On Episode 93 of The Edge of Innovation, we’re talking with entrepreneur Paul Rush, about the ups & downs of running a successful company.

Sections

How Substantial Began: Starting a Consulting Company
Momentum in Business
Taking On The Leadership Role
Architypes of People Who Make Up the Entrepreneurship Community
The Ups and Downs of Running a Successful Company
Making Tough Decisions and Following Through on Them
Science Fiction & a Post Capitalist Universe For Humanity
Is Optimism Necessary For Entrepreneurs?
Do Entrepreneurs Have to Be Greedy?
Investors & Entrepreneurs: A Tenuous But Important Relationship
What Keeps Paul Going Every Day
Book Recommendations
Closing Thoughts
More Episodes
Show Notes

The Ups & Downs of Running a Successful Company

How Substantial Began: Starting a Consulting Company

Paul Parisi: Well today I’d like to welcome Paul Rush from Substantial.

So, you’re at this company and you close down after a few years. What was next?

Paul Rush: It was the immediate transition to Substantial. So, I’d had a bunch of people who really loved working together. It turns out when you gather a bunch of people with a strong common interest – our case was music and electronic music in particular – We all were very happy working with each other. We were all very unhappy not making money. And so I turned everyone and said, “Hey, how do you guys feel about doing consulting for a little bit and actually making some money?” And everyone said, “That sounds fantastic!”

Momentum in Business

Paul Rush: And the funny thing is that there was a sort of a change in the momentum or in the headwinds that is, I think, really important. It’s another thing I consider a big lesson, which is about momentum in business. The feeling at the digital music retail company was of pushing a boulder up hill and it was so hard, and it got harder the farther it went up. And we were tired. Then we started this little consulting business and it was like letting the boulder go and following it downhill. Within a couple weeks we had office space, clients, employees and we’re in the black.

When you get something that just clicks, you get a product that clicks, you follow. And I feel like that’s not something that I know how to do reliably but I know when you push too hard in the wrong direction, there’s a sign there. And there are moments when you’ll just get something that works and feels good and it’s worth paying attention to those signals.

Taking On The Leadership Role

Paul Parisi: Let me ask you a question. So, you were all together. Why were you elected to say, Hey, let’s think about doing a consulting gig?” Why did you fill that vacuum? Or was there a vacuum? Or were there other people who said, “Hey let’s go do this.” And you said, “No, I want to go this direction.” And people followed you. Right there, that is an example of entrepreneurial insight where you’re saying, “Let’s do this.”

Paul Rush: Yeah, I think this goes to some other things we were talking about earlier. I don’t understand how to identify these attributes and if they’re learned or granted with your personality, but I was the one who had started the previous company and so I was in that position – in the leadership position – and it just occurred to me as the right thing to do and so I made it happen. And it was as simple as that. I don’t think anyone else was even suggesting other ideas of what we could do next. I guess everyone else just assumed that they’d go get a job. What makes a person do that? Just have an idea that they can. That they can carve their own path. That they can go their own way at any moment. But that’s who I am and that’s who I know a lot of entrepreneurs to be.

Paul Parisi: I agree with you whole heartedly but was there anybody else who was saying we should do something or was it pretty much…. Because for me that was probably very obvious to you that that was a potential next step. Like blatantly obvious. But I’ll bet for the majority of the people that went with you, it wasn’t obvious. And when you mentioned it, it was like, “Hey, that’s s a cool idea.” and it’s like “duh.”

When you’re an entrepreneur, one seems to be so close to the ideas that it’s like, “Well, this is obvious. Of course, you’d do that.” And I’m wondering how you have some ability to look back on it? What can you offer or insight? Did that happen? Was it not even thought of? What happened? A little bit deeper there. “We like each other. Let’s go do something together.” Or what was it?

Paul Rush: I think I realized that I had something valuable which was a group of talented engineers and people that liked each other. And this sort of ethos around the VC world where VCs will generally look to who the leadership is and who the team is. Sometimes above and beyond what the product or concept is.

Paul Parisi: Right

Paul Rush: It was something that felt natural to me. That, “Hey, we had something valuable here, which is a collected group of people who are good. What can we do with this?” We could have gone and started a product but it didn’t seem practical given that we had negative money.

