Summary of Episode
#27: This week, Annaka and Ethan are joined by Dr. David Vik or 'Doc' to discuss how he helped Zappos find their 'wow factor' and his top advice for startups looking to establish their competitive edge. Doc is a former chiropractor turned startup advisor, investor, and expert known most prominently for his role in the success of Zappos.
Podcast Episode Notes
How Dr. Vik got involved with and helped to build Zappos [1:44]
What is the flywheel and why is it important? [16:24]
Should every startup have an advisor? [19:51]
How founders can find advisors [22:07]
What is the 'wow factor'? [24:38]
How startups can identify their 'wow factor' and leverage it [27:00]
The right time for your startup to work on identifying their 'wow factor' [32:11]
Developing a customer-centric approach to business and how to implement it [34:48]
Dr. Vik's most unconventional advice for startup founders [36:40]
One thing that is commonly twisted in Dr. Vik's message and why he isn't the 'Culture Tzar' [41:10]
How to fix a broken company culture [43:43]
The main takeaway from Dr. Vik's book: The Culture Secret [46:43]
The most common mistake Dr. Vik sees startup founders make [51:10]
Dr. Vik's forecast for the future of the startup ecosystem [53:19]
How founders can prepare for the future and make decisions with long-term strategy in mind [56:08]
Dr. Vik's #1 piece of advice for startup founders [57:50]
Connect with Dr. Vik at drvik.com or directly at (650) 388-2973 [58:52]
Full Interview Transcript
Hey, everyone. And welcome to Startup Savants. I'm Annaka.
Ethan: And I'm Ethan.
Annaka: If you're a returning listener, welcome back. And if you’re new, this podcast is about the stories behind startups, the founders who run and the problems they're solving. This episode we’re joined by Dr. David Vik, otherwise known as Doc.
Ethan: So, Doc isn’t actually a founder. He’s a long-time Silicon Valley startup advisor. In fact, he was an advisor for Zappos, before they were actually Zappos and helped them get to more than 2000 employees and an eventual sale to Amazon. Nowadays, he’s helping businesses grow by helping them find their ‘wow-factor.’
Now, we’re going to talk a lot about the ‘wow-factor’ but I think Doc’s advice specifically about creating a culture that lives ‘wow’ is something that all founders need to hear.
Annaka: In one of my favorite marketing discussions to date, we dissected the flywheel and how to use it to your advantage to keep customers engaged. And, Doc is the first guest to give out his personal phone number on air.
Annaka: Doc is a startup veteran with a lot of insight into what makes a startup great so let’s talk about it.
Hey, Doc. Welcome to the show. How’s it going today?
Dr. David Vik: Oh, it's going fantastic. I'm glad to be here. Thank you Annaka and Ethan.
Annaka: Yeah, we are thrilled to have you on and really looking forward to kind of getting all of the knowledge that we can from you. Let's start with how you got into the startup ecosystem, kind of infamously by helping to build Zappos. Can you tell us how that relationship was started and what it blossomed into?
Dr. David Vik: Ah, well that... Well, it first started when, you know, I started a chiropractic clinic back in 1982. And I didn't know what I was doing. Like a lot of people, they start a business, but they don't know business. So I knew chiropractic. I was the best adjuster around. People would come to me to learn stuff. And so I figured I'd just light the world on fire. But after about a year, I was borrowing money to keep afloat and so forth. So I would get different coaches. And I stumbled upon one coach, Kirby Landis, and Dr. Ward. And this was in 1983, I think. And I said, Hey, I'd like to have a great clinic, but I'm having trouble here growing and scaling. And they just talked to me and they said, Hey, for one thing, you have to have three unique factors.
And it's like, what? What's that? And they said you need three unique factors to set you apart from everybody else out there. It doesn't matter what you sell, whether it's chiropractic or a law firm or a tech company or whatever, you have to have three unique factors. So back in the day, I started to figure out what was broken in my industry. And the three things that were the biggest broken parts were people had to do their own insurance. And I don't know if you guys ever had to go ahead and bill your own insurance with like a receipt from a doctor's office, but it's, you need the codes. You need the ICDA numbers. You need the diagnosis. You need all these different things. It's really, really difficult. You don't speak that language. So that was one thing you had to bill your own insurance.
Number two, you always waited for a half hour or an hour, any doctor you went to. Remember back in the day, that's the reason I got into it. You know, doctors and lawyers were the kings and queens of industry, right? That's where to be. And they knew it and they made people wait, and it wasn't a good thing. People really hated it. And number three, you couldn't get a hold of the doctor at any time you call the office and they'd say, no, the doctor's busy. You couldn't get in touch with them at all. So very simply, the three unique factors were everybody got the doctor's home phone number. There were no cell phones in those days. So everybody got the doctor's home number. We had an insurance department that was staffed with insurance experts, and we would do all the insurance for the people. And no one waited. They all got seen within a minute or two.
And we had to change our process and procedures to go ahead and have everything work properly. Like we had to have an insurance department and we had to run on time and not overbook, and overschedule, all that kind of stuff to make sure people got seen right away. And it was easy, every doctor, me and other doctors I had in there, they had to go ahead and give... Well, first of all, we always call the patient after the first visit, say, if there are any questions or concerns and people go, wow, the doctor called me to check on me, you know? And he gave me the home number. He says, call anytime, because you know, we're not treating patients, we're treating the person.
