Champion Story 17 | Jeff Dennis
Recorded on December 14, 2018
Biography: Jeff Dennis acts as Fasken’s Entrepreneur-in-Residence. A trusted advisor, Jeff works with high-growth companies, providing strategic advice and financing. Frequently working with start-ups, acquisition, and financing for a variety of businesses, Jeff has assisted clients spanning a range of industries, including real estate, hospitality, film, insurance, cosmetics, franchising, high technology, alternative energy, investment management, medical software, online auctions, incentive marketing, and employee motivation.
Co-Founder of the Toronto Chapter of the Young Entrepreneurs Organization now called the Entrepreneurs Organization (EO), Jeff has served in many leadership capacities for the organization, both nationally and internationally.
Through his association with EO and the Ewing Marion Kauffman Foundation, Jeff created a seminar series called “Lessons from the Edge.” At these highly-rated events, entrepreneurs shared their worst mistakes in business and the important lessons they learned. Jeff’s best-selling book Lessons from the Edge was inspired by this successful seminar series.
Thank you for your support, Jeff. I know you’re passionate about mental health.
Mental health and stress is an issue in the tech community, but I don't believe it's anything new. Stress is something that entrepreneurs have been dealing with for generations. It may be different today. It may arise differently.
There may be other factors today that make it different in some ways. Many years ago, when I wrote my book called Lessons from the Edge, the idea was for entrepreneurs to share their war stories, their biggest mistakes in business, and the lessons that they learned.
I was a member and leader with the Entrepreneurs' Organization, which is called EO today. I was able to solicit stories from members because I was a global leader. We received over three, four hundred stories. When we solicited them, we weren't sure what we were going to get back, and we weren't sure what the common threads were. We had to read them all, slice them, dice them, and figure out… What's the message here?
There were five themes that we kept seeing. Leadership, what is it to be a great leader? Stories around people, employees, customers, stuff like that. Stories around money, investors, bankers, lenders, receivables. Stories around partners, co-founders, lots of those. We could've written a whole book on that.
A separate book?
Right? The last part of the book was the personal stuff. We didn't specifically ask for personal stories, but we received many. Mental health plays a role in these issues, but it was also a thread throughout all of the stories. There were stories about addiction. There were stories about divorce. There were stories about health issues because the entrepreneur didn't take care of themselves.
The connection between business and mental health is nothing new. We wrote this book 17 years ago. Somebody could have written it 25 years ago or 100 years ago. It's stressful. It's stressful being a founder running your own business. People look at you. Everybody believes in you. Part of your strength is to be persuasive, to get people to quit their jobs, to get customers to try the product, to get investors to write the checks.
You’ve got all this riding on your shoulders and it's taxing. It's a big burden. I remember we had a company we were involved with... It’s 20 years ago now, but it was a venture capital-funded situation. It was a cosmetics franchise company and we raised quite a lot of money. We followed the strategy which has become prevalent in tech businesses - where you build out the infrastructure first, believing that the sales and customers would come.
It was working, except we ran out of cash. We had to go back to the market to raise more money, except the economy changed. It was just one of those situations where it was a bad time in the economy; you just couldn't raise any more money. We're burning through cash, and we're laying people off. Where is the money going to come from? What are we going to do?
When we hit a wall, we had to sell the company. It was restructured by the buyer and a lot of people lost their jobs. Everybody was shocked. Nobody could believe it and were seen as bad guys. We were surprised by the anger as we operated an open book business. Our employees were well aware of our predicament. They knew everything, yet they didn't want to believe that the entrepreneurs couldn't save the day like Superman. Right?
Everyone believes in you - your employees, their families, their kids, their bankers, and their mortgage people, their lessors for their cars. All these people are depending on you. It's a lot of stress. It's a lot of stress, so what do you do about it?
The message that we distilled from the book was to live a balanced life.
Follow your mother's advice: eat well, get lots of sleep, exercise, have some spirituality in your life, whatever the flavor is for you. It doesn't have to be a religion. It could be yoga. And if it's really bad, get help. See a mental health specialist, take medications. To survive as an entrepreneur, you got to check those boxes.
There was a study that was released in May of this year [2017]. It was done in Silicon Valley with the top 30 tech companies and they interviewed 11,000 employees. They found out that the burnout rate is 57%. That’s crazy and we’re not even including the executive teams in this.
I wonder what we can do differently. Because if this is the trend right now…
It's a culture thing. The culture generates this idea that it's a badge of honor to pull an all-nighter. People come into the office and brag. We see that in the law practice, and probably investment bankers, and some of these other sort of Type A, high-pressure, very big money fields. They're bragging that they worked all night, had to order breakfast in, etc.
