The Titanic Effect with Todd Saxton (Series Part 1 of 3)


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Today we are doing something different, and kicking off the first of a three-part series on the Titanic Effect (, which is a new book written by Todd Saxton, Kim Saxton, Michael Cloran, about startups and the journey they go through. In today’s episode, we talk with Todd Saxton, and how the book was created. He said that through decades of experience working with startups, the writers noticed patterns in terms of icebergs startups run into, that end up limiting their potential or sinking them.

We hope it’s more than just a book. We do hope it translates into some ideas and tools that actually help startups be more successful.
— Todd Saxton

Topics in the episode

  • Pros and Cons of “pivoting”, and the effects it has on your value proposition

  • Two most common Hidden debts of a startup:

    • Integration of strategy

    • Imbalance

  • Process of naming “Titanic Effect”

  • Establishing a trial period with clients to be the most advantageous for your business

  • How to motivate and coach people in ways that are helpful

  • The curse of “third-sies”

  • Using a tiered labor pool as a hiring strategy in a startup

Contact Info



Mike Kelly:                          Welcome to the Startup Competitors Podcast. Today were doing something different that we've never done before. We are going to be doing a three-part series this week and the next following two weeks on The Titanic Effect, which is a new book that is hopefully by the time this goes out and available, you can find it in all the finer retails including Amazon. It's a book that's written by Todd Saxton, Kim Saxton, Michael Cloran, and it's about startups and the journey that many startups go through, and some of the icebergs that they can hit along the way. Today, we have Todd Saxton on the podcast. Todd, welcome.

Todd Saxton:                     Thank you very much. Appreciate the opportunity to be here Mike.

Mike Kelly:                          I figured we would start with you to maybe start with a general overview of the book, and maybe why you guys thought The Titanic Effect needed to exist?

Todd Saxton:                     Sure. Well again, thanks for the opportunity and I guess through our years, decades now, I almost hate to say that, of experience working with startups, teaching startups. I'm a professor at the Kelley School, and I've done a lot of mentoring of students and alums, but also do a lot with a venture community including with DeveloperTown and get to encounter a lot of entrepreneurs and their startup ideas.

Todd Saxton:                     Over the years, Kim and I have started to notice patterns in terms of these what we are now calling deathbergs or icebergs that startups run into that end up either limiting their potential down the road or in some cases even sinking them. When you start to see these patterns, you start to want to start calling out warnings like, "Be careful, you're about to hit an iceberg."

Todd Saxton:                     Around the same time that we were seeing these patterns and piecing this together, we had the opportunity to be at joint functions with Michael Cloran, our third author, who was talking about technical debt and how DeveloperTown could help early stage companies avoid technical debt. Many of you are probably familiar with that, maybe I'll even let you give the technical explanation, but basically when you're a startup, you have lean resources. You may have to bootstrap or cut some corners to build your initial software or really product of any type, but then as you start to scale the organizations, start to get more customers, it's kind of like a house of cards. You don't have a robust infrastructure to build on whatever that product or service might be.

Todd Saxton:                     Those patterns don't just exist in the technology or the product domain. They also exist in the people that you affiliate with early on in your startup. So, that maybe your co-founders. It maybe the advisers or investors you bring on. If you get to the point, which is great that you're actually hiring people who are your first employees. Again, start to see some patterns across the set of relationships that founders were engaging in, how they were doing things like allocating equity across the founding team that tended to systematically resolve in problems down the road.

Todd Saxton:                     On the marketing side, I'm sure you'll hear more from my co-author and partner Kim, but this was around the time that the lean startup was also really getting traction. Entrepreneurs became very enamored with the term with all know and love pivot. Everybody loves to pivot. You have to realize that every time you pivot, that you start to send one signal or message to your market one value proposition. Every time you move away from that, you actually have to create a new perception in the minds of your customers, in the minds of your market, and even in the minds of your investors in some cases, and re-educate as to who you were and what you're really trying to, what problem you're trying to solve, and who you're trying to solve that for.

Todd Saxton:                     Again, seeing these patterns across startups of not just technical debt but a broader concept that we are calling in the book, hidden debts. Then how to categorize them, to recognize them, and then hopefully navigate around them, so the venture is less likely to fail.

