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On Episode 92 of The Edge of Innovation, we’re talking with entrepreneur Paul Rush, about how to get out of your comfort zone and overcome the first hurdle of starting your own business!

Sections

The Motivation Behind Making Money
Overcoming Shyness as An Introvert
The Romanticizing of Business & Entrepreneurship
What Paul Rush Did With His CS & Music Degrees
Starting a Company For the First Time
A Lot to Learn: The First Hurdle When Starting Your Own Business
Doing What You Know You Have To Do Even When It’s Hard
Establishing Trust With People in Meaningful Ways
A Crisis of Faith in Humanity
The Pull of Entrepreneurship
Music Downloading: The Beginning of an Era
How To Fund Your Startup: Get Out of Your Comfort Zone
Principals of Product Development
Closing
More Episodes
Show Notes

Get Out of Your Comfort Zone! Overcoming the First Hurdle of Starting a Business

The Motivation Behind Making Money

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

So, let me ask you a question. The end point saying, “Okay, I’m going to go to school for computer science and music.” But you talked about entrepreneurship and that’s sort of the art of money-getting. How to get money. What was your motivation? What did you want? Why did you want money when you were a teenager? Did you not have that?

Paul Rush: Well, we were not a wealthy family, but it wasn’t for the desire of money. It was almost like this interesting or fun game to play. There were certain things that I wanted with the money.

Paul Parisi: Did you go out and get a job mowing lawns, or doing something to say, “I want that resource. I want that utility that that money does.” Were you motivated to do that?

Paul Rush: Yeah, it’s like a nerdy answer but I did get jobs all through high school and it was mostly to be able to get closer to computers or to buy books and things.

Paul Parisi: I think that’s an important thing to realize because I wanted to work as quickly as possible. I got a job at fourteen.

Paul Rush: Yeah, same.

Paul Parisi: I went in relentlessly with the owner of that business every day after school, “When are you going to hire me? When are you going to hire me? When are you going to hire me?” Because, I wanted to buy stereo equipment. And that developed my ability or the drive to do something. I’m not at all a money-grubbing kind of person. That’s not what drives me, but it was, “Oh, gee. I want to get that computer. I want to do this. Well I need the resources to do that.”

Overcoming Shyness as An Introvert

Paul Parisi: Because you highlighted computer science and music and I can imagine a musician being very introverted and going off to college and learning that and coming out very introverted. The same thing with computer scientist. They’re very introverted. They’re not the best social people in the world.

Paul Rush: For sure. Yeah.

Paul Parisi: But you had a radical approach to that because you’ve also mixed in entrepreneurship and that’s social capability. I’m trying to identify what caused you to get outside of that box because you could have been really pigeon-holed in that.

Paul Rush: Yeah, well, I was never really in love with the computer stuff just for computers. It wasn’t like a programming fascination. It was that networking thing. It was really about the fact that computers could really let you connect to people that you could never connect to in the, quote on quote, “real world.” So, I think I had a bit of that to begin with.

Although, of course, like most geeky teenagers, I had a lot of shyness to overcome but I really wanted to. That said, I know now, I know entrepreneurs who come from all different walks and a lot of them are extremely introverted. I think probably more fifty to sixty percent, I would say are introverted. But they have a desire, generally speaking, across the board, to engage with reality and to understand how human beings work.

Because at the core of every single business is an understanding of human psychology and why people buy things, why they desire something over another thing. So, there’s a lot of the human factors that go under business. I don’t know if I always hear people talking about that but it’s super important.

The Romanticizing of Business & Entrepreneurship

Paul Parisi: Also, I think there’s this romanticizing on business and entrepreneurship and innovation that people think that it’s luck or it’s easy. Frankly, I’ve never done something more difficult than start a business.

Paul Rush: Yeah.

Paul Parisi: It’s not just the market, it’s the people. It’s the product. There are just so many levels that it is all encompassing.

What Paul Rush Did With His CS & Music Degrees

Paul Parisi: So, you went off to school. Where’d you go?

Paul Rush: Carnegie Mellon.

