Business Leader and Venture Capitalist Mike Smerklo Discusses the Importance of Mental Strength for Entrepreneurs

The life of an entrepreneur can vary, but one commonality is the mental strength for the unknown. On today’s show, we have someone who has a deep understanding of successful entrepreneurship, we’re pleased to welcome Mike Smerklo, serial entrepreneur, investor, business leader, and best-selling author of “Mr. Monkey and Me: A Real Survival Guide for Entrepreneurs.” Smerklo is also the Co-Founder and Managing Director of Next Coast Ventures, which has backed more than 40 companies and champions a new generation of entrepreneurs by building disruptive companies in big markets.

Transcription:

Jim Fitzpatrick:
Thank you so much, Mike, for taking the time out of your, sounds like, very busy schedule there to join us on the show.

Mike Smerklo:
Thanks Jim. It’s a pleasure to be here.

Jim Fitzpatrick:
Sure. It sounds like you’ve got a lot going on. For those that are unfamiliar with you and maybe new to the name, you’ve bought and scaled a small business into a publicly traded company worth nearly $1 billion dollars in value. Take us briefly maybe through that journey and tell us a bit about your background.

Mike Smerklo:
Yeah, real quick. I was the first person in my family to ever go to college. Grew up in Toledo, Ohio, found my way into financial services, public accounting. Started off at investment banker jobs I hated, but I learned a lot. Got my MBA at Northwestern, moved out to Silicon Valley in the late ’90s. Then was fortunate, my first operating job was with Marc Andreessen and Ben Horowitz, now of Andreessen Horowitz, legendary Silicon Valley investors. I did that for a couple of years and then I quit to go buy a small business. I wanted to be an entrepreneur, didn’t have a great idea. So I found a way to become an entrepreneur by buying a small business. Ran that business, as you said, all the way through taking it public. Ran it for 13 years and then moved to chairman and then moved on to start Next Coast Ventures in Austin, Texas.

Jim Fitzpatrick:
When do you sleep? I mean, you just keep going, right? Keep reinventing.

Mike Smerklo:
Yeah, caffeine helps.

Jim Fitzpatrick:
That’s exactly right. Talk to us. How do you overcome the odds and still achieve success as an entrepreneur? Especially, there’s a lot of entrepreneurs out there that are listening to us today that are struggling right now. Obviously, with the pandemic, some have been hit pretty hard. Others have actually been hit with incredible growth that they can’t even keep up with, which is a an odd situation. But talk to us about that.

Mike Smerklo:
Yeah, it’s interesting. The book I wrote was about the mental aspect of entrepreneurship and I wrote it because I think entrepreneurship is amazing. It can change lives, it transformed my life. It can build communities, create jobs, but it also happens to be in my humble opinion, the hardest job in the world. I think entrepreneurship is hard even in the best of times. I think 2020 might have tested the best entrepreneurs in the world. You have a pandemic, you suddenly had to deal with work from home. Throw in the fact that we had social causes moving into the workforce. So entrepreneurship is hard. I really think the cornerstone and foundation to be successful really comes down to mental toughness and mental tenacity.

Jim Fitzpatrick:
Yeah, yeah, for sure. But Mike, isn’t it a breeze? You work for yourself. Maybe you work at home. Maybe you go in when you don’t want to, you make all this money. I mean, as an entrepreneur, God knows the boss makes all the money. I mean, it looks like a simple thing to do, right?

Mike Smerklo:
Yeah. I think my 13 year old son could give me a meme because he’s all into memes. All these memes of what you think entrepreneurship is versus what it really is.

Jim Fitzpatrick:
That’s exactly right.

Mike Smerklo:
Right, you make a lot of money to go play golf whenever you want. Who cares? You’re the boss.

Jim Fitzpatrick:
Exactly. You’ll be out of business in a week. That is so true. A lot of people, they’re working for a living like you were. I just want to be in my own business. This working for somebody else really sucks and I could be my own boss and I know I can do a better job. That’s the spirit in which a lot of people jump in with both feet and go, “Uh-oh, I don’t have that compensation coming in like I did when I was Mr. Cocky back here.” It is all up to the entrepreneur, isn’t it? I mean, every single day you got to be out there thinking about what’s coming around the corner.

