Pivot quickly and don’t take anything too personally: business lessons from a six-time Silicon Valley CEO

0:11Dan Roznov:Hello and welcome to The Entrepreneurs on Monocle Radio, the show all about inspiring people, innovative companies and fresh ideas in global business. On today's show, we're talking about the rollercoaster of entrepreneurship with the author of a new book on business failure. Just because things often fail doesn't mean they always fail. Companies can find a way forward. There are opportunities to pivot and then pivot again and pivot a fourth time and eventually you very frequently find a way. And from the lessons of failure to one marker of success, we'll meet a Zurich-based champagne expert to hear how the industry is coping with rising temperatures.

0:51Mike Grossman:All the emails I'm receiving currently, they start with bold letters like never seen before, unbelievable, historic, because it's the earliest harvest in the whole history. This is The Entrepreneurs with me, Tom Edwards.

1:17Dan Roznov:You're listening to The Entrepreneurs. Mike Grossman is a six-time Silicon Valley CEO who spent nearly three decades building and leading venture-backed technology startups. Before becoming a serial entrepreneur, Mike worked at McKinsey, Johnson & Johnson and Intuit. He's the author of the new book, Failure is an Option, which brings together more than 40 essays on what life inside a startup really looks like beyond the success stories. Monocle's Andrew Miller caught up with Mike about the book. Andrew began by asking what inspired him to write about mistakes. I wasn't interested in writing a book that was like everybody else's books.

1:56Dan Roznov:And it seemed to me that when I look at business books, they fall into two categories. The first is how to's, how to sell, how to market, how to raise money. Or the second, biographies or autobiographies that tell a very similar story from one another, which is businesses start into great excitement. There's adversity that strikes and then people get through the adversity and there's enormous success. and neither of those really resonated with me and neither of them reflects what my experience has been. My experience in Silicon Valley has been that there are ups and downs in random sequence. It's a kind of wild roller coaster ride.

2:36Dan Roznov:It doesn't always end with success and there's always failure along the way. See, this is what I liked about the idea because it's long been my own contention and this is an argument I have had with more magazine editors than I can name that that success as a subject is actually not very interesting. When you ask someone about a great success and how did it feel, they just say, yeah, it was great, obviously. Whereas failure is actually much more interesting. And the idea is ideally we should learn something from it, which your book does try to lead us to do. But I wanted to start by going back to your beginnings.

3:09Dan Roznov:When you think of the first thing you tried in the business world that just didn't work, is there one in particular that you come back to? I've run six venture funded companies and we started experiencing failure from moment one. I started a company the same day my wife went into labor with our first kid. And we were incredibly excited. I say we because I had a business partner and then pretty quickly two business partners. And within six weeks, it looked like we were going to successfully raise money. And for various reasons that I actually describe in one of the chapters in the book that fell apart very quickly.

3:43Dan Roznov:And we then spent two years in the wilderness, metaphorically, trying to build something, not really making that much progress, not able to raise any money. And eventually we broke through and started making progress. But I would say the first two years were fun, but more about failure than anything else. So that's how I was basically greeted into this entrepreneurial arena. And what I basically found is that that's kind of the way it works. It's the condition of doing entrepreneurship. And people like to maybe avoid talking about it, but that's real life. The truth is these companies struggle mightily, even the ones that are successful in the end.

4:24Dan Roznov:And you can't avoid the struggle. And the bad days very often trump the good days in numbers. I mean, your introduction does note, and they are extraordinary numbers. You say that fewer than 1 % of startups raise any venture capital at all, and only 25 % of the startups that do raise venture capital end up making any money. So you're right. Failure is going to be most people's experience. Yeah, I think that's exactly right. And what's interesting, though, is even in the companies that succeed better than some of those statistics, the aberrations, if you will, the ones that are most successful, they also fail many times along the way.

