Dean Graziano has been a tennis coach; a software CEO and even — in one of the more unusual startup pursuits — a small businessman who attempted to place advertisements at the bottom of urinals in mens’ restrooms.
To say it simply, Graziano has encountered a lot during his long entrepreneurial career.
“You got to be a little crazy,” says Graziano about those who make the startup leap. “Ultimately, passion is the first thing. You have a passion for something, whatever that is…. And the second, I think, is a complete fear of working for somebody else…. I just can’t do it.”
I knew that Graziano had founded Visible Technologies, and most recently was the brainchild behind the up-and-coming live music application Lively. But, other than that, I didn’t know much about his story.
That’s why it was fun to sit down with the New Jersey native on stage this week at the big Seattle Interactive Conference, talking about his views on startups, venture capital, workplace culture and more.
Perhaps it was his East Coast roots. But Graziano offered a raw and blunt view into the world of startups — the good, the bad and the ugly.
As moderator of the discussion and an entrepreneur myself, I soaked much of it in, as I know the audience did as well. You can listen to the first portion of the talk here, with extended excerpts and the second part below.
On moving from tennis to tech: “I actually have a very interesting background, which I think is good because it says that anyone can be an entrepreneur. I was a tennis coach and … that’s what I did right out of college and that’s what I did for about 12 years, and gradually started coaching some top juniors and professionals. So, one, a background in sports, I absolutely believe that’s where I got a lot of my leadership abilities and my entrepreneurial abilities…. There are lots of connections between sports and good business. Then, I came to Seattle and I got the tech bug and lo and behold started my first software company. I think that shows that if you have a passion for something and some drive — I went from tennis to tech which is about as far away as you can possibly get.”
On the importance of sports in learning how to do a startup: “I look at everything as we are in this together, it’s a team. If you have some type of high-level sports in your background, it can only help in your entrepreneurial endeavors.”
Tell us a story of failure and what you learned from it: “I had a business right after Visible Technologies — which was a success — called LookDownAds and it was kind of creative…. It was restroom advertising, and the idea was that with men, we don’t look left, we don’t look right, we look down — and so the idea was to wrap the urinals with 3M wrap … I saw it for what it was: It was a very good advertising play since you have my attention and we did it very professionally with 3M wrap, and it was very cool. But, with brands, they had a visceral reaction to it….To take a brand to make the leap for that, was a little much, but what I would have done differently — instead of trying to find a brand to pay for a test to get into stadiums… — I should have just wrapped them myself just to get the conversions because I had a gut feeling that the conversions would have been something that no one could have argued with…. I wouldn’t say it was a failure. I don’t think there’s ever a time when an entrepreneur says that it completely failed. I think it didn’t work or it wasn’t the right timing, but there are successes along the way. Sometimes it is just maybe not a home run or a triple, but you go out and do it again.”
How long did it take you to determine that the idea wasn’t going to work: “It was about a year and a half, and then the wife starts saying: ‘Are you going to stop this?’ That’s the other thing. You have to juggle with family … and sometimes they give you the rope, but how long are you going to get the rope for until you cut it off and it wasn’t the right time, or it didn’t quite work.”
It can be hard to move on because it is your baby, so how do you make that decision? “It’s really just the (decision) that this one isn’t going to be the one to get me where I want to be, so just cut the cord. And, I can always come back to it. There is nothing that says I couldn’t. But I am OK to try things. Failure is part of it.”
On why he likes the entrepreneurial culture in Seattle: “People aren’t afraid to fail here. In fact, the majority of my coffee chats I have with folks …. half the conversations are about our failures. What didn’t work? Why did I take too much venture capital money? There are not a lot of coffee chats about all of the home runs we hit…. It’s a great town for that. Maybe Silicon Valley and New York would be the next two that would be something like Seattle where failure is OK. I grew up in New Jersey, and it is not like that. Here you kind of wear it as a badge of honor. There it is almost: ‘You got your one shot, and you didn’t do it.’ It’s almost like you don’t do it anymore. But here, I am fine with it. And I think that is part of the entrepreneurial spirit — you just get up again.”
How did you go from a tennis coach to software CEO? “I was a tennis coach traveling around and my wife wanted to move to Seattle — her son was here and this was 2004. And he was doing SEO, and he told me about it, and I thought that sounds amazing, let’s start a business. My wife literally said: ‘Your email address is tennisdeano@hotmail.com — what do you know about technology?’ I was like I don’t, and we will figure it out. We are passionate about it, let’s do this.”
On the hardest thing facing entrepreneurs: “You know, the hardest part is starting. Once you start, you start kicking up some dust. Once you start, things happen. We received a little bit of funding. And it was the right time — pre-Google going public. I met WPP, the largest advertising company in the world and they liked one of our products — we were doing reputation management, which is not really big, but back then it wasn’t. And then it keeps snowballing, and you keep riding that wave.”
On celebrating the good times: “That’s the other thing with sports: You lose more than you win. We are talking about a hitter hitting .400, that means they actually miss six balls. You have to celebrate those wins as an entrepreneur and ride them because you are only another day away from some fire burning. To understand that is really important.”
If starting is the hardest part, what advice do you have for people to make that leap? “Don’t listen to anybody else. Even my wife when she said what do you know about (technology) — I could have easily said I don’t. But you literally have say: ‘I am going to do this.’ And you may piss some people off. You have to jump off the cliff. You have to.”