Mike Kelly:                          Got it. The two big areas that you focused on I think. Guess I should do this in a form of question, but I think the two areas that you focused on were the human and strategy pieces of that, correct?

Todd Saxton:                     Yes. I am a management and entrepreneurship professor. That's my training, early consulting work, and then my doctoral training was in the management discipline. Kim is in marketing, and I'll be assuming Michael is an expert in the technology piece. So, kind of covered the oceans as we call them using extending the Titanic metaphor in our areas of expertise.

Mike Kelly:                          Random question. Did you learn more than you ever wanted to know about the Titanic in the undertaking of this book?

Todd Saxton:                     Learned a lot more? When you say more than we ever wanted to know was actually really interesting. I'll tee up a little bit. The initial naming right? So, this is one of those fun origin stories. We're sitting around the table, a table right here in DeveloperTown talking through our first presentation together where we wanted to unveil these concepts. Michael already had his gig very well now down on technical debt. We were trying to feel out whether these other domains of debt resonated within, which they did. We have the opportunity to present at the Innovation Showcase, which was held right here in DeveloperTown in 2015.

Todd Saxton:                     We were mapping out the presentation, talking about hidden debts. I'm both a visual guy but also I'm a naming guy, which means I don't get any deeper than naming it, and then it's like, "It's up to you to make this work, but I've got a good name." So came up with a name, extending hidden debt. A lot of it is beneath the surface. So, it's like an iceberg. Who doesn't think about icebergs without thinking about the Titanic? To me, it just jumps right in my head The Titanic Effect. What an interesting metaphor for what ventures run into. Now in this case, not because it's too big to fail, but because you're running into something where most of the substance is non-visible or below the surface.

Todd Saxton:                     Well, my co-authors felt that we should probably do some research to see if there was any substance to that as a name for the presentation, which was actually ended up being a great idea. As it turns out, there are a number of parallels across all of these oceans or categories of hidden debt that the White Star Line, which builds and operated the Titanic, and the ship, the Titanic itself incurred and with your permission I'll give just a few good examples.

Mike Kelly:                          Please. Yeah, absolutely.

Todd Saxton:                     White Star Line was in financial trouble, brought in a new investor Christian Schwabe if I recall, who made them change shipyards to his nephew's shipyard surprisingly. You bring on a new investor, and you think, "Great, we can stay afloat. We got the source of money," but all of a sudden they're changing something pretty fundamental about the organization.

Todd Saxton:                     Well, in the new strategy which was brought on by a different investor who JP Morgan actually, if you know JPMorgan Chase, that is the original JP Morgan. He came on in the early 1900s and was getting increasingly expensive for White Star Line to maintain its differentiation which was to be the fastest in the ocean.

Mike Kelly:                          Okay.

Todd Saxton:                     He won the Blue Riband Prize which was the fastest to cross the Atlantic from Ireland or England into ports in New York typically. They won that prize a number of times with earlier generations, but as the ships get bigger, it gets more and more expensive and difficult to maintain a speed advantage. What they switch to was luxury and size. We're not going to be the fastest anymore, we're going to be the biggest and most luxurious.

Todd Saxton:                     Well, they decided to build three ships at the same time, all the biggest. They ran out of rivets that were made of steel. You think about the things that hold the boat together, right?

Mike Kelly:                          Yup.

Todd Saxton:                     You have these big steel sheets. You have these rivets hold them together. You run out of steel, you have to rely on slag, which is basically an inferior material that's a spinoff of the steel. The slag rivets ended up being in those exterior bulk heads where the ship hit the iceberg. You have this technical debt of trying to curve too fast using inferior raw material, coinciding with the change in strategy of ship now moving to most luxurious instead of fastest.

Todd Saxton:                     Then, they were some design changes. If you're going to market something luxurious, you don't want to have just a one story dining room. You want to have a two-story fabulous dining room, which shrinks the height of your bulk heads. So, when it hits an iceberg and the rivets tear, you've got water pouring in to bulkheads that have a lower barrier between each one. So the water spills over faster, and the ships sinks way faster than anyone expected.