5:06Dan Roznov:Business models fail. The moment of success, something bad happens. In order to succeed, you have to constantly fail. That's at least been my experience. And it's the experience of many of the people around me. I think the companies that get founded, many of them never see the light of day. But even the ones that are most successful face enormous adversity and struggle. But people don't like talking about that as much, interestingly. I mean, one of the more, I guess, startling lessons you've learned along the way and that you do impart in the book, which is this realization that you can do absolutely everything right.

5:44Dan Roznov:You can tick all the boxes, you can work all the hours that God sends, you can assemble a fabulously talented team, and it can still end up in the tank. What do you do once you've understood that? Like, where is, I guess, the useful learning from that? I think it's you're understanding what you're getting into. Just because things often and fail doesn't mean they always fail. And very often companies can find a way forward. There are opportunities to pivot and then pivot again and pivot a fourth time. And eventually you very frequently find a way. One of the things I've learned is that when things are going well, you should expect them to not go so well.

6:21Dan Roznov:But when things are going badly, if you have a committed team that works really hard and is very adaptable, you'll eventually start doing better. So it's on both sides of that. But I think having a realistic view about how challenging it is, is a very useful thing, because when adversity strikes and inevitably does, you're much more ready for it emotionally and practically, because it's not a surprise. I think for a lot of entrepreneurs, and I felt this way the first time out, it was astonishing. We were working so hard. And I think in a reasonably objective sense, we're doing a good job, and yet we're making very little progress.

6:59Dan Roznov:And I hadn't anticipated that. Once I accepted it as a kind of working condition, I found that I was able to ride through the ups and downs much better. This is why you describe yourself in the book as neither an optimist nor a pessimist, but both at the same time. That's right. And I think that that's realistic. I also think it's great coping strategy because it is a rollercoaster ride and it's very emotionally draining. The lows are very low. The highs are high too, but the lows are particularly low. So one of the challenges that I've experienced and I've seen other entrepreneurs experience is how do you cope with the inevitable downs?

7:40Dan Roznov:And the way I taught myself to cope with it was to have full faith that when things are bad, they will get better, but also to be realistic when things are good, that they will get worse. Is part of the key to that learning how not to take anything personally? Because I think that is one of the difficulties that all people have with any kind of failure. You inevitably think this must be something I did wrong or because there's something wrong with me. Whereas a lot of the times things just go wrong because they went wrong. Yes. I think people often identify the outcome with themselves. And so if the outcome is good, they feel better about themselves.

8:18Dan Roznov:If the outcome is bad, they feel worse about themselves and regard it as a statement on them. And I know what that feels like. It doesn't feel very good. But the truth of the matter is that you can't control the outcome. Not in my experience. You can control how hard you work. You can control whether you have a great team. You can control whether you're approaching a problem in a thoughtful way. There's a lot of things you can control. But what ends up happening, you can't control. And one of the things I wrote about was the company that finally was starting to succeed. We had pivoted several times.

8:51Dan Roznov:We started growing very rapidly. And at exactly the moment where it appeared that we were on our way, the U.S. Congress changed the law and legislated our business model out of existence. And just like that, we were dead in the water. And we had no control over that. That certainly had nothing to do with me or anybody else on the team. It just had to do with a U.S. senator who was trying to satisfy some constituents and make them happy. And it destroyed a business that was actually doing very well. And I've had the inverse experience, too, situations where it looked like the universe wasn't going to cooperate no matter what we did.

9:28Dan Roznov:And at exactly that moment, a big acquirer swooped in and paid a very substantial amount of money to buy the company. So the unpredictability of it is something that is unavoidable. And one of the lessons I learned is don't think of the company as somehow connected to yourself. You're not your situation. You're not the company. So, yes, I think that it's not personal in some fundamental sense. Of course, it affects you emotionally, but it's not about you. It's about this project that you and a group of people are trying to pursue and you do the best you can. And sometimes it works and sometimes it doesn't.

