Jon Falker of Prime Data Centers: Five Things You Need To Create A Highly Successful Startup

An Interview With Paul Moss

Resilience is a key trait. In startups, even seemingly great news can have a downside. For example, a large, early customer might really help your cash flow, but it also might commandeer your product road map and lead you in a suboptimal long-term direction. They also might swamp your staff, sucking up all the oxygen for necessary foundational work. I’ve seen that happen more than once and luckily, we had the guts to sever or hive off the relationships with those whale customers.

Startups have such a glamorous reputation. Companies like Facebook, Instagram, Youtube, Uber, and Airbnb once started as scrappy startups with huge dreams and huge obstacles.

Yet we of course know that most startups don’t end up as success stories. What does a founder or a founding team need to know to create a highly successful startup?

In this series, called “Five Things You Need To Create A Highly Successful Startup” we are talking to experienced and successful founders and business leaders who can share stories from their experience about what it takes to create a highly successful startup.

I had the pleasure of interviewing Jon Falker.

Jon Falker is the Director of Marketing at Prime Data Centers, a wholesale data center developer. Jon has served as one of the first marketing hires at five for-profit startups, and as a board member of one non-profit startup. He also helped larger companies such as Intel and Sunrun during periods of intense scaling and growth. In his free time, he skis and bikes the Lake Tahoe backcountry.

Thank you so much for joining us in this interview series! Before we dive in, our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?

I went to undergrad business school and majored in marketing, so when I graduated, I looked for marketing roles. I ended up at a tiny software startup in DC as their first marketing and sales hire. I was the only non-engineer for a couple of years. It was an incredible learning experience and I fell in love with tech. I joined that SaaS startup in 2003, when SaaS was a pretty new concept. Salesforce was just starting to prove the model. Having a front-row seat to watch SaaS become the dominant software delivery model has been quite an education. I’ve been in tech ever since, usually as a first marketing hire. So as luck would have it, that first role out of undergrad really became the template for most of my career.

What was the “Aha Moment” that led to the idea for your current company? Can you share that story with us?

Like many investment companies, Prime Data Centers was born from an investment thesis. Our founders are real estate developers who saw that data centers were likely to be one of the most important commercial real estate sectors of the next decade or two. They also saw an opportunity to stand out from other data center developers by offering a non-commoditized approach to large enterprises. Custom solutions with flexible partnership options. As that initial investment thesis proved true, we’ve built a growing brand around it.

Was there somebody in your life who inspired or helped you to start your journey with your business? Can you share a story with us?

My first three corporate bosses were all inspirational and influential for me. To this day, they remain some of the best bosses I’ve ever had. In that respect, I was extremely fortunate. Having bad bosses in your first few career roles would be very difficult.

Andrew Ryan was my first boss. As a software engineer, he opened my eyes to the potential of technology to change the world. As an entrepreneur, his confidence was inspiring. It was a potent combination…I saw that a skilled tech team could go out and affect change boldly and relatively quickly.

Sandra Lopez was my second boss and her confidence and diplomacy served as a guide for how to be an effective team member, leader, and action-oriented, results-driven performer.

Ryan Baker was my third boss and I always admired how he stayed cool under pressure. He knew how to parse the important from the unimportant, and therefore prioritize effectively.

Finally, my brother is an entrepreneurial inspiration to me. He has taken over the real estate development business my dad started in 1978 and is doing an admirable job reshaping it to match the modern market demands.

What do you think makes your company stand out? Can you share a story?

Prime Data Centers really focuses on partnership. That may sound like marketing-speak, but we prove it and live it. For example, we offer large enterprises joint venture equity sharing in our properties. That’s something that almost none of our competitors offer. We can do it because we’re not trying to force-fit our customers into a pre-defined building or service template.

How have you used your success to bring goodness to the world?

