Eliot is a writer who created what he wanted to see in the world. Growing up in Oakland Eliot didn't open a lemonade stand or have a paper route but he remembers his first entrepreneurship experience involving a violin. Playing the violin was one of those things that Eliot's parents made him do. We've all been there, some of us were reluctantly signed up for summer camps and sports teams. While others had that dreadful instrument collecting dust in their room, that they were expected to practice weekly. Making the best of it, one day during the holiday season Eliot decided to take his violin to a popular area in town on College Ave in front of a cafe and began to play. He made sure to leave his violin case open on the ground in front of him in order to collect any tips from generous passersby. Like all good things, this eventually came to an end when a police officer, who wasn't filled with the holiday spirit, decided to shut him down because he lacked a business permit. This run in with the police was quite the experience for Eliot. At seven years old he was sure that he was going to jail and would miss out on the holidays. Fortunately he was let off with a warning.
Eliot got his degree in Global Studies at the University of California Santa Barbara. Which was a nice mix of International Business, International Relations and Non-Profit management. While finishing up his studies at Santa Barbara, Eliot started interning at a company based out of San Diego, Adaptive Arc. Adaptive Arc makes plasma gasification systems which turn biomass into electricity; pretty cool stuff. After finishing his undergrad at UCSB, he went on to continue his studies at UC San Diego. While at UCSD he realized that he was really passionate about the internship at the startup, more than school and decided to spend more of his time on it. From there he cofounded a consulting company with some friends in order to help other clean tech companies expand into international markets, primarily Latin America. One project in particular, his firm helped hook up an entire village in Baja, Mexico which previously didn't have any access to electricity. Also, pretty cool.
We discussed how often people prepare for a moment in time, with the idea that the preparation is experience enough to anticipate how life will be in that moment. Only to learn that life in that moment isn't what they thought it'd be and they want out. For Eliot, this moment came when he started doing some lab work by conducting environmental policy research. Up until this moment in life, he was sure that academia was what he wanted to spend his life doing. He constructed his studies around it, with the intent to use his education as a foundation for a career in research. Though through the opportunity at the lab he realized that a life of detail oriented, meticulous work that left you quite removed from seeing the impact of your work, just wasn't for him. It's important to get some experience with what you're preparing for to see if you really like the taste of it. Could you imagine walking from Canada to Argentina because you heard of a really cool lifestyle in Buenos Aires that you want for yourself? Only to get there and realize, "good for these guys but this country ain't for me". Luckily Eliot was able to get some ample experience which helped him make the decision that was best for him. Lesson learned: If you want to do something, just hop into it. No planning. You'll figure it out.
"Get your hands dirty. If there's something that you want to do, you're the only one holding yourself back. Figure out a way to make it work."
Touching on his experience with starting the consulting firm, Eliot shared a concept that I believe all entrepreneurs should spend more time with. And that's: spend more time with your clients. A lot of entrepreneurs in the beginning spend loads of time doing research online and writing a business plan, revising that business plan and then revising it multiple more times. All without speaking to one potential customer. Which can really put you in a dark place, because truth be told you can't develop a plan of attack without first scoping out the battlefield. This goes back to Eliot's previous point to skip the planning process and get dirty. Or in the words of Sir Richard Branson: "Screw it, let's do it." After Richard and team finished their preparation process and started spending time with their clients they discovered that their clients needs were actually different than they anticipated. If they had spent more time with their clients in the beginning they could've saved themselves about six months. This experience, I'm sure is one that most can relate to.
After running the consulting firm for some time Eliot was recruited by a venture capital firm called T2 Venture Creation. Not only was this a good experience with the venture capital side of things but T2VC was different from most VCs. They invested very early and chose companies that were commercializing radical technology. For example: Somark Labstamp. A company that upgraded an outdated process of tagging lab rats with an actual tag, which often would fall off or be chewed off of the rat. They replaced traditional tags with tattoos of RFID embedded ink on the tails of the rats which is a much more efficient way of keeping track of the rats during the duration of an experiment. Today this company is very successful and very profitable.
