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In this week’s episode we sit down with Steve Hoffman, Chairman & CEO of Founders Space.
Founders Space is one of the world’s leading incubators and accelerators. He’s also an angel investor, limited partner at August Capital, serial entrepreneur, and author of several award-winning books. These include Make Elephants Fly and Surviving a Startup.
Hoffman is a serial entrepreneur, founding and exiting two venture-backed startups, in the areas of games and entertainment.
Hoffman went on to launch Founders Space after his own successes, with the mission to educate and accelerate entrepreneurs. Founders Space has become one of the top startup accelerators in the world. Hoffman has trained hundreds of startup founders and corporate executives in the art of innovation and provided consulting to many of the world’s largest corporations, including Qualcomm, Huawei, Bosch, Intel, Disney, Warner Brothers, NBC, Gulf Oil, Siemens, and Viacom.
SUCCESS STORY PODCAST
The Success Story podcast is focused on speaking to incredible people who have achieved success through trials, tribulations, wins and losses. In each episode we sit down with leaders and mentors. We document their life, career and stories to help pass those lessons onto others through insights, experiences and tactical strategy for business professionals, entrepreneurs and everyone in between.
Machine Generated Transcript
people, startups, entrepreneurs, silicon valley, job, called, game, big, world, book, money, founder, company, started, work, idea, Hollywood, podcast, business, space
Scott D Clary, Steve Hoffman
Scott D Clary 00:06
Welcome to the success story podcast. I’m your host, Scott Clary. On this podcast I have candid interviews with execs, celebrities, politicians and other notable figures, all who have achieved success through both wins and losses. To learn more about their life, their ideas and their insights, I sit down with leaders and mentors and unpack their story to help pass those lessons on to others through both experiences and tactical strategy for business professionals, entrepreneurs and everyone in between. Without further ado, another episode of the success story Podcast. Today I have Steve Hoffman, better, better known or referred to as Captain Hoff and I’m going to figure out why in a few minutes. As he’s called in Silicon Valley, he is the chairman and CEO of founders space, one of the world’s leading incubators and startup accelerators. He is also an angel investor, limited partner and August capital serial entrepreneur and author of several award winning books, including make elements elephant fly, and surviving a startup. Hoffman was the founder and chairman of the Producers Guild of the Silicon Valley Chapter Board of Governors of new media Council and founding member of the Academy of televisions Interactive Media Group in Silicon Valley, Hoffman founded venture backed startups in the areas of games and entertainment, and worked as mobile studio head for infospace, which created games such mobile hit games such as Tetris Wheel of Fortune and Tomb Raider, the Hitman skee ball X Files, a lot of names that you’ve probably played around with on your phone. And then after that, is where, you know, Steve, or Captain Hoff is right now at founder space, where he’s working with a whole bunch of entrepreneurs, helping them accelerate their businesses, helping them educating them on what it takes to be successful. So he’s, he’s heavily involved in the startup space, and outside of what he’s done as, as an entrepreneur himself, and as an angel investor, and mentor to startups. He’s trained startup founders and corporate executives in the art of innovation, and provide a consulting to many of the world’s largest companies, including including Qualcomm, Huawei, Bosch, Intel, Disney, Warner Brothers, NBC, Gulf Oil, Siemens and Viacom. So a ton of a ton of I don’t know, takeaways, ton of accolades is a ton of probably, you know, speaking points as to how you came to who you are today. So, thank you for sitting down. I appreciate it.
Steve Hoffman 02:39
It’s great to be here with you
Scott D Clary 02:41
know, it’s it’s exciting. So I love speaking business. I love speaking startups. You know, even the, the consulting of some of these, like, you know, household brand names. It’s also exciting. But I’ll, I’ll pass it over to you and maybe start off. Why Captain Hoff.
Steve Hoffman 02:59
So, in Silicon Valley, that’s my nickname, because I’m the captain, and CEO of founders space. And so founder space is a startup accelerator and incubator here in San Francisco. And we help startups not only in Silicon Valley, let me adjust this, not only in Silicon Valley, but all around the world. So we have offices as far away as China, we actually have a lot of offices in China, where we work with entrepreneurs, we work heavily with them in South Korea, Australia, Taiwan, across Europe. And our goal is really we work with hundreds of entrepreneurs every year. And our goal is to help them with their business to help them with their concept, figuring out if there’s a good fit with the market, helping them go to market and helping them raise venture capital. We also I’m an investor. So I do a lot of investing in startups, both here in the United States, as well as all over the world. And I’m always looking for great companies.
Scott D Clary 04:03
So so this is where you’re at right now. So walk us through, because this is like a very boilerplate summary that I pulled off a website. So walk us through, like your life, your origin story, how you came to be captain off,
Steve Hoffman 04:18
ah, how I became the captain off. So it all started when I was a wee child. Now, when I was small, when I was young, I was very passionate about being creative. So I was always doing projects. So probably like you with this podcast. I was I was out there as a kid, I was shooting movies. I got all my friends together made over 50 films all the way through high school. I was inventing games. So I always knew I wanted to do something. And but my father, he was an MIT rocket scientist, and he was like, son, you have to study computers. Computers are the future. So I went and got an election. took a computer engineering degree is not soon as I. As soon as I had that degree, I knew it wasn’t what I wanted to do. And I actually went to grad school and film at USC. So I studied film and television. And then I graduated with my master’s degree with no job. I was like, What do I do? So is in Hollywood at the time, it was, I didn’t know, really have any inside connections or anything. So I literally found out how to reach out to all the top people in Hollywood. And I would contact them I’d write them letters write, trying to get their attention. So I sent out 150 of these to the top people in Hollywood when I could get their information. I only got three responses. So the very first response I got was from the producer of Empire Strikes Back, you know, the Star Wars series. So he called me up, he said, I loved your letter, I, you know, I thought it was great. I don’t have a job for you. But he just wanted to chat. So we we spent like 45 minutes talking, and that was that. The second call I got back was from Disney. So they invited me in to an interview where I met them. And I was, you know, I was really, really wanted the job at Disney. And it was going very well. I was with the director of production. So my dream job. And then they asked me what films do I like? And they’re like, do you watch a lot of Disney films? And I go, Yeah, yeah, I watched some Disney films. But then I started because I’d gone to film school, and I knew all these amazing directors, you know, producing, you know, incredible works. And I started to rattle off all these, you know, high end directors with their incredible works, and then they go, but none of those are Disney, Phil. As soon as I did that, the job interview was literally over. Like, if I wasn’t gonna, like, say what they wanted to hear. So this is maybe a lesson for you. Yeah, in a job interview, you can’t say what you really believe. You got to say that their product is the greatest. So I learned basically, I saw that the expression on the the the head of the productions face, her expression just went. And I went, none of the directors I listed or none of the films were Disney that I was really passionate about. And then it was over. I was literally over. So then I had one other person out of all those people I’d spent all this time trying to reach out to brought me him. His name was Chuck freeze. He had the time he had a big office on Hollywood, this big building the top floors. He had his name on, it was Hollywood Boulevard. He had his name and huge letters, everybody knew it. And he had produced over 150, television shows and movies and things like that. So he’s very well known. And he brought me into this office. It’s this huge imposing office like you’d see it. In a Hollywood movie. It’s like the type of office you would imagine a Hollywood producer to have a big shot. There’s long, long, long office, all his Emmys were on the wall and everything. And then he looks at me. And he goes, What do you want? What do you want Hoffman? And I was like, I want a job. I want a job in Hollywood. I want to be a writer in Hollywood, can you hire me. And then he just goes on, I don’t know about this. And then I’ll see what I can do. And then I wait. And a week later, I get a job offer. But it’s not the job I had in mind after going to graduate school and film school, it was a low low low level job. It was called a script reader. And basically, you’re paid by the script, very little money to read the script as quickly as you can, and then summarize it, and give it back to them. It’s not a job where you can even afford to pay your rent, let alone buy pizza. So it’s, it’s a, it’s something you do when you have no job or nothing else to do. But I took it, it was the only thing I had, there was nothing left. So I took this job, work really hard analyzing these scripts, doing the best there’s a bunch of other readers like a dozen other coming in and out every day, getting scripts going back. And the head of production that worked under Chuck. She was, uh, you know, she she was very nice. She’d give me the scripts and stuff. And then a couple weeks later, I was like, I can’t do this forever. You know, I want to make stuff. I don’t want to just read stuff and write a synopsis