In February 2014 Christy Wang, a student at MIT Sloan School of Management, interviewed Steven Cox, CEO and Founder of TakeLessons.com for her Entrepreneurship class. Here is the transcript of the interview.
4. What makes a good startup business partner? Where can you find them?
There’s a line that I read from Stephen Covey, who wrote many successful books, including the “The 7 Habits,” but he also wrote a few business books. One of those things he talked about was developing a world-class staff. When you build your business, this is the number one thing you’re looking for – building the right team. Even if it’s just a two-man operation, you look for people whose strengths offset your own weaknesses. If it’s a team environment, you look for the weaknesses, and say, “Where do I play so that the strengths of one person make the weaknesses of another obsolete?” If you can find that and keep building that sort of team, over time, it becomes easier and easier for you to solve the problems.
Now, along those lines, I would also add that, in addition to finding people who have offsetting strengths and weakness, you need to find people who have a shared value system. While you’re not looking for robots, you are looking for someone that, when push comes to shove, your values are aligned. Second of all, your work ethic needs to be aligned as well. I think those two keys are critical, specifically in a very young company. Otherwise, you’ll just run into more problems later on.
5. What is the best way to find investors, and what is the most valued lesson you’ve learned from successful pitches?
I would say that the best way to find investors is through a pecking order, if you will. The first place to look is yourself. There are many people who have taken out money on their house, credit cards, or savings and started investing in their own startup; I think that’s one of the best investments that one can make. It is risky, and there is a high probability of failure, so one has to take that into account in trying to figure out if they should be their own investor. I funded TakeLessons.com right out of the gate, and it was my money on the line. I think that entrepreneurs have a tendency to work a little bit harder when it’s all of their own money on the line at the beginning. That money should be used to get some traction within the business, and from there, the place you look is for people who believe in you.
Instead of going out and trying to convince someone that, not only that your idea is good, but also that you are investment-worthy, find people who already believe in you. Finding money becomes much easier because they already believe in you.. You’re a go-getter and a hustler. You’ve proven that you can turn a dollar into ten bucks. That’s the next set of people. From there, once they’ve invested, ask them who else they know and whom they vouch for that could also listen to your pitch. I find that that’s the next best group to go after. It’s all through referrals.
In this business, the people who invested early with me were people that I just knew personally. Some of them, I had never done business with before, but they knew my character. My very first investor’s name was Steve Martini, a San Diego commercial real estate broker, and I had bought a car off of him three or four years before he invested. We just kind of got to know each other and hung out and took a look at a couple of deals together, but we never ended up doing something together. But, when the time came for me to raise money, I told him that I had already put my money in, and I showed him what we were doing. His words were: “Well, listen, I have no idea what you’re doing, and I have no idea if it will work, but I believe in you, so here’s a check.”
That’s normally the best way to get the deal done; it’s through people that believe in you. I will also preface that by saying that, in order to get those people, you have to be the type of person that other people want to do business with. Your character has to precede you asking for the money. If you’re a crappy guy or girl or you shyster people or you’re dishonest, good luck. You shouldn’t be in business to start with. Integrity is the key. There are no promises in start-ups, but these investors think, “I know this a gamble, but I’m willing to gamble on this guy.”
[Have you ever encountered any investors who also wanted to take control and make decisions?]
There are two kinds of investors. The first are what we call “passive investors,” and those are people who simply put their money in and don’t have much input in the business. The second are people known as “active investors,” and those are people who truly do add value to the company. They have a wealth of knowledge within the space that you play in, and it would be a crime to not use them to try to grow the business. Sometimes, we add those people on purpose as an investor or an advisor in order to grow the business. They become very, very useful within the context of what the business needs.
The issue and pain comes from investors who should be passive, but try to become active. These sorts of investors do not have higher amounts of knowledge or skill than the entrepreneur and may get in the way. I find that if you are clear upfront with the investor about their role, it helps manage expectations of what you can expect from them, and they can expect from you.
6. What is the biggest challenge of being an entrepreneur, both in personal and business life?
I read somewhere that, unless you have a high threshold of pain and are comfortable knowing that there’s a 90% failure rate, don’t be an entrepreneur. In fact, go work for someone else because it’s much more safe and secure. I think that’s true. There is a high risk of failure. There is a lot of competition. You have to have an incredible amount of persistence, drive, and belief that you can add value in the world. It’s got to be something inside you that drives you because it’s extremely difficult; it’s tough.
There will probably be days when you don’t know if you’re going to make it, and there are days when you’re down to not knowing if you can pay the bills. There’s a lot of pressure to build something out of nothing. Some people are built for that. Some people get a high off of that, and some people don’t. People should be very honest with themselves; there is equal nobility in both building a company as an employee as well as a founder or entrepreneur. The key is finding out what is right for you.
For me, I had to learn balance. I have lost friends and girlfriends over my business. I did not balance my life correctly. I’ve gotten physically run down and sick from the stress and pressure. But I’ve decided not to do that anymore. I needed to make sure that I took care of myself – and those important to me – just as much as I took care of the business.
