Being a Tenacious Entrepreneur with Chris Michel
Meet The Operators: Founder of Military.com, Affinity Labs, & Nautilus Ventures, Chris is a serial entrepreneur, an avid investor, and epic photographer. Prior to his successful business career, Chris served in the US Navy, and then worked at the Pentagon as Aide to the Chief of the Naval Reserve. There isn’t much Chris hasn’t done!
Zaw had a chance to sit down with his good friend Chris, and discuss a life-changing career move into tech, running start-ups, and advice for Board Meetings for both new and experienced entrepreneurs. A must Read & Listen!
3 Fun Facts About Chris Michel
- Favorite Superhero: Batman, because his only superpower is his commitment to helping do what’s right. Gets to our potential as individuals to make a difference in the world.
- If you could meet any historical figure: Benjamin Franklin. A scientist, writer, author, and inventor.
- Favorite Two Places You’ve been: the Arctic and Antarctic.
Check out Chris’ Photos Here.
MTO’s Favorite Pics from Chris’ Photography Collection
“It’s a funny thing when you know you want to be an entrepreneur but you don’t have the idea.” — Chris Michel
Top 5 Questions MTO Asked Chris Michel
- Lessons: What were the biggest lessons that you learned when starting Affinity Labs, and going back to run Military.com? Listen to Chris’ Response (7:00)
- Hiring: When building a team, how do you test for a candidate’s passion in an interview? Listen to Chris’ Response (11:00)
- Culture: What have you learned on building the right culture? And any advice to entrepreneurs out there? Listen to Chris’ Response (15:35)
- Investing: What do you look for when investing in companies, and entrepreneurs? Listen to Chris’ Response (32:45)
- Board Meeting Advice: From an entrepreneurs standpoint, where have you seen the most successful outcomes, and how to create effective board meetings? Example of Board Deck from Chris
View Chris’ Full Board Deck Below
Read Chris’ Responses
- What were the biggest lessons that you learned when starting Affinity Labs, and going back to run Military.com?
There were three main lessons.
First lesson was confusing activities versus outcomes. You might have heard me talk about this before, but when you have a lot of money in bank, everything seems like a good idea. We had big launch parties…we paid 20,000 dollars a month to a PR firm. A lot of things that seem reasonable; we had a board of directors, all these things sound good. What I learned was that many of them were activities that couldn’t be tied to outcomes of the company. When companies are not resource constrained, they do a lot of things that sound good. But do they really matter? I’ve seen a lot of companies hire very quickly, then get a lot smaller. The CEOs always say the same thing to me, “Boy, it’s amazing how much better we run with less people.”
The Second lesson, maybe the most important area, was a lot of the mistakes I made relating to people. We talked about the Three P’s: people, passion and performance. We hired very quickly in the company…from zero to 60 people in a very tough hiring environment in three months, and I made a lot of errors relating and hiring the right people.
The two-by-two matrix that I use to relate to people and the mistakes they made is Competence vs Fit (for the role).
Top right quadrant is somebody that’s incredibly good at their job, and they’re a great fit. The challenge…Finding them and keeping them.
Bottom left quadrant — Bad fit, no competence. It’s not the devil, but it’s like the DMV (sorry DMV). It’s just people that aren’t good at their job and they’re not nice people to work with.
It’s the other two quadrants that get people in a lot of trouble, including me. The top left quadrant is the really really nice person that’s not that good at their job.
The bottom right quadrant is a real challenge for people. Do you know what this quadrant is? It’s the person who’s really good at their job, but an asshole. This is the devil. The devil is not incompetent. The devil is very good, and extremely competent. But they’re cancerous. Maybe they’ve had issues with you directly, but you’re afraid to get rid of them.
A lot of companies have problems with these two quadrants. Not everyone can be in the top ranked quadrant all the time, but if you have good people that are passionate about their jobs, that are good at what they do. You can move people up into the top right quadrant. What’s genius about this is, if you have an organization where people feel like it requires your A game to be at the office every day; everyone, including the CEO, and including the front desk person or whoever, they all feel they’re something special.
The third is just tenacity. I’ll just say that when I was starting Military.com we couldn’t raise money, we almost shut the company down, but we kept going and we raised money. When the company was failing, I even had the Commandment of the Marine Corps say, “Sometimes you just need to give up.” I had board members that said, “Basically, this thing’s a non profit, it shouldn’t exist.” I was talking to bankruptcy lawyers, and everyone said there was nothing here, and that we should shut it down, BUT we just kept going! This happened also at Affinity Labs when we were raising money, we had a problem in the financing and it was looking difficult for a little while, but we just kept going!
2. How do you test for passion in an interview?
Part of my job is an obligation I have to the company and to the team to make sure we only have really great people that are really passionate. Right? Part of that means, when it’s not working for people, I’m going to try to help but if it doesn’t work, we deselect them quickly. The worst thing that can happen here in an interview isn’t that you don’t get the job. It’s that you get this job, and it’s the wrong job for you.