Todd Saxton:                     So, you have this kind of interaction of changes in strategy, changes in marketing, and how you approach the market. All of these manifestations of hidden debts ended up playing very nicely into our narrative of hidden debts, how they can sink startups and create this kind of aggregation of factors as opposed to just the unstoppable force meeting the immovable object.

Mike Kelly:                          That's awesome. I didn't even know all that stuff. That's really cool. Okay, so let's jump into an ocean. Which would you prefer to start with, human or strategy?

Todd Saxton:                     Let's start with strategy. I think it placed nicely into what I was just talking about with the White Star and Titanic. The strategy ocean, I'm a strategy prof first, came in to entrepreneurship second. Strategy is basically about how you manage interactions between those different oceans. So, if you think about when you're trying to be strategic in building your business plan, it's not just about the product. It's not just about the people that are going to build and deliver that product. It's not just about who you're going to sell it to. It's not just about how you're going to fund it, and what you're going to charge for, it's how all of those relate to each other.

Todd Saxton:                     We're talking about patterns in my experience, technical founders whether it's software or product engineers, tend to get way down the road with the product before they start thinking about the market, the customers, the people, and how to pay for it. They get fascinated with the design and the build piece of things.

Mike Kelly:                          For sure.

Todd Saxton:                     By the time this is good it takes something to market and discover that that's not what customers want to buy, it's a little late. So, you want to make sure that you're navigating the uncertainty across these different domains roughly parallel to each other as opposed to having one dimension. Now, I mentioned the product oriented engineering type, but we see a large number of the sales oriented marketing type who just want to get out and sell something. They sell something to the market way in front of when they can actually build or deliver, or whether they even can be sure they can build or deliver it.

Todd Saxton:                     So, a very visible example might be Theranos and Elizabeth Holmes, and selling this technology that they couldn't even build. Now, it's not that the theory was wrong, but the ability to implement it. You don't establish a $9 billion dollar cap on a dream and a promise that has no substance behind it. Anyway, helping entrepreneurs understand their natural inclinations which might be to overstep or overinvest in one domain, one ocean if you will, before understanding the uncertainties and navigating the uncertainties in other related domain. So, that's the main area that we see in strategy is an imbalance between and not appropriate timing or sequencing of how you move forward.

Mike Kelly:                          If you just pop one or two within strategy, one or two hidden debts that you see the most often, maybe when ... I mean, I know you sit on a number of boards or you have tons of people come to you to talk strategy or fundraising. I mean, you're pretty active in the venture community. If you're having those conversations, what are ... Maybe hit me with a couple of most common hidden debts that you encounter in the wild.

Todd Saxton:                     Sure. Two I mentioned. Integration of strategy, so understanding the implications across and then an imbalance. Those are two icebergs that we identify in The Titanic Effect. If you have very specific example of where ... and it's amazing how many entrepreneurs don't connect the dots very effectively on this. So, they developed a product. They understand the market. They get product market fit. They go out. They build their financial statements, and they start to go to market, and all of a sudden they start to find some resistance. Does this actually work? How do we know it's going to work for us? So they say, "You know what? We're going to have a strategy of a free pilot. That pilot might be one month to three months."

Todd Saxton:                     First of all, if you're going to do a free pilot, always make it an opt-out at the end of that period as supposed to an opt-in. Meaning at the end of the pilot trial, they have to do something to exit that relationship and not pay as supposed to at the end of that period. So, it's kind of like your credit card renewal. If you have your credit card in there and it comes up for monthly, if you had to actually make a decision to go pay the bill, you might not. If it's automatically coming off with credit card, you're probably less likely to just continue.

Todd Saxton:                     Anyway that aside, so we see these marketing plans where you look at the financial statements and then realize that they have adapted, let's just say a 90-day pilot to get your software in to a B2B Saas kind of solution. Well, if you haven't rippled through and integrated the fact in your financials that you're not going to start charging for three months, and then you probably have another 60 or 90 days before you have cash in the bank, you got to basically have six-month lag between when dollars come in the door and your investment, and build your investment in sales and marketing and support that you have to cover through investment.