10:05Dan Roznov:When it does work, though, success can obviously also have contained within it the seeds of eventual failure. It's what obviously the ancients would have called hubris, what you call a rational exuberance. And how do you guard against that? Have you got better as you've gone along at not getting carried away? Yes. And the reason is because I've had many experiences when I did feel somewhat carried away that things ended up not going as well as I would have hoped. One of the main areas of irrational exuberance is when companies raise money. When you raise venture capital and you have millions of dollars that come into the bank, it's very easy to think we're on our way.

10:48Dan Roznov:We've made it. We have all this money in the bank. And the truth is, all that's happened is that you've convinced an investor or a couple of investors that what you're doing has merit and they're willing to bet on you. So it's a validation that you're maybe onto something. but in no way indicates that what you're doing is going to work. And so, yes, I've learned to be very patient in these situations. And that's what I tell teams. It's like, this is good, but this is a marathon and we just need to focus on what we can control and let's try to do the best job we can. And then we'll see what happens on the other side of it.

11:26Dan Roznov:Because there's a related question I was wondering about as well attached to something else you write in the book where you write every time you've expanded a company's strategic scope, the company has performed worse. Is there a lesson there about knowing what our own limitations are and indeed knowing what the limitations of our business are? There is that sort of very wry fable you tell about nearly costing a company millions of dollars by trying to save five grand doing your own legal work? It's hard to do anything is kind of my experience. Even if you have a team of people, 10 people or 50 or 100, especially when you get up to 100, it sounds like a lot of people.

12:06Dan Roznov:But the truth is, it's hard to do anything. And so if you end up trying to do two things or three things or five things, what ends up happening is you end up doing all of them badly. At least that's been my experience. I do want to ask just finally the question that I always end up wondering about when I read a book like this or when I read anything where somebody is reflecting on what they learnt because something went wrong. We have now as a species thousands of years, you would think, of accumulated wisdom about how not to fail and how to respond when we fail anyway. Do you think, and at the risk of undermining the premise of your book, can we actually learn anything really from the failures of others or are we doomed to have to learn everything the hard way ourselves?

12:54Dan Roznov:That's a really interesting question. It reminds me actually of something my father told me when I was younger, where he said that when I was little, he wanted to teach me all sorts of things. And then somewhere along the line, he concluded that I needed to experience it myself. Otherwise, I wouldn't really understand it. Yes, I think that ultimately we learn the most when we experience things ourselves. We can really relate to them in a much more significant way. But having said that, I thought it would be interesting to try to reveal what it really feels like to be in this type of entrepreneurial context, failures and all.

13:30Dan Roznov:And I don't think that that's a story that at least I've read previously. And so I think that there's, for a group of people out there who are entrepreneurially inclined, or just think that the world of technology in Silicon Valley is interesting, getting a chance to have an authentic view of what it really is like, what it really feels like, has value. And just as a final, final thought, is there one failure at all that you've still never quite managed to achieve that philosophical zen about? One particular thing which will occasionally have you waking, screaming in the night at three o 'clock in the morning?

14:08Dan Roznov:Yes, the answer is definitely yes. The first one that comes to mind is I had an opportunity to sell a company at a relatively early part in the company's development. And I overplayed my hand in the negotiation, not realizing how difficult it would be to get another comparable offer. And I basically blew the deal. And I blew the deal, not just for myself, I blew it for my business partners, one of whom was my father, and the situation never repeated itself again. And so even though that's now 25 years ago, I definitely wake up at times at two in the morning and I regret how I managed it. I blew it.

14:53Dan Roznov:That was Mike Grossman, the author of the book, Failure is an Option, Reflections of a Silicon Valley CEO, which is available now.

15:11Dan Roznov:You're listening to The Entrepreneurs. Dan Rosnall is the founder and creative director of Champagne and Friends, a Zurich-based luxury event series that curates tasting experiences in Switzerland and beyond that he started almost 10 years ago. Dan recently stopped by Studio 4 in our Zurich HQ to discuss how climate change is impacting the champagne harvest. He spoke to our Emma Nelson and regular Monocle contributor, Juliet Linley. I'm told they discussed the industry and Dan's business, but I gather a tasting of rosé champagne was also on the cards. And, dear listener, if I can shock you, this was the morning.