Mike Smerklo:
Yeah. The beauty is you’re your own boss, the downside is you’re your own boss in everything. Think about customers, employees financing, all this stuff comes down to this one person. That’s why I think mental tenacity is so tough. I mean, it’s interesting for me, if you had a good friend, you came to me and I’ve run a few marathons in my life and you said, “Hey, I want to run a marathon.” Well, I wouldn’t say, “Well, great. Just go get a pair of running shoes and you’ll be fine.” We would say, “It’s going to take six months and you’re going to have to do all this training. You’re going to have to really prepare, change your diet,” all these things that are germane to running a marathon. Entrepreneurship, you watch Shark Tank. Oh, wow! Mark Cuban gave you a thumbs up. You’re off to the races. That’s just not even an important part of the whole process.

Jim Fitzpatrick:
That’s right, that’s right. That is just so much of just the very, very tip of the iceberg. The very beginning of what’s to lie ahead. You touched a little bit about the motivation behind writing the book. Tell us what the spirit in which you want the viewer or that’s to say the reader to leave with? What are some of the takeaways from the book? I got to ask you, the title, Monkey and Me, where’d that come from?

Mike Smerklo:
Yeah. The reason I wrote the book is I got frustrated. As an entrepreneur, I never felt comfortable in my skin. I struggled with self-doubt, imposter syndrome and I wondered, “Gosh, am I the only person that has this?” Then when I went out to become a venture capitalist, I saw all sorts of entrepreneurs. And I consistently saw A: there was no one size fits all. But I realized that everyone struggles with, can I do this? Am I good enough? Am I going to get ahead? But yet the content that most entrepreneurs are faced with, and I love your show, because I really think it hits in some really relevant points. But most of the content is either here’s how to write a business plan or the seven things that Elon Musk does before breakfast.

Jim Fitzpatrick:
That’s right.

Mike Smerklo:
Which, to your point, if you’re starting off and you’ve got a one person shop, the wealthiest man in the world, it doesn’t really matter what he does before breakfast.

Jim Fitzpatrick:
That’s right, or that he even has breakfast.

Mike Smerklo:
Yeah, exactly. The book is really intended to help the entrepreneur think about what it’s going to be like, prepare for it, be the marathon training, if you will, for entrepreneurship.

Jim Fitzpatrick:
Yeah, yeah. That’s fantastic. How about the name, Monkey and Me? Who’s the monkey?

Mike Smerklo:
I’ll bring this out. I’ll do this on TV. He’s always here. I wrote it because I had this voice in my head and it was always telling me, even since a young age, I came from a very humble background, but all these things filling my head with fear, uncertainty and doubt, in my case. And what I’ve found is the more I was able to personify it, name the beast, if you will, it at least helped me understand that voice. So in the book, I talk more about my failures than successes, about how this saboteur, if you will, is going to come in and try and mess with your head. Then I try and provide a formula to help address the monkey voice. For me, the monkey voice showed up in one way, it can show up as apathy. It can show up as putting something off, there’s all sorts of different ways it can affect you. In my mind, the goal is to put the voice aside, respect it, learn from it and try and grow from there.

Jim Fitzpatrick:
But know that the monkey is always there, isn’t it? I mean, it never really-

Mike Smerklo:
Always there.

Jim Fitzpatrick:
It never really goes away. Obviously, you’re an entrepreneur, now an investor in many other businesses and such, is that monkey always there and you’re always aware of it?

Mike Smerklo:
Literally, he was jumping around my home office right before I came on and said, “What are you doing you idiot? No one’s going to listen to you. What are you talking about?” That voice and we all have it and I don’t mean to dismiss it. I think it’s just an important part of recognizing it. But yeah, I don’t know. I don’t know what I’m going to do to quiet the beast, but it doesn’t go away. So the faster you realize it’s not going to go away and then learn to benefit, that’s what the book’s all about.

Jim Fitzpatrick:
I love it, I love it and that’s so true. So many entrepreneurs, especially that are listening here today can relate to what you just said because they do go into business for themselves. They do take that step. They do put their family’s bank account right on the line, many cases. Every single day, every single hour of every day, it’s a scary proposition. While it’s got huge highs and a great amount of potential in front of it, it is a very scary proposition for a lot of individuals, right? I mean, that is a reality.

Mike Smerklo:
It really is. The interesting thing for me is, it doesn’t go away. It doesn’t stop. You think starting the business, coming up with an idea is hard. Then taking the courage to start it. I thought early on in my career that someday when we hit certain revenue targets or employee count, that it would all get better. And certain things did get better, but like the rollercoaster you alluded to, it just keeps coming and the hills get different and all that stuff. The more you have that going in, I think you’ll be better suited to be successful.

Jim Fitzpatrick:
Yeah. There’s a lot of wins and losses in business, especially as an entrepreneur. Those nos and losses that can take a toll on someone mentally. Talk to us about the realities of mental health challenges.