Todd Saxton:                     It's amazing how many times entrepreneurs just stumble into the free pilot. Sales and marketing love it. "Oh, it's getting so much easier to sell. We're getting in our systems and all these pilots." All of a sudden, their burn rate goes up. Their cash in the door hasn't increased at all, and they run out of money. Their fume date ends up being a lot sooner. So, that's not kind of integration across functions that when you make sales and marketing choices, there has to be a ripple through to your financial statements, in this case a significant delay when you get cash in the door.

Mike Kelly:                          Yeah, the way you forecast it. It's interesting, I was smiling while you said that because we have been one of our companies. We have even a more complicated version. It's very much the same thing but more complicated. We built a bunch of financial models early on that basically showed first we knew we would have a long sales cycle. We forecasted a long sales cycle and then we knew we would do a pilot period with clients, and we believe they would be paid pilots but I'm not talking big bucks.

Mike Kelly:                          We have a paid pilot engagement that would go for some period of time and then at the end of that, then the client would flip over and leverage us throughout their portfolios, B2B solution. Leverage us throughout their portfolio, then of course then the money rains, right?

Todd Saxton:                     Knock on wood.

Mike Kelly:                          Exactly. So then of course, when that strategy, we built a performer for them. We raised on that. We did all these things, classic things. Then of course when reality hits and that plan hits the real world and find out the sales cycle is twice as long as we planned, pilots went twice as long as we planned. When the client eventually did flip over and take us live through their portfolio, it wasn't overnight.

Mike Kelly:                          They would say, "Great, now we're going to leverage in all 300 widgets. We're going to leverage you in five widgets, and then next month maybe 20 more, and the next month maybe 30 more. Then, maybe next ..." So, it was this slow ramp over 12-month period. Where then sure, by the end of what we originally forecasted is like ... I'll make up some numbers like nine months, we would be at full contract value. It turns out it's like, "No, no. It's 15, 16 months before you have full contract value."

Mike Kelly:                          Then just thinking through, then you have all the ramifications of that on everything else financially, and in the performance, and how do you account for that, like exactly what you're saying. For me, who's one of the people trying to make the math working in the performance, it was at every step along that way. You're trying to wrap your head around like, "Wait, what does this mean from a cash position? What does that mean for everything else we're doing?" and not trying to be frustrated that you're learning, right? This is the whole point.

Todd Saxton:                     Right.

Mike Kelly:                          This is what this business is. You need to go out there, try it, learn, figure it out, and adapt. Then, really understanding like, "Okay. If this is real, if this is really the way it's going to work, what does that mean for everything else that we're doing?"

Todd Saxton:                     Absolutely. Then to the next level, you're learning from that. Your ability to articulate what you've learned and then have that influence your projections is so important in communicating with investors subsequently down the road because especially by the time you get to these seas, they're wanting to know what lessons did you learn about all of those things and have you changed systematically your planning accordingly, so that when you come to me to raise, you really have a pretty good understanding.

Todd Saxton:                     In your next customer, obviously you're hoping that sales cycle is going to be shorter. You're hoping the pilot is going to be shorter, but you can't really count on that as you start to build ... You're now legitimate experience, you start to get a better understanding of, "No. The sales cycle is 12 to 18 months," or "Hey, we're getting better at this. We got it down to nine to 12 months, but it's never really going to get to six months."

Todd Saxton:                     Again, that's part of the learning that hopefully as a founding team, you're building over time to be able to tell that compelling story to investors. If you have a straight line growth chart where you're tripling every year, no bubbles, no leveling off, that's a pretty good indication that you don't really have a good understanding of what's really going to drive scalability.

Mike Kelly:                          Go back to those first two that you mentioned where you're out of alignment across the oceans. The way you're thinking about technology doesn't match with the way you're thinking about sales and marketing, which doesn't match the way you're thinking about people and process. When you see that, I see this all the time. When you're outside of it, it is always easier to identify it and diagnose it because you're not in the mix and it's easy to have that detached to a part of you. What do you do? How do you coach somebody through seen what you see, and then helping them get on the right path to fix it? What does that look like?