so they don’t have to read it so they can just read my synopsis. So I asked to meet with Chuck again, and I get an appointment. I go back into his office. He’s sitting there is this huge guy. And I don’t know if you’ve ever seen the movie Barden think? No. No and brothers. Okay, great movie. It’s about Hollywood. It’s about this young writer comes to Hollywood With the producer in that movie look just like Chuck and tell I’ll Google it after. This is a big guy, this giant guy, and he kind of like, oh, Hoffman, what are you doing back here? Aren’t you happy with your job? And I go, Chuck, I could do more. I can do more than read, I could write for you. I could do that. How half men, you’re not even satisfied, go away, sends me away. But sure enough, a week and a half later, he gives me an opportunity. So I get to work with his son, who’s in the office, who is a disgruntled, the disgruntled. He’s working for his dad, right? So he feels like failed. And he’s in his, like, late 30s. And he isn’t really producing. He’s just working for his dad. And so He’s bitter. But he and everybody in the office is terrified of him. So his name is Butch. And he looks at me, like, you know, like glares at me. He doesn’t smile at anybody. So I’m terrified. You know, my first job. But he gives me this project to actually write a whole what’s called a treatment, which is an outline for a miniseries a TV miniseries about the Wild West. So I do all this research, I work really hard. I write it, I give it to him. And I’m waiting. And eventually he calls me back into his office. And he goes, this is really good. So wow, he loved it, you know, and I was happy. You know, I actually got him to smile. And then, as soon as I got that confirmation, I made another appointment with Chuck to go back and ask him to do more. So I wait. He calls me into his office. He goes off, man. Do you ever give up? Are you ever satisfied? Yeah, but I can do more than you know, do an outline for film. I could write stuff for you. I could be a writer. Hoffman, I don’t know about you go away. So I go away. I’m, I’m at work. I continue working for a couple more weeks, I get called in to the head of development, and I sit down to get my script. Nothing’s happening. She looks at me and she is upset. She is like, mad. I could see that fire in her eyes. And she goes, you got me fired, like, and then she stands up and runs out of the room. And I was like, what’s going on?
Scott D Clary 12:22
Yeah, you’re still young. When this is all this is like your first job? Yeah.
Steve Hoffman 12:26
I just graduated college. So I don’t know what’s going on. I’m sitting in our office. Then. The secretary for Chuck calls me into his office, and I sit down there. I’m really flustered. I have no idea. This is crazy. And Chuck goes off, man. You’re the new head of development. It’s your job. I like what I so he basically fired her and put me in her job.
Scott D Clary 12:51
Because the script you wrote was was good. Yeah. But she’s not
Steve Hoffman 12:55
a writer. Oh, I was job I was asking for I was asking to be a, I was asking to be a writer, and she’s a development executive. So I got put in her job. I didn’t know what she did. Like, I had no idea. So I go, sort of terrified. Like, I don’t know what the job is. I wasn’t what I wanted. And I’m back in our office. My office overlooks Hollywood Boulevard across the street is the man Chinese Theater. It’s like just like a movie. If you’ve seen the movie swimming with sharks, it’s another movie. It’s it was just like that, like, and so it’s like kind of living out these movies about Hollywood. And then the phone rings. And I don’t know what to say or whether to pick it up. So I eventually I pick it up and I’m like, hello. And they ask for her, you know, and I go, well, she’s not here right now. Can I help you? And it’s this agent from ICM. And he’s like, can we send over this script, blah, blah, blah, blah, blah, blah. And I don’t know what to say. So I’m saying, Sure, send it over. And then I go back to her desk, and all the other readers start to come in. And they’re like, Where? Where is Karen? Where is she? I’m like sitting at her desk. And I was like, well, she’s not here right now. But I’m kind of doing the job. But they’ve been working as a reader. Some of them for years, like five or six years. They they know the job much better than I kind of just started a couple months ago. And so they have to tell me what to do. Like they have to instruct me like what to do. And then it gets worse. Because I was sort of this. I like tie in movies. I told you earlier with Disney. So they call me in. Chuck calls me into his office office with his two sons. And I’m sitting there and he’s like, Hoffman. We have this TV show. We want to cast this actress in it and it’s about this and blah, blah, blah, blah, blah. Who do you think should star in it? Well, I have no idea. I don’t even watch TV. Like I’m so busy like working and watching these high end films that film school that I was just like, I didn’t haven’t watched TV for years. I have no idea who the hot actresses are actors are or any of this stuff that the that I’m supposed to know. So I’m panicking. Like he’s asking me that to say something. I’m like, he’s gonna fire me tomorrow like, it’s I’m over, I’m done. Like, this is like he’s gonna find out. I knew absolutely nothing about this job. So I say, you know, Chuck, that me come back with you with a good answer tomorrow, I need to think about this. So I go back to my office. Soon as I get back to my office, I call my brother’s best friend. He works in Hollywood. He’s a young guy, but he has a photographic memory. And he is obsessed with everything Hollywood. And he literally knows every actor that a actors, the B actors, the C actors, the actors that just had a cameo in one television show 20 years ago, he’ll know them, right? So I call him up and I describe the story and I go, who would be perfect and goes off? Well, this person would be your first choice. Their second, this is your third. Next day, I get called back into checks office. Oh, man, have you thought about it? Who should we put in the role? Well, this would be my first choice, this would be the second this is the third off, man. That’s brilliant. So basically, every day of this job, I was sure I was gonna get found out and I would be fired. But gradually, I learned what to do as a development executive. And, and with the aid of my friends, I could actually perform the job halfway decently and still do some writing on the side. And I stuck with that job for a year. And then I decided it wasn’t for me, it wasn’t like I wasn’t writing I wasn’t really doing I was just kind of managing the the development process is like, I got an opportunity to go to Japan and work for a big game company, which was I thought, oh, I can make games I can design games. They’re going to put me in as a designer. They want to hire somebody from Hollywood. So I basically took that opportunity and quit the job. And then Chuck was like, shocked. He’s like, What are we going to do? Why is there another Hoffman we can get? You know what I told him? Well, you could hire my brother. Nepotism, it’s Hollywood. I’d like you could hire my brother, your brother. What is he doing? Well, you know, he is working in a record store. Does he have any experience? No. He has no experience whatsoever. But he’s living in LA right now. And he could would certainly like the job. And then he’s like, if he’s off, man, we’re hiring him. So yeah, they hired my brother. And I flew off to Japan. And my, my, my brother’s really smart. He did a great job. But I flew off to Japan. And then I worked in games for another year designing games. And
Scott D Clary 18:01
that was a whole new learning curve, though. Yeah, coming from where you were. Yeah. Because that’s not
Steve Hoffman 18:06
totally new. Right. So I had to start over again. And I it was a whole nother story. I won’t go into too much detail. But I lasted a year. And then I decided after a year, I decided I had all these game ideas that I wanted to make that they weren’t ready to produce. So I was like, I’m just gonna start my own game company. But I can’t do it in Japan, I have to move back to Silicon Valley, back to St. Louis, go. So I moved back there. That’s when I became a startup founder. My first company was a game company. My first game was called bazillionaire. So it’s all about, it’s actually, it’s still popular today. So even this was a long time ago, but it’s on Steam now, the game. And it’s all how to become an entrepreneur, and all but it’s fun. It’s like you’re in outer space. And you’re trading lava lamps and all these crazy products and growing your business and advertising. And that game was a hit. We got we closed a big deal for that got put in all the stores got went everywhere when it first went out. And then I made a series of games in my own company. After that, I started sort of a game combined with television, my two back pieces of background technology, combine them all did an interactive TV technology company and went back to Hollywood did that whole thing. And I just kept going I did three venture funded startups. And then after that, all my friends started to come to me and like Steve Kaplan, how do you raise money? How did you start these companies? What did you do? And then I would just tell them, like for fun. And they all had similar questions. They were all asking the same questions. So I basically what I did was I would, I would start to write down the answers I gave them and post them on my blog. And I named that blog founder space and founder space is what became our incubator and accelerator because after doing the blog, people didn’t know started to ask me questions about their reps, and I was like, well Do a meeting and we do these founder space roundtables. And then they’re like, don’t you want to start an incubator accelerator? So in 2011, we started our own kind of incubator and accelerator. And basically, it started here. But I started to meet people from all over the world, right? They were like coming at me. And they were saying, well, could you, you know, we want to bring Silicon Valley to Budapest, or we want to bring Silicon Valley to hon Joe, wherever, you know, Sydney, Australia, can you help us? And I was like, Sure. So we started to take our programs overseas, I started to travel a lot. Last year, I traveled like 70% of my time, this year, I’m not traveling, I’m stuck at home.