And I had known that there were people that were hiring for this kind of work. It was in high demand, so it was a natural answer of the question of, “What comes next?” But, I think that it is interesting that not everyone asks that question of themselves. “What can I do with what I have? How do I take what I have into the world in a way that is novel or non-traditional?” I guess.

Architypes of People Who Make Up the Entrepreneurship Community

Paul Parisi: So, do you think, as we talk about entrepreneurship and innovation here, that – see for you that’s not a scary question or a scary discussion to have to say, “Well, let’s do this?” Whereas some people may not even perceive it, let alone have the wherewithal to survive the scariness of it. They may be terrified of saying, “I’m going to go start a business.” Or, “Let’s do consulting.”

Now, me and you would come and say, “I have no idea how to do that but well, we’ll figure it out.” Some people are wired, maybe the majority of people, with, “I have no idea how to do that. I’m going to run away.”

Paul Rush: Right. Right. Yeah, I have thought about the sort of architypes of people who make up the entrepreneurship community and there are different ones. I think you and I might be more similar. I do know that there are people who work in the corporate world for fifteen, twenty years even, and then decide one day that they want to do this. Although I think that’s probably a lower percentage.

I really think that if it’s not something that was sort of given at birth, than I think the alternative is that someone turned you on to the ideas in a strong way, that you could do your own thing. That’s the reason why I want to teach entrepreneurship and why I care. I mean, I think it’s a very positive force for the world. So, at the source, it’s that. But I don’t think most people even know that it’s a possibility.

I can’t identify when, but I know I was exposed to this idea by different people. My father probably was one. He wasn’t an entrepreneur, but he was an independent. Knowing that you can get out there and do your own thing, is the seed. And when that grows with some amount of confidence and the desire to try, I think those two things are super important. And I think it is a shame that we don’t teach people more, that this is a thing that is possible.

The Ups and Downs of Running a Successful Company

Paul Parisi: Interesting. So, you were at Substantial. You founded Substantial. Now you’re back at Substantial. What happened in between there?

Paul Rush: Well, the first couple years of the company were fast growth. We hit the 2008 slowdown. That was a really really rough year. We survived it and then we started growing again and we were doubling year after year, for quite a while. And then, I think it was incredible because we never really intended to have a consulting company. It was an accidental start as a lot of companies can be accidental successes. And then suddenly, I wound up with eighty-five employees and a company that was doing very well, and people were excited to work at and we were just following our noses.

The problem with that is that following your nose only gets you so far. And people run into this at different points, I think, when they’re starting businesses but you do run into a wall of lack of experience and this sort of intuition that you have about where to go next, or the luck, or whatever you want to call it, sort of runs out. I got frustrated after a year, to a stagnant situation where I thought to myself, “You know, maybe I’m not good at this next phase.” We had hit a plateau We’d hit plateaus before and I’d figured out ways to get around them but this plateau seemed more difficult to overcome.

And so, I talked to people and was convinced that the right thing to do would be to let other people take over and I went through a big crisis of confidence, thinking maybe I was the one holding the company back. Maybe this is something that is my fault and I need to let it go and I owe the people at the company that. So, it was really hard to take these things a part. But that was what I ended up doing, stepping away from the CEO role.

I attempted to take a break and didn’t get too far into it when the company started performing worse and worse and I spent the next year trying to work from the sidelines to help get things back on track and it wasn’t working and I was kind of in denial of the fact that it wasn’t working. It was a very difficult time in life for lots of different reasons, but it was hard to watch a thing that you’d built, start crumbing. And people on teams you cared so much about struggling so hard. And then the financial reality set it. It got the point where we were in debt to the bank. And I couldn’t deny the fact that things were not going well any longer and I stepped back in and then went through a very difficult process of trying to pull us out of the nosedive that we were in. I managed to do it somehow and then had a process of figuring out who to run it next because I was still pretty convinced that this was the right thing to do. And found someone internally and prompted them. They were head of accounts, and she’s now running the company. She’s in the CEO position and I’m back full time in a sort of founder role, doing sales work and doing other things and trying to push the company in interesting directions.

But yeah it took two tries and the second try seemed to be doing really well. We’ve formed a great team and she and I, of course, don’t always see eye to eye, but we are working really effectively together, and the company, since we made those changes, has been profitable month over month every month.

Making Tough Decisions and Following Through on Them

Paul Parisi: Cool. Now were those changes ultimately in retrospect obvious?