Todd Saxton:                     So, one of the big factors that advisers, mentors, investors like ourselves are very sensitive to is what we call coachability. Not we call as if we invented the term, but a lot of people use that term. It's really interesting to me how diverse the reaction to that kind of feedback is, which ranges everything from, "Boy, you just don't get it, do you?" to "Huh, I haven't really noticed that or thought about that. Let me think about it some more, let me do some researching, get back to you."

Todd Saxton:                     I think the first part is just your personal orientation and how you take feedback in terms of spotting those trends or issues. This is something that I do as a professor is we take people away from their own experience and show them a model of someone else that is similar. So sometimes, I'll have an entrepreneur go identify a success or a failure story in adjacent space, maybe not a direct competitor and say, "Go look at them and tell me what you've learned."

Todd Saxton:                     Now, what they might not know is I already know why they failed, and they failed because, "You're making exactly the same mistakes." If I just tell you that, you're going to be like, "No." If you go and read it, and this is about somebody else, it's like, "Hey, wait a second. You're kind of like us." Then, they come back and say, "Hey, you know what? They failed because they were doing this, and I think that's what we're doing too." I'm like, "Really? You think?"

Todd Saxton:                     There are ways to get this across without hammering somebody with it, and part of it is being coachable on the founders or the entrepreneurs. Part of it is learning how to coach them in a way that they are going to respond to. I'm going to digress here for a minute-

Mike Kelly:                          Please do.

Todd Saxton:                     ... because it's a great story. Rick Carlisle who is now a coach in Mavericks as many of you might know. Rick went to University of Virginia who just won the NCAA tournament by the way. When I was there as an undergrad, and he was in Spanish class with me, so I got to know him. I wouldn't say we're great friends but we know each other and recognize each other on campus and things.

Todd Saxton:                     When he came out and was an assistant coach for the Pacers, I was able to bring him in to the classroom to talk to the students mostly about how do you manage these high ego people? It was really interesting at what he loved about coaching at that time and obviously he's moved into a more senior leadership role as a head coach. He just loved trying to take a part what each athlete needed to be motivated.

Todd Saxton:                     There's a basketball player that's well-known, and I will not name him. If you directly even spoke to him, he would get angry, like physically angry, or visibly angry. Coach Carlisle figured out over time after trying a number of different experiments that if you video tape something and left just two or three little bullet point notes on the video tape, put them on the guy's mailbox, the next day the guy would commit and he'd do that. It's like, "When you're rebounding, you need to put your foot closer to the basket," or you need to widen your hips so that someone isn't rebounding over you."

Todd Saxton:                     Again, one or two little bullets but this guy would watch the video. He would see and really work on those two little things or three little things. So again, I think part of the secret especially as you move beyond your co-founders ... Although actually in some cases, your co-founders as well, just learning what motivates people and how they're going to absorb information. That's my challenge but also my greatest thrill as a professor is figuring out how to reach people who don't really understand or don't embrace the material initially. That's what we do.

Todd Saxton:                     Anyway that maybe more of interest to me than anybody else, but I think it's a fun and important part of being in the ecosystem is trying to figure out what's the way I can frame this message that will resonate with the audience. Incidentally, that is what we've tried to work into the book. It's not to write an academic text about thou shalt or thou shall not, but something that is hopefully a little bit more consumable, and gives anecdotes, and examples that the reader can relate to and learn from without being hit over the head.

Mike Kelly:                          We've already swerved over into the human side just with the last couple of topics which is fantastic. Let's do the same thing over there. In the human ocean maybe start with the quick overview of that, and then I'd love maybe one or two nuggets that pop from your experience, the once that you encounter the most in a while.

Todd Saxton:                     Yeah sure, thanks. First of all, the way we structure the book and extending the metaphor, we have these oceans that you've already talked about. Then within each of the oceans, we have a number of seas. So in the human ocean, we have the co-founder sea. Who are your co-founders and how do you treat them et cetera? We have the investors and advisers sea, and then we have the employee sea. I hope none of you were like oceanographers or anything out there who would go, "How can you possibly have the sea inside an ocean? That doesn't make sense." Just let that go, if you don't mind.