Paul Parisi: Great school. So, you came out with a CS degree and a music degree?

Paul Rush: Yeah.

Paul Parisi: What are you gonna do with your life?

Paul Rush: Well, I had my one and only job for about six to nine months. I was recruited by a company called Trilogy that was an internet.com poster child of excessive spending and hilarity. So many amazing people at this company and they’ve gone off to do a ton of entrepreneurial stuff. This group is a special group of people, but it lasted only about six or nine months and then I started my first real company. So, it was pretty much right out of the gate that I was interested in business.

Paul Parisi: So, what was it? That the company was faltering? You said they’ve done really well so were they part of the bubble and it burst, and you had to find something to do or you were just like…

Paul Rush: No, no.

Paul Parisi: So, you’re nine months out of school and you’re going to start a business.

Paul Rush: Well I wanted to start a company right away but I felt like I, quote on quote, “should go do something.”

Paul Parisi: So, your parents must have thought you were crazy? Or had they learned already?

Paul Rush: I think they already knew that. I was super strong-willed. I didn’t want to take money from them. I wanted to figure out how to make my own way. So, by the time I was doing all this they were just kind of nodding their heads and following along. I’d been doing fine and supporting myself, so they weren’t panicked at that point. But I was very lucky to have parents who were very progressive and accepting of following something. I don’t know what that would have been if I had said, “I’m going to tour South East Asia as a yoga disciple.” They might have had something different to say but fortunately that part worked out.

Paul Parisi: So, what year was this about?

Paul Rush: This is ‘99.

Paul Parisi: So, at the height of the bubble.

Paul Rush: Yeah, but I left that company before that.

Starting a Company For the First Time

Paul Parisi: But you’re starting a company. Are you crazy? If you’d done it a year and a half later maybe you would have been crazy. You started it as the bubble was about to burst. What did that company do?

Paul Rush: It was consulting for the music industry, so we ended up getting hired to build technology systems for a bunch of music companies. The biggest one was a very large product – Sony Music. Ironically, they were basically building iTunes. About six years or so before iTunes launched. And I learned there that large companies, to the benefit of entrepreneurs and people with vision and perseverance, they have no idea how to get out of their own way. Watching Sony at work from the inside was baffling. No group talked to any other group and the politics were impossible and their relationship with the other big labels was just abysmal. Hilarity ensued.

Paul Parisi: Well, I hear you and I’ve observed it firsthand. But it’s really sad in a lot of ways because there’s so much potential that is squandered in that friction that occurs. And it’s very sad in my opinion.

Paul Rush: I don’t know if its being an entrepreneur or being an engineer or both, but you wind up looking at the world and seeing so much – I don’t want to say wasted but I’ll just say that for now – wasted energy and human potential and time and resources spent on things that you know aren’t going to go anywhere. Dysfunction and organizational problems stop things from actually happening that could be and you can see it in government. You can see it in companies. You can see it probably in groups of friends. People really limit themselves and each other and it’s very frustrating.. You can find examples of this everywhere even if you’re just thinking about traffic like a place like Los Angeles. Think about the number of man years of effort wasted every day, just people sitting around in traffic.

Paul Parisi: Yeah, absolutely!

Paul Rush: It’s horrible. Certainly, in big companies.

Paul Parisi: So, you did this consulting. Was it your consulting company? Is that what you did?

Paul Rush: Yeah and then I hired a bunch of friends and then we were off to the races and making a good amount of money.

Paul Parisi: But this is a huge shift because you went from being a computer scientist programmer and a musician, to running a business. Those are vastly different things.

Paul Rush: Yes. They are.

A Lot to Learn: The First Hurdle When Starting Your Own Business

Paul Parisi: Were you initially good at it or did you have a lot to learn?

Paul Rush: I think the first big lesson that I learned was, you know, you start a company. You’re really excited. You’ve got some friends with you and then nothing happens. There’s no business. There’s nothing to do. I was sitting wondering why money wasn’t coming in and I made some phone calls and sent some emails and it was kind of hard to find clients.