15:50Dan Roznov:Why do I never get these gigs? Anyway, here, gamely managing her morning sparkling intake, is Emma.

15:58Mike Grossman:Dan, welcome. Just tell us how difficult is your job to be a creative director of Champagne and Friends? I mean, this is an impossibly hard task, surely? Well, of course it is, but it's not such a hard task if you're in the studio with a bottle of champagne in front of you, like right now. Do we take that as a cue to say pop it, Dan? I'd say so. Now, talk us through your technique. It's a good one. You just hold the cork in your hand and you turn the bottle, not the other way around. Ooh. Bit of a micro pop there, Emily. Yeah, the micro pop. So discreet. It's an elegant thing. It shouldn't pop.

16:34Mike Grossman:It actually shouldn't pop very loud. You're not tilting the glass. Is that a thing? Are you allowed to let the fizz go up? Yeah, you should because when the fizz goes up and when you have the foam and you stick your nose into it, you actually get the real taste in it. It's like a trick because people swirl glasses when they have wine to get the flavor in the nose. But with champagne, you don't need to do that because all the bubbles, they transport the flavor. Right, so Juliet and Dan have now given me a glass of champagne. I'm clearly the one who looks like they need it most. Thank you so much.

17:06Mike Grossman:Yes, they're absolutely delicious. Dan, just talk us through a little bit. Well, first and foremost, we've got the wrong glasses, haven't we? Dan came in with his champagne and said, don't you have any other glasses? Now, we have a sort of a very elegant but standard issue tumbler here at Monocle. Are we wrong? Well, at the end of the day, the best glass is the one you have, but this is sort of like the Spanish tapas wine glass for modern day. But usually you would use a rather kind of white wine glass that has a slight tulip shape. It's actually not advised to use flutes or coupes, both. Why?

17:40Mike Grossman:Because it takes away all the winey and the flavor. Because if you have a thin glass like a flute, you only taste sugar and acid. And that's why a lot of people, they don't like champagne. That's the reason I don't like champagne. Thank you, Dan, for telling us. But can we just bring in this story back to the fact that we're suffering like the hottest summer ever we feel. And Emma and I keep complaining about that. But so the champagne harvest is early this year. This is a historic moment. Oh, totally. First of all, let's not complain. I mean, the hot summer has given us lots of excuses to open bottles of champagne and to indulge into that, which we're very happy about that.

18:21Mike Grossman:But joking aside, harvest in the Champagne region starts today officially. And all the emails I'm receiving currently, they start with bold letters like never seen before, unbelievable, historic, because it's the earliest harvest in the whole history. That's never happened before. When would the harvest usually be then? Usually it's like in September. Now with global warming, it's moved to end of August. And now it's mid of August. It's never happened. 20, 30, 40 years ago, it used to be December and October. So this is quite, this is historic. And if I may say, there's like two things to know about that.

19:03Mike Grossman:We're thinking of heat and grapes get ripened faster. That means logically more flavor, more juice, more ripeness. but we're talking about champagne that has the same latitude of Canada. You can't really make wine there. So to have fizz, to have the elegance of champagne, you need structure in there. So how is the heat going to change the structure, the taste, the sugar content of this vintage? Well, if you only want sugar, then you're just going to do grape juice. It's as easy as that. But to do elaborate, elegant wine, you need terroir. I know that always sounds so fancy when we talk about terroir, but wine is more earth than fruit.

19:46Mike Grossman:And you must know that champagne has chalk, chalk foundations. And chalk acts like a huge sponge that kind of collects waters and that keeps the whole roots nurtured and wet. So when you look at Burgundy, for example, where the most expensive wines from the world come from, they have a real problem this year because they haven't had rain for over a month. And that's where it starts. It's not actually about that it's just hot. There was no water. And when it's only hot during the night, the wines can concentrate. The flavor profiles can concentrate. And where's all the structure and charisma happens.