Todd Saxton:                     So we have these seas. In the human sea again, we have the founder sea, investor, adviser, and the employee sea. Within each of those, we have some icebergs that you might encounter or sets of icebergs. One of the first with the founders is how you actually allocate equity? It's not at all unusual for three founders to go out for beers and sit around, and sketch something out on the back of a napkin and, "Wohoo, we're the next Facebook. Let's split it 33 and a third percent each or whatever."

Todd Saxton:                     Well, you've just created a huge iceberg right there. You don't even know what the implications are downstream for what investors are going to do, and how it's going to influence behavior, so especially with three ... I think Michael calls it the Curse of Thirdsies.

Mike Kelly:                          Thirdsies. Yup, thirdsies is evil.

Todd Saxton:                     Thirdsies is evil.

Mike Kelly:                          Yup.

Todd Saxton:                     We talked about that again in the book. When you have three people that or at the very beginning of a journey, it's very unusual for all three of them to stay equally engaged through that entire journey. So, what often happens is one person, not because they're bad people or because they intend to be a free rider, but life changes. They got a new job. Their spouse gets out of work and they have to work harder. Whatever it is, but life gets in the way and they gradually disengaged a little bit, but they still own a third of the company and you're not getting equal output.

Todd Saxton:                     Again, one of the big icebergs and then one of the big ... How do you address this? At a minimum, you want to make sure you vest over time. You can do this reverse vesting, or there are number of mechanisms to do that, but allocate equity as it's actually earned. I advocate what I call extreme vesting or something that goes well beyond what I see recommended to many startups, which is if you're five to 10% of the way through the journey that's going to be long and difficult, don't allocate more than five to 10% of the equity.

Todd Saxton:                     So, if your two co-founders and you have an idea when you start to move it forward, maybe each of you get 5%, but then you set up what does it take to actually now earn the next piece of equity. You've got plenty of left on the table. Now at a minimum, what most would recommend is you have a set aside option for.

Todd Saxton:                     So you have 20% that you set aside so that when you bring somebody new on to the management team, which is just likely going to happen in your first years, you don't have to dig in to your own pocket and take money out of your wallet. You have a pool already set aside. It's not coming from anybody's stake. It's already been factored in to the cap table. That's an easy way.

Todd Saxton:                     So those are two things. Vest equity over time. Don't split evenly, and have at least a set aside pool if not extreme vesting.

Mike Kelly:                          Give me another one that you see in the wild on a fairly regular basis.

Todd Saxton:                     I could cite some local ventures that fall into one of these two models.

Mike Kelly:                          Dude, I'm right here. I'm sitting right here.

Todd Saxton:                     One is the whale or the really big fish, or the bunch of minnows. Entrepreneurs tend to love either go get the guy who was the first salesperson for XXX, insert your favorite big success story here.

Mike Kelly:                          Got it.

Todd Saxton:                     Yeah, it's going to cost us $200,000 a year plus options and equity stake. Yeah, they're an arrogant beep. I just beeped myself.

Mike Kelly:                          Thank you.

Todd Saxton:                     I mean, Mike don't even have to do that. Yeah, look at the success they had. Well, first of all, success in one other venture is pretty unlikely to actually translate to the next venture. So, you want people that have a track record of success over a number of firms and ideally one or two failures as you start to bring them in. So they hopefully have learned some lessons, maybe humble them a little bit. Also, you're overpaying for an asset that you just don't know is going to work.

Todd Saxton:                     Now, the flip side of that are the people who say, "Man, I love these interns." We have a number of programs that take these undergrads, and they're bright, and they're well-trained, and whatever that may be.

Mike Kelly:                          Just given their raw talent.

Todd Saxton:                     Yeah.

Mike Kelly:                          That's right.

Todd Saxton:                     They're cheap. This is awesome. They're so inspiring, but they don't know anything. So you have to spend a lot of time training, getting them up to speed and one in 10 may actually be a good fit for your company, but it also might take you a couple of years to groom them and for them to get traction. So, hiring 10 people at $30,000 or one person at $300,000 is probably not either extreme that you want to be on. You want to have some kind of tiered labor pool.

