In this very special edition, students from college campuses around the country who are in the ZinnStarter program ask Ray for his wisdom on being entrepreneurs and business people.
Guy Smith: Well, welcome back to another edition of the “Tough Things First” podcast. And I’ve got to tell you, this is going to be one of the most special editions that we’ve created today. We have with us different guests. Students from different Zinn starter schools. And these schools were selected by Ray Zinn and given money so that the students there, the student entrepreneurs, could kickstart their ventures, begin to move their products, their business ideas out into the world. And they all have read Ray’s book, and they’re excited to be with us. We’re excited to have them. And of course first, we’re most excited to have Ray Zinn with us as always. How are you doing today, Ray?
Ray Zinn: Just wonderful. And I am so appreciative of all these wonderful and bright students that are joining us today from all over the United States, to be here, to kick of this first special podcast as Zinn starters. So, welcome guys and thanks again for being a Zinn Starter fellow.
Guy Smith: And I’m looking forward to this. Zinn Starter program has been an astounding success and it’s only in its second year. And we hope to expand it. Per Ray’s design, we have been recruiting what they call, land-grant colleges. Colleges that came to life simply because a hunk of land was donated to the cause. And we’re really excited because we’re finding entrepreneurs in every corner of the country. So enough of that, let’s actually get these students online because they all have questions for Ray. And I am excited to hear what’s on their mind and what kind advice they’re looking for in moving forward with their business projects. We’re gonna start with our inaugural school, the first Zinn Starter school, which was Virgin Tech. And with us is Glenn Feit. And Glenn, why don’t you tell us just the little bit about your project.
Glenn Feit: Well, first of all Ray, thank you so much for having us. I’m really excited to be here on this podcast today. I’m working to commercialize a medical technology, which will allow patients suspected of having a particular liver disease known as NASH, to be tested for it beyond base of means for the first time.
Guy Smith: I find that exciting. There’s a lot of things that are going on in med tech right, which are going to be absolutely revolutionary and in getting the diagnostics down is the first step. So, what question do you have for Ray this morning?
Glenn Feit: I was wondering, Ray, when you started Micrel you took out bank loans to retain full equity in the company. Would you make that same decision today, given the easier access to capital? And how do you balance giving up equity for raising external funds to fuel faster growth?
Ray Zinn: Excellent questions. And if I read all the ones you guys have asked, or wanting to ask, and this is one of the more favorites ones I have that I cover pretty well in the book. [inaudible 00:03:31] Bank, Angel, Venture Capital, or family, however you want to fund it, make sure that the money that you raise will hold you for two years, at least, or until you get to profitability. Don’t just raise enough to get yourself started and then end up having to go back after more and more money. So, depending upon the venture that you’re gonna do and how much capital you’re gonna need will kind of define where you go to raise the money. It just os happened that because in my case, now this may not be true in your case, I wanted to own the company outright. I did not want to have to share it with a number of other people. So, I raised the money through bank financing and so I could retain ownership.
Ray Zinn: I had a problem with previous ventures where the other [inaudible 00:04:20]tried to tell me what to do and as a consequence of that I didn’t do well. And I have to have at least the majority of control so that I can implement the programs that I wanted to do. So, it really depends on how much money it’s gonna take to launch your venture and your time horizon. For example, in the medical field, that’s a pretty long horizon to hit the ground because there may be a lot of testing, lot of FDA requirements. And so, it just depends and it depends upon you. How much ownership do you want to give up? If I had to do it over again I would do the same way I’m doing it now. I mean, I did, which is to do it with my own money.
Ray Zinn: I’m not saying any of them are better or worse than others. It just depends upon your project, your vision, mission, that you have. And that’s what will help determine it. So, when you get further into your project, then we start looking at what is gonna take to really launch you. Then, we can better decide how to go and fund your program. Does that make sense?
Glenn Feit: Yes. I think that makes a lot of sense, Ray. Thank you so much.