Scott D Clary 20:41
I think everybody’s stuck at home right now. But
Steve Hoffman 20:44
But I traveled all over the world, we basically ran courses and other people’s incubators, accelerators, we work with different governments all over the world we worked with, we set up our own incubators and accelerators, and it just kept going. And we did investments and all this stuff. It’s been a crazy wild ride. But in my life, doing all of these things, you know, either you’re an entrepreneur or you’re not. So in your life, you’re an entrepreneur, you’re just trying many, many, many crazy things like how what can you do in your life, you know, what will happen in originally when I went to abroad, like I got invited to China, first of all, they invited me there, I thought, Oh, this is just a free trip, right? They pay for everything. I’m never going to do business in China. Like it’s too different. I don’t know anything about it. But you know, I saw an opportunity. And this was several years back when they were just because it was behind the US. They’re just starting to grow their startup ecosystem. Now, China’s huge I mean, they have as many unicorns as we do, like, it’s a huge startup area. But at that time, it wasn’t. And I, we became like, I became super famous in China more, much better known than I am here in my own country. The United States, like everybody in in kind of business knows me. And the and because I was just there at the right time, we set up our debater, I wrote a book, my first book, Make elephants fly was like a best seller there. We did all these deals. And and so you know, my advice to anybody out there is, don’t be rigid, don’t be fixed on what you think should happen. Because if you think something should happen, and you keep in, it’s not happening. This is where I see most entrepreneurs fail. They’re like, I this is my vision. And I think it should be this way. But the world isn’t doesn’t care, right? The world doesn’t care what you think in your head. The world only cares about whatever it cares about. So, you know, I always say the best entrepreneurs in the world. They don’t, you know, we like we have this vision. And I’m a romantic. So I’m a passionate guy, if you can’t already tell. But I’m all I believe that, like, you should always follow your vision. But I learned that the times when I stuck with my vision, whatever it was, were the times and I didn’t and I kind of put on blinders on like, I’m doing this no matter what people say, they can say it sucks, nobody can tune in, I’m still gonna do it. Those usually weren’t successful. But the times where I looked is an interaction between what I did and the feedback I got from customers from the marketplace from things like that. And I kind of let it take me in a direction where there was a real need, those are when it took off in a big one. So my my, my kind of learning on how to be successful is one of the fundamental lessons is to be successful, an entrepreneurs job isn’t necessarily to create something entirely new that nobody’s ever thought of. And entrepreneurs job is to discover unmet demand to discover something unique create some sort of value can be an entertainment, it doesn’t matter. It could be a product these all these businesses are the same. It doesn’t matter whether it’s whether it’s Hollywood, or the entertainment industry, or you know what we’re what you know, the tech industry or industry, you’re if you’re going to innovate, you need to IT innovation is about matching is about being an explorer going where other people haven’t gone, trying something out, and then gauging demand. And you if you can strike a really like a gusher like when you hit an oil, yeah, uncapped, and that nobody has gotten and it’s just pushing you, then you know you have it, that’s when you put all your energy into it. Before that happens. Don’t commit in your mind, because I see most startups fail because they stick with the same idea too long. Rather than that they try too many things.
Scott D Clary 24:34
Mm hmm. I have a I’ve, uh, so I want to keep going and speak about what you’re working with now with founders based like maybe some of the startups that you’ve worked with. But one thing that I noticed and I kind of dive into that because you pivoted a lot in your career. So you went from film you went to game development to building your own game. And I think what I wanted to understand was when you came back from China You said you started this this game because zillionaire and and it was sold, and now it’s on Steam, and it’s worked out well. But one thing that I didn’t hear from you, that was interesting, I didn’t hear a lot about, like any failures that you’ve had over your career. And that’s one thing that I always noticed, like entrepreneurs, successful entrepreneurs speak about. So I was curious about things that may not have gone as well as as you thought, or, or were you just very fortunate with, like the ventures that you did?
Steve Hoffman 25:28
Know, I failed a lot of times. And because I tried a lot of things I failure, first of all, for every entrepreneur, I know, is literally part of the process. If you’re gonna go off exploring and try something crazy, you’re gonna fail most of the time, because it’s something new, it’s something nobody’s tried. And you won’t know for the work until you try it. So, you know, my first couple games, my first few games were a success. I got like, super lucky. But then I went in, I told you, I did that interactive TV company, you know, where we were actually the first company to combine laptops, like on your laptop, you could play along with a live TV show. So at first, we were huge success, like we literally, it’s a whole nother story I don’t won’t go into. But it’s a crazy story, though, you know, we were like totally out of money. But we at the last minute, we closed a deal with MTV, Viacom, and we closed a deal. And we had to pivot many times. So when I first started that company, it was called Spider dance. So the first product we launched, we were like, well, there’s first it was going to be online games. We’re like, we’re at the very beginning of online games. So really was one on successful online game at the time, and of course, EverQuest, and it just like a nascent industry wide open. And we were like, well, you know, doing games is a tough business, right? It’s a hit driven business, you know, you can put all you can put like two years of time into a game, and it just flops like, you know, why did it fall? Well, you know, it just like movies, some are hits and some art. So we’re like, I knew this business, I knew the game business, I’d made three of my games that were successful. And like work, where I was like, let’s don’t build games, let’s build an online platform. Because platforms, you don’t have to have a hit, we can just get a lot of other people on our platform. So we started out building an online gaming platform. And I basically ran out to all these other people, and tried to get them game developers to sign up on our platform was so early in the days of online that they didn’t, they didn’t trust us, there were no online gaming platforms. And gamers tend to be fiercely independent game developers, and they all wanted to build it themselves. And those that I could get to join, wanted us to do all the specific customization work for their game. And the technology was still immature, we were a small team, like, you know, just for people, we didn’t have the resources to do that. So immediately, we had to pivot the first time. So the first thing we failed, we failed fast. They didn’t have this lean startup methodology back then it was pre created that but we kind of intuitively knew that we can’t deliver on this product. So then we tried to build our own online game. And we got into casual gaming. And we were kind of the first ones to build another kind of really pushing the limits. were the first ones to try a platform for online gaming. And then we were the first ones to try a plugin that you could plug into any website. And we called it jabber chat. And you could actually play games as you chatted, like, you could chat online, and you which was really getting popular just getting pumped up. And you could play games as you chatted. And they were fun word games and other games. So it makes chatting a whole new experience. Well, this one, the best interactive game of South by Southwest, you know, the big conference, all hundreds of sites embedded our code into their site, we were the first and they were like, This is so cool. And then we were like, okay, and then we put in ad revenue, right? Yeah. Now, this was early days of advertising on the Internet. And we were like, Okay, we’ve got all these sites, we got all this recognition, we’re gonna make money. You know, how much money we made our first month with hundreds of sites using our product. Am I not enough to buy a pizza? We literally the ad market wasn’t there yet. We were it was the early days of the.com. Like, you know, thing. And there were no they these services, there was no Google AdWords, there wasn’t none of this. It was just some other service that some random people and they really had no advertisers that would pay any decent money. So we’re like, we can’t live off of this. Like we’ve already tried one pivot. We’ve tried another we’re running out of money. You know, this is our own money. We’re spending, we need something that work. And that’s when we heard that MTV was going to do an interactive TV show. And we’re like, oh my God, how do you get a deal like this done? You know with MTV, We didn’t know anybody at MTV. So we kept calling them though we got a phone number of like the vice president of MTV in charge of interactive, and we kept calling him and leaving messages on his voicemail. He never called back. And then one of my partners, she went, got invited to CES to give a talk. So she goes up on stage on CES. And she starts talking about, we hadn’t built anything yet. We are just beginning, you know, we had just pivoted, you start talking about our dream to build an interactive TV platform. And after she’s done with the talk, this guy comes running up, and he’s like, I got to talk to you, I got to talk to you, you have exactly what we need. And she was like, Oh, who are you? I’m the Vice President of MTV.