If you’re going to do a start-up, it is going to require a lot of time and a ton of effort. What you might learn over time is that your business is not you. It is a separate entity from you. That’s a key distinction. This allows you to tether the spikes and ride out the drops. It allows you to find a good balance so your personal life doesn’t experience the same torrid whipsaws of your business.
There will be days in business where it is incredibly horrible and other days where it is incredibly high. You learn over time not let the lows get you low and to not let the highs get you too high. You acclimate to both the struggles and victories, and you learn to move forward no matter what. I think there’s a peaceful understanding that comes over time with knowing how to achieve that balance of emotional security with the imbalance of entrepreneurship.
I learned from a good friend of mine when I was starting my business. I think we had raised maybe $1.5 million or something like that—just a small amount. His business had raised $80 million. It went bankrupt after about five or six years, and his dream ended. I called him on the phone and said, “Hey, I read about your business, and I’m sorry about that, man. How do you feel?” He said, “I feel fine.” I then asked, “What do you mean you feel fine?” He said, “We gave it our best shot. We knew there was big risk going in. I would have liked it to have worked, but it didn’t. I’ll move on.” I asked him, “Isn’t it your baby? Don’t you feel crushed by it?” He said, “No. I’m not defined by the success of my business. I am the same person with or without the success of my business. I wanted it to be a huge success, but I am not defined by that success.”
I would ask this simple question when looking back over life: if an entrepreneur has a very successful business, but his family falls apart and his kids won’t talk to him, is he or she a success?
That’s something that each person has to answer separately. That’s a question I’m not sure too many entrepreneurs ask, but it’s important.
For me, I ask, “How do I have a wonderful life that entrepreneurship is a part of?” There is a tradeoff in life. That tradeoff is this: how much money, satisfaction, or happiness are you willing to trade your life for? Because that is what you’re doing every single day that you go to work.
Entrepreneurship is one of the best ways to make a living and to make an impact on people. For me, that’s what the juice of life is about. How do I make a great living for my family as well as make a difference in the world? If it’s used as a tool to create a higher objective, it’s a wonderful experience. If you can combine your work into your mission and into your long term goals in each aspect of your life, then you’ve got an incredible formula for life.
7. Have you ever had a moment of self-doubt? If you did, what was it and how did you deal with it?
I can only speak for myself. I do have self-doubt, but here’s the key: I believe in my team. I believe that we’re making a difference. I believe in myself. In addition to that, I also have days where I doubt myself, and I wonder, “Am I growing as quickly as I want?” There are times when I screw up. Honestly, I screw up a lot, but I don’t mind it. I used to think, “Oh man, if I screw up then that’s the end of the world, and I’m a horrible person.” I used to think all of these things, but what I got very comfortable with was knowing that life and business is full of potholes. I got very comfortable with moving quickly and not making the right decisions all of the time. That’s called life. When I have those doubts and I don’t know for sure that I’m making the right decision, I am confident it’s the best with the information I have.
For me, I have confidence in knowing that I can improve, and that goes back to our core values. I know that I’m constantly getting better, and that we’re constantly improving. As long as we’re doing that, I feel like we’re being successful. When those moments of self-doubt come in, I’m able to see a bigger picture in knowing that we are making a difference and knowing that there are people out there who are able to make a better living because of what we do. That gives me a great sense of pride and a great sense of humility at the same time because I know that what we’re doing is working. A lot of it has to do with what you tend to focus on as well. Self-doubt comes from your current state of what you’re focusing on. If you focus on all of the negatives and what is going wrong, doubt will continue to grow. If you focus on asking yourself better questions, things can go right. For instance, instead of asking, “Why did this happen?” or “How can I be such an idiot?” I ask questions such as “What did I learn, and how can I become better and not make the same mistake anymore?” By simply focusing on a different set of questions, you get different outcomes in your life.
[Have you ever had a dilemma between making your own decision and listening to your team’s decision?]
Of course. I think that’s a key for good leadership—admitting that I don’t have all of the answers. I try to put a team around me that’s smarter I am in many areas. If that is so, I should not be coming up with all of the right decisions. If I can come up with all of the right decisions, I don’t have a strong enough team. That’s absolutely what I believe. To counter that, there’s also times that when push comes to shove, I make the call. With those calls, I don’t necessarily agree with my team, but I feel like we’re making the right decision for the business. It’s never about who comes forth with the idea; it’s about choosing the right idea.
One of our core values at TakeLessons.com is CANI – Constant And Never-ending Improvement.
In addition to putting things in motion to become better at what we do, we wanted to change the company to make it a place where talented people can thrive. It’s good to see (from the pic below) we’re making progress towards that goal.
The only way to constantly get better is (1) know where you are (2) decide where you want to be, (3) commit to getting there, and (4) measure your results.
