Involve the people closest to you and make sure they want to be involved

One of the most successful venture capitalists I know tells me that the first interview he does when considering an investment is always with the CEO or founder. The second is always with the CEO or founder’s spouse. Not the CFO. Not the VP of marketing, or biz dev, or any other function. The CEO’s spouse.

The founder/CEO is typically the most critical person to the company’s success and without the support of a spouse there’s no way for him or her to handle the workload and stress of managing an entrepreneurial venture. After all, travel, relocation, and at times lengthy separation go with the territory. None of these are possible without spousal support. My VC friend won’t fund a company if he feels the CEO’s spouse isn’t as dedicated to an entrepreneurial lifestyle and the unique sacrifices that go with it as the CEO.

Casey has failed at this one. In the talkcast he stated that he didn’t even want to move 75 miles in order to live in one of his houses, in large part because his wife wouldn’t do it. He’s also acknowledged recently that she’s really seeking stability and a family – not things that often fit into an early-stage entrepreneur’s reality.

This morning, Casey admitted that "She has always felt like this is MY business, and she is just tagging along. We tried many times to work together without much success. She feels the business is her competition." Reading this, I almost fell off my chair. I’ll admit to having been feeling a bit sympathetic to his wife recently, but if there’s even a shred of truth to this, then she’s as deluded as Casey.

Casey, you are in California and the year is 2007. Generating enough income to support a growing family and maintaining a desirable lifestyle is going to mean hard work. For most couples it means hard work for both, at least for a few years before having children. It always means hard work on an ongoing basis for one of them. One can argue that Casey has wasted a lot of his time on useless efforts, but supporting a family solo is going to take that much time and maybe more whether it’s a W-2 job or anything else.

His wife needs to get with reality. Having a family and having a husband who is around most of the time to attend to her and give her full-time attention just won't happen unless she's content with living in a small crappy apartment and sending her kid to a public school in a lousy district. Having more means harder work, travel, sometimes odd hours. That kid she wants is going to cost a lot of money and it better be saved up in advance. She needs a job too.

Casey went ahead with his plans without having any real discussion with his wife about what it really would mean. If he's wanted to do this for as long as he claims, then it's unbelievable that it wouldn't have come up before they got married. His wife may also be living in a fantasyland.

This morning Casey asked if anybody knew "any entrepreneurs out there who have successfully done both? I’d love to have an example to follow…" OK Case, here’s a list. I don’t think you’ll like it though, because if nothing else their examples show that you’ve been going in the wrong direction from the start:

• Eli Broad. Never heard of him? How about Kaufmann & Broad, now known as KB Home (NYSE:KBH)? He’s the "Broad" in that name. One of the most successful real estate guys of all time and by all accounts several times more successful than Trump will ever be in everything other than shameless self-promotion. But (and this is the part Casey won’t like) he built it slowly, not taking too much risk and recognizing that sacrifice was necessary. He had the support of his wife all along. It was not "his" business, it was "theirs," and she knew it before she married him.
• Sticking with the real estate theme, Sam Zell, who just sold his business for $39b. Not a whole lot is known about his wife Helen, who mostly stays out of the spotlight but is on several boards and is generally acknowledged to be involved in much of her husband’s charitable work, if nothing else. Oh, and once again. They built it slowly. (And to make another point that Casey doesn’t want to hear, Zell started out by working with a guy he met in college…)
• Warren Buffet. If you need to ask, just shoot yourself now and do us all a favor.
• Andy Grove. Another great example of what it takes. His wife followed him across the country in the early 60s to get his PhD and then through several startups the last of which was Intel. Not a whole lot is known about her, but anybody who's witnessed his workaholic ways can attest to the fact that she had to put up with a lot.
• Nolan Bushnell. Truly one of the great tech-entrepreneur stories with lots of success and failure. Little is known about his wife, but they have been together for most of his career and have several children.