Dr. David Vik: And that's what it boils down to. So basically, I made my clinic customer centric. And the average chiropractor sees maybe seven people a day. And we saw 200 with bursts way up there, past that a day. And so it just was really good. And I'm right in the heart of Silicon valley, I took care of a lot of the big wigs of the Silicon valley. I invested with startups that were really cool. They had cool cultures. Everybody lived and breathed, what they did, kind of like we did in that clinic. And that I set up in my clinic, because I had to create the culture that supported our three unique factors. And basically it was delivering ‘wow’ that's how we kind of over umbrella it.
So, I invested in private companies. I've had some excellent exits. And I had with Zappos, a founder, a guy named Nick, is a founder of Zappos and he was raising money to start his shoe company. And he asked me, he goes, Hey, do you want to, I hear you invest in companies. I'm going to start a shoe company. And I said, okay, what's the name? And he goes it's shoesite.com and it's like, whoa. That's hard to find on the internet. You know, when you type in shoe, then a billion things come up.
Dr. David Vik: So anyway, I kept saying, no. I kept saying, no, it doesn't sound right. You know, you can't feel, you can't touch the shoes, you can't do anything. And I don't know how you can be unique online. You know, there's some real trouble out there, as far as shipping time, it was two to four weeks and you had to pay for shipping and all that kind of stuff.
And so anyway, I finally gave him some money and then he started and then he had to change the name. And we talked about that. So we changed it. Zapatos is Spanish for shoes. So we changed it to Zappos. And then you started to be able to find it on the internet, you type it in, that came up top. So it was great. And initially it had one P in it. So it was Z-A-P-O-S. But then in about a year, when Tony came on board, he says it looks like Zapos.
And so he added the P. So Tony added the P. So that was really cool. But when I talked to him at the very beginning and he loved my clinic, he had Tony become a patient. And he just loved, because it's just, everything was wow. Everybody knew the patient's names and we just buffed out our people, they didn't wait. And just, everything was really cool. People just wanted to come. They didn't care if they got adjusted half the time, they just said, Hey, go to Vik chiropractic clinic. This place is amazing.
So in the shoe deal, we couldn't do anything with the product. And the product was a commodity really. I mean, everybody sold them for the same amount. And Zappos sold shoes and still sells shoes at retail. So we had to do something different. We couldn't change the color of the Converse that people were buying and stuff. That was it. And so we had to work on the delivery. So just again, just like what I did with my clinic, look at the three broken parts. And that was: shipping was very expensive, two to four weeks and you had to pay money.
Dr. David Vik: And number two is the selection. Like when you go into a store, Foot Locker, for instance, there's only a couple Nike's in there of styles, but Nike has 500 different styles. A matter of fact, that's the reason Nick started the shoe company. He tried to find a certain boot and he went all over the Bay Area. He couldn't find it. He goes, this is ridiculous.
You know, this shouldn't be like this. So that's how Zappos started, or the light bulb that, how it started. And also when you bought shoes, you had a 30 day window to return them and you had a restocking fee for any shoe. And so just doing the opposite of the three sticking points that people hated with the shoes is we had fast free shipping to overtake the expensive, costly shipping. And we had huge selection, which was the opposite of the very narrowed selection at shoe stores. And we had 365 day return policy for the shoes, which took care of the 30 day window that you had with shoe companies or shoe stores and the restocking fee.
Annaka: Right. So those are three factors?
Dr. David Vik: Those are the three unique wow factors. And our whole umbrella at Zappos too, was ‘deliver wow.’ And so having the three unique factors, again, we had to get the process and procedures. So whether it's the call center or the fulfillment center in Shepherdsville, Kentucky, they had to make sure that the shipping was quick and it continued to get quicker. So that's where a lot of assets went, because that was unique factor. We had to keep making it better.
Dr. David Vik: And the same with the selection of the shoes and the return policy. So we had to set all of our processes and procedures to support that because those are our big wows. And then we wowed them all the way up and down every which way you can in between there.
Annaka: Yeah. Yeah.
Dr. David Vik: If that makes sense.
Annaka: It does. And are you still working with Zappos?
Dr. David Vik: No. No. We got actually, I went down, I retired at 45. I had a goal to retire, so I did it. And after about a year, I don't know, I was getting kind of bored and so forth. So I went down to Zappos and gave him a talk about delivering wow. For a couple days to all the teams and departments and individuals. And then Tony, unbeknownst to me, said, Hey, I had everybody vote on you if they wanted you to come down here and I go, what do you mean come down there? And he goes, “come here and work for us.” And I said, “well, I don't know if I'm going to, I've never worked for anybody right. In a big company since I've been an adult.”
So anyway, he says, “well, we'd like you to come down here and help us out.” And so what I did is I worked with all the teams, departments, and individuals and so forth to make sure the wow was getting sunk in the DNA. But we got bought by Amazon in, I believe it was 2009. And I went down there in 2004. So when that happened, the DNA was so strong in everybody, and everybody was wowing and slapping high fives. It wasn't even a need for me anymore. Man, I was just, I was a coach that wasn't needed because everybody was like coaching themselves and-
Dr. David Vik: You know, having, having a good time. So I came back and I work with other companies now.
Ethan: So you mentioned “we,” “we sold to Amazon.”
Dr. David Vik: Yeah.
Ethan: But you weren't working for, or with them at the time. It seems like you really have a lot of embedded, intertwined spirit with these companies that you work with. Is it just Zappos or do you get that feeling with every company that you work with?