Paul Rush: It’s obvious that we needed to change leadership.

Paul Parisi: Or were they unanticipated? The changes you needed to make, were they surprising to you or were they pretty obvious. This was what needed to happen it was just a matter of specifics and how we do that?

Paul Rush: It was a lot of the basics were pretty obvious and the reason why that can be such a problem is that it’s very easy to know what you have to do and it can be very hard to do them if those things are difficult.

Paul Parisi: Because you’re a nice person?

Paul Rush: Yeah, because you want to be liked. You want to like yourself. You want people to like you.

Paul Parisi: So, you must not have had any venture capital in this business?

Paul Rush: No. I did not raise any money for this.

Paul Parisi: Because that would be the equalizer. “We don’t care about people.”

Paul Rush: That would change things. That’s right. That’s totally right. And I’m a big believer in businesses that are done outside that. I think they have a lot more character and can leave the world in a much better place. But yeah, they were mostly obvious changes that I just dragged my feet on forever.

Paul Parisi: Because it’s hard.

Paul Rush: It’s so hard. That has got to be one of the hardest things. Making the tough decisions and following through on them.

Paul Parisi: So, this is an interesting question. It’s difficult dealing with people because it’s great when they do everything the way they should or the way you want them to, assuming that’s the right way, but there’s a lot of inertia to overcome. A lot of energy to put into people to say, “No, let’s do it this way or let’s do it this way.”And that’s hard hard work.

Paul Rush: It’’s so hard. It’s another one of those things that I think we will work out as a group of people on the planet, is figuring out how to get people aligned and moving in the same direction.

Paul Parisi: You’re a very hopefully man!

Science Fiction & a Post Capitalist Universe For Humanity

Paul Parisi: So, you said you were an aficionado of sorts, of science fiction. Which universe are you into the most? Is it the Star Trek universe? The Star Wars universe? I’m hearing the Star Trek universe because it’s the Utopian view of people finally working together and not needing money.

Paul Rush: Yeah, I was never a big fan of a Star Trek fan growing up. I was much more of a Star Wars person but the ideas that Roddenberry put into play and the world, particularly of Next Generation. Next Generation is such a fantastic TV show. It’s really worth checking out. It can seem a little cheesy at times but it’s this fantastic Twilight Zone experimentation of the limits of humanity and an understanding of a lot about how the future could work. It’s a really beautiful show. But yeah, Roddenberry paints a picture of a post capitalist universe for humanity and I think that it might be that the next evolution of, “Can we graduate to that level?”

Paul Parisi: It’s a lot of work to graduate to that level. We have a lot of things to do scientifically. Energy is one of the biggest problems. How do we provide energy?

Paul Rush: Well, if you know the whole thing about type 1 and 2 and 3 civilizations, that’s how much energy you’re extracting from your local star. We’re not type 1 even, which is harnessing the energy that lands on our planet. When we can get to even that place, then energy becomes basically free. It’s as free as air is which is not entirely free, but mostly free. And things change dramatically. You’re right. It is about energy. As soon as we have energy liberated, we are in a much much better place.

Paul Parisi: Well, we are but we have a huge debt to overcome of knowing how to react to circumstances that we’re not used to. Because all of a sudden, how do you – not you – but how does the non-entrepreneurial, non-innovative person react in a world where they can do that? And that’s a challenge because there are a set of people that, “Just tell me what to do. I’m not interested in that.” That’s going to be a difficult paradigm shift for people to go through.

Paul Rush: Of just having more time on their hands or more agency with their lives?

Paul Parisi: More agency I would say, in choosing what to do. We would like to think that everyone would be altruistic and take the better road potentially. The road less traveled. But we just have so much overwhelming, overcoming the inertia to do that.

Paul Rush: I kind of believe that it will get easier over time. I know I sound incredibly optimistic in everything that I’m saying right now. There is a lot, but I think human beings, by and large, gravitate toward things that are better for them over time. I mean, that certainly feels like how history has gone. We are in this, quote on quote, “best time to be alive” of history and most people are not talking about that. They are talking about all the problems that we see but it’s only because we’re so globalized and we see all the problems now in focus. We used to only see community problems. You could argue that pre-agriculture was a great time to be a human too but as we are, it seems like the trends are going in the right direction. We just have to get over a bunch of really gnarly problems around how to organize ourselves and then solve some science hurdles out there. But I think it’s possible.