And she goes, I’ve been leaving messages on your voicemail.
Steve Hoffman 30:51
And literally, we close the deal, we got a lot of money, we produced the whole thing, but we got the rights to to take the technology and the platform out to other TV providers. So we took it out broadly. We got him at Viacom, we got Warner Brothers, we got NBC, we got Game Show Network, we got History Channel, we just like it Turner networks, they were all our customers. We were doing great. We got this amazing. Our one of our biggest competitors, which is a public company, came to us with a buyout offer all but our venture capitals were like, this isn’t enough money. It’s not enough money, you know, we’re not going to do it. And then the.com Bubble imploded. And when the.com Bubble imploded, every all our customers, every media company, they literally cut their interactive spend. So anything interactive, which is what we were doing, got slashed to zero. I don’t know if you remember the time, but there was this group called mbci, which is MBCs interactive group. They had 250 employees, they were doing, we were doing weakest link their big game show at the time for them. And they basically got cut to like three employees. So they had no money to pay us. With all our money gone. And all our venture funding that we had raised was run, basically we’d burn through it, you’re expecting to do another big round and grow a business. Nobody wanted to invest right now. Because we had no customers. And we were out of money and things were like now it was this big implosion. Right? Yeah. And, and our industry was particularly hard hit. So at that time, I kind of deal with our creditors. i We didn’t go bankrupt. But I basically, because they were already our creditors were in bankruptcy, we had borrowed a bunch of money to to keep going. And they were had lent to a bunch of venture companies. And so they were in bankruptcy. So basically, I cut a deal where I handed off our tech. And we basically quietly shuttered, shut our doors. Now, I will tell you, this was a failure, right? It was a total failure, it hit me really hard, because up until that point, I had had nothing but success. And I thought that, you know, it in I was sure this company would be successful, because we had done that so well. And here I was, I had basically should have taken that buyout offer that we had earlier, that would have made all the founders rich and would have done incredibly well. But at the time, you know, hindsight is 2020. But I blamed myself. So I went into a depression. I felt so awful. And I doubted whether I should ever be an entrepreneur again. I seriously doubt it. Now, you wouldn’t think of that, because I’ve done it my whole life. But at that point, I was just like, I was ready to like I basically, you know, I ended up moving to Canada, I ended up writing a book on game design. You know, I was just like, I wrote a lot of short stories like science fiction, I even wrote a novel, I was just like, I don’t know what to do, like, yeah, you know, after the.com implosion. So I was just like, I shouldn’t go back and be an entrepreneur because I blew it. But then gradually, I realized that the only thing preventing me from trying, again, was myself, I was basically telling myself that you had failed, you work. You shouldn’t, you know, you had let down your employees, you had to lay them all off, you’d let down everybody’s dream. You shouldn’t take do this again, because you’re a failure. And at a certain point, I realized that as long as I said that it was going to remain true, right? I wasn’t going to take a big risk. I wasn’t going to do another company. I it because I did I feared having that happen again, because it was so so painful. And that wasn’t my last failure, I will tell you, but it was the pivotal one, because it basically taught me that no, I can go back out there. I can do it. Failing is fine. You know, I have my successes. I have my failures or some things in the world. You can’t know ahead of time. There’s some things in the world you can’t control like, you know, like we’re going through right now the Coronavirus and the economy you can’t control or the.com bubble bursting. You can’t control those. And but the one thing you can’t control is your own attitude, and and your own mental script, what you say to yourself, how you how how you view the world, I could control that. And over time, I became more and more resilient through that failure and subsequent things, you know, because look, if you’re doing a startup, anybody out there has done, they’ve been an entrepreneur of any sort, there’s always ups and downs, even if you’re working in a corporate job, like their ups and downs, like not everything you do works out. And you’re just it doesn’t matter where you are, life is full of ups and downs. And the point is, whenever I get overwhelmed now, whenever I am stressed out, I look back and say, Look, you went through, like, so many of these failures, like where things didn’t work out, and all your dreams are shattered, and you thought you could never get over it. And now you don’t even care. In fact, it makes a good story now, like, it’s a fun story to tell people. And you wouldn’t even have that story. And I couldn’t relate to, like entrepreneurs who are going through trouble. If I personally hadn’t, you know, totally and utterly failed and let down to everybody on my team, you know, and made decisions that I would later regret. If I hadn’t done that. I wouldn’t know what it’s like to do that. And so whenever things happen, now that don’t go, right. I’m just like, oh, that’s nothing like that could be bad, but all lived through it. And, and at the end of the day, if you have that attitude, you actually make better decisions, because you don’t get stressed out. You don’t get anxious, you’re not like there’s no negative feedback coming from yourself, right? And you’re able to actually navigate. And most of these things like it literally like every day, it’s there’s something that doesn’t go perfectly right in most people’s lives. You know, everything, there’s no perfect thing. Now, whenever something even small thing, I’m like, Well, you even remember this thing that seems so important today, like you’re like so anxious about it. Will you even remember that like, five years from now? You won’t? Will you even remembered a year from now? Probably not what you remember it six months from now? You know? No, the answer is usually No. So why are you worried? Like, why are you stressed out? It doesn’t even
Scott D Clary 37:15
matter? How do you get out of your own because I I’ve worked with entrepreneurs before and like the biggest issue they have is getting out of their own head. And, and understanding that it’s that failure is part of the process. It shouldn’t be like a failure shouldn’t always be welcomed, like you want to succeed. But I mean, like, it’s gonna take a lot of, you know, a lot of shit that you have to go through before you are successful. And if you are successful, so you know, you work with tons of entrepreneurs, how do you how do you sort of enlighten them to this?
Steve Hoffman 37:45
Oh, so I Well, some of its storytelling, and some of it is you’re never out of your head, right. So you’re always trapped in your head. But you can change your your what you what your head does. So you could literally reprogram your head, like you reprogram any, any code to actually put things like I reprogram so that when I hear myself saying negative things about myself or getting stressed out, usually you’re getting stressed out, you’re not, you’re getting stressed out, because you’re telling yourself to be stressed out, you’re saying this is so important. I can’t Oh my god, I’m so angry, I’m so upset. If you listen to what you’re saying to yourself, you can hear yourself programming yourself in a negative way, you’re actually telling yourself how to feel. So if you literally just step back and say, I don’t actually have to feel this way I could feel fine about this. Because I know in the future, I’m not even going to care about it. And I know that getting stressed out won’t change the situation, it’s not going to make me make a better decision. In fact, it just depletes the energy that I actually could use to actually figure out how to solve this problem or if it’s unsolvable to move on to something else that I could make a difference on. So that’s, that’s the key. I tell entrepreneurs
Scott D Clary 39:00
is that the biggest you find that that’s like the biggest issue they have like a an entrepreneur, like a first time entrepreneur, you find that that mental I don’t know hurdles that they have to get over.