Todd Saxton:                     So in the employee sea, that's an iceberg that I see a lot of startups make. It's tricky. There's no easy solution for this. I'm not trying to pretend I have the answers to everything, but again systematically I have seen those two ends in the spectrum, and I think both are equally dangerous.

Mike Kelly:                          When you guys were planning the book, how did you intend for it to be read? Is the idea that this is something that I as a founder, I'm just reading through cover to cover and try to take as much out of it as I can at that time, or is it more like a reference book that as I hit these heuristics, because an iceberg is heuristic. As I hit this hidden debts like, "Oh that feels like something I read in ... Back when I read that book, The Titanic Effect. Then, I'm going to go back and read that or just dive into that one chapter because that's where I feel pain right now maybe." When you guys were envisioning your reader, who was that person and how are they going to read it?

Todd Saxton:                     It's a great question. It's one we talked a lot about in terms of the book design and feel. Initially of course, like any entrepreneur we're like, "Everybody is going to love this book," right?

Mike Kelly:                          Sure, right.

Todd Saxton:                     You can't write it for everybody. You got to write it for one or a few population. If you look at the inner circle who were targeting, who do we really hope this book can be a benefit to? It's the early stage entrepreneur either pre-revenue, in planning, or early stage revenue and growth. If you're already at the point where you have a board of directors and you're scaling, and you're raising your A or B round with venture capital, I think it still hopefully would be entertaining and you might look back and go, "Wow, did we make a lot of mistakes."

Todd Saxton:                     The fact, as we talked about these concepts, it's not unusual to have an entrepreneur say, "Where were you dude three years ago?" Now, we're here. In reflection and when you start your next venture, hopefully there's some benefit there. Really, the core founder or founding team can really benefit in the early ideation and early launch stages in terms of just our very narrow core.

Todd Saxton:                     Now that said, there are folks like yourselves who are not only entrepreneurs, but also investors, and also touched a lot of other entrepreneurs. We think there's benefit for those members of the ecosystem, who's support entrepreneurs, but also investors. So mostly again, early stage angel investors, et cetera, that you start to see these patterns across your portfolio of either opportunities to invest in your companies you've already invested in, and you're actually in a position of influence. If you understand these concepts and can pass them on, we think that could be of great benefit.

Todd Saxton:                     Now, we also share the book within and hope that people who like to listen to how I built this, even if they might never be an entrepreneur, or people who think history is cool and business is cool, and the intersection of those two is kind of cool. By the way, I might learn something about the entrepreneurial ecosystem. We hope that those folks enjoy the book and if nothing else, when your cousin comes up and says, "Hey, I'm going to be an entrepreneur," you can have a conversation and actually be somewhat knowledgeable about the icebergs that they might encounter and ask them good questions.

Todd Saxton:                     When we shared some initial versions of the book with entrepreneurs and that third category, non-entrepreneurs but interested business readers, the non-entrepreneurs love the Titanic stuff and how it was woven in. Thought that was really cool. The hardcore entrepreneurs were like, "You spent too much time on the Titanic. I want to you to get to the good stuff."

Todd Saxton:                     We had to balance a little bit of let's weave in some snippets of history and the Titanic, but not have that be three or four pages, and then get to some more recommendations. That also led us to include some tools within the book that are navigation clues. So, we have these icons that we've embedded from a design standpoint. Entrepreneurs can recognize, "Oh, okay. These are some icebergs I should be aware of." So, if you're looking for those icebergs, you can quickly familiarize yourself and then go back and find them later when you start to hit those icebergs.

Todd Saxton:                     For investors and supporters, we have this look out that it's like a red flag. If you see entrepreneurs doing this, you probably should be wary or at least warn them about it. So, one of my favorites is if you have an entrepreneur that's out raising institutional dollars that are going outside friends and family for the first time, and they're still referring to the venture as I, they have not internalized the team concept. It's about them.

Todd Saxton:                     In my opinion, I'm not going to invest in somebody and I wouldn't encourage you to invest when an entrepreneur is still referring to the company as I, because at that point they typically have co-founders or at least other members of the founding team or management team. They have employees. To me, it's just a signal of how they view the venture that needs to evolve.