Guy Smith: Great answer there, Ray. And we’re gonna move right now to BYU, Ray’s alma mata, and talk to Jonothan DiPeri. Hello Jonothan. How are you today?
Jonothan Diperi: I’m doing well. Thanks for having em.
Ray Zinn: Go Cougars!
Guy Smith: Well, it’s great to have you. Tell us a little bit about your project.
Jonothan Diperi: Yes. The product I’m working on, I’ve developed a consumer vibration and heat therapy massage device that’s been designed to reduce chronic pain as well as assists in muscular recovery for athletes.
Guy Smith: So, we actually have two different medical or at least physiological students working with the Zinn Starter Program and making the world a better place because of that. So go ahead and give us your first question today.
Jonothan Diperi: Yeah. Perfect. So, Ray, in “Tough Things First”, you recommend taking a few years to work in a nonprofit or unprofitable company in order for a CEO to learn better communication and leadership skills before starting their own ventures. But what would you recommend to a young entrepreneur to develop these skills further if they’ve already started the business, and they won’t have the ability to gain that experience working for another company?
Ray Zinn: Don’t like companies who lose but getting some experience before you launch your venture just means you’ll have learned through OJT, on-the-job training as opposed to having to learn it all yourself. I mean as a parent you didn’t just become a parent by accident. You’re raised by parents and hopefully they taught you how to be a good parent. And then, you could then raise your family properly. So, because you’re not necessarily going to work for another company before you launch your venture, you’re just gonna have to apply some good principles. And we cover those in Tough Things First, and it’s not magic. It’s just a matter of understanding the parameters, the box that you’re in.
Ray Zinn: It’s like when you play a particular sport. If you’ve never played the sport before, you’re gonna make mistakes. But if you had a chance to play a sport then you’re gonna be more likely to succeed. I don’t know of a single university that would bring a player on their team that hadn’t played before, either in high school or in some other way otherwise, we’re kind of starting from scratch. So, it’s always better to have that up-front training before you launch your company as opposed to now having to do OJT. We gonna have to just kind of learn on the fly. But “Tough Things First”, the book, which hopefully studying, will give you a glimpse into things you need to know and understand. I know because of the fact you’re attending BYU, that you’ve got a great university behind you and mentors that could help you as well as your family and other training. But I know you have, to get where are today
Ray Zinn: So, I don’t know any other way to explain it than just apply what you know to be good, ethical principles that you have learned throughout your life.
Guy Smith: I think that was a great question, Jonothan, because one of the new things new entrepreneur faces is how to get along with people within an organization. And occasionally nonprofits are great places to do that because everyone’s there because they want to be. So, we’re gonna come to Silicon Valley now. San Jose State University and Shariq Shah. How are you today, Sir?
Shariq Shah: I’m doing great. How are you?
Guy Smith: I am fantastic. Tell us a bit about your project. I understand that you’re in music streaming.
Shariq Shah: Yes, I am. So, Ambii is a social music streaming platform. So, music streaming platforms already exist in Spotify, Pandora, YouTube Music, but Ambii is made for social listening. So, we are trying to address situations where multiple people are listening to everyone’s music. We want to be integrated into stores, restaurants, and lounge systems where they would allow their patrons to join the party in that specific establishment and upload and add songs to better contribute to the music experience or the musical ambiance in that area.
Guy Smith: Interesting approach to the market. So, what is your first question for Ray today?
Shariq Shah: So, you touched on this a little bit, but you launched your career with a very sharp focus. You started in rocket manufacturing, then you transitioned to work as an engineer. And over time you positioned yourself strategically in order to learn everything you could about semiconductor development and management. Then, you were able to leverage all of that stuff into developing Micrel as a powerhouse in the industry. What advice would give to student entrepreneurs without any money, clout, or experience who want to find the same success that you did?