Dr. David Vik: Well, I tell you what, I mean, I'm one person. When I left, there were 2000, right? So it is not about me at all, at all. You know, it's about we. And matter of fact, 60 Minutes called me to get me on a show because I was engaging the employees and they wanted to do a segment. And it's like, I was talking to the guy. I said, you know what, this isn't about me, man. This is, the culture that we created here is about them. So what, I would love to have you guys just go ahead and do a segment on Zappos, forget about me, because it's just goofy. Right? So anyway, so they came down and so we were on 60 Minutes. We did a segment on 60 Minutes about how our culture is. And I think it helped out a lot of other companies to have a much cooler culture that supported delivering wow. Now you can't deliver wow at the Navy Seals culture. Right?
Dr. David Vik: That doesn't work. You get different cultures for different throughput, whatever you're selling, products, service, knowledge, you have a different culture supporting that being delivered or provided.
Ethan: So you mentioned you're a startup advisor.
Dr. David Vik: Yeah.
Ethan: Can you tell us about that role, like what is it that you do for startups specifically?
Dr. David Vik: Okay. What I do with startups is I'm kind of the guy behind the scene. So many people work so hard in the business that they don't pull the lens back and work on the business. So I'm a business guy, plain and simple. So I help them get out of their own way, so to speak sometimes, with high turnover or whatever it is, but to help them scale. And a lot of times companies just aren't set up with unique factors. You know, they're not set up with a flywheel that supports what they're doing internally.
And so I work with a lot of, well, a good amount of companies just helping them along. And advisors, people don't really know what they do, but they should do pretty much everything as far as business, no matter what business you're in. To make it profitable, to allow it to scale. Whether it's starting with the pitch deck, the ideas, the business model, the unique factors, just from soup to nuts. The experience in the technology, the UI, UX, all that kind of stuff matters. And in this day and age, a lot of people are taking a company and trying to put it on the internet, but it doesn't translate too well because the technology, sometimes isn't focused on being customer centric.
No, and I think you can see that every day with some of the websites you pull up or some of the things you try to buy on and they're like clanky and janky and hinky, and it's like, what's the deal here?
Annaka: Yeah. You'll never really notice a good user experience. You will always notice a bad user experience, no matter what. But I want to go back. You said a magic word for me, the flywheel. People may be more familiar with the sales funnel. What is the flywheel and why is it important?
Dr. David Vik: The flywheel is the most important. Amazon has a good one. We had a flywheel, and probably why Amazon bought us. They left us totally alone. And they kind of, I think, used us as an experimental deal. And plus, learned from us. A flywheel basically gains momentum over time. And so what you want to do in business, it depends on what you're doing, but you want to have the experience, number one. And like Amazon has a flywheel where they have low costs. So that attracts buyers. And when you have a lot of buyers that attracts vendors. And when that attracts vendors, you make more money. And then you come back up and you put investments in the fixed cost experience.
And in Amazon, the fixed cost experience is delivery. So it was like three days and then two days, and then one day and then the same day, right? So they keep getting better and better. And it's like, oh, by the way, let's give you music too. You know, let's give you Amazon Prime. When you get that, let's go ahead and give you movies. You know, they give you a lot of stuff that is like, wow, I get this also. So we did that at Zappos, where we would do the description of our shoes and so forth, and they'd always get better and better. And then we took it and showed videos of our shoes. So we kept on investing capital into that and making that flywheel, so the wow gets bigger and bigger and it attracts more people which attracts more customers, then more vendors. And it just keeps going around. It gets better and better over time.
Dr. David Vik: A lot of people just, if it's not selling, they go ahead and just try to market it. But it's like, you don't want to market something that's not selling.
Dr. David Vik: You know, you want to get it right first and then let word of mouth spread. So you don't have to market. But when, if you do market very, very channeled.
Annaka: It's like the sales funnel was like, oh, we have one customer. That's the end of the experience. We got that one customer we win. And it's the flywheel has been picking up speed kind of, I don't want to say recently, but within the last, maybe 10 or 15 years where it's like attracting, engaging. I can't remember the third one, but there is a third one. And I'm going to kick myself for forgetting this later, but it's, you're not done with your first, with your capture of that customer, quote, unquote, you got to keep the experience going. So, this just makes me really happy.
Dr. David Vik: Yeah. You want to get it better and better. We had 75% return customers every day at Zappos. So we didn't really need the new customers. Right. But they came anyway, because everybody says, Hey, try it. You know, you'll get them the next day, so...
Annaka: Right. And it markets itself.
Dr. David Vik: Right.
Annaka: But should every startup have an advisor or someone to consult with, like you, when they're making decisions for the company?
Dr. David Vik: You know, it's really up to them. People don't know what they don't know. And I didn't know what I don't know, but I knew chiropractic at the beginning. But that wasn't enough. You need to know business. So I would suggest, but here's a challenge, advisors and board members. I've worked with board members working with companies and my gosh, some of them are just like done. Right. They had a good career. They don't need any more money and they're just done. Right. They just want a place to go to and someone to talk to. And the stuff that I've seen, some advisors and board members do is like pathetic. It's like asleep with the wheel. I think Musk recently started ripping some board members at Twitter just because they should be.
Dr. David Vik: You know, because... So you gotta watch out. But if you get a good advisor, yeah. Because they're going to be the jungle guide that goes from soup to nuts, or should be able to go to soup to nuts, throughout the process, through an exit. You know, whether you want a tax, a non-taxable exit or not, I mean little things along the way, just keep coming up. And I've seen some wrong moves, time and time again, people get wrapped around the axle quicker than you want to ever think about. And it's a sad thing, because they're going down the tubes just by a couple different decisions that aren't... And again, look at all the websites and internet companies you deal with. And there's probably a handful you keep, and there's so many choices nowadays. So you're not going to put up with something goofy. Right?
Dr. David Vik: And it doesn't take much to make it goofy.