Today’s post is a guest post by Tim Owens. Tim helps guide, advise, and accelerate the growth of talented professionals and entrepreneurs. I read the post and asked Tim if I could re-post since I thought it was a perfect analogy to getting the most out of life.
I’d like to share with you some thoughts I had bouncing around my ‘brain-housing group’ this past weekend. As I watched numerous NFL football games, (much to the chagrin of my wife) something struck me as fascinating. It’s the phenomenon called the ‘No Huddle, Hurry Up Offense.” Often, football teams employ this 1-2 punch tactic when they are losing the game and the clock is running down in the fourth quarter.
With pressure on to score tying or winning points in the last few minutes of the game, the offense rus
hes to the line of scrimmage without jumping into huddles between plays. The hope is to deliver a barrage of rapid knock-out blows which bewilder their opponent and ultimately score the needed points.
It’s fascinating that the team deploying this tactic hasn’t played particularly well in the minutes preceding. However, when the pressure is intensified by the ticking game clock and the stakes of losing are evident, through some divine inspiration the offensive team is able to sync up and plough down the field. The quarterback and receivers seem mentally connected as if they possess clairvoyant abilities.
Why don’t they play like this the entire game? Why is it that through this duress they are able to find the necessary brilliance to succeed? Why can’t they play every minute of the game with the intensity of the ‘No Huddle, Hurry Up Offense?” Certainly, the team doesn’t always succeed to win the game but most of the time they play much better than they had earlier.
It got me thinking about my life. Do I employ the same tactics? Do I live my life the same way? Do I play full out every day? Or, do I have a game plan that I follow and when it comes to the end of the year, I rush to complete projects? Is it when I finally realize the stakes involved that I employ the no huddle, hurry up offense?
I then ask, do I want to live my life like that? Do you want to live your life that way?
Pic by USAToday
The difference between our lives and a football game is that we aren’t guaranteed our next plays. We aren’t promised tomorrow. We could be in the second or third quarter of our lives and unfortunately, be taken out of the game at any time. We may never be able to finish our game.
Doesn’t it make sense then, to play full-out every moment of every day? And run your No Huddle, Hurry Up Offense NOW.
I wonder how different life would look if we approached it with this kind of intensity. What if we cranked up our efforts and realized what’s at stake. So, if our game ends short, we can confidently pass to the next stadium knowing we gave 100% of ourselves and left everything on the field.
It’s a courageous journey to take if you choose it. The work is mental. Great leaders have a crystal clear vision and IMAGINE themselves accomplishing their dreams in their minds first. With this clarity they are able to achieve the seemingly impossible.
Here are some questions you may find helpful to find your path too:
*Grab a pen and paper, write down your answers – this is a powerful excercise!
• What do you want? Do you really want it? Why? How do you know you want it?
• Why don’t you have it now?
• What does it mean to you that you don’t have it?
• What’s stopping you from employing your No Huddle, Hurry Up Offense? Again, do you really want it?
• What’s at stake and what happens if you don’t have it?
Now, here’s a question that always digs deep- If you knew WHEN your life would end, how would you live today? What would you do? Who would you do it with? Where would you do it? How would you do it? Would you still want to have or accomplish the things you said you wanted in the above questions? Would those things really matter to you? When you truly know the answers to these questions you’ll discover clarity of purpose which will develop into a state of certainty that will guide you to FOCUS, so you can live as you were intended.
We don’t have to wait until the last few minutes of the game to play full-out. It IS about WINNING the moments! You don’t have to beat the other team to win but you do need to play full-out so you can say you did everything you could. Of course, that is if you want to choose to live that way.
Moments make up minutes which turn to hours, days, weeks, years and in the end a lifetime.
What if you lived as if every evening was your last and every morning was your first.
All my best wishes to you for a happy and successful 2014!
Chris: As I mentioned before the break, we have a wonderful guest in studio today, Steven Cox, founder and CEO of TakeLessons.com. The team at TakeLessons has been connecting music students with the best local music teachers since 2006. They pride themselves on providing safe, affordable, fun music lessons to students of all ages. Steven Cox, welcome to the studio!
Steven: Thanks a lot for having me, Chris. Glad to be here.
Chris: So TakeLessons.com, we’re going to get into what that is. Obviously we’ll find out more about what it is that your company provides, but I want to get a little bit of background on yourself, where you came from, how you got out to the West Coast, and how you got started into TakeLessons.com.
Steven: Sure, well it’s an interesting story. So I grew up in the Midwest and grew up in Ohio, went to school in Kentucky, and I’ll tell you the quick story about how I got out west. So this is also dating myself, which is okay as well … but I was selling Prozac, actually, for Eli Lilly, I graduated — out of school, was selling Prozac for Lilly, there in Kentucky, which I can tell you all kinds of stories about–
Chris: That sounds fun!
Steven: [You can] imagine. A buddy of mine, he had invested in this company out in Las Vegas and he sat me down with a group of us, about six or seven of us, and he said, “Hey, I invested in this company out in Las Vegas.” The year was 1996 and the owner had raised $840,000 and literally gambled it all away. Every single bit of it. So he goes, “So we’re going to go out and take over the company. Do you want to go?”