Ray Zinn: Shariq, those are difficult questions to answer because everybody is unique in the way they want to approach their entrepreneurship. So, in my case, my experience was in the manufacturing of semiconductors. Even though I’d make rocket motors before, I was moving towards semiconductors. I liked that field. I thought that was an exciting field, the one that I thought I could do well in. And it’s kind of like a person who maybe is in real estate and decides to become a dentist. You know what I mean? They don’t connect. They don’t come together. So, because of the fact that you are a young entrepreneur, meaning you really haven’t had a lot of experience, you’re gonna have to say, “Where do I want to go? Which way do I want to head in my career?” Sounds like music is where you’d like to be. And so, if you love something, as they say, you don’t work a day in your life.
Ray Zinn: So, you have to pick something that you’re going to really enjoy. And if music streaming, or the music industry is where you’d like to hang your hat, then what you got to do is learn everything you can about that. In my case, I studied diligently while I was working. I mean, I was like a sponge. I was absorbing everything I could about every department, every aspect of the organization. Because if you’re familiar with semiconductors, they involve a lot. They involve manufacturing, and design, of course marketing, applications, testing, waiver fabrication. There’s a whole host of things that you have to learn and manage a lot of pieces.
Ray Zinn: So, in your particular field, you’re gonna have to struggle with that and find out what is gonna work best for you, with your expertise. Because don’t try something that for which, number one, you’re not 100% committed and second, don’t try something that you don’t really enjoy or don’t think you’re gonna enjoy long term. Don’t make this a hobby, okay? Make this a career.
Guy Smith: Excellent answer to that. So, let’s go back out east to West Virginia University, who is launched into the Zinn Starter Program with great zeal. And we have from there, Ethan Ball. Hello, Ethan.
Ethan Ball: Hello. How’s it going?
Guy Smith: It’s going very well. Thank you for being here. And tell us what you’re doing with tractor trailers. This one has my particular attention.
Ethan Ball: All right. Well, my company, Gotel Mobil Accommodations is a socially driven, for profit company that plans to convert de-commissioned tractor trailers into five separate amenity full modular hotel rooms. And we’re designing these trailers for clients in the oil, natural gas, construction industry, sporting events, music festivals, or really any level surface where the trailers can be parked with minimal setup required. These trailers are also designed to cater to natural disaster relief and our commitment to social values as a fundamental pillar of the organization.
Guy Smith: I know some people who went to go work the oil fields up in the Dakotas. I can see where this particular offering would fit in perfectly with the growth explosion happening there right now. So, go ahead and ask Ray your first question.
Ethan Ball: Absolutely. Well, since obviously most entrepreneurs are starting their business by themselves, I know you hit on it in your book, but what advice can you offer to someone who really struggles with micromanaging? Specifically, during the very early stages of building a functional support team around you.
Ray Zinn: Okay. So, first lets get your definition of what you call micromanaging. So, what is your definition of micromanaging?
Ethan Ball: Well, for me personally, I just seem to be a little overly involved in some aspects that I really need to pass off, because I’m trying to take on everything from managing the financials to designing the trailers from an engineering perspective. And at the end of the day I’m just trying to wear to many caps to build this at the scale that I want to be at.
Ray Zinn: So do you feel that the people that you have involved aren’t capable of doing it themselves and you feel you’re the expert? You’re the only one knows how to do it?
Ethan Ball: Well, I feel personally, that I’m the one with the driving vision behind it. So, my problem is really finding those people to be on my support system. And really finding the people is where I’m having the most difficulty.
Ray Zinn: Finding good people is going to be the challenge for all of you. In fact, anyone who starts a business, finding the right people is key. That’s where you differentiate yourself from your competition because everybody has the same brick and mortar. Everybody has the same type of facilities. The differentiation really is the people. The people are the key to the strength and quality of the company that you have. So, being able to source the right people is going to be the challenge that you’re going to face and you will continue to face throughout your business career.
