Episode #571 - Be Motivated to Succeed. Have a Different Mindset with Steven Hoffman

Welcome to this edition of the million Dollar Mastermind podcast. This is where we pick the brains of high achievers from all walks of life and get their hard earned real world insights on winning. I'm your host, Larry Wydell.

So what's the difference in the three things that you start, the, the other venture things that you started versus what your, your founder space approach? What, what's the difference?

Oh, so well, I was. So founder space is really what we do is we take in entrepreneurs and we accelerate the growth of their company. So we, we, we basically go over everything they need to know to grow their business. And what we do is we take a lot of entrepreneurs who are either coming from across the US to Silicon Valley or around the world entering this market and we're connecting them with capital, what capital they need, we're helping them how to position their company, how to, you know, understand their customers, everything they need to do to like take that next leap from an early stage company, kind of in the beginning stages, all the way to a high growth company. When I was an entrepreneur with my own companies, it was me in the trenches, me doing that business, me out there like figuring it all out myself. And this was the early days of the Internet because literally when I chose to become an entrepreneur, the Internet was just taking off Netscape, the browser just launched. You know, it doesn't exist anymore, but it was a huge thing. And I saw that, I was sitting there and I basically saw the opportunity. I was like, this Internet thing is going to be enormous. Like I got to stop making games and I got to get on this Internet and figure something out. And I had a huge respect for my best friend from film school. She was an amazing person and she was working at one of the top ad agencies in New York doing interactive products for them. So we got together with an engineer she had worked with who had created a massively multi user gaming engine. And he had created this for Microsoft for one of the first massively multi user game. And we thought, wow, this is going to be a big business. Like this is going to be huge. So we all partnered together and that launched our company. And then it was like every company in the world, these things are wild rides. I could go into a lot of details and a lot of lessons if you want, but it was a crazy ride.

Now are we talking about founder space?

No, this is Spider Dance, my first spider. So my first startup, Lava Mind, where I did gazillionaire and a bunch of other business simulation games, was, was self funded, literally bootstrapped and I just, all the money came into my pocket. The second one, we were like, we're going to build a business that's venture funded, like not a game development company, but we're going to build a platform out there that literally. And so we met, we went through this is a struggle of being an entrepreneur. We had an idea and our, at least my idea, the thing I was passionate about, didn't work. It didn't work. So my first idea for Spider Dance, our company was we are going to take this massively multi user gaming engine and we're going to go out to every game developer because almost all the game developers in the world were producing single player games. Just single player, that's all they knew. And we're going to get them onto our platform. So I ran around because I was in the game business already talking to all these game developers and I quickly found out that there were two types of developers. There was one type of developer that was like, when we want that technology, we'll build it ourselves. Because people didn't use other people's platforms at that time. They were literally, they were like, we're smart, we'll just code it ourselves. They didn't know how hard it was. The second type were like, we don't even need it. Like single player games are fine, like we're making lots of money. Who wants to play multiplayer? And then there were the few that said yes. And those few that said yes said, we will do it, but we don't want to give you a lot of money. Because nobody at that time yet saw the true value of massively multiplayer games or very few people that I was talking to. So it was very early on in the industry and I looked at the numbers, they wanted all this to make all these customizations for them and they would pay us only a tiny bit of revenue. And then we had, in order to make money, their game had to be a hit. And we were like, this is too hard, too hard. So after a couple months of kind of doing market research, I was like, we can't, you know, we're not going to the timings, we're too early.

Yeah.