In looking at this list, it appears that most important thing all these guys did in their personal relationships is marry the right person. Some married young, others married older. All married "right." The partners they found shared their goals, or at least cared enough about their need to pursue those goals that they went along. Casey married wrong. They didn’t really know each other, didn’t discuss what directions they each wanted to pursue and when, and in fact may still not see eye-to-eye on much of anything.

Sadly, Casey’s statement this morning makes it sound like he views marriage as just another shiny object, another thing he needs to have in order to prove himself worthy to his family, his god, or some other external audience.

Casey may figure out a way to be a great success someday. I doubt it, but I’d applaud him if he did. But, I suspect that if he goes there he’ll do it alone. Whatever his wife thought she was signing up for, this was not it.

Have a plan

Casey has never had a plan. First it was real estate investing with no money down. Then it was blogging for relationships to continue his real estate investing. Now he’s selling links to unscrupulous advertisers in order to keep things going and to keep himself away from any kind of a real work commitment. Beneath it all he's still looking for that one big deal that will pay off his debt and provide him with the passive income he needs to live a great life with no work.

I have yet to see a business that didn’t have a plan. Often the plans change over time. Sometimes the business is started haphazardly, but if it's to continue, the plan has to come into being pretty quickly. [My own consulting business started that way. It was, literally, a creation of my first customer. But by the time I wrapped up that first deal and started looking for customer #2, I had a plan for what I was doing. I’ve updated that plan every quarter since I started. This, for a one-person business.]

Such a plan needs to have real benchmarks and consequences elaborated. How will you know if you’re doing well? How will you know when you’ve gone too far and need to pull the plug? The plan should address all these things. It’s no different from a trader’s plan. As any good trader can attest, you need to decide what will get you out of the trade before you get into it. Where's your stop-loss? What's the target that will trigger profit taking? If you don’t, have this, chances are you’ll get in for the wrong reasons and overstay your welcome.

Casey talks of sweet deals and opportunities, but to date has yet to articulate any real plan for what he’s doing, what he brings to the table, and how he’ll really make money.

Be realistic about timeframes

On that note, one of the things that has hurt Casey the most is his desire to do it all fast. This has put more pressure on his personal life and forced him into more leverage than he should have taken on. Most successful entrepreneurs balance these things by going slow.

I know that the internet boom and bust has made many people think that the "normal" thing is to build huge amounts of money quickly. In fact, that’s quite abnormal. One benefit to going slow over time is that you do get to keep your relationships somewhat sane. Note that all the successful entrepreneurs with successful marriages who I cited above have built it slow. Oftentimes "on the side" is OK, which leads to…

Start Small

Preferably as a hobby. I’ve tried lots of things in my life, and probably will try many more. I do them on the side, and if I fail it’s no big deal, if I’m successful I can think further about how seriously I want to pursue it. Some things are better as hobbies.

Deciding from the start, with no experience and an apparent degree of impulsiveness, that being a real estate investor was the thing for him was stupid. Going out and buying eight houses all at once and trying to fix ‘n flip them all simultaneously without really knowing whether he enjoyed everything about it was idiotic. And deciding to continue against all odds even when it’s clear to everybody that he really didn't like many of the most critical elements of the chosen profession is just plain absurd.

Have a partner

Somebody whose skills complement your own. As I’ve written elsewhere in this space, my grandfather was quite successful as an entrepreneur. He was the junior partner in the business and my great uncle was the driving force. Older relatives who were involved all agree that it took both of them to make it work. My uncle was what Casey probably would call an “ideas guy,” but also one who could bring incredible focus to the details that interested him, including merchandising and promotions. My grandfather helped figure out how to make it all work and held the ship together despite what some relatives have described as my uncle’s impulsiveness. They made millions when a million dollars still meant something. And neither one of them could have done it alone.

Having a partner means being trustworthy. Otherwise, at best you have a temporary relationship that will fall apart or a paid relationship which requires a lot more money than a startup one-person venture is likely to have.