Ray Zinn: What you do is you formulate the listings like you did for your company. You list down the things you want, here’s what I want for this particular position, the kind of qualities I am looking for in that person. So, people who are less concerned about themselves and more concerned about the company are the ones you want to hire. The people who are entrepreneurial by nature. And just determine from your discussions with him how excited they are. If they’re just looking for a job, you probably want to avoid them unless, of course, you just have to have their talent. But the people that want to be involved, the people who are excited about what you are doing, those are the ones that are gonna put forth the most effort. They’re not gonna be watching the clock. They’re gonna be just putting in whatever time and effort it takes to be successful.
Ray Zinn: At my [inaudible 00:16:22] and defined in the book, Tough Things First, we had four cultures. So every employee should have these four cultures: number one is honesty; second is integrity, that means doing what’s right when no ones watching; the third is to be respectful of everyone and be kind and understanding as they work with people; and the fourth is doing whatever it takes, no excuses. This is the part the ai was talking about, about finding people who are really interested and enthusiastic about what you’re doing. And if they have questions or concerns you may want to pass on them. So make sure the people you hire have those four qualities: honesty, integrity, dignity, and respect for other people and in doing whatever it takes, no excuses.
Guy Smith: Well, as long as we’re on the topic of values, corporate culture, and what not, Glenn at Virginia Tech, had another question, which centners on work ethics and corporate values. Glenn, why don’t you go ahead and ask that other question that you head for Ray.
Glenn Feit: Yeah. In your book you talk a lot about the values of having a strong work ethic, and I was wondering how do best model it plus maintain those values as championed in Tough Things First, for that an entire organization?
Ray Zinn: That’s a good one, Glenn. So when you set the example, you as in the leader of the band as they say, set the example. So working more than 40 or 50 hours a week is really not productive. So, when we talk about work ethic we’re not talking about 24 seven or that you’re working 80 hours a week. The most effective hours that you have are between four and five hours a day. That’s the most productive time. And so if you could focus on what you’re doing for at least four or five hours, you’re doing a pretty good job. But if you try to stretch that are over 12, 15 hours, you’re just trying to fool somebody and maybe you’re fooling yourself. So, having a good work ethic means that there not off and doing other things, watching sports program or involved in some personal financial thing or whatever else. That they’re focused on the task at hand. And if you can get four to five productive hours a day out of your employees then you’re succeeding.
Ray Zinn: And if you just take ea look at yourself as student and look at how productive you are, and work ethic you have as a student, you’ll see that you’re not putting in more than four or five hours of productive study a day. And so, don’t expect your employees to put in 15-20 hours a day or 14 hours a day because it’s just not going to be … they’re not going to be productive.
Guy Smith: Well, this all touches on the topics of leadership and maintaining confidence within side the team. So let’s bounce back to BYU and Jonothan, you had a second question that kind of is along these same lines.
Jonothan Diperi: Yeah. So my next question was what tips can you recommend to a young entrepreneur to help them maintain they confidence and leadership and to be able to portray that confidence to their employees while they’re still in the process of developing those skills?
Ray Zinn: That’s like looking in the mirror. If you could look in the mirror and feel good about yourself then that’s a start. So, having the willingness and the ability to look at yourself critically and say, not so much “What can they do more but What can I do more?” If you look at your people as a family or as a treasure as a valued resource you’re gonna treat them better. And that’s the way you really develop the kind of relationship that’ll get your employees to want to be productive. And so in all cases it’s a matter of being respectful and kind and knowing their birthday’s, knowing about their desires or their issues. I’d frequently ask my employees about their family. You know, how’s Joey doing? Or how’s Suzy doing? And I would show interest to them as a person as opposed to what are you doing about this particular part of the project. I very seldom talk to them like that. I mainly talk to them as a person. Just like if they were my new nextdoor neighbor.
Guy Smith: I think this is interesting because it kind of touches on one of your recurring themes in Tough Things First, which is the center of human happiness and what that really means in the management and leader perspective. So, let’s go back to Ethan at WVU. You’re second question kind of delves into this.