So then we pivoted, which many startups have to do. And we said, we have this idea, the Internet's kind of taking off right now in a big way. And people love chat. Like they love chatting online. It was before instant messengers. The only way to chat was to go to a website, meet people and chat on the site. We go, what if we gamified this what if we built a chat that you could plug into your site that was also games, so there'd be word games that you could play with people as you were chatting with them. We go, this would take advantage of our massively multi user game engine and we'll call it Jabber Chat. And literally we were one of the very first JavaScript plugins. The technology JavaScript was brand new. So we created this plugin. We, I went around to websites now and convinced them to plug it in. It wasn't hard. Websites were, this is so cool, you can do this. And they were all plugging it in. We got hundreds of sites using this, but we had no money coming in. Zero money. We're like, what do we do? Like we have hundreds of sites. Then we heard about banner ads. Oh my God. Brand new. This thing called banner Ad. We're like, okay. We contacted this company, they don't exist anymore. They were a banner ad company. And we plugged them into our Jabber Chat. So now we had rotating ads in there and they're like, we're going to make a lot of money. There's so many people using this. We're going to be actually pay for our hosting and pay, give ourselves a salary. We wait a month for the first check to come in. First check comes in $13.51. Not even enough to buy a pizza, let alone pay for hosting and everything in our life. We were like, oh my God, nobody's spending money on these ads right now. Too early. So we were like desperate. So we'd been working now a while, months and months and months on this, building these things right? And we didn't have any business. We're like, what do we do? Like we're hitting a crisis. Like, wait, we're gonna go out of business. Like we gotta have to get jobs at some point. But we looked around and we heard through the grapevine that mtv, Viacom, mtv, you know, they were looking at to synchronize online content with TV broadcasts. They're building a game show called Web Riot. And it was the first of its kind. And basically you're going to play this online music trivia game show and they want a company to perfectly synchronize so people could play along with the game show online. And we were like, well, we have the massively multi user engine for this. We haven't built the synchronizing part, but how hard can that be? And so we decided we would call MTV and tell them we could do this even though we didn't know so we get on the phone, we're calling mtv. We're like, we're Spider Dance. We have the technology you want. We can build this. Guess what happened. We were calling the vice president. We got the phone number, the vice president, executive vice president of interactive tv. Guess what happened? He never called us back. He just ignored these calls. Like, who is this crazy company, Spider Dance? Like, we're Viacom, we're mtv. Like, we only work with like Microsoft or big companies, you know. And my friend, she, My partner, she, because of the ad agency was very famous. She got invited to speak at ces, the big, you know, ces, on a panel about consumer electronic show. Right, right.

Vegas.

Yeah, Vegas, the biggest one, right? So she got invited on a panel to speak her at what she was doing at the interactive stuff she was doing at the ad agency. But of course, now she's working for us. She did. She just went. Kept the speaking slot, went there as Finderdance. And basically she was on the panel, she starts talking about what we're going to do and she starts saying, we haven't built anything. Literally, she starts saying, we are going to redefine interactive television. We are building a platform that can literally synchronize online content on the Internet to television broadcasts and frame accurate. And after her panel discussion, somebody comes running up from the audience and he's pushing through all the people pushing through. And he pushed right up to her. And he goes, you have the exact technology we've been looking for. I am the senior vice president of MTV Interactive, and I need your technology. She goes, I know I've been leaving voicemails for you. Apparently, he wasn't getting the voicemails. They were going to his assistant, right? It was just deleting what's this crazy company's fighter dance. Delete, delete. He didn't get them. So he. Because. So he basically, within a couple weeks, we had a deal signed and we had $350,000 in the bank that bootstrapped us. We launched that company. Lessons learned. Like, you know, you don't know where things are coming from, but you got to pivot quickly. You got to, like, always be trying new things and looking for that opportunity that will. Where, you know, there's this extreme need. I call it extreme need. So I write about this in my book Surviving a Startup. It's like everything you need to know. From my experience, you know, real startups are not built on just great ideas. Because you saw I had two great ideas that were too early for their time, right? One was a massive multi user gaming platform which is really popular right now and would do well today. And another one is, you know, these embedded JavaScript entertainment things which came along bigger later when advertising actually could pay for them. But we were really early and I found that extreme need and literally our company took off. We, we, you know we signed the deal with MTV and there's even more to the story. I won't go into it because it's a long story, but we signed, we end up signing up most of the major TV networks. You know we had Warner Brothers, we had a History channel, we had Game Show Network, we had A and E, we had NBC. Like all of them ended up these.

Tumble one one leads into another. Or do you have to be proactive and go get them?

You have to hustle and get these people. You know everything like you sit there.

And they're all rushing up to the stage.

No, no, no, no, no. We type thing after we got our first deal right with them.

Explain the wild ride. Let's.

You want to know the wild ride?

Okay, let's just break down the wild ride because the wild ride is not laying back in your chair and they're all. Suddenly they, they get.

