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For many years, I had the privilege of interviewing tech founders and CEOs on stage before an audience of entrepreneurs and investors as part of my Startups Uncensored monthly event in Southern California. During the quarantine, I revived the fireside chat series for a virtual audience with the C-suite leaders of companies including Mattel, Zoom Video and Chipotle, and I recently partnered with Entrepreneur to host a new series entitled “If I Knew Then Leadership Lessons.” During these one-hour sit-downs with high-profile CEOs of global brands, from Waze to Blue Apron, we talk about the hard-won lessons they’ve learned along the way and the practical career advice they’d give other entrepreneurs.
In the third episode of the series, I wanted to talk to someone who started a successful business during a downturn. I found that leader in Tim Chen, co-founder and CEO of NerdWallet – the go-to informational website that helps consumers make the best decisions on all things personal finance. We talked about how he was able to take $800 and turn it into a company worth half a billion. He certainly didn’t think so positively about being laid off from his job in the financial industry the day it went down, but it might have been one of the best things to ever happen to him.
After spending four years working for hedge funds, Chen’s career imploded along with a lot of others around Christmas Day 2008, as the financial crisis rocked Wall Street. It was when he was sitting around “twiddling his thumbs” while out of work that he discovered the problem that was destined to inspire NerdWallet: There was a major shop-ability problem with many financial services companies. The vital information potential customers needed was often hidden in banks’ dense materials. Seeing the need for transparency, Chen used $800 of his own money to cover the costs of starting NerdWallet. Now, it’s a $520 million-dollar company that reviews the pros and cons of financial products for three million monthly visitors. Even after all this success, the company remains privately held.
Chen is incredibly smart about his entrepreneurial journey and was refreshingly transparent about the oft challenging process of shepherding a startup. The ideas he shared with me are among the most thoughtful I’ve heard in my years of interviewing founders and chief executives. Below are 12 major points he hit upon during our conversation:
1. Early on, you may not be able to afford to buy attention
NerdWallet bootstrapped for the first five years of its existence and focused on how to reach people with the resources it had. If you don’t figure out how to build consumer trust and reach people at a reasonable cost, nobody is going to know you exist. NerdWallet focused instead on being a trusted partner to its customers, and that element became the company’s calling card.
2. There are good and bad lessons to be learned for future entrepreneurs working in the finance industry
Working in finance is a good way to learn about the drivers and levels beyond businesses. Without that knowledge, you can’t invest very well. But you can also pick up some bad wiring in the financial world that can conflict with what you’ll need when you’re starting a business: aggression, being the superstar and a focus on short-term compensation. You don’t always learn collaboration, which is a very valuable skill to have as an entrepreneur.
3. Make sure you’re on the right obstacle course
Before you even try to beat the course, make sure you’re on the one you need to be on. Chen says in the past he’s spent as much as six months building the wrong product, one that he would have known was a stupid idea if he had just picked up the phone and tried to sell the concept once.
4. Fascination with opportunity can keep an entrepreneur up at night
The head spins. Chen knew early on that he was interested in the hustle. He was fascinated by figuring out opportunities as early as the fifth grade.
5. If you’re doing it right, it feels like you’re leaving six things on fire to go put out another
You need to prioritize the one thing that matters most. NerdWallet hired certain key personnel very late, such as a product manager, as its team was still solving the customer acquisition problem.
6. Be both audacious and humble
Be audacious with your ideas and your sense of superiority, but be humble about what you can learn from your competitors.
7. Start with the relationship, not the transaction
Customers have seen it all when it comes to a hard sell, so they’ve got their guard up against insincerity 24/7. But even in a more defensive marketplace, it’s still important to make a connection about something other than the transaction first. A customer needs to find a reason to trust you.
8. Some smart people don’t know what they’re bad at
That can make them both valuable to have on your team and insufferable to work with. It’s important to invest the time and training to get your group to work well together.
9. Be prepared for the most probable failure point
Find out the highest-probability reason that your venture might fail, and figure out how to validate that reason in the cheapest way possible.
10. It’s a mistake to assume that someone who came from a high-profile company is great at their job, or that someone who came from a lesser-known company is not
Many tech companies became monopolies overnight, sometimes with questionable execution that was never addressed in light of that success. Higher-ups coming from “good” companies might have grown complacent about their own failings as they’ve perhaps had less reason for self-examination.
11. The power of Silicon Valley as the epicenter of tech might soon come under scrutiny
After a successful experience of remote working during the COVID-19 crisis, many workers in the tech industry will wonder why they ever need to commute three hours a week again. Working remotely, they can afford to buy homes in areas away from big tech hubs, in places where life is more affordable. This has potential to affect the power of Silicon Valley as the epicenter of all tech.
12. As you become more successful as an entrepreneur, your personal bandwidth becomes the variable for which you have to solve for in all things
This might mean changing the way you feel about certain things you think you have to control. Your time is precious. Assuming you’ve hired the right people around you, delegate more. With a limited bandwidth, determine what you are really needed for. What needs to be a live meeting? What can be an email?
For more enticing samples of the highly valuable advice Tim Chen shared with me, watch the hour-long webinar. He truly is one of the most thoughtful CEOs I’ve had the pleasure of talking to, especially when it comes to understanding his own path to success.