More disruptors please!
A healthcare company started by President George W. Bush’s cousin Jonathan Bush has the tagline “More Disruption Please” for their program designed to help foster the building of innovative ways for the healthcare industry to operate effectively.
The Disruptors
Disruption is obviously caused by disruptors and most of the time it is looked as positive in the startup world. Disruptors are those individuals who look at someone taking advantage of a confusion of facts and they in turn do something that causes pain for others in that industry, leading to something different. Oftentimes that new thing is a change in the very business models used.
A few years ago I wrote the article The Dark Ages of Austin Startup Capital on TechCrunch and it received its fair share of boos and hurrahs. The hurrahs came from the entrepreneurs themselves who found great value in reading me openly discuss something that caused me great pain over the years: the hidden world behind the closed doors of venture capitalists.
Confirmation Bias
Favoring a specific worldview is precisely how we get confirmation bias and fail to see that, for many, we really need more disruption. While they are very excited to fund disruption in other industries, the VC’s sat there, mouth-agape and with their chin hitting their mahogany desks, as their industry changed — at least in the city of Austin.
They were once supportive of me disrupting.
Disruptor
[dis-rupht-or]
One who causes disorder or turmoil in
One who destroys, usually temporarily, the normal continuance or unity of; interrupt
One who radically changes (an industry, business strategy, etc.), as by introducing a new product or service that creates a new market
The very people who used the term positively to describe me and my work taking on the automotive repair, education, hospitality, and healthcare industries, had morphed it into a new meaning.
Disruptor
[dis-rupht-or]
He who threw a grenade in our backyard and exposed our abuse of the confusion of facts.
I am very proud to wear the new D that sits emblazoned across my chest. (Your jokes are welcomed and appreciated)
For the first time ever — damage control pieces started flowing
Some decided to pen damage control pieces to the Dark Ages that were less than welcomed by the entrepreneur community due to their new-found lack of trust in the very words that used to be spoken as startup gospel. The industry in Austin shifted, uncomfortably. Backroom conversations were made public. People started talking about my written work — a lot. There was a noticeable buzz.
The venture capitalists themselves were forced to do something they had never done or expected to do before. They put together discussions to help quell the fears of their industry’s disruption. I was offered a seat at the table to participate in some of these forums. I enjoyed it.
What they didn’t know is that the attachment of the new scarlet letter to my chest had the unintended consequence of propelling my work on the other side of the table from them.
Unbeknownst to them, I covertly helped dozens of companies negotiate for better terms from a position of power with information gained by my own experience and by that gained from my new-found fame. That fame allowed me the opportunity to talk with hundreds of entrepreneurs who reached out with their own stories. Hundreds of them.
Value creation for the entrepreneurs
In one instance I saw a valuation presented by the firm to a company updated by close to 200% because the venture capitalist wasn’t going to make the entrepreneur’s short list.
Yes, you read that right. The entrepreneur had a new-found power and a list. Another time saw a local firm fighting with another local firm about the poor deal terms that they thrust upon the entrepreneur in a previous round. This started to demolish the firm’s poor deal terms as their standard operating procedure.
Look for me walking around like Austin’s subversive super hero
Today I wear my scarlet letter more proudly than ever. It is my badge of honor for having had some small part in kicking off disruption within Austin’s venture capital industry. I am still asked on a regular basis to help new startup companies with their preparations to meet investors and venture capitalists. I do so whenever I can. I advise a half dozen companies in a more established role because of my knowledge and experience.
Interestingly… I became the outspoken ass I am, demanding more from others, because of my own health scare.
You may not be aware of the reason I took the opportunity to help less-experienced entrepreneurs by writing the Dark Ages article. For those of you reading who don’t know, I had a blood clot that made its way to my brain through a trans ischemic attack and came millimeters from causing a stroke or even my death. I was given a second chance at life. I seized the opportunity to share and wrote about the experience in my fiction-esque Medium piece that was published a mere month before my Dark Ages article.
I wrote the “Dark Ages” to give something back to the community I love because I came inches from not being able to ever help my colleagues again. I felt a responsibility to share my information.
I may never get another investment from the authors of my scarlet letter and that is of little consequence to me as I continue to build and grow great companies. Investment comes from many sources and in many forms. When we as entrepreneurs create something of value, investment will come as people’s eagerness and interest to offer high returns to their general partners shadow any scarlet letter that may have been previously applied.
My current role has me helping propel a company from early-stage through growth stage. They have been raising capital without challenge and they are growing quite well. While I am not in the trenches creating fire with two wet sticks anymore, I am indeed leveraging my experience to help transform this company from the inside-out.
Where do we go from here?
Calling all disruptors! Continue to disrupt. Continue to find places where the cards are stacked on the side of the incumbents and look for someone taking advantage of the “confusion of facts” I wrote about earlier. Push the envelope. Help and share your thoughts with others in the startup community.
I like to think of Jack Lemmon’s phrase “send the elevator back down” as my call to action, helping the younger and less-experienced entrepreneurs. In this case, I send the glass elevator back down filled with sticky notes on its walls.
“Be open about your warts and the right investor will help you freeze them off”
“Be cautious about the first offer as the only thing better than one term sheet is two”
“The only thing worse than a no (which really isn’t that bad) is a firm who drags a slow yes over months and months waiting for you to be in a worse position to negotiate.”
“Focus 85% of your time building your business and only 15% looking for funding to ensure your business gets the love and attention it needs to prosper”
What post-it notes would you leave on the elevator as it heads back down?
Kindly post them in the comments below.
Sincerely,
Richard Bagdonas
Principal Disruptor In Charge
