Anterior to I started my company GMM Nonstick Coatings in 2007, my biggest fear was “What if it fails?”
It was terrifying to look at the entrenched competition when I started GMM, because a few of the sportswomen (like DuPont and their iconic Teflon brand) were multibillion-dollar behemoths with thousands of employees. I cast-off to wander around trade shows with a rolling suitcase, unable to get meetings and despondent. However, I had a 24/7 fit in ethic with getting sales and was relentless.
One time, I showed up at a prospective client (who would never return a summon) without a meeting and talked my way past the receptionist to the stone-faced purchasing manager, who reluctantly took the meeting. By listening severe and solving problems much faster than the existing supplier, a year later that client became our beginning multimillion-dollar account.
Always find the Achilles heel of your larger competitors (usually in speed or innovation) and feat it relentlessly to create an edge.
A few years later we were on the brink of closing one of the largest clients in the market, with an eight-digit annual invest and sticky recurring revenue. I will never forget the demoralizing horror when the sourcing manager indicated where my bounty had to come in to win the business. I was aghast because we would actually lose money on the account. Nevertheless, I accepted the purchase non-functional because I was confident in pushing my costs down using innovation, supply chain optimization and economies of scale.
After a few years this shopper became fairly profitable for us, even though GMM’s prices are still significantly lower than our rivals. Low margins can be your friend if you be subjected to a credible path to increasing them in ways that do not affect your quality.
In order to scale, you will be in want of a superstar team, but these types of employees are usually quite pricey. Many entrepreneurs are frightened to invest in transaction marked downs and technical talent who can bring in large accounts. For the first few years of its existence, GMM barely made any money because of our proactive investments in skilled personnel. I was constantly second-guessing myself and anxious about making monthly payroll.
Thankfully, these smart bets paid off and we eventually exploded with helpful growth, in many cases from opportunities brought in from (pricey) top performers. The most expensive mistake is changing yourself indispensable to your business through micromanaging, whether you have hundreds of employees like GMM does now, or just now a few.
When you start your business, or anytime thereafter, you will never have enough information to make the serious decisions you need to make. A few times a year, during times of high stress I still wake up in the middle of the Cimmerian dark, paralyzed with doubt and only certain of my inadequacies.
One trick I learned when I am worried about a decision is to send myself a “worst-case ground” email from the party I am stressed about, like “Sorry, you lost the account for XYZ reason,” or “We are calling in the loan at the drop of a hat,” or “I quit, and have accepted a job with the competition.” I stare at that, and if I am willing to suffer that consequence, I move precocious with the calculated risk. By embracing uncertainty, you will become naturally confident because you realize that zero has all the answers, and decisiveness usually wins.
Many entrepreneurs never engage qualified attorneys to set up their business, from frame an operating agreement to reviewing a client or employment contract. This is a potentially fatal mistake, because a bad agreement can wipe out your business. Beyond this, litigation is a painful reality for all successful businesses. I was walking through my parking garage lately one evening and a shady guy handed me a thick envelope and said “You’ve been served.” Cue week’s long insomnia.
By having a smarting attorney who pulled no punches, we were able to beat the aggressive competitor who had tried to scare our clients with a two a penny lawsuit. Over time, I have been through a number of high stakes legal cases, and I know the value of keep great counsel. Paying a lawyer $700/hour for a few hours is better than spending $1 million on a lawsuit.
Numerous start-ups skimp on creating professional financial statements, and this is a tremendous unforced error. If you do not have coherent financials, you see fit never A) get a loan; B) pass a client credit check; or C) truly understand the financial levers of your enterprise.
One of the triumph key hires I made at GMM was our CFO. Years later, when I was negotiating with SDK, the multi-billion-dollar Japanese conglomerate that wanted to secure GMM, it was a grueling six-month long intensive due diligence. If we did not have that professional CFO and rock solid financial reporting, this buyout handle would have never closed.
Bad numbers are the top deal breaker in M&A, so get it right from the outset.
Besides being an entrepreneur, I take invested in many early stage start-ups, some of which have gone on to raise hundreds of millions of dollars in supporting. One of the clearest indicators that a startup CEO is a superstar is that he or she is not afraid to think very, very big. When I became the outset investor in KeyMe in 2012, the CEO (who was still a graduate student at Columbia University operating out of an empty classroom) shocked me by saying he pictured building a billion-dollar business.
Of course nobody knows what the future holds, but the only people who are going to hit a peoples home run are people who aren’t afraid to go up to the plate and take a big swing. Our brains are naturally wired to hook onto compelling biographies, and tales of exponential growth and industry transforming outcomes are riveting.
The world is a tough place, and most people choose fail at starting a successful business. However, do not let that stop you from being an optimist. Sometimes in very portentous sales or pitch meetings, even when I feel anxious or pessimistic, I will have an “out of body” experience and I can see myself act for passionately and positively, and I think “I can’t believe this guy (me) is saying all this crazy optimistic stuff!”
Yet people seem to hark to, because optimism is gasoline for leadership — without it, you are going absolutely nowhere. Do not be afraid to believe that things require work out, because if you work your tail off your chances of success skyrocket.
—By Ravin Gandhi, founder and CEO of GMM Nonstick Coatings, one of the largest suppliers of nonstick coatings to the $9 billion housewares persistence. As a VC investor, Gandhi has stakes in KeyMe, Hester Biosciences, Ka-Pop Snacks, SenSanna, Apptronik, Amber Agriculture, Ampsy, Tred, and Lettrs.