The organizations create a culture that encourages that, rewards that. The bonuses are tied to it. They make TV shows, like Silicon Valley, which glorify it.
The other problem is that these companies are under-capitalized, so they're trying to squeeze as much juice out of the orange as they can. They don't have enough revenue or capital to pay these people what they’re worth, so they create a culture that's rah, rah, fun! They’ve got foosball. They’ve got ping-pong. They feed them. They can sleep at their desk, and do everything for them. They don't have to leave.
It starts in the organization. We have this problem with law firms too. It’s better than it was 25 years ago, but it's still hard for young lawyers in traditional law firms.
When I think about what's happening right now, it's not just tech. Companies incentivize long hours, not work-life balance.
Yeah, you end up with these conflicting messages where HR has got the wellness thing, they've got diversity lunch, but then sales managers are cracking the whip, so you're getting mixed messages. There’s got to be an integrated, balanced philosophy about what life looks like for employees in and out of the business.
If I had been a lawyer, practicing in a law firm for my entire career, I probably would have missed a lot of my kids’ games, and plays. As an entrepreneur, I could build my calendar and my business around those priorities.
Of course, there were times when business got in the way. However, I coached most of my kids’ hockey, soccer and baseball teams. I was always there.
Most traditional lawyers miss their share of their kids’ events.
Wow. That is a huge problem for entrepreneurs nowadays. We can let our work take over our lives, rather than putting some boundaries. What do you think we, especially younger entrepreneurs, could do better?
I have a couple of reactions. The first reaction is that there is this misconception, in my view, that you can start a company with a laptop… That it’s all you need to start a company, $2,500, get a Mac, and you're in business.
The second part is that all these companies are under-capitalized, grossly under-capitalized, and so what they're trying to do is capitalize their company through human capital.
Right.
They don't have enough capital. That's why they're stretched. When I first got into business over 30 years ago, you needed half a million bucks to start a business. It was a brick-and-mortar era, right? You put a key in a door. You get a lease, furniture, inventory, employees. That would cost half a million bucks.
Today, people go into business with virtually nothing, then are running around looking for strangers to fund their dream and get people to work for below-market rates and sometimes for shares. When we speak about mental health, we’re talking about the symptoms, but the disease is under-capitalization. These are all the symptoms of that disease.
On top of that, the founders end up with a fraction of the company after the VCs are finished with them. They work their guts out, risk everything and finally sell the business, and they are left with 15%. I never had 15% of any business. I mean, my partners and I had 100%. I never had venture financing. It's crazy to me.
In our industry, it’s always about how do you get the Series A, right? It's crazy.
Careful what you wish for. I was the chairman of Razor Suleman’s advisory board at Achievers from its beginning. Razor shares this story in speeches. He wanted to be financed by Sequoia. This dream was specifically mentioned in the Vivid Vision that he prepared 5 years before it actually came true. Sequoia funded their Series C and Razor moved to California. He did it!
He raised $30 million from Sequoia and he moved to San Francisco. At one of his first board meetings with Sequoia in attendance, after he achieved his lifelong dream, they asked him to step aside and chair the committee to find his successor to become CEO of the company.
It’s five o'clock in San Francisco (8 pm here) and the phone rings. I had my family over for dinner and Razor is literally in tears.
He had just been named tech entrepreneur of the year. He'd raised all this money. He was the toast of the town and Sequoia, his dream financial partner, wants to fire him. Razor regrets ever raising venture capital. They made his life miserable for five years.
I often say to entrepreneurs who come to see me for advice. I challenge them to be sure that this is the life that they want. Be careful what you ask for. VC-funded life is not necessarily all that it's cracked up to be. You end up owning 10 to 25% of your business. What's the point? What are you doing it for?
That's the other thing people forget. Why are you in business? What's the purpose? For me, it was providing security for my family, period, but some people are in it for ego. They want buildings named after them. They want the Orders of Canada.
Thank you for sharing that. What a lesson. The thing is, it can be so easy to succumb to that pressure because I feel like as a younger founder, that is all we talk about at events. The Series A, the exit, but not about what really happens behind the scenes. How it really is like…
Well, the most important thing is to be true to yourself, to understand what's really important because what ends up happening is, especially with these VC-funded companies, you get too many cooks in the kitchen. These investors have different timelines, different return objectives; their expectations are not necessarily aligned with yours.
Do some self-evaluation to really understand yourself and understand what's important to you. You said it earlier, what are your values? People get into partnerships with co-founders and they've never had that conversation. They spend more time interviewing employees than they do their co-founders. They jump into business without really knowing them.