Chris: All right, all right.
Steven: And I’m thinking to myself, well I just broke up with my girlfriend, I don’t have anything here anymore–
Chris: Didn’t even know what the company was?
Steven: Well that’s one thing I ask him. I said, “So what’s the company do?” And he goes, “Well, we’ve got these CD-ROMs and what we’re going to do is try to let people buy and sell stuff over the Internet.” And I go, “Oh, the Internet, yeah I’ve heard about that. So — yeah, sure, why not?”
Chris: And it’s not selling Prozac. “I’m in!”
Steven: This was literally a Saturday. I called my boss on Tuesday, quit my job, packed everything I owned up in a storage van on a Thursday, and then the next Saturday, literally, we were trekking it cross-country in a budget mini rental van with a couple of things we owned in the back. We traveled out west to start a company out in Las Vegas, where I first cut my teeth really in the Internet space, and it was 1996. Kind of typical, goofy Internet companies, had no idea what we were doing, software didn’t work — that sort of thing — a lot of testing in that era and that environment, but it started catching on and we landed a couple clients and that company grew from about 8 people to 800 people. Went through the whole funding, IPO, was the 3rd-best performing stock of ‘99, I believe — and was kind of able to see a lot about how to build a business as well as how not to build a business. One of the key takeaways that I had learned from that was, first of all, what goes up must come down — as we’ve all experienced — and second of all, it’s to really try to build things that are of high value for people. If you focus on building those high-value items that truly solve a problem for a particular group of people, then … you have a chance of really succeeding in the business.
So I never went back. I was in Vegas, and then I visited out here in San Diego, flew into downtown, and I was like, Wow, I’ve got to move here. There’s no heat wave. This is great. Also, there’s no snow. From there, I moved to San Diego and started with a company here that a lot of your listeners may remember — it’s called College Club, which was one of the very first social networks. And they were around … from about 2000 to 2004. The company didn’t get the chance to go public, but they sold out to a publicly-traded company. Again, it was just like a MySpace or a Facebook before Facebook, so I’ve always done Internet startups.
Chris: There’s actually been some success … too. There’s a lot of websites that people just put up, and nothing happens, right — but you’ve done a little bit better with that.
Steven: We’ve done okay with them, sure.
Chris: So now that you’re in San Diego … now this company came and went, 2004 rolls around, 2005 — what’s the next venture and how did it get started?
Steven: Sure. So I’m a nerd — I’ll totally admit that. What I do — and still do, actually, I was out pontificating — I was drinking a martini, which is something I typically do, and sitting out on my deck, pontificating, “Oh, where is the web going to go?” We had seen this big move over the past five years from, really, the late 1990s and through 2005 to where Amazon started, had launched, and really taken off. They grew from books to basically where you could buy just about any type of product that you would think about. And then we were starting to hear about this little company called Zappos that was starting to get a stronghold in the market. And I’m thinking, “If people would buy shoes over the Internet, they’re going to buy everything over the Internet.”
We started the general thesis back then with a couple guys I knew that, at some point in the future, services would move to the web very similar to how product had moved to the web. We’d see this giant shift — services in general make up over 75% of the economy, yet it’s very difficult to buy services over the Internet — and the main reason is, if I want to buy a product, it has a SKU number, right? I can take a look and I can accurately compare what that product is versus another brand or another site. When it comes to buying a service, whether it be financial services, or an accountant, or in our case, a tutor or a music lessons provider or a dog walker or a babysitter — you name it — we don’t have SKU numbers. So it’s very difficult to compare. Our whole thesis is, that at some point, brands would establish themselves as the place to go where consumers could go to know that they could get a trusted, vetted service provider that would give them a good service, and if they weren’t satisfied, that they could get their money back as well. That was the general premise, as far as the Internet goes, for starting TakeLessons. That tied in with one other thing that was happening at the time — that I could tell you about, if you’d like.
Chris: Yeah, absolutely.
Steven: In-between my startups, I come from a very musically-oriented family. My grandparents cut records, my parents cut records, all my brothers are session players, and I’m kind of the least musically-oriented out of the entire group. But I’ve always been in bands my entire life. I DJ’ed my way to pay for college.
I was playing in a band back in 2002, 2004. No, we weren’t any good. Most of us, anyway. I was, again, the worst out of all of them. But I was the lead singer in the band — and our drummer was just an incredible musician. He had studied for years, had a masters degree in music performance, and not only just an incredible drummer, but also an incredible human being. We had just finished a gig, and after the gig we went over next door to the bar to drink, and he said, “Hey Steven, I’ve got some news for you.” I said, “Well, what’s going on?” He said, “I’ve got to quit the band.” [I was] thinking, if you quit, the whole band’s going to break up–
Chris: You are the band!
