Try Doing the Opposite

How I learned to stop following advice, and start trusting myself

Welcome to the latest entry in The Workaround. You’re in good company with thousands of fellow entrepreneurs and innovators!

I’m Bob, your host. My mission here is to share personal, behind-the-scenes stories of the ups and downs of my career leading tech startups and corporate innovation.

I write to make you think, smile, and discover a shortcut to success or a trap to avoid.

Here we go…

(It works!)

I’ve given plenty of advice on this here, Substack, each week.

But I wouldn’t feel bad if you did the complete opposite of every suggestion I share.

That’s because all of my advice comes from my particular situation—a combination of genes, childhood, parents, friends, peers, positions, places, times, and pure luck that are more unique than a fingerprint.

I’m a storyteller and a signpost. I offer no guarantee that what I say suits your journey.

Socrates said, “He who is wise admits he knows nothing.” This is another life lesson I learned the hard way during my first startup journey. Sometimes, going against the general wisdom is the surest path to success.

Executing the Startup Playbook

In 2012, my co-founder and I launched a startup together. He had just graduated from a startup accelerator program about a year earlier. I had spent that year at a VC firm as an entrepreneur-in-residence after selling my digital marketing agency. These experiences loaded our heads with advice on what it took to build a successful startup. As first-timers, we listened closely.

The playbook at the time was consistent: Raising money was the first goal. Then you hired staff, got office space, pushed a product out, and raised money again. Amid countless happy hours and pitch nights, investors and founders sounded the same refrain: “How much have you raised? When are you going to raise again? How many employees do you have? What’s your MRR?”

I vividly recall our first real board meeting with professional investors, in which two topics set the tone.

First, when we got to a financial slide, a board member asked, “Why are you showing a profit—or loss—on this slide? As a SaaS company, you don’t need to worry about your net income for a long time.”

Second, another investor turned the conversation toward what numbers we needed to show to look good enough to raise our next round of funding.

In both cases, my brain scratched an internal record. We don’t need to worry about profit? We need to worry about our next round already?

But I just went along with it, thinking, “OK, Bob, this is a different game, and you’re going to have to adjust to it.” Every blog I read and podcast I listened to featured famously successful founders and investors suggesting the same course of action.

As the following months and years went by, we continued to do what everyone said we should be doing. We hired a very fancy San Francisco-based CTO and his whole former team. We hired a CRO even though we had only four sellers.

[Side note: if I had a quarter for every time I heard an investor advise a founder to hire more sellers…I could afford another seller.]

We pushed out more product features to “keep shipping.” We flew to fancy events like the Cannes Advertising Festival because “everybody” would be there. We raised more money—and prepared for the next raise.

But eventually, shit hit the fan.

Few of our customers renewed. They barely used our software, which frequently broke. Our five-person data science team had nothing to do. Despite following all the consistent advice, we were staring at failure.

Our investors stepped up with one more check to give us a final chance. It came as a down-round and pay-to-play structure. Then, they mostly left us alone.

We said goodbye to our CTO, our CRO, my co-founder, and many other excellent employees.

The small group of us remaining had a handful of months to pivot before the remaining money ran out. My COO, Ryan, and I created plans to reduce the team to a skeleton crew of five people.

Acting in desperation, we found lucked into a pivot to influencer marketing. But this model broke the “startup rules”—it was media dollars instead of a software subscription, and there was no annual lock-in. We’d have to keep selling clients on running a new campaign with us each quarter.

But there was no time to argue about business model purity. We needed the cash to survive, and clients wanted to buy with a campaign structure that fit their media budget habits.

It started working, and we continued to re-think every rule in the book.

Instead of hiring a CRO, Ryan and I split the task of running and growing our sales team. We each played to our strengths in running sales meetings together. This kept us close to the business and saved us from spending +$500k to fill the position.

Instead of building SaaS that customers wouldn’t use, our tech team—led by a much scrappier and local CTO, Ross—worked to reduce costs and build internal workflow tools. Thanks to the tech team, we rapidly ramped up the campaigns we managed while hiring just a few more people.

We doubled sales two years in a row and got profitable. Instead of using these enviable metrics to raise more money, we locked in our success by negotiating a strategic acquisition of our business through a competitive process.

The Costanza Principle

A few months into our successful pivot and turnaround, I remarked to Ryan one day that we seemed to be doing the opposite of everything we were told was the right way to run a startup.

I couldn’t help but compare it to the Seinfeld episode when George decides to do the opposite of every instinct that comes to him. Out of desperation, he realizes that if those previous decisions failed, doing the opposite might lead to success.

And it works out…at least for one episode:

What if the common beliefs about how to succeed are false?

What if the big dramatic thing everyone is worried about turns out to be no big deal?

What if we did the opposite of the competition?

How might we be completely wrong?

If nothing else, this is a valuable strategic thinking exercise. It’s a way to escape our bubbles and keep us from falling in love with our ideas and opinions. It gives us a new angle, with some distance. It’s a reminder that what worked in the past will not necessarily work in the present—and that no one can predict the future.

You might also use the model to uncover new business paths. If everyone else works similarly, there could be a window to re-think your category or find a profitable niche.

When your team sees that you are willing to abandon your current beliefs based on real-world results, they will feel more confident and bring you better paths forward.

[While researching this episode, I discovered that The Costanza Principle is an actual thing!]