One of the most urgent callings of anyone is to lower your carbon footprint and to help others lower theirs. Preferably through advancing climatetech in scalable ways. At Prime Data Centers, we take sustainability seriously and are working towards developing a system to ensure that every property we develop is as efficient as possible, with the lowest carbon footprint possible. Personally, I’m helping Prime advance that goal in every way I can.

Outside of Prime, I try to volunteer my time frequently to worthy causes big and small. I’ve spanned everything from serving on non-profit boards to picking up litter in my neighborhood. While it might require a certain kind of resume to get a board seat, anyone can easily volunteer to help their local area.

You are a successful business leader. Which three character traits do you think were most instrumental to your success? Can you please share a story or example for each?

I’d say confidence, empathy, and curiosity.

• Confidence (paired with capability) helped me gain trust from those around me. My first boss at Intel always encouraged us to stand up and ask the CEO questions during our in-person quarterly business update meetings. I remember being nervous to get up that first time, in front of not only Intel’s CEO, but also a few thousand other Intel employees. I did it again and again though, and as long as I felt that I had an interesting question that others would appreciate hearing the answer to, I found the confidence to ask it.
• Empathy helped me connect with other people, whether coworkers, customers, partner organizations, or anyone else. International travel is what has helped me strengthen my capacity for empathy more than anything else. I’ve been fortunate enough to have traveled abroad frequently, both for work and for pleasure, and those experiences helped me understand what connects us despite relatively superficial differences like nationality, race, religion, language, etc. I vividly remember being in a taxi in Santiago, Chile, on September 11th, 2001. The towers had just fallen in New York City and I was rushing back to my study abroad family stay home. The taxi driver was really scared. He was certain that the U.S. would launch a retaliatory nuclear strike. I was doing my best to assure him that we would not use nuclear weapons. I started to better understand how others might perceive my home country.
• Curiosity enabled me to constantly be learning. I’ve found that with increasing knowledge comes an increasing awareness of all you lack knowledge in. That happens frequently as a first marketing hire. Marketing is such a broad discipline and being a marketing team of one means that you have to teach yourself many things. I’ve had to teach myself marketing operations, design, PR, analytics, and more. Without a healthy curiosity, that could seem overwhelming.

Often leaders are asked to share the best advice they received. But let’s reverse the question. Can you share a story about advice you’ve received that you now wish you never followed?

Good question. I decided to go to business school based in part on the advice of some work colleagues. I figured that having a masters degree in business would make me more marketable to large companies. In retrospect, I don’t think I should have gone. While I had a great time and met some incredible people that I still keep in touch with, the cost and the two years out of my career field were tough to justify. When I talk to young people considering business school these days, I usually recommend that they don’t do it. The value of continuing to gain real-world work experience, and earn a salary while doing so, is too great to sacrifice. If you really feel like an MBA would help you, I’d recommend doing it part-time so you can continue working. That means that you’ll be stretched pretty thin though, so if you have a significant other or a family, you should really be certain that the sacrifice will be worth it.

Can you tell us a story about the hard times that you faced when you first started your journey?

I’ll be honest. I had a tremendous head start. I went to great schools and my family was able to pay for my tuition. So I didn’t have to overcome the kinds of challenges that many people do. I didn’t graduate with an enormous student debt burden.

My “hard times” were of my own making. I stand up to workplace bullies, even if it damages my career. It’s just in my personality. I can’t stand bullies.

At one of my first corporate jobs, my boss’ boss was a bully. I stood up to this person and as a result, I was disciplined. I was nearly fired. That experience certainly shaped me. While I would still stand up to a workplace bully, I might do it in a slightly more diplomatic fashion.

Where did you get the drive to continue even though things were so hard? What strategies or techniques did you use to help overcome those challenges?

In that particular situation, I moved to another group so that I’d never have to interact with that bully again. It was a smart move. I ended up spending another four years with the company, with an excellent boss who really helped me develop my career and personal brand.

The journey of an entrepreneur is never easy, and is filled with challenges, failures, setbacks, as well as joys, thrills and celebrations. Can you share a few ideas or stories from your experience about how to successfully ride the emotional highs & lows of being a founder”?