And, I realized pretty early on that if you want to be successful in life, you had to put the effort in. You had to leave your surroundings. You had to get out of your comfort zone. I feel like a lot of people don’t even make this first hurdle but I think that’s the first big hurdle for whatever industry you’re in. So, leaving my house and going, talking to strangers and calling random people was a thing I had to do because after a month or two of not doing that, money was starting to run out.

There’s that beautiful thing in entrepreneurship that I’m sure you know about, when your back is up against the wall, you start figuring out how to solve problems. And, so, that was a revelation. It was hard. It was very hard work and it was scary putting yourself out there that way but that early lesson, that’s probably like the single – well there’s probably a lot of single biggest lessons – but that’s such a huge one.

Doing What You Know You Have To Do Even When It’s Hard

Paul Parisi: Let me dig into that. So, did you intrinsically know that you had to do that, but you were avoiding doing that? Or did you not have a clue?

Paul Rush: I think, I didn’t know it then, I heard that that’s what you’re supposed to do and then I avoided it like the plague.

Paul Parisi: Did you have someone coming along side you, an advisor to say, “Hey Paul. You really got to do this.” Or was it just like, “The world’s collapsing! I don’t know what to do! What do I do?!”

Paul Rush: If I remember, I don’t think I had anybody at that time who was really in that role. I did later for sure, but I think I was just reading business books as much as I could and probably reading business books instead of going and getting clients and at some point this same advice sunk in which is, “I gotta hustle. You gotta make something happen.” Otherwise you’re just sitting around.

Paul Parisi: So, how did that go for you? On one hand you’re an introvert because you’re a computer scientist and musician. But you were seeing that the web was a way to connect people, so you seem to be somewhat of a people person in these two fields. So how did that go?

Paul Rush: It went a lot better than I expected and I think that’s one of the things about saying hi to strangers and talking to random people that our society is losing a little bit by being so connected through devices.

Establishing Trust With People in Meaningful Ways

Paul Parisi: We see both those connections.

Paul Rush: Right. These immaterial non-substantive connections. They’re teaching us that that is the way to live. And the reality is that we’re still these biological creatures that have not evolved in the last hundred thousand years in any meaningful ways. I feel like everyone really needs to keep this in mind when they’re thinking about how we make decisions and how we connect with each other, that our systems of behavior have been basically coded from a long time ago when we were tribal and it was super important to look at someone and see, “Can you trust them?”

And I’m sure you know how important it is for business, to establish trust with people. Both people you’re working with on teams, as well as people that are going to be giving you money to provide a service or product. And the way that you do that most effectively is by sitting down with people and that’s why we still do so many meetings in person. Even video calls are not high fidelity enough to develop real relationships.

So, it was really about that. Getting out there and starting to meet people in person. And it turns out that people want to meet. Some people don’t. The more busy people don’t want to meet because they don’t have enough time. Or sometimes they do and you have to figure out how to get on their schedule or how to get in their face. But in general, people want to connect, and it seems scary to get out there and it seems unapproachable if you’re younger and you haven’t done it before, but it’s something that is immensely valuable to practice and get good at.

A Crisis of Faith in Humanity

Paul Parisi: Okay. So, you built this consulting company. You have your friends in there. You figured out that, “Oh my gosh. I’ve gotta go risk, put myself out there to get the business.” And I imagine you got business.

Paul Rush: Yup.

Paul Parisi: So, you closed some business. You did the work. You delivered. You felt good about that.

Did you sell that company? Did you spin it down? Does it still exist? What’s the next step? What’s the next thing?

Paul Rush: Yeah, I ended up doing so well with it that – and I was so idealistic at the time, this is embarrassing to say because I was like 22 I think – I was really jaded with where technology was going. It didn’t seem like it was about having fun, discovering things and building cool things, so I just hung on to contracts for a while, but I basically spun it down and decided to do music full time.

Paul Parisi: Okay, so that’s interesting. Was that a crisis of faith in technology or how would you characterize that?

Paul Rush: it was a crisis of faith in humanity. And I still think I have this. Silicon Valley, at that time, was so money obsessed and so money hungry, that it felt like it was warping the original sort of nobility and wonder that was associated with exploration of technology.