You raised a lot of money at Visible and a smaller seed round at Lively. What advice can you give about raising money? “I’d say money solves all sins. It does sometimes. It also depends on what type of business you are building…. My advice is to take the smartest money you can, so with Visible the smartest money we took was with WPP as a strategic investor. With Lively, I am talking to Universal as a strategic investor, because you not only get the money, you also get distribution, or whatever that might be…. Stay away from family. There is no reason to ever mix business and family.”
What about VC funding? “You need to know what you are getting into when you get down the venture path…. There is an old saying: ‘It is not what you sell for, it is what you own.’ With money comes dilution. At Visible, I actually raised too much money where as a founder you end up losing too much control of the business. So, at some point, if you take too much money, you have a math problem. And that’s actually when I decided to leave Visible and start Meteor Solutions with Ben Straley, because it didn’t matter how well we did, I was going the other way with dilution. It’s a game. It is a complete game.”
Talk about what happens when you lose control, because it is your baby and you put a lot of time into it. Explain the emotions that come along with that? “I thought that I was the only idiot out there that had that happen, but after talking over the last four or five years, there are a lot of folks who have a war story of: ‘It just got away from me.’ The board went one way or another. It is interesting. I knew the exact day that it happened (at Visible). I still did fine and the business is great, but I did lose control of the company.”
If you don’t mind sharing, what was the day it happened? “It was a Friday in April. I will never forget it because the VCs brought in some adult supervision, and a new CEO and he wanted to move the company from Seattle to Factoria. And he’s a nice guy, and I like him personally. He came in and said: ‘We are going to move the company.’ And we were in Occidental Plaza in Pioneer Square and it was just the greatest office. And to me, the saying from the ex-Costco CEO and I took this from him: ‘Culture isn’t the most important thing, it is the only thing.’ And I run all of my businesses like that. And, so for me, the culture in that office space, and everything about it, was really important. And when I learned he was going to move to Factoria, I said that it is over, and that it was going to change dramatically. And it did. So, I left on a Friday. The movers came that weekend, and they moved on Monday. I had an office at the other place, and everything, and I was like: ‘I am not even going to go over there. I don’t even want to see it.’ It is very personal. You are going to live this thing. It is your baby.”
On the most important parts of building a culture: “For me, it actually starts with the office. This is such a great place, and there are so many great areas. I’ve always been in Occidental Plaza. I like the (exposed) brick, and that open feel. There are no cubicles — ever. My office now, at Lively, we got an 11,000 square foot warehouse … down in Sodo and it looks like a club you’d go in, because we basically built the Lively Lounge, which is a place for bands to come in and play…. It is very, very cool. A lot of people, you’d say, we are 15-people, so you’d get a 2,500 square foot space. I said no: This is the vision that I want, so we are going to go ahead and get that. That’s the other thing: You have a vision, and don’t let anyone else tell you not to do that, and don’t let what’s in your bank account drive what you want to do. I am always spending more than what’s in the account, not that I am bouncing checks. But I know that the investors gave me that money not to collect interest, so as long as I am doing the right things, they will keep putting money in and I can raise that money at a better valuation…. For me, back to your original question, it starts with the environment, and in this case the office space. And, for me, the people. I generally tend to not hire the … best resume. It is more about the person who fits with this culture.”
So people and environment. Is there anything else that makes up culture at your startups? “Ultimately, the leader. I have to be the one that drives that culture. From everything that I do — from implementing Friday lunches to implementing as many things as you can along the way to make sure that your employees are happy, and you keep that environment that you want, from parties to health benefits. No matter how small we’ve been, I’ve always made sure we had health and benefits. Once you get the people and the office set up, then it is what I do about it.”
On trying to hit the right ‘windows’ at a startup company and what he did after leaving Visible: “I cashed out, cause I knew where it was going. I think there is a statistic or a book out there that says 80 percent of companies fail when the founders leave. And, again, I was completely engrossed in this thing. This was my baby. I knew everything. Somebody told me once that you do everything from putting candy in the candy dish to selling the big deals, and that is really what an entrepreneur and what a founder does, especially early on. I knew everything about this company. I had the pulse of it. And, every company has a window. There are windows when you know in your gut — we are rocking and I don’t see how it gets better than this. And you say: ‘Maybe there should be an exit.’ Remember, there are only four things that a business can do — it can go out of business; you can run it forever — and these are not mom and pops and I am not going to hand this down to my children; you can have an IPO or you can have an acquisition. Investors want to get a liquidity event. They want their money back. We are not going to run this forever; we are not going to go out of business and we are probably not going to IPO, so you are going to look for an acquisition or some type of exit, and there are windows for that. We had a few windows, and I saw those, and some of the VCs — you know everyone has their own sense of urgency and their own sense of goals and some want to keep hitting the home run. But if you are an entrepreneur and you haven’t made a lot of money yet, you just want to hit a double or a triple. It is OK. So, you have these complete conflicts of interest along the way — once you are start taking money. It is amazing. So, for me, I saw the windows, and I knew that I needed out. And I am glad that I did. You have these gut feelings. No one will know the business better than you.”
And here’s part two of the talk:
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