Mike Smerklo:
Well, I think that one: it’s real and it doesn’t get talked about enough. I mean, not just my book, but just really trying to make sure that people understand the challenges. I think then what also is, and I try and provide a formula in the book to say, how can you think about being aware, being self-aware? Getting help, having the right attitude, understanding the ups and downs of it. That’s the formula I lay out in the book. But it really is to try and say A: think about mental health, B: then have a formula and some very specific ways to increase your mental health and then put them into practice. I just think it’s something that, to your point, so often overlooked and in my humble opinion might be the critical difference between success and failure. You think all the things that could make a business successful, have you thought about mental health as one of the attributes that candidly, might be the difference between success and failure?

Jim Fitzpatrick:
Wow, you’re exactly right. That has probably never been on a list that I’ve looked at, the checklist of the entrepreneur. Just to make sure that your head is screwed on straight and that you’re looking at this through a clear picture every day and getting those demons out and staying focused on the goal. My father used to say, and it’s an old saying, “The obstacles are what you see when you take your eye off the goal.” That’s so true in the entrepreneur head. You’ve got all of these distractions and you think if something happens, “Oh, this is it, it’s over. I wasn’t prepared for this. Let me go back and get a J-O-B.”

Mike Smerklo:
Yep, yep. Listen, I think the world needs entrepreneurs first and foremost. I have amazing appreciation for anyone who takes the risk. It’s hard. Jumping in that pool is hard, but boy, right now, more than ever, the world needs entrepreneurs. My goal is to help people one: take the step. Mike Tyson, the great philosopher, Mike Tyson, my favorite philosopher-

Jim Fitzpatrick:
I was going to say, Mike Tyson?

Mike Smerklo:
Here I am quoting Mike Tyson. Yeah, I’ve got all –things. But a great saying of Mike Tyson is, “Everyone has a plan until they get punched in the mouth.” I think that same thing with entrepreneurship is you can come up with a great idea. Something is going to go wrong.

Jim Fitzpatrick:
That’s right.

Mike Smerklo:
Again, how do you stick with it? Because the world needs entrepreneurs now more than ever.

Jim Fitzpatrick:
That’s right, that’s right. And behind every successful entrepreneur, it seems when you scratch away from the surface, they’ll tell you, “Well, yeah, I look highly successful now. You didn’t know about my first three ventures into business and entrepreneurship and they didn’t go so well. But that’s what built me to be the entrepreneur that I am today.” You need those, you need maybe those losses or those challenges in your life that make you a better entrepreneur, a better businessperson. I mean, look at those and almost welcome them, knowing that they’re going to come and then how you’re going to learn from them.

Mike Smerklo:
That’s exactly right. And the other trap I see all the time and I think, yes, the failures can really serve as so-called fertilizer. But the other thing is I see entrepreneurs sometimes I got an idea, but is it big enough or does it really matter? Go read Shoe Dog, my favorite book by Phil Knight. He started off selling shoes out of the back of his trunk. Howard Schultz started Starbucks. He didn’t think he was going to dominate the world. He wanted to have a cafe experience in Seattle like he had experienced in Italy. Mark Zuckerberg started Facebook. He wanted to meet girls at Harvard. I think to your point, when you read all of this entrepreneurial, we used to call it entrepreneurial porn, but I try not to. This glamor, the glorification or heroism of entrepreneurship, it’s a great point. Go back to look at the roots. Most businesses start with a simple idea that contributes value and helps solve a problem. If you go to that level, who knows where it will take you, but don’t get caught up on imagining that your idea isn’t big enough.

Jim Fitzpatrick:
Sure. You know what you find too, with entrepreneurs? They’ll come up with a great idea and have a huge passion behind it. Then they make the mistake in many cases of sharing it with their loved ones and their circle of friends and such and what happens, Mike? They start to get that negative from everybody. Talk to us about that because it’s a reality that you’ve got people out there that are, “Oh, why would you do that? Why would you spend money on that? If it was so good, how come it’s not built already? Well, others have probably failed with this.” By the time you’ve shared the idea that you have with others, you go, “Okay, I’m just going to go back to bed. This was a terrible idea. I’m never going to come up with an idea again.”

Mike Smerklo:
Yeah, it’s such a good call. I mean, two things I’d say on that. First is, be prepared to sell your story to an indifferent world. I mean, I tell people all the time, it’s like, “No one’s waking up saying, ‘Hey, what does Mike Smerklo think?’ My job is to go out and tell the world about Next Coast Ventures or the book, and be prepared to be met with indifference.” Maybe your mom will say, “Oh, that’s a great idea.” Love mom and all that stuff, but don’t trust that as is it a good idea? First of all, that.