Paul Parisi: So, that hasn’t changed would you say?

Paul Rush: No, No. And if anything, it’s gotten several orders of magnitudes intensely focused toward money. Little did I know at the time that it would continue that time forever.

Paul Parisi: Well, yeah.

Paul Rush: Or at least the next fifteen years.

Paul Rush: Musician Years

Paul Parisi: So, you went into music. What does that mean? You started playing music or what was that.

Paul Rush: Yeah, I was helping out a company in Berlin called Native Instruments, that did music software. I’d gotten deeply into electronic music and DJing and audio production and I was playing festivals and it was like entering into another life.

Paul Parisi: It sounds like a fun.

Paul Rush: Yeah. As fun as things are in life. I mean, it sounds fun on the outside but it’s tiring and it’s difficult and full of ups and downs but at times, totally incredible! That was such a fun time in life.

Paul Parisi: But something happened, and you switched back into business and entrepreneurship?

The Pull of Entrepreneurship

Paul Rush: Yeah, I couldn’t stay away. I couldn’t stay away from the pull of just having so much background in technology and being kind of in love with it. So I ended up talking to some record labels and asking them if they’d want to put some of their music online to sell. It was originally for DJs. That was the idea and it was a platform to sell people music online before iTunes. Mp3s. Because a lot of people were now DJing with either laptops or CVs so they were needing sources of music.

Paul Parisi: Okay, so this is a great opportunity to discuss how much were you selling the music for?

Paul Rush: I think it was a dollar an MP3.

Paul Parisi: That was very wise at that time. That was revolutionary!

Paul Rush: A dollar to three dollars maybe, was the most expensive.

Music Downloading: The Beginning of an Era

Paul Parisi: And so, why aren’t we talking to Steve Jobs right now? Why aren’t you as rich? He’s passed right now but he’s a fairly successful example. Wouldn’t you have had it before him?

Paul Rush: There’s many answers to that. A lot of people had this idea of doing this. The most practical answer is that Steve Jobs and Apple are hardware company and a lifestyle company with broad regions and strategic inter connections among their products that are incredible, which we all know. But this company, I was dedicated to this niche audience.

And at the time, I was again being struck by the idealism of the head that I was in, and really wanted to sort of liberate the world of audio producers for the DJ community. And that’s just a very small market. At the same time, you’re competing with lots of file sharing.

It was so easy. You could reach out into the ether and pull down hundreds of tracks that were just released. There was no SoundCloud. There was no anything else. All the discovery channels, you got the music for free first and then you had to make the leap to go buy it. Sites were not navigable. There was no real discovery products other than going to the record store and using file sharing.

So, this is a classic problem of an idea a little bit before it’s time. There are companies that do this now that do okay but they’re very small, in the tens and twenties of millions of revenue. And also, just the market dynamics. The fact that you could go get free music somewhere. And then once you’ve got that, there’s no real reason to buy.

Paul Parisi: Was that a problem that you guys fought against? That they could just go to Nabster and download it?

Paul Rush: Yeah, it was that. It was discoverability. It was getting people to pull out credit cards and payment systems were not super sophisticated. It was a very different time than today. We forget. It’s very easy for humans to get into this trap and think the world has been like this for a long time but there were no smart phones. There were clunky music players. There was no way to pay easily online, so it was a totally different world.

Paul Parisi: So, when iTunes started to come out, what was your reaction?

Paul Rush: I mean the same thing that happens any time a person is starting a business and they see a competitor come out, especially one that’s much bigger. It was an “Oh my god! Oh my god! The sky is falling! This is the end!” And then you realize that they’re not going to do the same thing that you do or there are ways to have competitive advantage. But it was a great legitimizing moment at the same time, because suddenly there is this force in the world that was changing the buying behavior and that’s a big thing.

In the world of getting new products to market, if you want to change the way consumers think about the product or category, it can be very challenging because you’re going to have to teach people a new behavior. To adopt it and share it. So, sometimes there are cases when large companies help you with that and it winds up helping you out. I mean in our case it didn’t. We ended up shutting the company down in a couple years. There was a lot of work put in and not much output.