Annaka: So let's say for instance, I am a startup founder and I'm like, I'm lost. I need some help. I need someone. I need an adultier adult. Someone help me. How do they find people like you who actually know their salt versus someone that's like buy my 10 step guide to starting a startup.
Dr. David Vik: Yeah.
Annaka: You know?
Dr. David Vik: You know, that's really tough. It's probably just ask around or see the results that they've done in the past. And the way advisors mostly go, is they take equity of the company. And the cool thing is if the company doesn't succeed, they don't succeed. So if the company doesn't have an exit, they're not going to get paid. And 9 out of 10 companies at least don't have an exit. And so I've worked with companies that I've seen go down the tubes because they go right when I tell them to go left and they're gone. You know what I mean? So it's like, nothing you can do about it. The average exit with me is like 10 years.
Annaka: Yeah. Wow.
Dr. David Vik: Yeah. So, I mean, when they start with me you might get equity, but otherwise I'll be working for free for 10 years or that equity I got is going to be really successful because in 10 years it's going to like go up a couple of thousand percent. That type of stuff. And you can get a consultant, but then usually pay cash. So you can do that. But sometimes you need to preserve a lot of the cash with startups and that's one of the troubles there or challenges.
Ethan: Sounds like your incentives are really aligned with the future, the main goals of a startup at that point.
Dr. David Vik: Yeah. And that's what's just so exciting. To have it go right and have it scale. It's just unbelievable. It's just super exciting. But again, I've been with companies that just don't do that. And I no longer, I used to invest in a lot of companies and they call it spray and pray. But the problem with that is after a while I did that and I'd see these people just go off a cliff and I couldn't do anything. Wouldn't listen to me. So it's like, you know what, I'll be your advisor, first. And then once you guys show me, you get in the right direction. Boom. I can invest some. I'll invest with the people in the future or by myself. So yeah, that's the way it goes.
Ethan: All right. So let's jump into that wow factor. You mentioned it earlier and you kind of covered the basics of what the wow factor is. So if I were to just come at you and say, what is the wow factor? And how did you come about this concept?
Dr. David Vik: Yeah.
Ethan: How would you go about answering that?
Dr. David Vik: Well, I got it from Ward. They said unique and wow factors, that's what you got to do. But I pictured it, to tell you the truth of, if my mom was a patient, right. You just want to, all the really difficult things or like she has to wait an hour. I don't want my mom to wait an hour. Right. And I don't want my mom to go ahead and shuffle through insurance pages trying to get reimbursement, when the doctor can easily go ahead and send it in. He has all the information, the diagnosis, the prognosis, just everything, the ICDA codes. We have everything, but it's just kind of lame that the docs don't bill for it. Right, back in those days at all, and it's goofy. And you know what? Treat the person, give me your number so they can contact you if they have a question or after hours. Right. It's just goofy. So that's kind of, wow.
So basically, I lived in Hawaii for a while, and a buddy of mine, Chris Mc Avin, in Lahui. He's a chiropractor also. I lived at his house for a while, and he just says, yeah, just buff him out, man. And so you just want to buff someone out whatever it takes. I've worked with companies that we had out of state guests that are flying in. It's like, Hey, great. You're flying in when does your plane arrive? And we send a limo to pick them up.
Dr. David Vik: Wow. I mean, they flew five hours, pay 80 bucks and give them a limo or an Uber or something it's like, and “Hey, you're traveling to San Francisco.” This was a San Francisco company. Great. What do you like to do? And they go, well, like to do this, this and this. So you send them an itinerary of all these different things and where to go and what to do when they come here. So what do they do? They go, wow. You know, I travel to a lot of places. No one else does this for me, but it's not that big of a deal, right? It's just doing the right thing and treating people like they matter. And that's what all our companies do, do the right thing, treat people like they matter.
And everything else works.
Ethan: So it's kind of just going, finding those ways to go over and above to make the people happy who will end up making you happy? Does that sound about right?
Dr. David Vik: Yeah.
Ethan: All right. Easy enough. So, let's jump out of the textbook and get into the kind of tactical application of this wow factor. What can startups do to identify their wow factor? And then once they figured out what it is, how should they best leverage it?
Dr. David Vik: Okay. First of all, when you have a company there's three things, any company sells, it's a product, service or knowledge, three things, that's it. And the thing is a lot of them, if they had a product, that's all they sell, which is good. But if they add a little service to that product and maybe give them a little knowledge, like how to, origin of it, all that kind of stuff, you're wrapping all three of these things. And that's what people want. That's what Amazon does. That's what we did at Zappos. That's what we've done with other companies I've worked with. That, let's say, Amazon's going to sell this pen. Well, they'll give you the description of the pen, right?
Dr. David Vik: And so they'll give you the knowledge of what happened and they'll give you other items to see that are just like that pen, which is the service and the delivery of it is a service. So they're getting all three. So that's one thing that the people can do to create the wow. Deliver the three things: product, service, and knowledge. Okay. That, and then basically look at what's broken out there and then do the opposite. And try not to worry too much about the how, at that point. And we started with Zappos it was like, I think seven day shipping, because everything else was two to four weeks, right?
Dr. David Vik: It was expensive. But with the flywheel, six days, five days, four days, three, it's the same day. Right. So in doing that, we had our first fulfillment center at Zappos in Northern California. But the thing is everything ships out of Kentucky where the UPS hub is. And so it was always one day to ship it there, but we wanted to have same day shipping from the very beginning again, we didn't know how, right.