Ethan Ball: Absolutely. So during your years at Mikril, how did you effectively hold upper-level management accountable when problems arose without completely eliminating that happiness factor and vice versa? How did upper-level management hold you accountable at times where you might not necessarily performed at 100%?
Ray Zinn: So make sure you’re in the best mood, in other words if you’re upset or angry mood when you try to hold somebody accountable, they’re not going to be listening. They’re going to be focusing on your mood. How are you as a person? Not, what is the issue at hand? So, if you’re going to hold them accountable make sure it’s not that you got the gallows up in the tree and you’re ready to hang them, type mentality. You say, “How can I help you? What can I do to help you be more successful?”
Ray Zinn: As you approach particular problem. So what could we have done more as opposed to what could you have done more? What could we have done more? How could I have been more helpful to you in this particular areas as you talk about their accountability. And what I always do is I always focus on the things that they’ve don’t right. In other words, I start, “Boy, I’m sure appreciative how well you’ve handled this particular schedule.” And so I complement them before I start in saying, “In this other area we seem to have some difficulties.” And then, we talk about that. And then, I end with another positive. I say, “Again, thank you so much for working for the company. I appreciate your loyalty.” And so forth. And you start on a positive, talk about the negative, and end on a positive.
Ray Zinn: And of course, the way my board held me responsible, depending upon the board member, some were good, some were not so good. They thought their job was there to bash on me and beat me up. And others were more kindly and understanding and looking at what was going right as opposed to what is going wrong. So it depends upon the approach that the board member took. What their attitude was. Obviously, some of the board members I wished would have left. But your kind of stuck with them because they’re kind of hired by the share holders. But anyway hopefully that answers your question.
Guy Smith: Well, certainly always some positive tension between the CEO and the board. And if everyone’s working towards the same shared vision, then it tends to work out. More [inaudible 00:23:51]. We’re going to go back to San Jose State University and Shariq. He had a question concerning start-ups that are cash strapped, but had some considerable expenses during their formative stage. So, Shariq?
Shariq Shah: So, you touched on this earlier but in a startup like mine, patents will cost thousands of dollars. And music licensing can cost upwards of a million dollars. For a cash-strapped startup like ours, how would you recommend that we secure the requisite funding?
Ray Zinn: Well, being cash strapped is kind of normal, if you’ve got too much money then you’re just gonna spend it. So, I don’t see anything wrong with being cash-strapped, because then you’re more frugal. But you need to find ways to cut those expenses. For example, legal, you might trade some stock or trade some equity to get that patent application done less expensively. And if it comes to getting a license for some music, again, you negotiate. You try to find out ways that you can capitalize on your relationship and maybe they’re willing to share some upside equity for giving you a better deal on the licensing. So, there’s always ways around the problem if you’re practical. Often times, people raise too much money and then they spend it. And just because your company has a great value, like Uber has a high value they don’t make any money. And so, to me, if you don’t make money, you’re not a real company because you’re not sustainable.
Ray Zinn: So, don’t be concerned about being cash-strapped. I think that’s the way you want to be. You want to look at yourself as just having to always cut corners and find ways to run your company more cost effectively.
Guy Smith: That’s a great answer. There’s always a wonderful tension in terms of making sure that you maintain rational frugality in an organization. Well, I want to thank all the Zinn Starter students for being here and having just absolutely, marvelous questions. This has been my favorite Tough Things First podcast, to date. And that’s saying a lot because I think we’re approaching 150 episodes of this podcast, so far. And so, again, thank you to Ethan, and Jonothan, and Shariq, and Glenn. And thank you, of course, Ray Zinn for your marvelous wisdom and passing it on to the next generation. And to our audience out there, if you have not yet read Tough Things First then you need to get to it. Go to Amazon and order your copy today. It’s becoming required reading at universities all around the country. And by all means, write and review this podcast on iTunes, and Stitcher, and whatever resource you use to obtain your podcast because that will let the rest of the world know that you have latched into one of the best minds with inside a business and technology. And tune in again, next week for the next edition of the Tough Things First podcast.