June 12, 2015 6 min read

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Before launching my current startup, I started a company called Trace3 with $100 and grew it to over $400 million in revenue. Certainly, Trace3 has been successful as a technology consultancy and reseller, but I didn’t start the company to get rich quick.

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You too need a different reason for starting your business. If you want it to impact a market or even just have longevity, your business at its core must wage a constant battle to find the truth. And for a business, "the truth" means value. As an entrepreneur, you should be spending every day getting to the core of what "value" means to your customers.

Your job is to build a venture that will search for real value and "the truth" of what your client really needs.

Separate people’s goodwill from the truth.

When you are getting ready to launch a new venture, you should find five potential customers and talk to them about the concept, product or service -- whatever you are about to bring to market. Then say, “I am contemplating starting this business and I need your help. I would very much like you to convince me why I shouldn’t do it. I am hoping you will listen to the concept and tell me why it won’t work.”

After explaining the concept, shut up. Don't "sell." If your potential customers encourage you to pursue your idea, then you need to go one step further: Ask them right there to pay for the product. Not make an investment, but pay for the product. Tell these customers to consider that act a prepayment for serious value, to be delivered soon.

I have started many companies, and asking for the money right on the spot is a critical act. All of a sudden, a completely different conversation happens. It is a real conversation, and one that drives progress.

All of a sudden, those people you're talking to may tell you that their purchasing department is not really adding any more vendors right now, or that they want to see a couple of more iterations first, or that you’ll need to show them 100 other clients using the product before they can commit to anything. Or maybe they'll say they are out of cash.

Whatever their reason, you'll be separating their goodwill from the perceived value of not just your concept, but their belief that you can execute it.

Next, ask why you shouldn’t do it, and if all goes well with that conversation, ask for money. Usually half of the people you ask will still give some excuse why they can’t pay now.

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Be willing to change course quickly.

A critical moment in the growth of Trace3 came at a dinner meeting when one bold client told me that if our company continued down its present path with its current offering, we would be out of business within three years. That was a gut punch for me, but it was the truth.

This client recognized that a product of ours which had offered us terrific growth had hit a ceiling and was potentially going to be commoditized very rapidly. Even though we had grown from $100 million to $300 million in two years, we might be sprinting right off a cliff, the client said.

After much thought and debate, I made the call to build two new practices and invest all the profits from that year into my bet. We would continue the old business, as it still had good play in the market. But we would also fund a cloud and big data team and start to look at how to add advanced technologies for our clients by offering the best next-generation products coming out of Silicon Valley.

I made the executive decision to lose money and invest in securing our future and creating massive opportunity. Not everyone agreed with my plan, but in the end it worked. The point is that progress does not always mean racing forward as fast as you can. Sometimes it means taking hard feedback and retrenching on those things that are no longer working.

Progress may even mean executing a 180-degree turn and walking back to the start. If you are walking away from value toward money or short-term gain, yours will be a short walk. And I do not mean that in a trivial sense. When you have to make this call, you can never know for sure if you are making the right move. Many times, you will be wrong.

Failure isn’t just acceptable, it’s mandatory.

Progress toward the truth requires trial and error. The classic Silicon Valley term “fail fast” should be your motto if you are starting a company. When I started my new company, POP, I asked five clients to tell me why I shouldn’t do it. I wanted to fail fast. But three different companies gave me $35,000 each based on the concept alone, and now I have a new company that I love.

POP is a crowdsourcing app that drives engagement and buy-in from a company’s human assets. We pivoted at least 20 times in the first six months to figure out POP’s true value. I expect to pivot 20 times more now that we have clients such as DirecTV, Comcast, CoreLogic and Kaiser Permanente.

Failing isn’t just acceptable, it’s a prerequisite for success. If you are reasonably intelligent, and you hire a smart team, most of their work will involve testing value and making small corrections.

Failure is an integral part of making progress toward real value, which is another way of saying you are making progress toward the truth.

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