Steve Hoffman 39:11
It’s different with every entrepreneur. So some entrepreneurs are just amazingly resilient. And they always are able to do this. You look at some of them like Elon Musk is doing crazy stuff. Right? And yeah, half of it doesn’t work. He has rocket ships blowing up Tesla almost went bankrupt several times, you know, and every day there’s a new disaster or something on his production line. So but you know, he just keeps going so some people naturally have it built in other people like me weren’t as blessed. Like we were actually programmed differently from childhood we got we are much more anxiety prone, let’s say are much more prone to depression or not, you know, reacting in the right way
Scott D Clary 39:49
with so many MLR which many people are that’s a you know, a lot of people I think, have autonomy.
Steve Hoffman 39:54
I was programmed with a lot of passion, but also, you know, not as strong not as resilient as many other entrepreneurs are. And so I that was my weakness, so I had to work on it. Whereas other people, you know, everybody has different weaknesses and different strengths. And you just have to recognize, you know what you’re not good at. And really, folks, so mine was a conscious effort to get over that it was a conscious effort to position a to give myself the tools necessary so that when I faced adversity, I didn’t crumble in front of it, like I did the first time. Like when that company like, it just hit me way too hard. It didn’t have to do that, like I did that myself. And I think the one thing I can say to entrepreneurs is, the more you go through it, the more you the more you realize that you can go through it, right. And so the more you put yourself out there, but if you can prep yourself in advance, so you don’t have to suffer as much, you should start doing that. Now. You should start it on the little things, and then graduate to the bigger things like those little things that make you upset or unhappy, or whatever you should focus on, on, you know, listen to what you’re saying, in your head. Listen to me, that will get you not out of your head, but into a different mental state, where you can be more objective about what’s happening, oh, I’m making myself feel this way. We’re all we don’t just feel like we’ll have our initial reaction, right of anxiety or stress, that initial reaction, oh, you know, I can’t control it, but maybe a Buddhist monk could. But I’m not a Buddhist monk. But I can’t control but what I can control is what comes after that initial reaction. And that is my response to the negativity. So I might feel stressed out. But then I can step back, and all of a sudden, start to push myself back into a better frame of mind. Let’s, um,
Scott D Clary 41:51
let’s speak a little bit more about founder space and what your what you’re working on now, if you don’t mind. Because I love speaking entrepreneurship. So I guess, you know, what is founders faith? Founders space, excuse me focus on um, and also, like, what are what are your takeaways from what Silicon Valley is today is I just want to get your, you know, your two cents on Silicon Valley, because you’re, you’re living it. So
Steve Hoffman 42:17
I am living it. So a founder space today focuses on helping entrepreneurs around the world educating, training, I do a lot of public speaking, I give a lot of talks around the world, we run our own programs, we run our own incubators. So basically training and helping entrepreneurs raise capital, and then we invest in some startups, not every startup we work with, because we were way too many. But that is our mission. And we’re really committed to that. And I believe the biggest gift we actually give in the end is not the money, or not even the relationships, it’s the experience that we share that myself all of the founders of founder space. And all of our instructors have been entrepreneurs, and we’ve all failed, and we’ve all gone through it. And we’ve been through it, not just with our own companies, but also with many, many other companies that we’ve been helping. So that gives us a lot of knowledge, we can see where a company is going. And we might have had a startup just like that. And we’re saying no, no, no, we saw somebody go down that path. This is what’s gonna happen. Like, you’re you need to start thinking of alternatives right now. Because if you just keep working on it this way, it’s just gonna It’s a dead end for you, or you’re gonna go off a cliff, as a company. So really helping them early on to evaluate their business to make smart decisions is the biggest thing we give them. Silicon Valley today is a very dynamic place. It’s a very different place. When I started here, with my first game company, when I got back from Japan, Silicon Valley, it was like the late 90s, the mid 90s. Actually, there was like a long time ago, it was nothing like today, it was much more laid back. It was much less corporate. It was much, you know, a little more bohemian. And it was a different world. San Francisco and Silicon Valley were a different world. Today, it’s a much it’s a much bigger business, right? There’s massive amounts of venture capital, and startups, and we’ve gone through so many different iterations. So it’s not worse or better. It’s just a much larger scale, and a much more systematized and and venture capitalists are more knowledgeable than they ever were before. They’re much better at. And when in the early days, they just didn’t know right? Now. They didn’t know about the lean startup. They didn’t know about any of this. So now, venture capitalists are they there’s a playbook they go by that can be good and bad. My feeling is the really interesting thing is that it’s not just Silicon Valley anymore. We have a lot of resources here. But if you go to Beijing, or Shenzhen, or Berlin, or London, or Seoul, Korea, all of these places, they’re startups everywhere. There’s a innovators everywhere, there’s people innovating. It’s like a really exciting world. So Silicon Valley is still the biggest innovation hub in the world. I work with a lot of the venture capitals here, a lot of the entrepreneurs, you know, I wrote my books based on all my experience, you know, my make elephants fly and surviving a startup. Those books are based on that. But you can get that experience all over the world. Now, you don’t have to be in Silicon Valley. But the beauty of Silicon Valley is that when you go to China like Beijing, they’re mostly Chinese when you go to Korea, South Korea, Seoul, it’s mostly Korean. When you come to Silicon Valley, it’s not mostly Americans, I over half the the startup companies are founded by somebody born overseas. So foreigners found half the startup companies. And that creates a real diversity of not of, of mindset. So you’re meeting people from India, you’re meeting people from Asia, you’re meeting people from Europe, and they look at the world a different way, when you’re working at that with them. And that allows our companies who have these talent pools from all over the world to be much more creative, and much more innovative because they’re getting different perspectives. And people are blending ideas, and you’re going to meetings, and you’re seeing all these different things from all over the world. And they all converging here on Silicon Valley. Everybody wants to come to Silicon Valley at one point or another. So this inflow of ideas and knowledge. It’s a very exciting place. It’s really, to me, it’s that’s why it’s still the hub. It’s not the hub because it produces more value, because there’s value being produced everywhere in Israel and all over. But it’s the hub because it’s where everybody in the world meets, and is open and is free. And it’s exchanging ideas.
Scott D Clary 46:44
So where do you think? I’m just curious, because we’re kind of living it right now. Do you think that Silicon Valley will be affected by Coronavirus and the recession? Or do you think that it’s going to come out the same way? It’s been it’s been growing?
Steve Hoffman 46:59
Well, it’s already been affected. I mean, startups now are if you’re a startup, like in the food tech, business arrests, serving restaurant floors, Yelp, you’ve laid off 1000 People from Yelp. And, you know, these companies are being dramatically affected, will it affect Silicon Valley in the long run? In the next few years, it’s definitely your we’re gonna feel the effect. It’s not this thing isn’t going away tomorrow, like these effects linger, right? So, and venture capital is already becoming more conservative, all of these things are changing. But in the long run, Silicon Valley is very resilient. We’ve been through the.com, bubble burst, we’ve been through the 2008 financial crisis, we always bounce back. The beauty of technology is there always no new technology coming. And every time a new technology is born into the world, it creates a million new opportunities for entrepreneurs. And trust me, there’s a lot of technology in the pipeline, a lot that it totally blow us away. Like, in the next few years, we’re gonna see technologies out there that change how we use our computers change how we use our phones, change, even, you know, how we think and act in our everyday lives. So we’re just that we’re just, if, if what we’ve seen in the past with Facebook, and and, you know, Uber and all these companies and Apple and Google is amazing. Wait until the next 10 years, we’re going to be more amazed.
