brought up and then what trade-offs are being made and whether those trade-offs will match the vision or help you facilitate the vision or not. So it seems like what you’re saying is you should be into that discussion and understanding so you know the company is veering off course.
Rudy Prince: Yeah. Exactly. Just lead by example and don’t shy away from problems just because you’re in management.
William Griggs: And then if our audience gets to this point, we hope they do. A liquidity event, an IPO, like E Facts or an acquisition, what can you share on that front?
Rudy Prince: I think my main advice would be for the first – until the business is a success, leave it as a slide or two in your pitch deck and you can show other exit strategies in your market and what it might look like and so forth, but don’t focus on it because you don’t know what your exit strategy is going to look like. You don’t know if anybody will want to buy you.
You don’t know if you can get public and all that on the front end of this. You focus on building a good business, getting customers, figuring out how you can make money off of customers and just focus on the product itself and all the executive of your business and not on an IPO or exit event, that those will come if the business is successful.
William Griggs: Right. That makes a lot of sense. So you just kind of focus on the areas and some other additional areas, but some of the areas we’ve covered, the business a success and then you’re able to do that. You’re able to create of something of value that other people will be interested in. Well, we’ve gone rapid fire through these questions. People might have rewind and listen to it once or twice again to kind of go deeper and figure out what they need to work on, but as we wrap up, what category did I miss?
Is there one category, a related mistake that we should surface for our listeners so that we can help them avoid it and increase their likelihood of success?
Rudy Prince: Well, here’s one. We were joking yesterday about the overuse of the word pivoting or pivots and essentially this always happens. Businesses twist and turn and technology changes and that’s just a reality of the business. We were joking that maybe we should call the term the Salem term packing.
Packing means you just change the angle just to optimize your direction and moving forward as opposed to pivot might give the idea that it’s totally changing the type of business you’re in, but the reality is as you look at the twists and turns of your business, you really have to think about the best way of addressing the customers or addressing that market and make those decisions carefully.
Because those are big decisions to make about whether you’re a product firm or a services firm or a consumer facing company or a behind the scenes company. All those kind of things need to come into consideration as well as how much capital you really have access to. That certainly has an impact on that.
William Griggs: Awesome. I’ve definitely learned a lot this episode. I really appreciate your time. If people want to connect with you or if they want to find out more about Wing Up, how can they do that?
Rudy Prince: If they want to connect with me, I’m at Rudy@wingup.com and please go to WingUp.com and check out our video and our app in the app stores and we’re very excited about it. We’re just getting launched as we’re getting this interview going and looking forward to some success in the business travel space here.
William Griggs: Great. I’ll put the link to the app and the website in the show notes. Rudy, thanks for joining us today.
Rudy Prince: Thank you so much, William.
Rudy Prince’s Bio
Rudy Prince is currently Co-founder & CTO of WingUp which is providing mobile networking apps for connecting business travelers. Formerly, Prince was Founder / CEO of eFax.com where he led its IPO and built eFax into the world’s leading provider of Internet Fax services prior to merging with J2 Communications. Before relocating to Austin, Prince spent 17 years in Silicon Valley where he founded or assisted many companies along the way including Entropic Speech (acquired by Microsoft) and RidgeRun, a leading developer of Linux for mobile phones. He also led the development of Mediacart’s “Shopping Cart of the Future” which was heavily promoted by Microsoft. For the past several years, Prince has been leading developments of various mobile apps and services including conference calling, group texting, photo sharing and social networking for Callvine, Pivit, WingUp and others. Prince currently advises startups in a variety of strategic marketing, software development and consulting capacities. He holds a B.S.M.E. with Highest Honors from the University of Texas.
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