How To Fund Your Startup: Get Out of Your Comfort Zone

Paul Parisi: Now was that funded? How was that funded? Was that VC or…?

Paul Rush: Seed funding. Yeah, I had raised money.

Paul Parisi: Was that friends and family or was that just angels?

Paul Rush: Oh no, no, no! I reached out to a very well-known internet founder mobile, who I had read an article on, who was very interested in music. And I cold-called the guy and flew to where he was. And I got a meeting with him.

Paul Parisi: Really?!

Paul Rush: And he funded me on the spot.

Paul Parisi: Really?! Wow! That’s cool! What an experience. That’s cool!

Paul Rush: I never would have been able to do that had I not learned the lessons at the first company around getting out of your comfort zone. I think, one of the cool things to keep in mind about when you’re selling someone something – whether you’re trying hire someone – this is all sales. Whether you’re hiring someone, looking for funding, or trying to close a deal with a buyer, really understanding their headspace and what they’re motivated by makes it a lot easier to do this. So, knowing this guy was super interested in music was just a huge leg up and when we met, we connected almost instantly. If I had approached other buyers, which I did, there’s just no way to bridge the gap or the, “I don’t know who you are and I don’t know why this would be interesting to me at all.”

Paul Parisi: Right. Then you have to get into the numbers and the economic value and then there’s the interpretation. There’s nothing filling the sales beyond the numbers and that’s not very good.

Principals of Product Development

Paul Parisi: So, now, we’ve talked about iTunes and one of the things that I think that was clever about what Apple did was they provided a circumstance where you could want something and get it very easily at a very low cost. Buying music. And that’s really the insight. Oh, there’s great industrial design. There’s great software design, and all that but they got out of the way and you come down to the thing where the person says, “I want this, and you can fulfill that right now and I can do that for a buck.” It’s not buying a fifteen-dollar CD anymore. I can get what I want fairly inexpensively, and I think that’s the wisdom of the whole Apple. That’s one of the most amazing things about the whole Apple ecosystem.

Paul Rush: Yeah, Apple does this very well. I think one of the principals of product development that is worth keeping in mind when you’re building something, is that the amount of friction a customer experiences in the journey, will determine in large part how successful you are. Our jobs as product developers and product designers is to lower that friction as close to zero as possible. And I think that’s what music companies were really struggling with for a long time. They had convoluted systems to buying music online digitally, that had all sorts of restrictions and the file sharing services were frictionless. You just get on there, type in name and suddenly you have something and I think it is amazing what customers will do if you provide something that is at least frictionless, or more frictionless. Less friction than what exists actually becomes a plus now.

But when the Apple iTunes store launched, you just had the name and you’d buy something. Credit card was on file and it was as seamless transaction. And it’s so weird that the music industry didn’t get that that was what they need to do for so long.

Paul Parisi: Well, that’s the definition on innovation. Well, not the definition but the imperious for innovation is doing something differently in different ways. And it seems that innovation and entrepreneurship are inextricably bound and in their very fabric of everyday life. You have to innovate, and you have to be entrepreneurial.

Closing

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 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.

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 2 of 3 our interview with Paul Rush. Stay tuned for Part 3, coming soon! We’ll be talking about the ups and downs of running your own business!

If you missed part 1, “The Basics of Business & Entrepreneurship” you can listen to it here.

Show Notes:

• Watch This Episode of The Edge of Innovation on Our YouTube Channel Here!
• Substantial’s Website
• Contact Substantial
• Read Substantial’s Blog Here
• Find Substantial on Twitter Here
• Connect with Substantial on LinkedIn
• Connect with Paul Rush on LinkedIn
• Connect with Substantial on Facebook
• Carnegie Mellon University Where Paul Rush received his CS and Music Degree
• Meeting New Clients and Contacts Through Networking
• Native Instruments’ Website
• Steve Jobs: An Extraordinary Career
• Link To Savior Labs Assessment