Scott D Clary 48:27
Yeah, I think that and I’ve seen this a little bit and I’ve sort of I scan the news and whatnot. And it’s pretty hard to avoid now. But the amount of companies that are wising up to how to incorporate new technologies, I think actually could be a benefit to Silicon Valley, because people are a traditional industry that perhaps didn’t understand or bring in the same technologies like you wouldn’t like startup land. I think they have to be a little bit more inclusive of new tech. We’ll look
Steve Hoffman 48:52
at it who is winning on the retail side out of on on commerce site out of all the companies Amazon, right, yeah, tech driven company, because in this even in this conditions, it can fulfill in the conditions of like the Coronavirus, it can fill everybody’s need very efficiently and Amazon is further automating, you know, there will come a point where there’d be nobody working in their warehouses, it’d be machines, I guarantee it. You know, you go to the Amazon store now, they don’t really need these Amazon Go stores, you don’t really need people in them. They you know, they’re, they’re designed to be automated, needing a minimal staff. This is the future. It’s just one industry. But across the board, you know, you were seeing industries that they this will only accelerate the pace of automation. I’ll tell you that for sure. Because it’s a vulnerability, right? We’ve shown it’s a vulnerability, it will change the landscape. There’s a lot of pluses and minuses. I’m giving talks on this now you know, will we have a jobless society will definitely have jobs will change. And eventually, I mean, ultimately we will have a jobless society I mean We won’t have to work, we may want to work because like you and I, we love what we do, you know, we like communicating and teach you, there will still be people working, but it’s gonna be a very different world coming. And all of us will have to adapt. And technology is going to play a pivotal role.
Scott D Clary 50:16
And what does that mean? Jobless society? What does that mean? That means listening,
Steve Hoffman 50:21
you, we, I’m not gonna put a date on this. It could happen, you know, it’s not going to happen overnight, put it that way. So jobs are there are always new jobs being created with new technology, there’s always be a job jobs being discarded throughout the, throughout the history of humanity. Right. You know, very few people are leather workers today are cobblers, you know, you just don’t walk down the aisle, you’re a cobbler, you know, that used to be a big profession. Making shoes, but you don’t see that. So it’s always gonna change. But in at some point, with artificial intelligence, and robotics are advancing at the pace they’re advancing, there will come a point where literally, a machine can do everything a person can do in terms of most work, most work a machine, you know, they even have algorithms, now AI algorithms that can compose music, and you can’t tell the difference, like, you know, they’re putting this music now on Spotify and others, and you, you wouldn’t know if it was an AI band, or real band, it sounds the same. And it’s been it’s been these machine learning algorithms are pretty amazing. You know, they can sample music, and then they can actually compose something very original, out of in different styles that you would, you know, even experts can’t tell and painting to these AI generated paintings are like, they’re beautiful. They’re like, gorgeous. So it doesn’t matter if it’s a creative, or if it’s technical, or if it’s manufacturing, of course, certain jobs will go first, like, you know, we autonomous cars are coming, you know, that’s gonna wipe out millions and millions of jobs. You know, factories are being automated, it’s still a lot of factories need people because people are very versatile, late, where labor is cheap, we’ve already seen them all move to China, now they’re leaving China and going to Southeast Asia. Because the labor is cheaper, but at a certain point, the the machines will be cheaper even than the cheapest labor human can produce. And it’s all economics, right? It’s economics in every job.
Scott D Clary 52:20
How do you how do you up Oh, go ahead, sir, I was gonna ask how you go girl to to sort of protect against losing the job?
Steve Hoffman 52:28
Well, you can only protect for so long, like, we’re all going to be the best best way is, I mean, if you own the means of production, you’re protected. As long as you stay on top, if you own the robots, you own the AI, you know, you’re in good shape, because you can deploy this this superior workforce at a low cost. And, but that’s going to mean a massive concentration of wealth, which is going to be a big danger for our future, that that the people with that wealth, if they don’t want to share it, and then some of them will, and some of them won’t be as generous. What does that mean for the rest of us? So we’re going to have to re examine society? You know, what do people do? What do we value in society? How do we reward people? You know, even now, it’s kind of an experiment, you know, a lot of people working out of their homes, should the government step in and pay pay people not to work? You know, Andrew Yang, his whole idea of universal basic income? How much do we give? You know, of course, $1,000, a month isn’t enough for most people to live? I don’t know about you. But it’s, but there will be a level at which you can do that. But is that the role of our government? Do? Will we even have a choice that may have to be the role of our government in the future? And then, but there are plenty of things people can do. I mean, people, like look at yourself, let’s say we lived in a future world where you didn’t have to work. Would you stop doing stuff? Would you leave that? No.
Scott D Clary 53:58
Well, I would I couldn’t stop doing stuff. So that’s why you know, for example, like what I’m doing now, this is not this, this this is actually not my nine to five right now. Like I still I still work in sales and marketing for a company. And I manage a small team and we sell software and whatnot. But and you know, we’re all working from home now. And it’s all great, but this is just, you know, maybe turns into the full time eventually, but it’s not the full time right now. So exactly.
Steve Hoffman 54:26
In would you like most people I know. They have hobbies that they love, like some of them love sailing, some of them love stamp collecting some of them love. You know, what, there’s a million different hops surfing and, you know, some of them love to create content like this. Some of them have to do art. People won’t be bored. Like people are like, well, if people don’t have a job, they won’t have meaning in their life. I totally don’t believe that. Like, what how meaningful is it to flip burgers like it’s, you know, people do that job because it pays the money and they may get some sense of a joy out of The interaction with other people on the job. But the actual flipping of the burgers doesn’t really the only reason jobs give people meaning now, or when they lose their jobs, they get depressed, or two reasons. One, the lack of income is depressing to society tells you that if you don’t have a job you aren’t providing for your family, you aren’t being worthwhile. But when in a world where most people don’t have jobs, right, because they simply aren’t available, society will no longer say if you don’t have a job, you’re not worthwhile. So people will feel like, I’m not a slacker, I’m actually, you know, normal, like, normal, this is the new normal, and people won’t feel bad about not having a job. In fact, they will define themselves in a different way you will define yourself by, you know, what you do in the world? Can you make people happy? Can you entertain people? Can you, you know, are you working on the biggest collection of bottle caps in the world, you know, and it’s going to be your legacy. But people will do this, and people will have lots of fun,
Scott D Clary 55:53
I think people will be more fulfilled, hopefully, because I think that even now, if you didn’t want to work, in theory, there’s so many in most in most Western countries are so many social welfare programs, that you could sit on your couch all day and not work and still find a way to get money from somewhere, to be quite honest. And some people do that. But I think the vast majority of people would much, maybe it’s because society imposes, you know, like these, these ideas of what you should do, and you know, you mentioned like you have to provide and whatnot. But like, for most people, you’re not going to be rich, but you don’t have to work to live day to day, but you choose to work.
Steve Hoffman 56:31
They do it because what we value more than the job is we value people are social animals. Like if you think about human beings, you know, in the hunter gather for, you know, 10s of 1000s of years. They just hunted when they needed food or gathered stuff when they needed food. But most of the time, their value wasn’t on their value. It’s on how they relate what they give to their community. And fundamentally, we all live in this community, the social structure, and that social structure is informing us how to feel about ourselves in that social structure will change with time, and it will free people up to do things with their time. Like right now you’re saying some most of the hardest people I know, the work the hardest are like, super rich, but like they could stop working tomorrow, right? Yeah, it’s like they aren’t working for more money. They don’t need more money. Like you look at any of these rich people. They work like Elon Musk, does he need more money? No, he has no need for more money built. You know, Bill Gates is working like crazy. But now he’s working on his philanthropy
Scott D Clary 57:32
like crazy. But he’s so he puts in the hours he’s putting in
Steve Hoffman 57:35
these people work, we don’t work, we work. Because what are we going to do? Right? Work creates meaning in our life. That’s why we don’t work for the money. So the people think that the welfare is going to make people lazy. I just don’t believe it’s true. I mean, if people are going to be lazy, they’ll be lazy, right? Yeah, be lazy on the job or off the job. If they’re the type who doesn’t want to do anything, then that’s how they’re programmed, you’re not going to change them. And if they’re the type who are going to if, if they’re the type like us who just love doing stuff, love creating stuff, love, you know, it doesn’t matter. We’re gonna we’re gonna figure out something to do with our time. Yeah, and they’re gonna do it. Yeah, I
Scott D Clary 58:14
think my I think my, my issues, I always try and figure out, I always try and take on too many things as hobbies. And I have to remember that sometimes their hobbies, if
Steve Hoffman 58:23
you had a day job, you would I guarantee you, you would be busier than ever. I’m just gonna be like, I don’t want that. I want to do this. And I think most people who want to be busy, will be busy and those who just want to sit around and, you know, play games or watch television, they could do that. Right? Yeah. Yeah, do that. Now, every chance they get, they’ll still do the same thing. People do what they do.