Steven: “You are the band! What’s going on?” He had a wife, and he just found out that his first baby was on the way. And he’s like, “I’ve got to make some life decisions and I can’t pay with this. So I’m gonna quit working in music and I’ve got a job lined up and I’m gonna be a cook at Chili’s.” My heart — and his heart — you could just see it, just sunk to the bottom of the floor. And I’m thinking, Wow, this can’t happen to this guy.
We started talking, and I ask him if he was teaching. He said, “Well I’ve got my posters hanging up at the local drugstore, but not too many people [are] calling me.” I said, “Why don’t you use the Internet for that?” He said, “I don’t really know anything about marketing or the Internet and, plus, I just really want to teach. I don’t really know how to really run a business.” I said, “I’ve got a little background in that — why don’t I help you do that?”
That concept was what also kind of — the genesis of the idea was: how do we keep Enrique out of Chili’s — our drummer — out of Chili’s? And really help him make a living out of doing what he really loves to do? The belief of the company is that if we can help enough people make a living doing what they love to do, we can make a very positive impact on the world because we believe people are just generally happier when they’re doing stuff they love to do.
Chris: Absolutely. That’s a great point, great philosophy. So — what is TakeLessons.com? Let’s talk about what it actually is and what it is you guys actually do.
Steven: Sure. We’re a marketplace where you can come onto the site and find a local, vetted instructor for music lessons as well as tutoring service — academic tutoring services — as well.
Chris: Okay, so, perfectly matching up people that want to get instructions either via music or any other type of potential lesson via your website.
Steven: You got it. Instead of — you can imagine Mom hopping on Craiglist and finding some long-haired dude to invite into her house to spend time with her nine-year-old — it’s kind of creepy.
Chris: It can be, sure.
Steven: We take the creepiness out of it. All of our instructors … they walk through a whole 7-step process — all 40,000 that we’ve had apply — a 7-step process where we vet them out, they do background checks, we check with their professors, they walk through best practices before they’re even allowed onto the site. And about half — well over half of the people that apply don’t make it onto the site. They just don’t pass the standards.
So you could think of us — if you think about eBay and it’s a very open-type marketplace online where anyone can come, buy and sell — we’re kind of like that, but just for power-sellers in the same realm. Meaning, just the best-curated type instructors so that way the consumer knows that they’re going to get a really great experience.
Chris: They’ve done all the legwork for the person looking for an instructor because you’ve already vetted them all the way through.
Steven: You got it.
Chris: Okay. It sounds like a great website. I know I’ve checked it out — it’s awesome. We’re going to take a quick break here with Steven Cox, CEO and Founder of Takelessons.com. Stay tuned, we’re going to get right back at it after the break.
Chris: Welcome back everybody, you’re listening to the Market Pulse here on ESPN 1700. We have the wonderful Steven Cox, Founder and CEO of TakeLessons.com here in studio with us, just talking a little bit about your background and how you got into TakeLessons and obviously some of your passion with — your family was … musically inclined, and you had a little bit more business sense as well to go with that. It popped up — how to keep your good friend Enrique out of working for Chili’s. So whatever happened to Enrique? Is he still with you guys? Did you help him?
Steven: So you know what? Enrique never started at Chili’s, which is a big, big win — for both him and me. He still teaches for us today; he is one of our drum instructors. If you are in the Encinitas area of town and need a fabulous drummer, hop onto our website and look up Mr. Enrique. He is the bomb.
Chris: Perfect. I’m glad to hear it. That’s a good story. Now, obviously you have a musical background — and even yourself, you play some musical instruments. Other than that, your passion to getting this involved, and raising funds for it, and understanding the business side of it — what was that process like? Did you guys have to get fundraising for it, or did you use your own funding for it?
Steven: Sure. [I’m] super passionate about music — and one of my even larger passions, or I should say, just as passionate with music is the idea of — how do you build? — you know, we’ve been very specific in the Internet space, that’s all I’ve ever done — and my idea was, can I go start and found a company and then build something that becomes a household name? And continue to build something in — one of our core values of the company is ‘build stuff you’re proud of’? That was something that was very dear to my heart is assembling a team, building out an ecosystem to where if you are working for the company, you wake up every day excited to be inside the company, and if you are not in the company, you’re thinking to yourself, “Hmm, how do I get in working with those guys?” That’s the type of company we wanted to build. That was a big passion of ours from Day One.
When we first started the company and we decided to take a run at that … obviously there’s a couple things that one needs, and that is a decent idea, a lot of elbow grease, and the third is some capital — so we had the first two. The third came from myself — I was my own angel, if you will. Angel money — we put some money into the company to get it started. I recruited five, six guys and they literally worked for zero pay for about the first six months — my co-founders. And then after that, they got a giant raise — they were then making $750 a month.
Chris: Right — huge.