Is Optimism Necessary For Entrepreneurs?

Paul Parisi: You mentioned the word optimism. Do you think that a pre-disposition toward optimism is a necessity for entrepreneurs?

Paul Rush: That’s a great question. I know people who are very cynical, and I actually think I am one even though I haven’t spoken that way in this conversation. But I think there’s something about being able to see that it is possible to get something off the ground and to make change happen in a meaningful way. It is an absolute requirement of being an entrepreneur. Because typically the process of entrepreneurship is going from something that doesn’t exist to something that does. And you have to have enough vision, imagination, hope whatever you want to call it, to see that that is a possibility. And of course, the hope and positivity to take a risk. So, you have to be optimistic when you’re facing a big risk, saying, “I think this is worth doing.”

Paul Parisi: I would challenge you on the word “cynic.” I don’t think you’re probably a cynic. You’re probably a skeptic. And the difference between a skeptic and a cynic, is that a skeptic, when shown what is possible, will be your best advocate. In other words, you can flip a skeptic to a champion. But a cynic you cannot influence.

Paul Rush: I like the term cynical optimist because it’s funny and self-contradicting but you’re probably right. I am probably not deeply cynical.

Paul Parisi: Well yeah. I agree. It is sort of an inflaming idea here to say, “Okay, what is that?” It’s a challenge. I’m a skeptic of most things but once I learn about it and test it all, and I agree, you’re not going to change my mind.

Paul Rush: Yeah, there’s definitely some stubbornness that’s also part of the entrepreneurship type where you have to be willing to stick with something long enough to get over the initial difficulties and hurdles and say, “It’s still going to happen! I’m definitely going to make this thing reality!” That perseverance. I guess people are calling it grit now or whatever.

Paul Parisi: The word of the day whatever it is.

Paul Rush: Just out of curiosity, do you think optimism is a requirement?

Paul Parisi: I do. I do. I don’t think it would be very fun without optimism.

Paul Rush: Yeah. That’s a good way to put it.

Do Entrepreneurs Have to Be Greedy?

Paul Parisi: Or you’ve got to be greedy. Gordon Gekko. Greed is good. That kind of thing. Greed has some bad connotations in society but go back and watch that clip. It’s a fascinating clip. I just used it in my class.

But I think, there is a dichotomy between the entrepreneur like you and like I have been, where we create our own worlds. Not in grandiose terms but we do. We’ve made the decisions. We’ve done the things and then when you start to get into venture capital and private equity and that whole world where they are concerned only with the money, it’s a very different world. I don’t think that necessary is a world of optimism. I think it’s a world of exploitation. And the almighty dollar is the bottom line and it’s a very tantalizing equalizer of interpretation, is the dollar. I’m not a big fan of that. And I’ve been involved with venture capitalists and I will never do it again.

Paul Rush: Good for you.

Paul Parisi: But that’s how they’re wired. They should be, because they want to make the money for their stock holders but I don’t see us as a planet getting very far with that methodology. You look at people like J. Paul Getty and things like that. The whole world of that early 1900’s Where did it get people? I don’t see a lot of value coming out of that except wealth. So, to make a long comment, yes, I think optimism is a requirement and mostly because I don’t think it would be very fun without it.

Investors & Entrepreneurs: A Tenuous But Important Relationship

Paul Rush: Yeah. That’s so weird that there’s such a tenuous but important relationship between investors and entrepreneurs because in some ways, they couldn’t be more different people. In some cases, you have to work with each other less than you might think but in some cases, it’s very important for real growth. Sometimes capital is super super important to have access to and to deploy before a competitor gets there, excreta. But the motivations really are just so night and day different.

And we’re seeing that with Apple now. I like to think that they can turn things around, but I think if you look at what Tim Cook is doing for the company, it’s really about optimizing the company for profit. And Steve Jobs was really working hard to make something new in the world. He had the entrepreneur spirit. And Tim has the sort of, operations hat on as the operations perspective. And it’s the same thing with all the investors that I’ve met. They really are looking for a return and it really doesn’t matter how they get it. And if you follow that logically, it can go to some places that are really not very positive for the people they are investing in.