Inverting Power

The late, great investor Charlie Munger has a different spin on this idea. He calls it Inversion. Instead of seeking advice—based on others’ experiences—he utilized a form of mental modeling that can help us see a situation from a different perspective. In this short video, he shares how this helped him better protect pilots as a meteorologist in World War Two:

Let’s take this for a quick spin. Imagine you’re the founder of a software startup. Your goal is to build a company that creates a successful product that eventually provides you with significant wealth.

Let’s Invert: How can we kill this company and crush your chances for a wealth event? Here are some of the most common ways:

• Don’t build something customers want—Usually, this happens when you make guesses or listen to people who are not paying customers.

• Never get to profitability or show a path to get there—You usually have to show you can make money for people to want to buy your company. It’s not a real business until you are profitable.

• Your team of founders has conflict—The group no longer works well together once the heat is on. The “heat” comes as pressure to build what customers want before money runs out. Note that raising money brings much more pressure into the picture.

• Investors come to own most of the company—You raise money to give you time to build something customers want. But the longer you take to achieve this (and get profitable), the more money you need from investors. The more money you take from investors, the less ownership, control, and motivation you have. Exit offers must get much bigger, and investors will be paid well before you are—maybe at 2x to 3x before you see a dime!

So, taking a look at this exercise, a path forward comes into focus that could best suit a founder getting started today:

(1) Make as much progress as possible in discovering the right product (or service) and profitable business model before quitting your day job, hiring people, or raising money;

(2) Work with people you know and trust, and resist raising money from strangers so that you have less pressure and get to spend more time focused on building the business; and

(3) Retain as much ownership as possible to maintain control and maximize your chances of a fortunate exit event.

Wow, look at this! You didn’t have to read books, listen to podcasts, or seek advice from others!

Can you also see how this model might go against the interests of your current and future investors?

With their business in mind, you can go through the same exercise: “How can we ensure that our fund doesn’t beat the market rate of return for our investors?” One would be allowing founders who crack the code to retain enough control to sell their companies for an amount that is a big wealth event to them but a small one for the fund. You would dissuade founders from selling services because service businesses don’t get as high of a multiple in M&A. Another would be to invest in companies that don’t go for a gigantic return that delivers the fund. And finally, they don’t want their investments to fail, so when things look bad, they offer a lot of…advice…

Look, no one is evil here, but you’ve got to see through the eyes of everyone you partner with and be wary of where interests diverge. You are one of several companies in their investment portfolio, but this is your life. Handle with care.

My Own Fear Was the Fault

Speaking of inverting…In the process of writing this post, I finally understood the core source of my mistakes in those early startup years.

I cannot blame the advice of my investors, peers, or other thought leaders. I’m the guy who followed their words out the window. I was closer to the business and had much more personal capital at stake. I had built, grown, and sold a company before my startup, so I knew how to run a strong business. I should have known better!

But my Fear got in the way.

Fear is the source of all pain and suffering in our lives.

As a first-time startup founder, I was afraid of doing the wrong thing. I was afraid to go against the recommendations of people who were smarter and more experienced than me. I was afraid that my investors wouldn’t support us in the future if I didn’t go along with their suggestions. I was afraid of hurting my relationship with my co-founder. I lacked the courage to go against the grain.

Deep down, it was easier to accept their advice—and probably, subconsciously, I was laying the groundwork to blame them if our startup failed…

It took hitting rock bottom to burn down my ego’s walls and be open to a different path forward, which was ultimately successful.

Today, I try like hell to continually invert situations back to me. When someone doesn’t react the way I would like, or when a problem pops up, I bring it back to how I can alter my perceptions and reactions. I cannot control or change other people, but I can work on getting my shit together.

This is the challenge of our lives.

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How we might work together…

• Are you interested in launching your own consulting or service business or need help taking your current services business to the next level? Fleet is our holding company for services, and we’re actively looking to build business partnerships with winning leaders. Let’s talk!

• Need guidance with revenue alignment or revenue growth management? We built Revelin to serve organizations through fractional and project-based execution, specializing in GTM alignment, CRM optimization, territory design, annual planning, M&A integration, and building your RevOps function to support growth. Schedule your revenue assessment.

• My team and I lead Hearty, a boutique recruiting service that helps tech-forward companies hire proven talent. Our senior team of operators sources and screens, saving you time and money. When you need help, let’s chat.

• Need help with a software project? Perhaps a product MVP, a project that requires outside help, or a fractional CTO for key strategic decisions? Our team at Shipwright Studio has worked together to build multiple successful startups, and we love helping leaders turn their dreams into reality. We're the team our clients trust for software built to last.

• Looking for Influencer Marketing and Content Creation? The team from our previous company is back by popular demand with A2 Influence. We’re ramping up now and would love to share more.

• Feel free to schedule a time during my Office Hours to discuss questions, feedback, networking, or any other topic! You can also find me on LinkedIn or email.

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BONUS: Cool Content of the Week

A little something I found meaningful. You might agree…

“Nobody Knows What They’re Doing”

Nearly two years ago, I got my first touch of heat in the Substack ecosystem through a post titled “Nobody Knows What They’re Doing.” Since then, many thousands of new people have kindly subscribed.

The post is a story about how my little agency team got a chance to pitch with the big boys and girls for a giant global account. I discovered that everybody is making it up as they go along. Never assume that someone is better than you because they work at a fancy company, have a lot of money, or graduated from an elite school.