Scott D Clary 58:46
Yeah. I want to ask a question. Just the first book that you wrote, make elephants fly. What is that? What is the Book about? And this is not a plug, I didn’t plan this at all. I just was curious about the title. why you chose that title. The
Steve Hoffman 59:00
elephant? Well, I like fun titles. So the elephant, it’s called make elephants fly. The subtitle is what it’s about. It’s called the process of radical innovation. And radical innovation is an innovation. Not incremental, like not a little innovation, but a huge leap forward. So how do you get there? So the elephant for entrepreneurs, it’s your big idea. It’s your dream. It’s like what you want to do, but it’s an elephant, how elephants don’t fly. How can you get this huge idea off the ground? So the book tells you how to come from an idea, all the way to execution, how to take that idea and make it fly.
Scott D Clary 59:38
So let’s speak about that. Let’s speak about that because let’s speak about it in the context of I have a hobby I’m working you know, I’m working full time and I’m using myself as an as an example but a lot of people have these side hustles right now, yeah, even especially even more if you have more free time, because you’re stuck at home and you don’t have anywhere else to go so people are starting. I have I’ve never seen so many live Instagram sessions live Facebook sessions before in my life, I feel like everybody’s just starting something new now. So it’s good. But okay, so you have an idea of a side hustle. How do you take that, and you turn it into a flying elephant.
Steve Hoffman 1:00:14
So this is all about the process of innovating, right, figuring out where your idea meets reality. So it’s in a way, a process, starting with the idea. There’s a lot in there about ideation and how to create ideas. But once you have these ideas, how do you know which are the really good ones? Because if you’re anything like me, I have a million ideas, right? A million ideas. And I think they’re all great. When I first think of them, I just get excited. I’m like, Oh, my God, that’s the best idea in the world. But you know what, like, 99%, they have a flaw 99% are actually ideas that will not work. And most of them, maybe not 99%. But most of them are actually terrible. So not great ideas. It’s just in my head. So how do you go into what is the process through which you go into the real world, you test out an idea. And also, I go through this thing called the innovation loop, where you go through a process of discovery with each new idea. So I liken being an entrepreneur, to being an explorer. Now, an explorer, your job is to find something really valuable, but it’s very dangerous, you’re going to go into uncharted territory, like the explorers that came to the Americas, you’re going to be hostile forces, whether it be nature, that’s going to kill you natural thing, or there’s going to be other, you know, companies or tribes that are going to come after you. But what you have to do is a figure, you don’t know what’s there. So when you first go there, it’s all this black wilderness. And your job is to figure out your way through that wilderness as quickly as possible without getting killed. You know. So getting through that wilderness without getting killed is not an easy thing. Most startups die over 95%. From idea from conception, all the way to, you know, being profitable or selling your company is 95% Do not make that. So what are the goes into detail on like, the pitfalls along the way where startups go wrong, what type of what is wrong thinking, it goes into the fundamentals of business model. Like there’s certain business models that are really lucrative that like, make a lot of money, and there are others that are doomed to failure. But on the surface, you might not even recognize which is which I can give you an example. So there are a lot of people out there who put up these Kickstarter projects. And the Kickstarter projects are pretty cool. Like they are like, a super cool gadget, that, but what they don’t realize is that, that that gadget that they’re putting out there on Kickstarter is a, there’s some problems with it. Number one, maybe the market is too niche, right, there’s just not enough people out there who would buy it, or that people think it’s a nice to have, it’s something they would like to have that they don’t really need. And even if they get enough people to like give them their initial Kickstarter, target doesn’t mean it’s going to be a successful product. Because the most successful products out there are products, not that you sell once to a person because as a small company, when you sell to get a new customer, let’s say you make a gadget, the profit margin isn’t that high. And you start off maybe with a if it’s really novel, you start off with a reasonable profit margin. But as soon as people in China and other countries start copying you, that margin starts to shrink, right? It goes really, really low, because they didn’t, they’ll just sell it for whatever they can get away with selling it for as low as possible. And, and if you have to acquire new customers, which is the biggest job for any entrepreneur, like do acquire new viewers for your show, or whatever it is right? acquiring new customers is expensive. And if you don’t have a big profit margin, you can’t afford to advertise. And you definitely can’t afford to call them up and do direct sales, right? Yeah, like person, the person and you can’t afford even to market on Google if the profit margin shrinks. So that will just kill your business ultimately. So you have to recognize that now the companies that really succeed well, like Microsoft, Google, Salesforce, Apple, whatever they are, they they don’t sell a product once. Once you buy into them, you are continually giving them money. So whether it’s on your iPhone, whether you’re giving the money through the app store over and over and over, you’re locked into their ecosystem, you’re buying their upgraded phones, you know, over and over and over, whether it’s Amazon which you know, they they make take a commission off every sale whether they sell it or whether their partner sells it they’re you’re giving them money every time you go back to Amazon, whether it’s Uber you know, the reason that got the big valuation was because you know, Once you have that Uber app, you keep using it over and over and over. So the recurring revenue when you can get recurring revenue, that is the type of business model that really scales, Facebook has the same thing you’re going on to Facebook, over and over every time they’re getting a few pennies from you, you view an ad, but you’re going over and over and over and over. So the thing is, you know, I go into detail on the book, like how you can get a customer and never let that customer go, never let that customer go. And then how can you make that customer as valuable to you as possible over their lifetime?
Scott D Clary 1:05:35
I love it. That’s, that’s very, that’s very smart. That’s a very good takeaway. And I think that, you know, it’s funny, I’ve always worked in organizations that focus on recurring revenue, my background was in telecom, and now I’m in now, so obviously, they’re very profitable. And, and also, now I’m in SAS, or software, right. So it’s always about recurring revenue. But I think that a lot of industries haven’t haven’t woken up to that fact. And now they’re getting hit hard, especially when if they’re selling physical products, or they have physical storefronts, or brick and mortar. And that’s just killing them, if they haven’t expanded, and they haven’t taken their, their store online, or expanded their products into the recurring revenue products. You know, like, that’s why people are really hurting now, but that’s what I think is gonna fuel I just tweeted this out yesterday, I think this will be a benchmark in the fourth industrial revolution, and it will push people to look at digital in a new way. And not just as, that’s my opinion, at least I don’t, I don’t know if it’s gonna change everyone’s behavior. But I already know it’s changing some people because you know, now it’s like, all the people that were told, Oh, you can’t work from home, well, now they’re all working from home. And they’re probably working harder because they don’t know how to shut off. And you know, so like, now all the people that had all these work life balance issues, didn’t want to commute an hour and a half. Now they’re all working from home. So now, what does that do to the to, you know, all these cultures, these office cultures globally that didn’t want it before, like, there’s so many changes that are going to happen because of this, but also just tech and, you know, modernization in general. But it’s very interesting. Very, very interesting. So what are you working on now? So I, you know, there’s a lot, you know, we can we can probably chat for a long time, we
Steve Hoffman 1:07:19
probably probably chat forever, but I have lunch.
Scott D Clary 1:07:23
So let’s, let’s just let’s just, let’s just chat about like, you know, what’s, what’s next for you? What do you want to look towards in the future? With your career? You’ve done a lot, and then we can we can wrap up this one, we could do another one in the future. Sounds on maybe. All right.