Resilience is a key trait. In startups, even seemingly great news can have a downside. For example, a large, early customer might really help your cash flow, but it also might commandeer your product road map and lead you in a suboptimal long-term direction. They also might swamp your staff, sucking up all the oxygen for necessary foundational work. I’ve seen that happen more than once and luckily, we had the guts to sever or hive off the relationships with those whale customers.

Generally speaking, balance and moderation are important. Don’t get too high during the highs and don’t get too low during the lows. It’s rarely as good or as bad as it may seem in the moment.

Let’s imagine that a young founder comes to you and asks your advice about whether venture capital or bootstrapping is best for them? What would you advise them? Can you kindly share a few things a founder should look at to determine if fundraising or bootstrapping is the right choice?

If you can bootstrap, do it. There aren’t many instances where a startup can realistically bootstrap however. If you can check many of the boxes below, you might be a good bootstrap candidate.

• You are already earning revenue and revenue growth is accelerating
• Your revenue model is subscription-based and you have low churn and high customer advocacy
• Customer acquisition costs are falling
• You are already profitable or are at least making strides towards profitability in the near term
• Your industry and business model are not particularly capital intensive
• You don’t need a big staff

If you can’t check most of the boxes above, you may need venture capital.

Ok super. Here is the main question of our interview. Many startups are not successful, and some are very successful. From your experience or perspective, what are the main factors that distinguish successful startups from unsuccessful ones? What are your “Five Things You Need To Create A Highly Successful Startup”? If you can, please share a story or an example for each.

The vast majority of startups fail. The successful few share these five characteristics:

1. Experimentation
2. Prioritization
3. Customer orientation
4. A great WHY/story (you’ve likely already seen the famous Simon Sinek video)
5. Happy employees

One of the largest root causes of startup failure is a lack of product/market fit. From the list above, experimentation, customer orientation, and even a WHY story, ladder directly up to achieving a healthy product/market fit.

Prioritization and happy employees have to do more with operational excellence — a topic that is far less frequently discussed than product/market fit, but equally important. Happy employees are part of a modernization of how companies define their stakeholder segments. Having been neglected for decades, employee happiness is now getting the attention it deserves.

Prime Data Centers has achieved what some startup analysts refer to as “escape velocity” in the relatively short four years since we were founded. We’ve just brought on a publicly-traded strategic partner (Macquarie) and signed a lease with one of the most important tech companies in the world today. We’ve gotten to this point due in part to the five characteristics mentioned above.

Experimentation is critical for any startup, but especially for software startups. Facebook is a famous example of rapid experimentation at scale. They test tweaks to the user interface every day and implement the best tweaks based on statistically significant data. Smaller companies usually can’t run experiments at statistically significant levels, but they can still experiment. For example, one of the startups I worked for was an app that helped other startups find product/market fit using the lean startup method. We ended up running lean startup-style experiments on our own product and business model which led us to pivot a bit to a full-blown product management software app. Those of you with any product management experience will understand how meta that is. If you’d like to read a bit more about product management experimentation, I’ve written a fair amount about it under my Medium handle. There’s also a great recent HBR article here.

For startups, there usually aren’t enough hours in the day. And you don’t want to work non-stop. So you have to be able to ruthlessly prioritize. As a marketing team of one at several of my startups, I’ve had to use marketing automation to put things like social media posting on autopilot. I used apps like Zapier and MeetEdgar to minimize the amount of time per week running our social media required. Automating social media to this extent results in less engaging posts, but it was worth it in order to free up my time to focus on more pressing matters.

Your customers and your employees are your two most important stakeholder groups as a startup founder. Being tuned into both is critical. At the product management software app I mentioned earlier, we regularly conducted customer interviews of various types to find out what challenges our customers faced on a day to day basis, as well as what they thought about our product roadmap. We also used data on how our customers were actually interacting with our software. That helped us really understand who are customers were and therefore how we might best add value.