"99% of all companies never receive funding."
Something that has been really big in business publication headlines lately is the amount of venture capital funding that companies are receiving. More times than not, these headlines are also associated with companies that are very successful in their respective sector. It almost implies that without proper venture funding in today's climate, you can't be successful. Personally, I think that this is a crock of you-know-what and is just the result of a bunch of news reporters living vicariously through the subject of their article. I asked Eliot about this and I was pleased to hear that he agreed.
Let's talk about funding for a second and what this actually means. When someone invests in your company they are expecting a significant return on their investment. The money you receive isn't yours to spend as you please, but it's to be allocated to fund the company's growth strategy. Let's say your company is worth $100 and Joe Shmoe buys a 20% equity stake for $20. In order for Joe's 20% stake to be worth than $20 the company needs to grow in value to a number greater than $100. Meaning it's profits need to grow and though that $20 you just received could buy you a fancy lunch. Joe's money in the register at your local Olive Garden isn't going to grow his 20% stake to be worth more than what he bought it for. Instead, spending that money on your agreed upon growth strategy will. You can be sure that Joe will be hovering around for at least the next 5 years to ensure that the growth strategy is in fact executed. While no one wants to see someone get ousted in the way Steve Jobs was in the 80's, if you do not execute properly Joe can have you replaced as CEO of the company that you started. So unless you absolutely need it or you and your company will sink into the abyss without it, don't buy a boss...I mean don't take an investment. More often than not, it's not worth it.
"For the vast majority of businesses, whether service or product based, you don't need venture capital and you can waste a lot of time trying to get it. It's important to be honest with yourself and try to find the right financing path for it."
"Raising money isn't a measure of success. Like, successfully getting someone to write you a check doesn't mean shit. In fact, what it means is that you just got yourself a boss. You just hired a boss."
When you take on venture capital, not only are you beholden to yourself financially but others. You could potentially lose someone else's hard earned money and if that doesn't make you nervous, then you shouldn't even consider VC at all. Period. "Financing isn't celebrated, what's celebrated is getting actual users, actual clients for their business. Don't celebrate a financing, celebrate a sale." Unfortunately our media coverage of current events in business consist of a lot of celebrations around the amount of money a company raises. Which doesn't show how profitable a company is, at the end of the day every company exists to make profits. "People who spend most of their time building their business end up needing financing the least, but if they do they have the easiest time finding it, because everyone wants to invest in a company that doesn't need investment."
Today Eliot is writing the last novel in a trilogy that he created called Uncommon Stock. He found that far too many of the business books available were very dry, borderline text books and were missing all the good content. The day-to-day drama that entrepreneurs endure while building their businesses. So instead of waiting for it to made by someone else, he took his experiences and things that he's witnessed as an entrepreneur and put them into a story lived out by fictional characters. How did he prepare to start his book and become an author? He didn't. Eliot opened up Microsoft Word one day and started to type.
The first book came out in the spring of 2014, the second released in December of 2014 and the final edition of the trilogy will be released in the summer of 2015. The premise of Uncommon Stock? "A pair of college students drop out of college to start a software company which has a product that's essentially a "spell-check" for financial fraud". I can see how something like this can bring on some unwanted attention by some powerful, yet corrupt bankers. You can get the first book Uncommon Stock: Version 1.0 here and the second book Uncommon Stock: Power Play here. His books were both published by a startup publisher based out of Boulder, Colorado: FG Press. "A modern publishing company that gives control to authors." If you want to read up more about Eliot and his perspective on business/financing check out his blog: Eliotpeper.com
Eliot's advice for aspiring entrepreneurs and people just getting started out:
"Don't worry about what people think and for every piece of advice take it with a grain of salt. Only you know what's best for your company."