Steven: Unbelievable, huge, huge money. But when you’re starting a company specifically and you’re looking for what we call a “product fit” — right? — and can you build something that the market values enough to pay for? Specifically in the Internet space — that’s … the first minimum viable product that you’re trying to search for. And sometimes that’s exactly what it takes. If one is not a proven entrepreneur with a track record, to where you’ve sold a couple companies off in the Internet space, then what you have to do is you really have to buckle down and either find people that believe in you and [are] willing to pony up and invest in you — because they’re really not investing in the idea; the idea’s going to change a thousand times in your first year — it’s very, very typical — but people who believe in you. Or if you’ve had some kind of exit in the past, and believe enough in the idea that you’re willing to put your own money on it, that really speaks accolades and volumes to the next group coming in.
Steven: So we funded the company — I funded the company myself, starting, and from there we started getting a little bit of traction, figuring out what’s right, what’s wrong. We launched here in San Diego, we launched in a couple other cities, and was able to attract our first round of friends and family. We raised another $800,000 — mostly it was people who just knew me. I had guys that were like, “Man, I don’t understand a thing you’re doing. but here’s some money–”
Chris: “We know you’re going to work your tail off!” Yeah, okay.
Steven: “Just, don’t lose it, okay? Try to make it something.” But luckily for them, we didn’t lose their money — which was great.
Steven: Then we found a local investor, and also a tech guy — his name is Jordan Greenhall. He was an early guy at MP3.com, a local company here in town, DivX — which went public, also a technology company here in town. He was our first lead investor. Finding that first lead investor, who is experienced in the space, savvy — what that does for the young company is that grants some credibility. So all the other guys who were kind of on the fence and thinking about investing — as soon as our lead investor came in — boom! Then all the rest of them. All the rest of them just fell right in line.
So we were able to close that round. The next round, what we did was another friends and family round, and we got a couple other folks from LA involved. One of the early founders of MySpace came into the company, and again gained us a little more credibility. But all along this way, I’m talking about the investors getting us credibility — but we were getting credibility ourselves. We were actually working on a product, solving a problem that we felt customers needed and customers were validating that. …
So this is 2013 — then [in] 2011, so we’re into the company 4 years or so, we had enough gunpowder and enough results here for what we were doing to where we were able to go out and do a first institutional round of financing. [We] looked around in San Diego — there’s not too many venture capitalists here in town, so we did a road show through the Silicon Valley area. Talked with 32 venture capital firms, had really good meetings and follow-up meetings with about 13 of those, we were able to get three what’s called term sheets — which is not a promise or a commitment — but, “Hey, we’re kind of interested–”
Chris: Good intentions.
Steven: If you’d like to work something out, yeah. Our first round was led by a group called Crosslink Capital. They’re a well-known fund out of the Bay Area. They also did Ancestry.com, they were the lead investors with Pandora, and with those guys came SoftTech Ventures, who backed Twitter and Facebook and a bunch of well-known companies — and some guys like, for instance, Maynard Webb, who was the COO of eBay, who in the marketplace space played a big, pivotal role. So guys like that we were able to get in once we had a proven track record that we were going to do what we said we were going to do.
Chris: Gotcha. So at that point, you must have been steamrolling ahead pretty well, having these backers behind you, and people really believing — the people that work for you, plus people that probably now wanted to come on to work for you, moving forward. Was there a pretty quick progression in terms of growth from 2011 to today?
Steven: Sure. There’s an old saying that I like to tell all young entrepreneurs, and that is, if you take a look at the Space Shuttle or a rocket that’s about to blast off, and it’s filled with millions of tons of fuel, and 80% of that fuel that it’s going to use is going to be used in the first mile getting off the ground. And then after it starts getting traction, then it can — not coast a little bit — but it becomes a little more efficient. That’s the same thing; that you are going to spend a tremendous amount of effort on the front end getting things right before you’re able to inject that kind of capital into the business, most times. We did have traction, we were seeing some results, and the funding really just allowed us to put more fuel in that tank and press on the gas quicker. We’ve grown — we were 18 or 20 people when we got our first institutional round. We’re about 70 people now, so in the past year and a half — not quite two years — we have grown substantially just in the number of people. As well as we’re just getting more mature in systems and processes and customer base and we’re really looking to build a company with a lot of long-term value for a lot of people.
Chris: I imagine you’ve been able to smooth out a lot of rough edges along the way. Now you’re almost a finely-tuned machine. There’s still always something you can tweak, I know, right?
Steven: I gotta tell ya, it never feels that way.
Chris: It’s never done, right? Work’s never done.
Steven: If you’ve started a company and you’re a few years into it, and you still feel like, “Jeez, does this ever get easier?” That’s the way we feel.
Chris: It’s what you’re supposed to feel, right? You can’t rest on your laurels.
Steven: That’s right. It’s very natural to feel, sometimes, beat up — sometimes to where you’re like, “Oh man, this absolutely sucks today.” But I don’t know, I wouldn’t have it any other way. if this was a simple task — I think we were mentioning earlier — everyone would do it. But building a company from scratch and getting traction takes a lot of work from a lot of people. Not only just good decisions, but a little bit of luck along the way, and certainly a lot of tenacity to make sure that you persevere through the bad times.