Paul Parisi: I think the biggest problem for Apple is that Steve Jobs was a once in a trillion people, once in a billion people. There’s just not that kind of thought, that mixes those things up. I’m going to get a link to it. There was a PBS special in the late 90’s which Steve Jobs was in, and this was after he had been ousted from Apple and it was one of the most insightful interviews. I think I have it at home somewhere at home on a video cassette and that’s how old it was. But it was very insightful about be very careful about who you give your company to and what you do this way. But you always got the sense that, from what Steve Jobs was doing, it wasn’t about the money. It wasn’t, “How can I make more money at this?” It was like, “This would be really cool to have. I want this.”

Now, he had good taste, so if he said “Gee, I want triple stuff Oreos or quadruple stuff Oreos.” Okay, you know, whatever. He happened to have a vision for the way technology synergized together to say, “This is game changing.” And that doesn’t exist in a lot of places.

Paul Rush: Yeah, yeah. And I’m always so confused with people who lump him in with other, more traditional money hoarders, other billionaires, because the difference to me is just night and day. It’s a subtle distinction that’s super important because the characteristics of a person like Jobs and like Musk, are people who really want to see change in the world and they’re willing to work hard to lead towards it, as oppose to people who are just amassing money.

In my opinion, one of those things is not very useful for society and one of those is incredibly useful. It’s one of the things that has been at the heart of a lot of positive change in the world. So, I wish people could see the difference for what you can learn from it and the positive sides to emulate.

What Keeps Paul Going Every Day

Paul Parisi: Well, we’ve been talking with Paul Rush today of Substantial. And he’s been joining us from Seattle. We’ve had a great conversation about, a little bit meandering I think, but it’s a fun conversation about both entrepreneurship and innovation and businesses he’s been in.

I’d be interested in feedback from our listeners, other areas you might like us to explore. Whether it be science fiction or people problems or things like that.

I’m going to ask you a couple of questions in closing but what do you think when you get up every day? Is it, “Oh man. I’ve got to get this work done with this client?” Or is it, “Boy, I get to work with this great group of people!” Or what’s not heavy on your heart, but what fills your vision?

Paul Rush: I think these days being back at the company and being a lot more focused on trying to make it sustainably successful. I’ve been working with some different coaches which I highly recommend to people. Coaching is an amazing amazing process to go through, of self-improvement. I am very set on the goals that I’m working towards and so I’m usually starting off the day being excited to make progress, small but incremental progress on those goals and thinking about what needs to be changed in sort of a course correction mode to get there. So that’s what my mornings are usually all about. It’s getting up and orienting the day towards taking a step forward.

Book Recommendations

Paul Parisi: Cool. Recommend a book? What’s your favorite book right now?

Paul Rush: What kind of book do you want?

Paul Parisi: Doesn’t matter. Something that you’d say if you met someone in the entrepreneurial world. Not just a person on the street but a, “You’ve got to read this book!”

Paul Rush: Okay. I’m going to recommend two. We’ve hinted at it or talked about it at some point in our conversation. Sapiens. Everyone’s been reading it. It’s a fantastic book. It’s really insightful as to how we got to where we are as a species on the planet. By Yuval Noah Harari, it is fantastic.

And then there’s this science fiction book that I think could be the most prophetic book dealing with capitalism and artificial intelligence and a lot of other fun contemporary topics called Pandora’s Star by Peter Hamilton. And they both provide, I think, glimpses or ideas about where things could go. That’s something that I’m super interested in.

Closing Thoughts

Paul Parisi: Very cool. Well, okay. Any parting thoughts that you’d like to cover before we close out?

Paul Rush: No. This has been just so much fun. There’s so many more topics to cover on entrepreneurship and I’m just such a fan of getting out there and making your own path. I would encourage everybody to do it and to find help and inspiration because it can be difficult to get over the initial hurdles. But if you can make it part of your life, I think it really opens up a ton of possibility and enjoyment, purpose, and engagement in life.

Thank you so much for having me. I really appreciate it.

Paul Parisi: Well, thank you for coming on and I’m sure we’re going to invite you back.

Paul Rush: Looking forward to it. Thank You.

More Episodes:

This is Part 3 of 3 our interview with Paul Rush. If you missed Part 1 and 2 you can listen to them here:

Part 1: The Basics of Business & Entrepreneurship
Part 2: Get Out of Your Comfort Zone and Overcoming the First Hurdle of Starting Your Own Business

Show Notes:

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