I just think this notion that VC financing is a panacea is unrealistic. I don't know too many people who have enjoyed having venture capital investors as partners.
What has helped you support you through your journey?
For me, it was my EO forum. You couldn't really hide there and sometimes the issues are with your co-founders. Sometimes, the office is the source of the challenge, so you need a place [like EO] for support. I found my forum group to be useful because I could take myself out of that environment, tell the story, and make a decision. As opposed to chasing our tails, working it out ourselves, and forgetting what you stand for. It's hard to see the forest in the trees, so it's good to have a little perspective.
The other thing that was useful with EO forums, which we don't see as much of it today, is that my forum was very diverse in terms of businesses. There were women and men, people in insurance, headhunting, medicine. Nowadays, most of them are tech.
It's interesting to see different businesses have different issues, and so on, but they bring ideas that never occurred to me. We don't do that in our industry, why can't we? All of a sudden, you're seeing something that you wouldn't otherwise see.
I still go.
Wow.
Right? My dad who is 83 is in a YPO forum. He's been out of YPO for 33 years and these guys are in their 80s. They still have forum meetings.
That's incredible.
Incredible, but they've dealt with life's issues. Like when it was business, it was business. Then it was divorces. Then it was kids who had screwed up, then it was losing spouses, and then it was health issues. These guys have gone through life together. None of them are in business anymore. They're all in their 80s, retired, and spend their time in Florida.
Spouses are important too. Spouses are really important. It's important to have somebody who is supportive. My wife says that there are two kinds of people in life. There are those that have the rollercoaster gene and those that don't. My wife does not.
I have taken her on an entrepreneurial rollercoaster for 30 years. We managed, but it was harder for her because she wasn't cut out for the life of an entrepreneur. She was supportive in other ways. If you're highly sensitive to stress, maybe you shouldn't be an entrepreneur, or married to an entrepreneur. It's a stressful life.
I'm not saying I did a great job. I’ve got the scars to show for it. Lots of stressful times. Lots of issues, but we did the best we could.
Yeah. That’s so valuable… a space to share your story and to hear other people’s. Sometimes we hold a story about success that isn’t really true. If we can have the courage to share honestly, the journey would be a little easier.
I'm worried that if our society values all this stuff like it's cool to be Mark Zuckerberg, to code and stay up all night, and not have this balance… If we glorify that, and the world comes crashing down because we've got a diminishing number of jobs available due to AI taking over, people are all going to be depressed because society sets its standards, its goals, and its values here. There’s going to be a huge swathe of society who cannot meet that standard and are going to feel like failures in life. All the mental health issues. All the violence. Look what's happening in France. Look what happened at Occupy Wall Street after 2008. That was nothing compared to what could happen in terms of a jobless society.
Right.
Society may have to change its values. Look at a country like Bhutan, where it's the so-called happiness capital of the world. I've been there and it is incredible. It's not entirely happy, but they've established four principles that are the fundamental principles of their society. That's what they believe. It's like a religion, so everything is measured against that. Whatever you measure is what you get.
Right now, everybody wants to be Mark Zuckerberg, a unicorn. Yet Trump is dealing with people who are closing coal mines and people are getting left behind in a world where it says the American dream looks like this and they can't get it.
Mental health is a symptom. Society is changing and we are not able to adapt fast enough.
That gap causes a lot of suffering. When people have worked so hard in their lives and they feel like they still haven’t made it…
Well, I'll leave you with this thought. When I was younger my colleagues, contemporaries, and I, we all graduated from university and everyone had these big dreams. You're going to be a big lawyer. You're going to be a big doctor. You're going to be an entrepreneur. Everybody had these dreams. There was a lot of pressure and everyone's like, “I'm doing this and I'm doing that.” We were all defined by our cool jobs.
Well, some people “made” it and some people didn't. For whatever reason, they picked the wrong field, they weren't smart enough, they had some bad timing, whatever. What happened next was a midlife crisis for many people around 40, maybe it was 45 years old. All of a sudden, some of my contemporaries started talking about spirituality.
They'd found God. They went to synagogues. They were born again. Yoga. All of this spiritual stuff. Why? Because they found that the dream, the goal that they set either couldn't be reached or if it was reached, it wasn't worth it. They were looking for meaning in life and looking to spirituality to help them find the meaning that was not coming from this Type A thing.
In the past, I used to think these guys that gave up the fight, the Type A battle, were losers and quitters. That was the mindset back then. I don't know if it was right or wrong, but I do know that that's what happened. That people started looking for the meaning of life that wasn't through career, wasn't through being bigger, best, faster, smarter. It was something else.
Thank you for chatting with me. Everything that we spoke about is so important.
Well, it's my pleasure. Good to see you.