Chris: At least at this point, Steven, you can take a look back and take some stock in what you’ve done and accomplished. I mean, you guys are heading the right direction — you’ve done a lot — your metrics are, what? You said 40,000 instructors now, or at one point? You guys have–
Steven: Yeah, we’ve had over 40,000 instructors apply. We’re in about 3,000 cities all across the US. We’re giving over a million minutes a month in lessons. Certainly a little bit of traction. And I really just give accolades to my team. This is certainly — I had the vision, but there have been just some incredible people — my co-founders, the folks who are with me today — that have been able to truly grow the business way past even where I thought we would be.
Chris: A million minutes a month. That’s remarkable. You’re giving — you’re teaching a lot of people or giving them the foundation to find what they need to move forward in their lives. That’s awesome.
Steven: There’s a lot of happy moms out there — because their kids are happy right now.
Chris: Keeping them on the right track. Keeping them out of trouble.
Steven: We’re pleased to be a part of it.
Chris: Awesome. We’re going to take a quick break. Steven Cox here, Founder and CEO of TakeLessons.com. If you have any questions for us here in the studio. We’re going to talk to him for just a few more minutes after this next break. I want to talk about if you had any mentors along the way if you have any advice for people that are starting their own business or maybe trying to get over that next hump so stay tuned — be right back
Chris: Back to the Market Pulse. We have Steven Cox, Founder and CEO in studio with us at TakeLessons.com. Obviously, they can go to the website — TakeLessons.com — or is there a number they can call as well? To get in touch with somebody or talk about more information about what they can do.
Steven: Sure. The best I did, just hop on your mobile phone or go to the website on your laptop, that’s probably the best way.
Chris: I’m pretty sure most people are — at least hopefully somewhat Internet-savvy at this point, right?
Chris: If not, ask somebody else — they can help you with it. So one of the things I wanted to ask you was, you went through a pretty big growth spurt from 2011 to now — is there certain things you guys see on the horizon for things you maybe have to overcome, or opportunities, or expansions for what you’re going to do moving forward?
Steven: Sure, Chris. So one of the ideas of the business when we were very young was: how do we develop out a platform and get to where we can launch with music and then start stacking other sorts of personal verticals on top of the same platform? So you can build once and then multiply your market expansion. We’ve been working on that for several years, and in January — or February, rather, we just launched tutoring. So now, instead of just music, we’ve also now allowed for tutoring where you can come in and find a math teacher, for instance, for your kid who’s struggling in algebra. And we have plans to launch other sorts of verticals on top of that.
In addition to the types of lessons, so just for music and tutoring for example, we’ve also launched an online product to where the majority of our lessons happen one-to-one. An instructor will show up at your house to teach you or your kid in about 3,000 cities, but there’s a lot of cities throughout the US. In fact, 12,000 [cities], so we still don’t cover the majority of the cities, believe it or not. We have all the large ones covered, but for all of those other cities we just launched an online product where you can literally, through the platform, pop in and schedule your lessons and do lessons over the Internet.
What’s really cool about that is first of all, it serves a much broader market; we have found that busy professionals such as, maybe Chris, like yourself, where you’re like, “Well I can’t go to a place once a week for lessons,” but at 8:30 at night, perhaps, you can hop on your computer and take a half-hour lesson and that’s much more convenient for professionals.
Chris: I’d rather spend my lunch break doing an hour webcam session.
Steven: You got it. So we just launched that product — it’s taking off like wildfire; it’s super, super cool — and with that we just got our very first international students — so Switzerland loves TakeLessons. They just told me about that last week, and I thought that was really cool. And it was a 53-year-old gentleman in Lucerne, Switzerland, who wanted to take lessons from an American and never had a shot before.
Chris: You went from 3,000 cities to every city in the world by doing that platform, right?
Steven: You got it. That’s the whole idea — is how do you continue to expand out the platform in such a way to where it provides a great service for people.
Chris: So what you’re saying is you’re going to become the next Amazon of the service industry on the web, right?
Steven: You know, we have big dreams, and we do things in a very methodical manner, which is something that folks ask me — they’re like, “Wow, you guys are expanding so quick!” But one thing that I’d like to point is out is that we were very lean and methodical and focused on one thing for six years, and just did one thing and tried to get the absolute best at that one, very particular thing.
I see a lot of companies out there when I advise younger startups, and what I say is they try to boil the ocean. They have this great idea and they’re going to do these 50 different things — they get zero traction at any of them because they’re not he best at anything. What I always advise is: find one thing that you’re super-passionate about and that you know you can do better and get a competitive advantage over someone else on it, because there are — if you’re in any other business, Internet or anything else — there’s probably fifty people working on your exact idea right this second. So the question is: how do you get really, really good at that? I believe in that as a focus and really diving down, focusing on one thing, because if you don’t focus down on one thing — you will never have the opportunity to focus on many.