Dr. David Vik: So we basically said, Hey, well this process and procedure, our fulfillment center or warehouse cannot be in Northern California. So that's when they moved it to Shepherdsville, Kentucky, which is 20 minutes outside of UPS. So, we have to set things up. So that's how little things incrementally go towards the ultimate goal of what you have, but you didn't know how you're going to get there.
Ethan: So, basically once you've identified this wow factor, I mean, do you just basically call up your marketing team and say “Hey, scream this from the rooftops.” Or do you just put your money where your mouth is and create that wow factor and then let it sell itself? Or am I not even thinking about this in the correct way at all?
Dr. David Vik: No, no. That's exactly right. We didn't really market that much at the beginning, as far as our wow factors. We just, we gave them the experience and they experienced the wow factors. But the one thing you want to do is clearly articulate the wow factors, has to be six words or less. I wrote a book called The Culture Secret, and I have a workbook, six words or less. Some people say what they do. And it's like, “we're the greatest company. We do this and that.” And it's like, no, what does the customer get? With the wow factor. So the customer Zappos got free shipping, free return, right? Not great shipping policies or something goofy. Right. It's not like what the company delivers. It's what they experience. So that's what has to be, what the customer experiences. It has to be clearly articulated. So someone could remember it, repeat it, tell somebody else. Okay.
Dr. David Vik: That's-
Annaka: The value statements.
Dr. David Vik: Right. And if it's too long, people can't remember it. And then also another thing that there's so many different layers, you have to have the vision and purpose and then you have to create the culture that will support and drive the wow. And live and breathe it. So there's these different moving parts, but we did it there at Zappos and I've done it other places. So it's not that difficult, once you know how. But there's different pieces you want to go ahead and align. Everything has to be in alignment. Of course, right?
Annaka: Are these things that people have to have, like before they even get started, is this, where does this part happen? Is this when they're validating the idea or do they kind of already have all the parts and they just need that cherry on top?
Dr. David Vik: Yeah. They could have all the parts. They could have no parts, but they really have to think about “what can we do to be customer centric?” Let's look at it from the customer's eyes. Right. And maybe we're charging too much money. So they got to really look at it through the customer's eyes, because the customer's going to bounce if something feels a little bit sketchy. I had a company one time, I'll let you know, it was a do it yourself recruiting company. And it was not, it was a great company. But the choices that they made is, I was talking to the founder and he says, Hey, we have a little too much churn because people want to use our site for like a couple months, and that's it. Then they stop paying. And I said, well, you got to get them more engaged, deliver some, a little bit of knowledge, just say, okay, this is the salaries range of candidates.
And you know, just give the people some knowledge every month. So they stay on and all that kind of stuff. He says, well, you know what, I'm going to just go ahead and make them sign up for a year contract. I said, really, you're going to piss them off for 10 months, when they really only want two? He goes, yeah. But you know, we get paid for a year. Well I think you can guess what happened?
Annaka: They paid a lot of money back.
Dr. David Vik: Yeah, no, they didn't pay a lot of money back, but they were gone. They were gone after about a year, year and a half. Yeah. So you see, you watch this kind of stuff and I had a lot of money into it and you kind of go, whoa, how can? You know what I mean? So if you're thinking like that, just a money grab without thinking about the person you're going to go downhill. And so many things, things are so pedestrian, it's just unbelievable that that happens. But look at all the websites, look at all the platforms you go to. It happens a lot, right?
Annaka: Oh yeah. When it's like, “I can't really think of any way to solve this. So, let me just get a little more so I can survive a little bit longer and maybe it'll come to me.” And I mean, you have a very customer centric, customer oriented approach to the startup strategy. And how does that translate? Because we have a lot of tech and a lot of web right now. How does that translate into the actual user experience from point A to point B?
Dr. David Vik: Well, if everything's aligned, it really is good. You know, you don't have like about 12 clicks once you get out. And when you put a credit card in, you don't have to keep doing it and doing it. And then all of a sudden it rejects it and you do it again. It's like, you know what I mean? So with that customer centric thing, it's just beautiful. You know, if everybody knows it and the front end team wireframes it up really nice. And then the back end team gets the navigation going well and so forth. Because you know, the simple thing of just scrolling, if I'm looking at a page and I just scroll the bounce rate goes up exponentially, if you have to scroll. Right?
And you probably look at with text, you want to have more infographics on the website and on your site and so forth. So people can pick up what you're trying to do and what you're trying to say and what you're trying to deliver and provide right at a glance versus reading. Probably when you get a text or an email where you have to scroll, you delete it. Right?
Annaka: Yeah. Or wait until later to read it.
Dr. David Vik: Yeah. Yeah. But you're not happy about it, you know?
Dr. David Vik: Right. So there's a lot of other things you want to do to capture everything together, but it was a great question, Annaka. Thank you.
Ethan: All right, Doc. So clearly you've had a lot of different experiences and roles inside the startup ecosystem and you've worked with all sorts of various types of companies. Can you tell us about a time when you gave a founder some, let's say unconventional advice?
Dr. David Vik: Ah, wait, just don't overthink it. That's some of the advice. They get, sometimes they get granular on stuff, but you know, I guess I'd like to broaden this out and you can tighten it up after I talk about a couple things, Ethan. But some of the biggest problems that I have is basically the unconventional advice I guess, could be, is they overvalue themselves, especially at the start. As things heated up in the stock market, people would say, “Hey, I got a pitch deck. You take a look at it. You know, it's 5 million, we're asking for $500,000 safe investment, 20% discount. And basically we're at a $5 million valuation.” It's like, okay. And then fast forward, like a year ago it was, people were coming in at a 10 million valuation. It's like, okay, what do you got? And they go, well, we need 500,000 to, or a million to produce an MVP. And that's a minimal viable product. And it's like, so you want money? So you could go ahead and create a minimal viable product. Why don't you have that right now? Right. What have you invested in this?
