Dan Martell is the founder of Clarity.FM, a service that puts entrepreneurs in direct contact with successful founders and investors for invaluable business advice. The service was acquired early 2015 by Fundable for its new umbrella brand Startups.co. He also co-founded Flowtown (acquired in 2011) and Spheric Technologies (acquired in 2008). Dan is also a successful angel investor, with a portfolio of more than 30 startups.
We had a chance to talk to Dan about the principles and methodologies that have helped his startups succeed. Check out his advice:
Q: So, Dan. You have a picture with Richard Branson. Would you like to tell us about how that happened and what it was like meeting one of the most visionary entrepreneurs in the world?
Dan Martell: Yeah. So, it’s actually an interesting story. You know, people always talk about the value of relationships and investing in going out and going to events. So, one thing I’ve been doing to help with that for over ten years now is organize dinners with entrepreneurs, usually at least one lunch or dinner a week. One time a friend of mine introduced me to his friend from New York, just moved to San Francisco, didn’t know anybody. And I said, “Hey, why don’t you come to this dinner?”
So he ends up meeting some amazing people there. We stayed in touch online, but we didn’t see each other at all. Then last February, I get an email from this guy and he says, “Hey, Dan, not sure if you’d be interested, but Richard Branson’s a friend and he asked me to put together a group of entrepreneurs that are helping other entrepreneurs in the world and, obviously, I thought of what you’re doing with Clarity. If you’re interested, we’re going to his house in Switzerland. Do you want to come?” And I was like, “What’s the date?…Is this April Fools?” I was so excited. I mean, I grew up reading Richard’s books. He spent the whole week with us and just — it was an amazing experience and I’ll forever be grateful.
I tell that whole story because it just shows that you should really try to give back and connect people without any expectations. And that was always truly my perspective and why I did it. You never know, four years later, hanging out with Richard.
Q: You mentioned that relationships are super valuable in starting a business. Are there other qualities that you feel make for a successful startup founder?
Dan Martell: I’m fortunate to spend a lot of time with some of the best entrepreneurs in the tech world for sure, and then some others in other industries. One thing they have is real hustle. People talk about hustle, but I think they don’t really get hustle. A lot of people aren’t willing to burn the boats and I think that real successful people, they don’t need to burn the boats. They burn the boats in their mind. There is no Plan B. There’s only a Plan A.
The other one is they give back a lot. You know, it’s not always financially, it’s with their time, it’s with their advice. They believe in pay it forward. And that’s my rule: You want more money, give more money away. It’s just the way the world works. And it’s not 50%-50%. It’s 100% with no expectations of anything back.
It’s kind of like back to the Richard Branson story. It’s like you don’t know how, you don’t know if, and it may never, but you just trust in the process and, even if nothing ever happened, just the emotional state that that gives you is so valuable.
And, then, I would say third is they care about their team — they’ll take 100% of the responsibility and they’ll give 100% of the credit to everybody else. They really do. Like, if we fail, it’s because I didn’t structure things to win. And if we win, it’s really because all these other people were kind enough to.
Q: You talked about hustle in terms having a vision and going for it. You seem to embody that on the angel investment side too. In the past you’ve talked about the three principles that you have on investing. Do you remember what those were?
Dan Martell: Yeah, I use them pretty much every day. I’ve invested now in 33 companies as an angel investor over the past nine years. So, step one is the person. Do they inspire me? Do I want to spend time with them? Because at the end of the day, I’ll probably lose my money because that’s just the odds. The upside is if they have taught me something or inspired me. If a person right off the bat can’t do that, I don’t care how amazing the opportunity is, it’s just not for me.
Second thing is would I be a customer. A lot of angels don’t believe in these. But, for me, I can’t be helpful if I don’t understand the problem and would be part of the people consuming the solution. Sometimes I like to Tweet out things that I’m frustrated with and hope to find people solving problems so that I can find new opportunities to invest in.
And then, the third one is can I be helpful? So, a lot of times, I love the people, I’m being a customer of the product, but they’re outside of my wheelhouse to be helpful. If I don’t feel like I can actually contribute more than just the capital, then I just don’t think it’s a good fit because there are so many other companies that would match all three.
Q: What do you think about focusing on one project versus juggling?