Steve Hoffman 1:07:36
Okay, so what I just finished my latest book, called surviving a startup, which is particularly relevant right now. And it’s everything I’ve learned as surviving my own startups, mentally and physically and every other way. And that book is the publishers, Harper Collins isn’t out yet. So it will be coming out. Soon. I’ll let everybody know. If people want more of my videos, and more, you know, I’m constantly creating videos and content, and a lot of it’s free out there. They can go to founders space.com. Okay. And they can get that we also have a three month online startup program, that if they like this, they will probably love it. And it’s really cheap. We sell it really cheap. But we also if you can’t afford it, if you’re struggling right now, because of the Coronavirus that you there’s a thing on there, just contact us. And we’ll give it to free. So we want it we want everybody to be able to have this weather. You can pay or not. So just
Scott D Clary 1:08:39
like what what’s up? What’s in the court? Like what are the what do people get out of this, like, Who’s Who’s your ideal customer for this?
Steve Hoffman 1:08:45
Oh, it’s any entrepreneur, anybody wants to be an entrepreneur. And basically, what it is, is every day, you get videos, sent you their short videos, a mostly a me. And I am basically walking you through everything startups need to do everything from the ground up. And the videos are anywhere from five minutes to 15 minutes. So they’re really bite size. And you can watch the ones that matter to you that are relevant to you. And you get those every day for three months. And then the other material to
Scott D Clary 1:09:18
if a startup. So maybe just one more thing, because I do want to, I want to focus on that just very, very briefly. A startup is looking for an accelerator or an incubator. So I know like I know, Y Combinator. So what would be the date? Like what’s the difference? I’m sure there’s a lot of ones that aren’t as large as Y Combinator founder space. I don’t know the size or how many, you know how many startups you work with. But why would a startup work with a founder space over a Y Combinator or is there certain categories industries that are more tailored to one or the other?
Steve Hoffman 1:09:52
So founder space is more internationally focused. So Y Combinator tends to be more focused on On Silicon Valley, they run their programs here. They’re very Silicon Valley based focused. We are very global. So a lot of our entrepreneurs, and about a third of them come from North America, a third come from Asia and a third from Europe. So it’s very mixed. We have, they would work with us, because they’re either coming from abroad to Silicon Valley, and our programs are kind of designed for that. Or they want to take their company and products abroad. Those are two good reasons why you’d choose founder space. Y Combinator is excellent. There many other good debaters experience, we have no monopoly on that. There’s a lot of great ones out there. And some go through multiple, like we’ve had our startups, they also joined Y Combinator, you know, people go back and forth, they try more than one incubator program. accelerator program, we’re very focused on education. We are also, you know, some of its personality, like who you connect with who you like, that’s true. And then sort of its opportunity because not everybody gets into like a Y Combinator is actually quite hard to get into very difficult. We have different programs at different levels, not just one. So some of our programs are very competitive, but others are more open. And and like we put on the online program, and things like that, that are open to everybody. Yeah. So if I’m an entrepreneur, I tell you try as many things as possible and test them out, see what works for you. And, and see what what you know, timing to right. If you get accepted program at a specific time, when you’re coming to Silicon Valley that can make all the difference.
Scott D Clary 1:11:35
I think the personality one is the one, all the points you just listed were good, but the personality one is very important. Because I think the biggest issue entrepreneurs may have hopefully not but I think a lot of them just see money, or they see support, and they latch on. And it could be not the right money or not the right support. And that could be very detrimental down the road. If you don’t like align with the right people from the from the get go. So
Steve Hoffman 1:11:58
getting with good people now. I don’t think you can go wrong with like a Y Combinator they have their own or not, not Y Combinator, I mean, but there are some other things where it might, you know, they might not offer as much value. Yeah, and it’s good to ask people been through the program, too. I always tell people, you know, ask people have already been through the program, if you get accepted before you decide whether it’s a really good program.
Scott D Clary 1:12:21
Yeah, that’s good. Okay, and then last, last sort of question just to tee up some of your experience. I like asking these questions. One piece of advice that you would tell your younger self that would help you get to where you are a little bit quicker.
Steve Hoffman 1:12:36
I would tell my younger self, take even more chances. Be even crazier than you already work because you can do crazy you can never have to and and really enjoy it enjoy every minute of it. Even the failures and the things that go wrong.
Scott D Clary 1:12:53
I love it. And also where do you go to to learn uh, books, podcasts, audibles mentors, any good references?
Steve Hoffman 1:13:01
Yeah. So I read tons of books. I’m an author. But even before that I read. So I read at least one new book a week, at least. So I am just an avid consumer. I love podcasts. I love news. I’m just always, I love information. I’m always sucking up information. So I’m reading like, you know, New York Times, Washington Post and every other you know, Matt, you know, I’m flipping through them really quickly. But I, I pay to subscribe because I want you know, people do investigative journalism and good news. So I do that. I also listen to lots of podcasts. I like those. I spend a lot of time on audio books now. Yeah, so I do a lot of audiobooks. And I’ve gotten to the point where I can listen at double speed. So especially if it’s informational. I can you know, it’s no problem for me. So I’ll be out even when I’m exercising, so I’m very good person. So all like if I’m in the car, if I’m in a plane, if I’m out jogging, or walking or doing any sort of exercise, I will be listening to an audiobook at double speed
Scott D Clary 1:14:07
do you have for entrepreneurs in particular, because that’s obviously like the target that we’re speaking about now. Obviously, make elephants fly surviving a startup when it comes up, but you have like other recommendations for like a title that people should consume that you just loved.
Steve Hoffman 1:14:21
I love so many books, so it’s hard, but I will tell you there’s one about Phil Knight, the founder of Nike called Shoe Dog great entrepreneurial story. I love that one. There’s another one about this FBI agent who who negotiates with terrorists and do how to negotiate called never split the difference. Yeah, really good book. I’m reading a really good one now called influencer that is all about No, it’s I think it’s called the power of influence. Okay, because it’s an audio book I you know, you don’t look at the title every No, no, no. But it’s, it’s it’s really fascinating. And it’s about sales about You do? So it’s like, yeah, all these techniques. So there are so many amazing books. But one thing I do encourage people to do is don’t just read business books or entrepreneurial books, those are good. You know, you can read my books, but, but read a diversity of books. So I hope because it opens your mind in a different way makes you much more creative. So I read like great novels, you know, all sorts of anthropological work, work on history. I read books about science and physics. And all of these give me ideas that I never would have had, if I had just been too narrow, like a lot of my best ideas and also allows me to interact and relate to people in science because like, I read a lot of books about like, cutting edge science or new technologies, it’s, it totally broadens where I think the world is going. So I encourage you, like be as diverse as possible read books on sociology and psychology. There’s just amazing, amazing mating books out there that you might not even think you’re interested in. But good just go Google them. What’s the best book on psychology? What’s the best book on sociology? What’s the best book on whatever subject you don’t know a lot about? And you will probably if it’s the best book, you’re gonna not only learn something, you’ll probably love it.
Scott D Clary 1:16:16
I love it. Okay, good. How do people get in touch with you if they want to reach out? Hey, you
Steve Hoffman 1:16:21
can go to founder space.com. That’s the founder space.com. Contact us. You can also email us at VC at Founder space.com.
Scott D Clary 1:16:28
That’s all for today. Thanks again for joining me on another episode of the success story podcast. You can download or stream this podcast wherever podcasts are available, including iTunes, Spotify, Google, Stitcher, I heart, radio, and many others. You can also watch his podcasts on YouTube. If you haven’t already. Please subscribe and share this podcast with your friends, family, coworkers and peers. Please leave us a rating on iTunes takes about 30 seconds as it allows other people to find our podcast and lets our amazing guests reach even more people with their message. And remember any rating is fine as long as it contains five stars. I’m Scott Clary from the success story podcast, signing off