Mike Smerklo:
Then secondarily, I do think though, go talk to people that are in the industry that you really respect. Let them try and talk you out of it. And you know, what, if you start to waver, it’s probably a pretty good indication that maybe the idea isn’t that great. Maybe the timing isn’t that great, or maybe you’re not that passionate about it. I do think there’s that test, but I used to say to people, “If enough people try and talk you out of it and you still want to do it, that means it’s a mission,” and that’s where momentum can really come from.

Jim Fitzpatrick:
Yeah, I would agree with that statement wholeheartedly. There’s no question about it. Sometimes you just have to do it to know for yourself that whether or not this thing’s going to work. So many great companies have come out of that. Of course, there has been companies that didn’t quite make it, but at least the entrepreneur in many cases would tell you it was something I had to do though. I had to see for myself and learn it.

Jim Fitzpatrick:
Let me ask you this. You’re a very schooled investor and an educated investor out there. Obviously investing in companies. Is now a good time for people to open up businesses and to jump into the entrepreneurial pool?

Mike Smerklo:
Yeah, I candidly think there’s never been a better time. If you probably asked me five years ago, five years from now, I’d probably say that. But right now I do think, and in all seriousness, I think there’s some mega trends that are coming out. We’re coming out of the pandemic. I think there’s unlocking of consumer spending. I think there’s some really interesting ideas around that. Just there’s going to be consumer spending at a robust level. Plus I think what the pandemic did, if there’s any benefit that came out of it, was it provided a bunch of new alternatives. You think about the last 12 months, how many behaviors were changed? The fact that we’re doing the interview over Zoom. All these behaviors that might’ve taken 10 years to come to fruition, got collapsed.

Mike Smerklo:
So as an entrepreneur and a backer of entrepreneurs, I look at it and go, “Wow!” It’s like, “My goodness. There’s opportunity everywhere.” Now, you got to go pursue it, but I couldn’t think of a better time to start a business. Plus you’ve got some economic factors. You’ve got abundance of capital. You’ve got low interest rates. You’ve got a lot of really interesting factors that I think this is probably the best time to start a business of all time.

Jim Fitzpatrick:
Yeah, wow! You’re exactly right and I agree with you. There are people out there like, “Oh, right now with all the uncertainty and the pandemic. We’re not sure about the economy and what have you.” I agree with you. There has never been a better time. You have all of the necessary ingredients out there, I think, to succeed. It’s just really up to what’s in your heart and your soul to go out and do it. Right?

Mike Smerklo:
Yeah, couldn’t agree more.

Jim Fitzpatrick:
Yeah, no question about it. In terms of the book, what are some of the other takeaways that you want the reader to leave with?

Mike Smerklo:
Well, first of all, I’d be remiss if I didn’t mention all the proceeds go to charity. We set up a scholarship, my wife and I, for students who are interested in entrepreneurship that come from under-representative or diverse backgrounds. –passion for entrepreneurship. So I’d be remiss. Anyone who’s listening, if you do buy the book, that’s what it’s going for. But my big takeaway is the job is hard, but don’t get afraid of it. Again, the world needs entrepreneurs more than ever, so how do you get people prepared for it? I want to have more people pursue this. I want to see have more successful entrepreneurs. And I want to provide a simple framework that you can take to work. This is not a Mike Smerklo success story. My joke, that would be a short blog post, at best. It’s really a book purpose built to say, you can read it. It’s a pretty quick read. Hopefully it’s practical and you can walk away with two or three, maybe 10 things you can say, “Okay, I can take this and bring this into my entrepreneurial journey.”

Jim Fitzpatrick:
Yeah, no question about it. Mike Smerklo, entrepreneur, investor, and author of a phenomenal book, Monkey and Me. For entrepreneurs out there, this is actually a must read. I mean, I’ve seen a lot of books, as you know, we’ve interviewed a lot of people with similar books. And while they’re all good, I highly recommend this one because it’s real world stuff. There’s no garbage in there and the guy lived it and does it every single day. Run, don’t walk to get the book, Monkey and Me. Mike, thank you so much for joining us on the show. It was a real pleasure and hopefully we can have you back to touch on more points that are in the book and then whatever’s going on in the entrepreneurial world.

Mike Smerklo:
Pleasure, I really enjoyed it. Thanks for having me.

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