Chris: That makes a lot of sense. That’s great advice. Did you have mentors along the way at all, or any advice you received? Or probably similar to what you’re saying now?
Steven: Yeah, you know what? I’ve leaned on a lot of smart people. That’s what I try to do. In essence, I can’t claim that I’m smart; but I can claim that I get a lot of smart people around me. That’s been the key. I use our advising group on the company, I use our board of directors quite frequently, and I’ve always tried to lean on people smarter than I — some of the very early product design came from just very good, deep conversations with other people in the Internet space trying to figure it out.
Chris: Right — that’s an awesome story. Steven Cox in studio, Founder and CEO of TakeLesson.com. Obviously — name of the company — go right to the website, TakeLessons.com. Located here in San Diego. And you can find just about every and any instructor at this point, whether it’s music medium or other medium as well–
Steven: Or tutoring.
Chris: Or tutoring. Perfect. We want to thank you again for coming on. Is there anything else you’d like to add before taking off for today?
Steven: I think that’s about it, Chris. I really enjoyed it. We love being here in San Diego. We’re hometown guys and it’s great building an Internet business here in the sunshine.
Chris: Any favorite bands you have? I know you’re in a band and a lot of people at your company are in bands, but anybody that you listen to or anybody that inspires you?
Steven: I’m kind of in the Foo Fighters, U2 realm — I listen to a lot of The Cure, just depending on my mood. 5:30 in the morning in the gym, I’m certainly listening to the heavy Foo Fighters or even Deadmau5 or something like that. I’m kind of all over the board so as long as it pumps me up.
Chris: I think that’s good. Eclectic taste. There’s a lot of good music out there. Perfect — Steven, thanks for coming on. We appreciate it. Steven Cox, Founder and CEO of TakeLessons.com.
A friend of mine asked me to watch a presentation that he needed to give to 50-60 people on a business topic and give him some feedback. While he did good, I had a couple nuggets I’ve learned along the way that I was able to share with him. Here’s the write up of my suggestions on becoming a better presenter and giving better presentations.
Why bother with presentation skills?
Because as you move up in business, it becomes imperative that you can present well. In order to influence, you must be able to communicate in a way that resonates with your audience.
Let’s focus on these two items you can use immediately:
When you present, your projection and energy levels tail off. You start full of energy and finish looking drained. People in the back of the room struggle to hear you.
What you can do about it:
Cognitively make a concerted effort to speak to the person in the back of the room.
Pick someone in the back of the room in your head, then project your voice with a particular individual in mind so you are sure they hear you.
Assume you are fighting for their attention and you want it.
Move around in a fluid, controlled manner. Movement garners attention.
Animate your voice by increasing the timbre of your words. Project them appropriately, but raise/lower the pitch and put emphasis on certain words.
Speak with authority.
Study Obama or Clinton or Reagan. Notice how they always speak with certainty. If you project certainty, your audience will pick up that vibe.
Your messaging is not concise. You ramble and give too much detail that does not add much to the conversation. This leads to people losing interest in what you’re saying.
Why you do this:
Because you’re not rehearsed well enough.
What you can do about it:
“Amplify the signal – minimize the noise” – meaning you should focus on a key message and work on getting rid of things out of your presentation vs. adding things in.
Rehearse with written notes:
What is your key message you want to get across? You reinforce this at the beginning and the end. Your supporting points between should also be tied to the key message.
What are your 2-3 supporting points of your presentation?
Find and use a quick story that reinforces a point is good so as long as it’s concise. Move between story and fact / both logic and emotion. It draws the audience in.
Do not ad lib or randomly come up with more examples. They don’t add value. You’ve already thought through your best examples and have practiced them. Stick with them.
Ever wanted to know how to apply startup/technology know-how to your new company? My good friend and author, Brant Cooper, is releasing his second book, The Lean Entrepreneur on February 26.
Check out what people are saying:
“This fascinating new book shows that at the intersection of disruption and lean company thinking, there is a new world of: lean entrepreneurship — empowered individuals who bring the world kicking and screaming into the future. I can’t wait.”
— Paul Kedrosky, Kauffman Foundation Fellow
Read from Scott Case.
“The lean entrepreneur cruises at 50,000 feet with a view of the context we are operating in today’s economy. At the same time, it dives deep into key ways the new startup tools, frameworks and mechanisms can be leveraged to take advantage of a world filled with uncertainty and opportunity.”
– Scott Case, CEO Startup America Partnership
And here’s what Startup Superstar Brad Feld had to say:
“The Lean Startup methodology has become a fundamentally critical approach to creating and building a startup. Brant and Patrick explain in a very accessible way, with extended case studies from a variety of exciting, contemporary startups, with awesome bonus illustrations from everyone’s favorite robotic dinosaur, Fake Grimlock. If you are a startup entrepreneur, this is a must-read book for your startup journey.”
-Brad Feld, Managing Director, Foundry Group; co-founder, TechStars; and creator of the Startup Revolution series of books