Do the financials. Then do them again
Then do them every month for the rest of your life

A friend who is a successful entrepreneur put it simply: "The difference between a hobby and a business is the financials." Not much I can add to that. The financials are a key element of both the plan and the management of ongoing operations.

Casey treats this as unnecessary detail. But in a challenging market it’s essential. Can Casey tell anyone what the cap rates were on the properties he bought? Cap rate is a critical valuation measure used by virtually all successful real estate investors. Yes, flippers too. Can he tell anybody what cap rates he’s looking for going forward? Can he identify any other financial metrics relevant to the deals he thinks he wants to do? If he can’t, then he’s made himself a sucker for all the guys who have figured out those numbers and will sweet talk him into taking lousy deals.

This means you need to know at least the basics of accounting and business finance. If you don’t, that’s one of the skills you must find in a partner.

Read the Mail
(and the email, and everything else you can get your hands on)
Then pound the pavement to verify the facts and take action

Jeff Matthews gives a great example: Work hard, keep your mouth shut, and answer your mail. You could be president too.

This is hard work and it’s often not fun. If you can't see why Jeff's story is relevant to an entrepreneur, then you shouldn't be one.

The Truth, the Whole Truth, and Nothing But The Truth

Paul Kedrosky once noted on his blog that in his experience, what employees really want is clarity. It’s even more true of your investors and partners. No flip-flopping, no half truths, no excuses, no vague statements, no explanations or expectations after the fact. Just straight out clarity.

Casey has been the king of saying something, then trying to re-interpret whatever it was that he said. Just a few weeks ago he promised his wife no more use of credit. Just two days ago he contemplated out loud about using his corporate credit line to pay off a different debt. I guess in his mind swapping one debt for another doesn’t constitute "using credit." I wonder if his wife would agree? To echo my earlier point, I also wonder why he asked the readers of his blog before asking her?

Sorry, no clarity there. There needs to be. 100% brutal, direct, sometimes unpleasant clarity. And from that clarity, maybe some real answers would emerge.

And Build Trust

This, more than anything else is why Casey is attacked. This, more than anything else, is why everybody Casey tries to do business with ends up walking away in disgust. This, more than anything else is why his former associates and even his brother are turning into haterz™.

Trust means doing exactly what you said you’d do. If you don't want to do it, you walk away from the deal. Saying "yes," and later saying "but…" just doesn’t cut it. It doesn't develop the "win-win" scenarios Casey loves to talk about but has never created. Anybody who is serious about business will abandon you if you behave that way, and when that happens, they'll do everything possible to make sure they look clean and their side of the story is known, just as Casey's former associate Duane is doing right now.

This brings me to the answer to the other question Casey asked this morning:

"Isn’t it true that anybody who gets enough public exposure runs the risk of Haterz digging up crap and talking trash about innocent family members? I can now identify with the politicians and movie stars.
I just wish it wasn’t this bad. What can I do at this point? Probably the only thing I can do is shut down the blog and hope everybody forgets about me."

If you look up any of those entrepreneurs above you’ll see that there isn’t much out there about their wives. Granted, people in that situation are able to do a lot of PR and rumor-squelching that Casey can’t. But they know something else that Casey doesn’t: You avoid attention to the people around you by avoiding controversy yourself. People don't go to huge efforts to dig up dirt on people they admire, but they will put in endless effort to do this to people they resent.

When the IamFacingForeclosure blog got started, there were no haterz™, just people interested in the story. When Casey continued to demonstrate that he was untrustworthy, unprincipled, unwilling to take advice, unapologetic and probably criminal, he brought on the hate. Smart businesspeople know they need to avoid this. Casey seems not to learn.

Casey, do yourself and the world a favor: turn your life around, start working and saving, start paying off your debt, start opening your mail, start talking to your creditors and the hate will go away. How you manage it might even make an interesting story.

-btc