Todd Saxton:                     So what you ask about was how does someone actually read this and learn from it. What's the best way to navigate the book? First, I would start with just reading the introductory chapter because that's going to give you a feel and flavor for the overall structure, but also whether you want to keep reading. I think in Amazon, you can go in. You can scan the first chapter. This is not going to be for everybody, our whole style and approach. I think you can get that in the first chapter.

Todd Saxton:                     Now, what bothers me about a lot of business books is you read the first and it's like, "Wow, this is kind of cool. It's a good concept." Then the other 250 pages are more iteration of that same exact concept, and all the reasons that the author was super smart in how they internalized and developed their consulting business around using that tool to sell everybody. We worked pretty hard at least trying to add value throughout the book as opposed to just one core concept in the intro or the first chapter.

Todd Saxton:                     However, we also hope and with some of the work that particularly Michael is focusing on with an iceberg index. What we've done is to take these oceans of hidden debt and these different icebergs, and actually develop an index which is like a self-evaluation tool of where have I encountered these hidden debts, and therefore what might I do about it.

Todd Saxton:                     Probably we're missing and not stating this earlier, but it's not that entrepreneurs shouldn't take on hidden debts. They have to make choices under uncertainty and there's going to be some unintended consequences of that. Those debts shouldn't be completely hidden. You should have an understanding that they're below the surface, but we understand that they're there. We're going to have to deal with them at some point and budget for that, whatever that means. It may not be dollars. It may be time. It may be people. It may be getting advice, whatever.

Todd Saxton:                     It's all about identifying those and being able to navigate around them as opposed to saying, "After reading this book, you will be in an iceberg-free ocean," because that's just not going to happen for a startup. However, to navigate these tools or this uncertainty, what we have done is translate it into this index and then a literal map of icebergs.

Todd Saxton:                     So, what we hope is that startups will download one of these maps and put it up on their wall, and employees they can do it anonymously, or it can be part of the weekly stand up where you go and put a sticker or a thumb pin in and say, "There's a hidden debt that's growing with our value proposition for customers," and that opens the door for a conversation.

Todd Saxton:                     Instead of putting your hand up and say, "Hey, we suck at ..." If there's a red thumbtack in and a founder or whoever is leading it says, "Okay, looks like we might have a problem in this area. Can anyone add some insight about that?" It's likely that multiple people within the startup actually recognize the issue. So, it raises those things that might be hidden and below the surface to a level where at least there's some insight into it, hopefully some discussion around it, and then hopefully that leads to, "Okay, so how do we fix this? What are our steps moving forward?"

Todd Saxton:                     We hope it's more than just a book. We do hope it translates into some ideas and tools that actually help startups be more successful.

Mike Kelly:                          Yeah. That's great. All right. I think that's probably a good amount of time. Thank you so much for making this much time available. If people want to learn more about the book, want to find it. I'm assuming there's a website for the book, and social medias, and whatnot. Where can people learn more?

Todd Saxton:                     Yes. I would encourage you to go to We not only have obviously going to the book and some endorsements there, we had some very kind folks write some nice endorsements about their perspectives on and concepts. We also have had a blog going now for ... Boy, since October. So, we've got a number of posts that are snippets of the concepts of the book that might give you some information and insight today, but also a sense of whether the content is something that's a good fit for you and your organization.

Mike Kelly:                          Awesome. Then, I know you guys are on Twitter because I follow you out there.

Todd Saxton:                     Yes, we are.

Mike Kelly:                          Then, I'm assuming you're on some other platforms as well?

Todd Saxton:                     Yeah. We personally are on LinkedIn. Also, always feel free, and then Facebook. I believe you can follow us on Facebook as well. You know who should I ask that question to?

Mike Kelly:                          Okay.

Todd Saxton:                     Is our marketing expert, Kim Saxton.

Mike Kelly:                          All right. We'll be talking with Kim next week. So, we'll dive into marketing in there. Todd, thank you so much man.

Todd Saxton:                     Thanks Mike.

Mike Kelly:                          It's a great book, and I'm super grateful you decided to do the extended three-part series with us.

Todd Saxton:                     Yes. Well, thanks so much and appreciate it again.