And so a lot of these founders, they'll say, look at my, they'll show screenshots and everything you go, wow, that looks really good. Can I see any navigation in the back end? They go, no, these are just screenshots. And so they probably took a couple months, made a pitch deck and did some screenshot and then want money at a five or $10 million valuation. It's like, okay, so we can sell your company with screenshots for 10 million right now. That's what it's worth. Right? And so the unconventional is, it's like, well, I don't want to take money and give away more equity at the very beginning. But here's the deal, investors, most of them and VCs and stuff, they're very smart people. And if it's valued low at the first round, you're going to have a stock split or they're going to get a better round and it's going to gain and it will attract more people anyway. But the harder you make it and the more difficult and expensive you make it just shrinks the market of people don't even want to…
Because it's always a big bet, nine out of ten, I'm going to lose my money. So I'd rather lose less money and less valuation than leave in less money at a higher valuation. So that's kind of the stuff, don't overvalue your deal, especially if you have nothing. But like the founders of Google they created their algorithm when they're still at Stanford. And the professor brought him over to a buddy's house and the guy looked at it. And back in the day, when you Google something or when you went on the internet, you couldn't really find anything. Nothing was really relevant. You know, you look for a bicycle in California and New Jersey bicycle would come up, or a factory or something.
Dr. David Vik: And so they looked at it and he goes, my God, this is unbelievable. And the guy says here's $500,000, because they already created it. You know? So the best thing is if you don't want to give away a lot of equity and have high valuation, create something, bootstrap it. And so you have something really cool to show that really has some impact and some wow. That's not just another me too company. That's what I can say to startup founders, take a little time, man.
Ethan: Right. Take some time, put some skin in the game, go bootstrap it.
Dr. David Vik: Yes.
Ethan: And then you know what, in two months you might not even need money. You might just be able to go off that MVP and keep it all for yourself.
Dr. David Vik: There you go. There you go. Exactly.
Ethan: Right. See, we got this together. We're going to knock this out.
Dr. David Vik: Yeah.
Ethan: All right. So you mentioned a while ago you were pitched to be on 60 Minutes, you've written a couple books. So I'm sure through the years you've done quite a bit of media, podcasts, interviews, conferences, all that sorts of stuff. Is there anything that people seem to get tangled or twisted about your message?
Dr. David Vik: Yeah. Since we had a great culture at Zappos and I've helped do other cultures, they go, you know what? I got the culture and a couple times they go, I'm the Culture Tzar, or I'm the culture person at my company. But the thing is, the culture is everyone. And I've seen it before, where if you have a culture person, then they're responsible for the culture and it's always their fault or what are we going to do next? Instead of creating the culture, it's like, this is what we do. And this is how we do it. And these are the values that we value. People don't really do that. They kind of short step it and just say, “Hey, we got a great culture and we have ping pong tables and we have great food and we have skits and all that kind of stuff.”
And the thing is, it's like a chair manufacturing company and it has nothing to do with getting their stuff out the door to have the customer. And they don't have any unique factors that will wow the customers, they're just creating a lot of fun inside, which probably makes happier employees, but maybe not more productive employees because they're not aligned on the throughput of what they have to deliver or provide to the customers. You follow me? I mean, to grow and advance in your career and have a company that's really scaling. It's all about the customers, because if all your customers go away, you're done, in a single day. Right?
Dr. David Vik: And conversely, if no employee comes in, you're done. So it's always about the employees and the customers, but the customers first and then the employees, first really, but then they have to support and align with the throughput to our customers.
Annaka: Absolutely. I think I want to speak for a lot of, well, I consider myself a good employee. The people around me are good employees. I think most good employees really want to show up for the client or the customer or the corporation, the company, all of that kind of stuff. And employees need supporting too. What happens when a company's culture is just in the garbage, how do they come back from that? Because at that point, the company's not serving anybody.
Dr. David Vik: Right. Right. Not at all. It's serving them poorly. Yeah. I've been with a couple companies that do that and they had a hundred percent turnover. And the biggest thing is you just sit down with each employee and get to know them. You know, what's your hopes and dreams? Where'd you come from? All that kind of stuff. Because they want to be acknowledged and recognized and validated. And then it's like, Hey, what do you think we could do with the company? You know, they say their thing. So you just go around, it takes a little time. But I remember one company, one of the founders, they had a hundred percent turnover. He reminded me, he went to breakfast last month and he goes, he goes, you know Vik, he goes, what I remember when you first came in, man... And they're doing unbelievably well.
Is that year over year turnover? They're a nine year old company and there's a guy named Ben that I said, oh, I got to meet with everybody. See what's going on. So I'm meeting with Ben and we come out of the office and Ben's laughing and I'm laughing. We're slapping high fives. And one of the co-founders, he said, I looked at him and they go, just wipe that smile off your face right now.
Dr. David Vik: But he was saying that in jest, because that's the way the culture was before. And it's like, what is my employee doing laughing and having fun with some interloper that came in to talk to him. Right?
Ethan: Oh man.
