Macala Wright: How Happiness Can Save The Sad State Of Startups

Is the default state of a startup failure? Serial entrepreneur chats about how to change this.

Technology startups are plagued with lack of innovation and strategic vision from their founders and funders, Rob Emrich tell us how to fix it.

Chris Dixon recently wrote that the default state of a startup is failure and I agree. It seems these days that entrepreneurship is dwindling. It’s not clear whether it’s because individuals have decided go back to the stability of a larger entity or because venture capital has become harder to secure because of the current economic state of the US economy. But an older set of entrepreneurs are exiting.

That state of startups, coupled with the blatant lack of innovation, most currently attributed to our unwillingness to invest in longer term gains at a significant scale, has led many to wonder if innovation through disruptive platforms and companies can continue.

So is future innovation bleak and disruption never to happen again? Not according to Rob Emrich. Emrich, the current founder and CEO of a promising Los Angeles-based startup known as PaeDae, white-labeled prize network for social games and apps that connects real world and virtual incentives.

Emrich is a serial entrepreneur; he has founded and served as chief executive of six startups and social ventures, including Road of Life (distributed $70M+ curriculum). He is a mentor at the startup accelerators Hub Ventures & Founders Factory, and sits on a number of nonprofit boards.

Why is the task of building a startup world in a state of failure?

A startup, in terms of physics, is an organization disrupting market ‘inertia’. Changing the status quo is an incredibly difficult task. Depending on its size, changing a market means changing hundreds, or thousands, or millions, of people’s minds and habits. It doesn’t always matter – in fact, almost never matters – if you have a better way of doing something. You have to have a remarkably better way, so much so that you can alter the basic tendency of people and markets to maintain their current state. This, with a few very rare exceptions, takes time, money, and persistent effort.

So should we fight inertia? In the ways many often fight change?

The natural corollary to the above phenomena is that when you are fighting inertia, most things will fail. Most of your ideas and efforts will not work, or not work fast enough. The ideas and efforts that do work will most likely have little impact on changing the market right away. Even if your company can provide a product or service better, faster, or cheaper – or even all three at once – it still might not catch on, or not catch on before your company has run out of money. Why? Because it takes most people a long time to change their minds and habits, and people make up markets. Thank God for early adopters, or else there would be no startups.

Has this led us to stop funding the future because investors don’t have the patience for long term gain nor the tolerance for the costs associated with it?

People must get comfortable with the process of failure. With a startup idea, product or company, you must understand that more will go wrong that right. The stress and challenges can be debilitating — the challenge is to stay positive. So in order to be prepared for the long road it takes to gain success, as an investor, you’ve got to say to yourself “What we’re doing is going to be difficult, it’s important that I stay mindful of the challenges of this venture, and I’m in it for a long haul, not just a quick payout.”

As an investor, It’s important to move with the obstacles you encounter and not become attached to patterns or processes. You need to focus on outcomes, not obstacles.

For an entrepreneur, it’s important to challenge yourself to change the market, because you’re defining yourself – thereby giving yourself a chance to change the world.

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Slow adoption, resistance to change and going the long road is mentally taxing, it’s in fact the main reason so many people leave the entrepreneur roles they had when they were younger. How can do those unwilling to accept defeat stay positive, open to learning from their failures and stay happy?

The Lean Startup movement (from Eric Reis, Steve Blank and Patrick Vlaskovits) has taught us all to pivot into a workable business model, but has not addressed a much more fundamental problem of entrepreneurship: how to handle the day-to-day rejections and failures.

I usually look to the work of an emerging movement within the scientific psychological community for answers: positive psychology, or to the the Buddhist tradition.  The most effective tool that I have found is one that Martin Seligman discusses in his latest book Flourish, which he calls ‘Three Good Things.’ It’s an exercise that I have incorporated into the daily huddle that we do at PaeDae, and will make a part of any company team I lead for the rest of my life.

The exercise is simple:  every day in our morning huddle we go over a variety of things, like priorities, learnings, metrics, etc. We always finish with ‘Three Good Things,’ which is the short time at the end of our huddle when each of the team members recounts two positive work events, and one positive personal event from the previous day. This gives meaning and context to our work.

By identifying goals and looking for meaning in that goal, we find powerful motivators and everyone in the company does better.  And happy people always have something they’re involved in where they known their contribution count.

More startups, whether they are new like PaeDae or their extremely established like Bill Gross’ IdeaLab, seem to realize that it’s important to support the professional and personal development of their employees. How can founders and senior management do this within their organizations?

Well strategically, you have to design a company where people feel good about what they’re doing, giving them a sense of purpose and also pleasure.  For me, that meant designing a company where that wouldn’t be involved or have negative effects on human beings. That right there supports the personal and professional development of our staff. We provide escapism and positive rewards for peoples’ daily habits.

We also do things like letting our employees bring their dogs to work and we pay for lifestyle perks like yoga classes, gym membership and meditation. Things like this help mitigate stress and prevent work burnout.

Why is it important for leadership to invest in their staff? What do they risk losing if they don’t?

In most startups, it’s hard to find talent for the salaries usually offered. So perks like the ones I’ve mentioned above, coupled with flexibility and incentives often allow you to secure talent you normally wouldn’t have a chance to get. But once they’re on board, it’s important you invest time in educating them in the ways that help your company grow, but also allows them to develop. Be receptive to ideas and contributions they may suggest that will may make the company work better. If you don’t listen, and respect the value they’re trying to bring, they’ll stop offering advice and most likely, you’ll lose them to another business who wants them.

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