At Prime, customer orientation is at the heart of our differentiation and positioning. Our Partnership-as-a-Service model means that we offer more flexible lease or equity ownership options to our clients than many of our competitors can.

If you haven’t already seen the famous Simon Sinek video, watch it. In summary, your customers buy from you when they understand why you do what you do, not just the features of the gizmo you’re selling.

Finally, we come to happy employees. I’ve not yet seen a study (although one probably exists) about the statistical correlation between a company’s Glassdoor rating and its long-term return on equity. It’s likely quite correlated. At Prime Data Centers, we treat job applicants as well as we treat our clients. We respond promptly, courteously, and professionally. We treat our employees like equal equity partners, because with profit sharing, they almost are. It’s also just the right thing to do. Let’s not overcomplicate this. Your employees are your company. If they’re not happy, do you really expect them to innovate, be productive, and make your customers happy?

What are the most common mistakes you have seen CEOs & founders make when they start a business? What can be done to avoid those errors?

There has been diligent, recent research into the most common reasons for startup failure. This study from CB Insights is a good example. In my experience, weak product/market fit is the leading cause of startup failure. Most of the other common problems that plague startups can be solved if you have solid product/market fit.

For other founders out there, since product/market fit is so critical, identify the first hires most necessary to build that. I would recommend:

• A rock-solid product team, starting with engineers, and then adding one seasoned product manager afterwards
• One full-stack marketer who gets along well with your product team and can help them conduct user research
• One seasoned salesperson, unless your product has self-serve sales and onboarding
• One seasoned HR lead who can attract and retain the right talent

My caveat is that the advice above pertains mostly to tech startups. Industries like consumer packaged goods, fashion, etc. have different needs.

Startup founders often work extremely long hours and it’s easy to burn the candle at both ends. What would you recommend to founders about how to best take care of their physical and mental wellness when starting a company?

First I’d say that mental and physical health is vital. Take it seriously. Encourage your employees to take it seriously. Role model the behavior. You can role model and simultaneously do some team bonding by doing things like training for and competing in an athletic event together. A half marathon or something like a Tough Mudder are great examples.

Not all of your employees can run a half marathon though. So an even better approach would be: create a private team on Strava and reward employees that put in at least two hours per week of exercise of their choice.

Don’t proliferate the “hustle porn” plague. If you’ve never heard that term, look it up. It’s real.

Ask yourself whether a heart attack at 50 would be worth it just to achieve some degree of entrepreneurial success. Most people would say it’s not.

If you can’t create a viable startup without wearing yourself ragged, you probably don’t have healthy product/market fit. Either that, or you have not built the team around you adequately. If you have good product/market fit and you’ve built a strong team around you, you can share the load so that no single person is having to work around the clock.

Finally, if you absolutely must work endlessly, don’t showcase it. Keep it quiet. Don’t send messages during off-hours. Respect the fact that most people have personal lives separate from their work lives and they probably don’t want you invading their personal lives. Speaking of respect, workplace mental health starts with respect and appreciation. Show your employees respect and how much you appreciate them. If you can’t or won’t, don’t expect them to respect or appreciate you.

You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. :-)

Climatetech. Join the party. It’s just getting started. For young people reading this, if you build up experience working in climatetech, you will always have a bright career future. More importantly, you will actually help save the world. To get started, check the job openings pages of climatetech venture capital firms like Powerhouse Ventures.

We are blessed that some very prominent names in Business, VC funding, Sports, and Entertainment read this column. Is there a person in the world, or in the US with whom you would love to have a private breakfast or lunch, and why? He or she might just see this if we tag them.

As a climatetech nerd, I’m a fan of Powerhouse Ventures, which I mentioned above. I’d love to be able to hang out with founder Emily Kirsch.

How can our readers further follow your work online?

On Medium (https://medium.com/@jonfalker), as well as Twitter (https://twitter.com/jfalk).

This was very inspiring. Thank you so much for the time you spent with this. We wish you continued success and good health!