Dr. David Vik: So anyway, he said it was kind of a turning point for him. And so we tried to, well, we didn't try to do it. We treated them more like an asset than a liability that you had to pay every week. These are our people, these are the ones, it's not about you, the founder, you, the founder, or you, the founder, it's about these people. If they never show up. At my clinic every day, it's like, I thanked everyone that worked for me. I said, thank you for the day. I really appreciate it. We served a lot of people. They're getting so much better and it's really all to you people. And I really thank you every day. And you know, at Easter we'd get See's Candy baskets. Right. And I'd open my clinic at 5:30 AM, but I'd have bunny trails to their offices. Right. So just, it's just the stuff. Right. For Thanksgiving, everybody had either a honey baked ham or a Turkey at our meat company or our a regular market. So little stuff like that, just treat him well, man, buff them out. It doesn't take much.
Annaka: I agree with that. I agree.
Dr. David Vik: Yeah.
Ethan: Just make people feel like they're appreciated.
Dr. David Vik: Yeah.
Annaka: All right. So of the two books on startups and entrepreneurship, Take it to The Next Level and The Culture Secret. What are a few of the main takeaways for entrepreneurs from either of them?
Dr. David Vik: Taking it to The Next Level is a DVD I made as a coach at Zappos. And it's basically ,a lot of it is self talk. You know, a lot of people, they talk to themselves poorly and if I talk to them the way they talk to themselves, they’d probably hate me.
And so that's a big thing. We don't want to do the self-talk, you know? So we just want to, you're the greatest, you're the best, you know? And then things will start fulfilling. It's the pygmalion effect. So I would definitely up that self-talk. Self-esteem too, just get your self-esteem where it needs to be with self-talk. We're only got one go around in this life and why not just go for the gusto and treat yourself right. And know your worth and know your value and so forth and contribute. And if you're not contributing in some way, contribute because you're never going to feel better in your life than if you help someone out or help nature or help animals and all that kind of stuff. So just help. Yeah.
Dr. David Vik: Yeah. That's one of the big things.
Annaka: I love the, I had heard of this perspective. I don't know, a couple years ago or something, something when it was like, would you let someone else talk to you the way you talk to yourself? And it's like, that's just such a huge, like light bulb moment where you're like, no, never, never. And then here I am waking up every morning, like, oh, it's you again? Like, come on. You know, so now I'm going to watch the DVD. So I need that little pep talk.
Ethan: There you go.
Dr. David Vik: I love it. I love it. Yeah. You, yeah, you gotta do it. It's just like, Hey, this is going to be a great day. And the thing is whatever... Now that's a good thing. You said whatever you focus on. You'll see. And you'll pick out, like, let me ask you a question. How many, on your way to work today, how many red cars did you see on the road?
Ethan: No, I'm just kidding.
Annaka: I'm like, did I see a single red car? I don't even remember.
Ethan: I actually wasn't watching the road at all.
Dr. David Vik: That's mostly the right answer. I gave workshops at Zappos. I'd ask them all the same question. And they'd say maybe one or a lot of people say, I don't know, I didn't really see any. I'd said, okay, we're going to meet tomorrow. Let me know on your way to work. How many red cards you see when you come in tomorrow. And they all had finite exact numbers, right? Like 14, 12, 6, whatever. But the thing is because they focused on it. So whatever you want to focus on, you'll see. So if you focus on the good, you'll see the good. But if you wake up and say, you know what? This is such a crappy day. I feel like crap. You know what? I hate this, this is a crappy day. You'll get up. You'll spill your coffee and everything you'll do will support your mindset, right?
So you say, see, look crappy day. You know, if someone cuts you off in traffic... Crap. But the thing is, if you say this a great day, unbelievable. Even if you spill coffee, you go, ah, I got to change anyway. I didn't like this outfit. And you'll be on the road. And as a person cuts you off, you won't even notice it. You'd be playing with the music, you know? And so it's a totally different mindset. And you could follow where your thoughts go and your self esteem and your self talk goes. So that's one of the big things on a personal level.
Ethan: Preach it Doc.
Dr. David Vik: Yeah. And the Culture Secret, I just wrote the book for, because I talked to thousands of people at Zappos and all our visitors that came in and someone would own a fruit stand, some would own a small watch company. So I just wanted to make something so they can take a look at no matter what they sell, and hopefully it'll help out there. I have some of the secret sauce still in my head that helps out with the companies I work with. But yeah, I would say that's about it. And just keep believing in yourself because that's really all you have. Okay.
Annaka: It's true.
Ethan: Darn right.
Ethan: Doc, what's the most common mistake you see startups or their founders make?
Dr. David Vik: Okay. Overvaluing themselves. And again, they can do whatever they want, but that's one of those mistakes. Not a real business model. When they come in, they go, Hey, this is what I'm making and I know it's going to sell. So they have no business model and no flywheel, no wow factors. And then they put it on Instagram or wherever they're putting it and it's not selling. And so when it's not selling, they just say, well, we got to go ahead and do marketing. And so they spend half their $500,000 on marketing, but they're marketing something that doesn't sell. And they're wrapped around the axle and they go belly up. You know, I see a lot of that kind of stuff, because if you don't have, you're not customer centric, don't have the wow factors. Don't have the culture to support it. You don't have the values, everything aligned and you just have a product or a service, that's great, but it may not even be articulated.
So whoever gets to product or service is not going to be able to remember it, repeat it, tell a friend. And so there's a lot of moving parts in there that they just don't put all together and think that advertising, and marketing's going to save the day for them later on down the road, especially advertising. It's like, do you know if your product doesn't sell or your website doesn't work, I mean, advertisers are not going to want to go on there and pay you. Right? So it's like, they don't get that. It's like, if they need money, then they'll just advertise. Or if they need to sell it, they'll just market. And so they haven't prepped it and aligned it and got everything working. So it will scale, and they end up pushing rope until it's done.