No, no, no. When we signed the MTV deal, we thought we had it made. We were just at the beginning of the wild ride. The beginning. Like the, the roller coaster was just going up the first hill. We just buckled in the. The. What happened next in our wild ride of this company was we, we literally got MTV as a client. We promised them in nine months. Literally in nine months. They wanted to launch and we told them, you know, they were like can you build this? Like, you know, this is television. Television doesn't crash. Television doesn't go down. We need to know. And television has a launch date. Like we're launching the show. Like will you have this done in nine months and will it work? And we're like absolutely. Like it's going to work, don't worry. We're thinking we got to figure out how to make this work. Nobody's ever done this before. Nobody's ever synchronized a live TV broadcast to the web in a frame accurate manner before. And we don't even understand what you need to do to do this. We know we have the massively multi gaming engine but we don't know anything else. So it's the old days and we were like, we had to go into the TV studios and figure out with their Chiron machines they wanted to actually take content from the online. The winners from the online and in real time, push it back into the TV feed so people at home could see themselves winning as they watch the show. And we're like, okay, we're going to figure this all out. And if it's a, you know, half a second too early or too late, out of sync, people can cheat. Like, they can see the answer on TV and then answer it online. Right. It doesn't work if it's a half a second off. It has to be perfectly synchronized. Yeah. And then they were going to throw massive traffic at us because this is a TV broadcast. It wasn't like other Internet sites that you wrote gradually and add servers. It was like, they're going to throw huge, you know, everybody watching MTV at once at our servers. And literally there was no aws, there was no cloud. We had to manually bring the hardware into a colocation facility with a T1 line. We had to hook, hook up all of all the wires. We had to build our load balancing system. We had, you know, there was no firewalls. We had to like, hack everything together all in nine months. So we are.

And if you'd failed on this, it would have been a belly flop heard around the world. Right.

Literally at the same time we're building this thing and designing it. Nobody's ever designed anything like this. We were also trying to raise capital because we knew the $350,000 would get us to launch, but barely. It wouldn't get us beyond launch. And we had huge hosting costs and all these things that we were.

The software companies go, are voracious consumers of cash, aren't they?

Yeah, capital. So we were like, we need more 350,000. Like, we can barely make it to launch. And we, when we had hired people to get this done. So I am out there trying to raise money with my partner and we end up going, we end up trying all these different VCs and, you know, all the VCs look at us and they say, that's interesting, but we don't know about this interactive TV thing. And what experience do you have? And we didn't have any, you know, and this is the early days.

Nobody's ever done it in history before. You have experience, right?

And before. It was before startup incubators, it was before money was easy to get. They wanted you to come out of Apple or some big company, Time Warner, and then they'll fund you. They didn't. Independent developers weren't the hot thing. So it was the early days of venture in Silicon Valley and they were just, they were like, Hedging and we couldn't get through and we didn't have any relationship. Finally we found this company in Hollywood, this, that had just formed. It was a new venture capital firm with all these luminaries on its board. Like, they literally, they literally had the head of Universal's TV production and they had the, that, they had Michael Milken, the junk bond king. He was, they had that guy, you know, guy who founded Leapfrog and all these like amazing, like people on their board. And so we went in to this room filled with amazing people and we pitched them our vision for the future of, of Hollywood. They were like, this is, this is the future of Hollywood. We are giving you, you want $5 million. And we were asking it for, at that time, what seemed like a really high valuation, but we, we thought we could get it and we were asking for 20 million post money. And in the early days of the Internet, that was super high for your first, you know, round of funding. But we, they said, absolutely, we'll give you the money. So we, we, we basically racked up $60,000 in legal fees, which is a huge portion of our money to, to actually negotiate the deal and get the contracts done. And we're nearing production on the thing. We're like a month away from product launch and we're like, we got to get the money in the door now. So we go, okay, we've done it, let's sign the deal. You know what they said? What? They said, you know what, we've been talking about this and let's wait until after you launch. We're like, they go, it's only like a little over a month away. Just wait and we'll give you the money. No, no. But we had no other options. We had bet everything on this one company. We're so busy, we'd spend all the time and focus on them.

Those frigging lawyers should have written that condition in that contract.

Well, we didn't know to negotiate. They couldn't do that.

Lawyers.

So we were just like, we were like, okay, we'll wait. We're, we think, we're sure it's going to launch, no problem. Meanwhile, we're sweating bullets like our servers haven't been load balance tested. There's no way to do this. Like if they're going to throw huge numbers of users at you, like you didn't have the software, the tools to do it. We just had to put. So MTV kept calling us and they're starting to panic now. Are you sure this can work? Because literally every single day for the past couple months they had been putting TV ads on MTV night and day. Come to webright.

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