Dan Martell: I try to do no more than three projects at once, and each one is in a different area of focus. And I do one really well. So, with Clarity we had one metric that the whole team were all focused on, and it would change depending on our goal. For example, we had a core metric called EDS, expert driven science, the amount of petople that would sign-up based on the expert promoting their profile. Because everybody’s focused on one, we could get so much more done.
Most companies die of indigestion versus starvation. I say this all the time–they think that they don’t have enough opportunities, and that’s not the truth. They have too many, and they haven’t decided to pull — you know, make a bet on one, and if that one doesn’t pay out, go to the second one. Especially when you’re a small team, you have limited resources, you want to figure out what that one core metric is, and focus on it for at least six weeks. Really move it, and then maybe pick a new one depending on strategic reasons.
Q: We do that in design all the time. We tweak this one thing, run one experiment, change this one variable.
Dan Martell: Because if you don’t, you don’t know what worked, right? I remember I was meeting with Gale from Constant Contact, one of the first SaaS public companies. And we asked her, “How was it building the first SaaS publicly traded company?” She’s like, “Man, we taught you young fellas so many things.” Like, they used to run radio ads, two different ads in two different markets and then lift the geography of the sign ups. So, they’ll run an ad in a sister city, and they’ll run two different ads to see how each one grew relative to their population. Very focused, and then pick the winner, and scale it out to the nation.
So, if you don’t know what’s working and what’s not, start — pare back to zero, add one, go.
Q: Did you kind of follow that process too when you were designing Clarity?
Dan Martell: Yeah. So, because we had such a talented full-time, essentially founding team member at the design level, there was a lot of good brand. And I always felt like we did a really good job to make sure that every blue color and drop shadow and everything was just always consistent, always tight. And I think that has a huge impact when you think about fundraising. You know, as much as investors don’t want to talk about it, they’re looking at logos and design because they want to announce that they invested in this company, and when their friends click the link, they’re like, “whoa, this is a beautiful website.”
Q: I was on Clarity within the first six months. And it never felt immature to me, it always felt finished.
Dan Martell: Do less, that’s the thing. You could do a lot of stuff, but then the corners are not tight. There’s all these loose ends. You know when a product is developer designed versus designer designed. And, you know, I was just adamant that our designers were essentially the leads, and then we would kind of edit and curate to kind of meet business goals. “I’d rather make surethat each feature really servesa purpose than just feel like there’s a lot of product.”
Q: That sounds like a lean principle. How has lean methodologies affected the growth and the ultimate success of all of your startups?
Dan Martell: I’ll share with you guys something I’ve never shared before. We actually built our own product development process called the Clarity Product Cycle. And it was, again, one part lean startup — so, the build, measure, learn, the learning iteration concept of that — and it was agile for the way we managed our stories and our backlogs, and did a kind-of co-development with our customers. We had this thing called the A-team, which is our customer advisory team. We would build clickable prototypes and test with them before we built anything.
We invested heavily in teaching everybody on the team to build their own design prototypes, we had our lead designer build these templates up in Keynote. And we had this very structured two week sprint model, which allowed us to dominate our core metrics.
Q: We’ve touched on a few methodologies here, so you probably do a good deal of reading. What are three books you would recommend to entrepreneurs?
Dan Martell: Oh, that’s a good question. I don’t know if it’s in the top books, but the book that changed my life is a book called Love is a Killer App by Tim Sanders. He was the ex-COO of Yahoo!, so, I was like okay, more my kind of guy. It taught me three things: 1) Read for your customers, actually learn for your customers and be of value to them. 2) Your network is your net worth, so invest in it. And 3) he called it being a Love Cat, giving to other people that experience in return. So, I think I’ve done an honor by executing on those three principles in some ways.
I think Napoleon Hill’s Think and Grow Rich. A lot of the stuff and the tactics we talk about have no substance without the mindset. And I think people don’t invest enough time in themselves. I always say, if you want to grow your business, grow your mind or grow yourself because the business is a reflection of you, 100%. So, Napoleon Hill, Think and Grow Rich is a classic.
And then, Unleash the Power Within, Tony Robbins. You know, Mark Benioff from Salesforce recently –Tony Robbins was on the cover of Forbes — and he said, “If it wasn’t for that book and Tony Robbins, there’d be no Salesforce.”