Ethan: All right. From your unique vantage point, and again, you've done everything in this industry, where do you see the startup ecosystem changing, and give us your short term forecast and then some longer term predictions?
Dr. David Vik: Ah, I think there's still a lot of entrepreneurs out there that want to do what they want to do. I think the landscape of funding is changing a bit for VCs. There's a lot of hedge funds now, and I think there will be even more hedge funds in the future, that they're going to have an arm of venture. And family offices, they're going to have an arm of venture. They already have an arm of venture. They want all their monies, this amount and venture, this amount in startups. So they're going to parse it out, whatever they want, but I think it's going to be more dispersed as far as funding. People make money, they're going to fund it personally. There's GoFundMe, all that kind of stuff. I think it's going to be more of a ground swell of starts where people have a product and they put it on whatever they put it on.
And then like a TikTok, then all of a sudden it goes big. But I don't know, since this is such a, you know we're tied to this all the time, this phone. I don't know if it's going to be more of the entertainment that's being produced by individuals, OnlyFans, all that kind of stuff. Or it's going to be actual companies that change the way the world works. And I think it's going to be a little bit of both, because the way the world works now is pretty much in disruption. You know, banking, internet, shopping, you look at the 11 sectors in the world, and they're basically all in disruption because they were broken just like, you don't need a bank anymore.
Dr. David Vik: Everything's online, our credit cards. So anyway, there's a lot of stuff that's been changed.
Ethan: That's a really big answer.
Dr. David Vik: And will change. Pardon me?
Ethan: That's a really big answer.
Dr. David Vik: Yeah.
Ethan: Which is absolutely fine because you're right. There has been so much that has changed in the world. And I don't, I personally don't see the rate of change slowing down in the near future. So how do you, as a founder or a future founder, how do you get yourself into the right headspace to where you can think of how these changes are going to affect the decisions that you make?
Dr. David Vik: Ah, the future's definitely going to change and for one, whatever they're thinking, think bigger. Right?
Dr. David Vik: And don't put out another, me too company because the me too companies nowadays are mostly broken. Right? And they need to change. So those two things for sure. And just pick on something you're passionate about, because then you don't even, not even working, man, you're going in there just creating and having fun. And that just spills over to the employees that come around. And then you can build a blueprint because you know, 10 employees are great at the start. They all know what's in your head, but pretty soon it gets siloed and bigger. And then things start going awry. No one can see what the house is going to be looking like when it's done. So you get all these contractors, like doing their own thing on this creation.
Dr. David Vik: And becomes ugly, quick. So-
Ethan: Isn't that the truth?
Dr. David Vik: Yeah. So I would really super be passionate about what you're doing.
Annaka: Yeah. At least that'll carry you through if there's setbacks, hopefully.
Dr. David Vik: Yep.
Annaka: Fingers crossed.
Dr. David Vik: Yeah.
Annaka: All right. What is your number one piece of advice for aspiring entrepreneurs? We're asking you the tough ones now. I know it's like, think of everything you've ever done and come up with one thing.
Dr. David Vik: Well, it's a couple things. Make sure you like what you're going to do. Once you commit, I would commit like that pig and in a ham and egg breakfast, and just go for it, man. Yeah. But you know, people always say you worked to yourself all your life and I go, yeah, you can.
Just pick at least 12 hours a day that you want to work and go ahead and do it every day. But a lot of people it's like, well, I just, I want to start my own company. It's like, really? Are you prepared? Right?
Dr. David Vik: Yeah.
Ethan: All right. Great answers. This has been a lot of fun. I've got one more question for you. And this might be the hardest one. So be prepared.
Dr. David Vik: Okay.
Ethan: All right. Where can people go to learn more or connect with you? And do you have any asks of our audience?
Dr. David Vik: Okay. Yeah, they could get my book that I wrote. It's called the Culture Secret, it's on Amazon. And I also have a workbook, so they can do that. They can contact me. My email is firstname.lastname@example.org, D-R-V-I-K.com. And as I told you folks earlier that everybody's had my phone number forever. So just like I'm taking care of the person. It's 650-388-2973. And you can always text me if you want or give me a call and let me know what's up. But the ask for the people out there and your audience out there is, you go around once in life and you just want to follow your dreams and your passions.
And if you do that in a way that helps people, things usually work out. If you follow your dreams and passion and it only has to do with yourself or makes you feel better, or self-serving, a lot of times they don't work out. So if you could just kind of bottle what's in you and the magic that's in you and figure out what you want to do. And you could even just be working with somebody or for somebody or for animals or at the SPCA, whatever it is, man. Just dig it. And once you dig something, nothing else matters, man. It's just, you're living the dream every day. And it's not all about the money. It really isn't. You know, you look at the rich people, they're more miserable than a lot.
Annaka: Yeah. For sure.
Dr. David Vik: So, that's my advice.
Ethan: All right, Doc. Cool. Cool, cool. Thank you very much for your stories, your insights. We are going to put everything in the show notes, all of the links, your phone number, your email address, it's all going in the show notes. So everybody go check those out. And that is going to be another one in the can. That is all for this episode of the Startup Savants Podcast. Thanks for hanging out with us. Now, I've mentioned this a couple of times before, but I don't quite think I've done it justice yet. We've got a whole team of folks who spend their days researching, filming, storyboarding and all the other things it takes to make really great videos. They are all business related, but somehow also totally actionable and entertaining. So if you haven't checked those out yet, head on over to youtube.com/truic and dive right in. I'm sure it will be love at first sight. For tools, guides, videos, startup stories, and so much more head over to truic.com. That's truic.com, T-R-U-I-C.com. See ya, everybody.
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