What I found is when you step over to the other side, and you really try to help people figure out whether it’s a good fit or not, people get real with you. People get real. Particularly when they think that they won’t get a say in the job if it’s not going to work out for them.
3. What have you learned on building the right culture? And any advice for entrepreneurs out there?
I’ll share a small anecdote to explain. When we try to compare PayPal, Facebook, or Apple: it’s difficult to compare these companies because they’re different companies in different sectors in different eras. However, when you compare Navy (military) squadrons during the same era, they’re very easy to compare. They have the same kinds of people, they do the exact same job, they have the same airplanes, the same training, BUT there’s incredible variability in performance. So why is there incredible variability in performance? Because leadership is different — the Commanding Officer can set a culture in the squadron. The squadron I was in was three times as good as the average squadron, and given “best performing squadron” award year after year. There was an expectation around how good you had to be, and people played up to that expectation. If you could see it in something that looked like a commodity product like the Navy, what’s possible with good leadership inside a company? A lot of things.
In a great company, everyone is holding everyone else accountable to exceptional performance. There are no team members that aren’t doing their jobs, and everyone has a right and obligation to insure that people are great. Frankly, in a small company, if one of your partners wasn’t getting it done, it’s hurting you. It’s hurting everyone in the company. People want to be great. That’s that kind of culture in a company, where even the CEO can get called out.
4. What do you look for in entrepreneurs?
When your life depends on it, a lot of great things can happen. That’s why tenacity is so important: in the most difficult moments, the best things can happen. Also, honestly, it wasn’t me being an officer in the military. It wasn’t working at the Pentagon, it wasn’t my degree from Harvard Business School, it wasn’t even starting a company that taught me stuff. It was when things got really difficult.
To some extent, the CEO’s that are out there running companies that are hard like Tod Sacerdoti (Read #MTO’s Interview with Tod) deserve so much credit. That guy deserves everything he’s gotten…nobody handed him anything. I really admire and respect the people that build the war room.
Those are the people that will make it up. I look for those entrepreneurs that fight. I don’t want…Some people are like, “We’re going to give it our best shot, if it doesn’t work, we’ll just move on to the next thing. Let’s fail often and fail quickly.”
I like the entrepreneur that says, “I believe in this vision and I am going to make it work,” even if it means that I’m down to two people and at a Starbucks still saying “I’m going to make it work.” I have seen those people make it work. If you refuse to fail, you will not fail. If you set up your company, by the way, with incredible burn rate, you’re going to have that moment a lot more quickly. This is one of the things we’re going to see here is; there’s huge burn rates in companies.
5. From an entrepreneurs standpoint, where have you seen the most successful outcomes, and how to create effective board meetings?
For very young entrepreneurs that haven’t worked with boards, you don’t want to make one of the mistakes I made, which is: when the board says something, you feel like it’s a directive.
The first order of business is take your own council. Make sure you’ve got some people you can talk to, other CEOs. Might be an independent board member, which is useful. They can give you the straight skinny. It’s important that you don’t just do what the board is asking to do.
Be careful, and this is going to sound a bit controversial. but, I wouldn’t put anyone on my board if I didn’t really trust them. Even if you thought there was a lot of upside and they were really smart.
The third is: “What the point of the board meeting is. What are we doing in here? Does the board meeting matter?”
The main thing that you really hope out of a board is that it helps you set up the rhythm and the cycle of your company. It’s almost like your quarterly earnings report. It’s an opportunity to come back with the metrics that you’ve all decided upon, and kind of show your performance. It forces the company to start tracking the things that matter; the KPI’s in the company. If you have the right kind of board system, you can even have board members that say nothing. If you’re tracking the right metrics and the company is optimizing against those metrics; the company every single day is focused and aligned around the things that matter.
The worst thing at a board meeting is that there is a problem and you’re not talking about it. The board members (most likely) know there is a problem, so they’re thinking either you don’t see the problem or you’re trying to hide the problem. This is a disaster!
What I found is, CEOs that are confident, come in and say, “Here are my problems, and here are the things I’m doing about them.” Those are the most effective board meetings.
Bonus Advice
Staying focused on leadership, because growth hacking, attacking new markets, are all important things but their not the big idea. The big idea is building a world class team that really believes in their own ability to accomplish anything. That’s the asset that your really creating. It’s the relationships, it’s the trust, it’s the friendships, it’s the memories. Don’t lose sight of that while your pedaling that hard uphill.
Be sure to follow Chris on Twitter.
Check Out Chris’ Photos
Check Out Chris’ Board Deck
Nautilus Ventures
Thanks, as always, to Brian Ko and Gina D. for the help!
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