20:26Mike Grossman:So it's a bit complicated. But that's another topic. How about cheers? How about cheers? Now stop the interview, ladies and gentlemen, because we're having a drink. Excellent. This is obviously what one does. So this makes for obviously big problems because we now have to stop speaking and drink. So we're going to take it in turns. Actually, what are we drinking, Dan? It looks pink to me. It looks pink to me too. Pink is a thing. Oh, yeah. Cheers, everyone. Greatest thing. Cheers. This is a terrible job. Glad you said it. So hard. Right. We're drinking pink and this is a thing. Yeah. So today we're drinking from a maison that's called Bilcar Salmon.

21:06Mike Grossman:It's like a boutique champagne producer who's been around for only 200 years. And their rosé non-vintage is called Le Rosé. And for me, it's like the everybody darlings of rosé champagne. Entry level, it's a non-vintage. And it's just beautiful. That to me is a luxury product that is perfectly accessible, that has elegance, that has sophistication. It's easy drinking, but still it has a bit of something special. But how worried are we seriously about global warming and its effect on champagne? I mean, and also, everyone's drinking less. So if the champagne isn't even going to be that good, what's going to happen?

21:48Mike Grossman:So, first question, global warming has been a topic in Champagne for 20 years already. So the region has learned to adapt because obviously, if you look at the famous Hugelin Index, The climate has moved from Bordeaux that used to be there where we're drinking our Cabernet Sauvignon at 14, 15 degrees up to Champagne now that is northern to a region that is used to do elegant sparkling wines. So they have adjusted that by farming, by better viticulture, by biodynamic practices as well, but also by harvesting earlier, by doing more lean wines. But it's a very complicated issue. So what's happening now is it has reached a point, obviously, where it's become so warm and we're seeing that nature has started to adapt slowly.

22:40Mike Grossman:And that is because of that shock. so I've just talked to some friends in Champagne two days ago and they said even though the grapes are super concentrated some of them are really fresh and that you don't get in other regions and that's why Champagne is so famous for being elegance and freshness and you you can't do Champagne if you don't have that freshness that elegance and then has to do with the chalk and with the way you farm it, excuse me, with the way you produce it. The one last thing I need to say is that you can't make the bubbles when you have too much alcohol. Tell me a little bit more about how the industry is shaping this need to make rapid change to adopt to the climate.

23:28Mike Grossman:Because when you look at something like Bilkarsamon, it's what, 1818 is when it was founded. It is a family-run business. I think the owner died last year, age 102. And so you have this real sense that this is a house, as are many of the great houses, happy to take its time, happy to really move slowly and use that slowness as a symbol of elegance. But we're now looking at the harvest moving massively quickly. So if you're someone like Bilkals Salon, how do you sort of keep control of everything? That's a very good question. You look at two parts. You look at the house style and you look at how they executed on the global, in terms of the global warming.

24:07Mike Grossman:So the house style has always been very fresh at Bilkarsalmont. And they do something that's called the débourbage. It's a bit technical, sorry. But they cool the grapes down in a massive fridge after harvesting before I press it to add another freshness. So it's an extremely technical product. So everything is made to keep the freshness. And with Bilkarsalmont, a house I've been friends with for a very long time. and I know the owners, I know the family. You have good friends. Yeah, Mathieu, the CEO. It's artisanal family business. They are dedicated completely to quality and that's what we love.

24:48Mike Grossman:And going back to my question about people drinking less, are we also drinking less champagne and are we looking at 0 % alcohol champagne in the future? Well, that doesn't exist because it can only be called champagne when it's a wine that comes from the champagne region and it's the wine region with the strictest rules on earth. So you can't... No chance. No chance. You can't even legally call a Prosecco a Champagne. It has nothing to do with it, anything. But going back to your question, obviously a lot of high-end, zero, low-alcohol drinks have come to the market, especially from Scandinavia, that are very sophisticated.