Eric Phung of Lola Digital Media: “Successful business owners and businesses also tend to have a long-term mindset”

Successful business owners and businesses also tend to have a long-term mindset. You need to imagine that you will own this company for life. There is a time and place to realize your investment, and when that time comes, you will prepare accordingly. If you think short term, as in I am going to sell […]

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Successful business owners and businesses also tend to have a long-term mindset. You need to imagine that you will own this company for life. There is a time and place to realize your investment, and when that time comes, you will prepare accordingly. If you think short term, as in I am going to sell in 3–5 years, you will find that you take shortcuts in terms of investment, capital allocation, infrastructure, eventually leading to a business built on stilts.

Startups have such a glamorous reputation. Companies like Facebook, Instagram, Youtube, Uber, and Airbnb once started as scrappy startups with huge dreams and huge obstacles.

Yet we of course know that most startups don’t end up as success stories. What does a founder or a founding team need to know to create a highly successful startup?

In this series, called “Five Things You Need To Create A Highly Successful Startup” we are talking to experienced and successful founders and business leaders who can share stories from their experience about what it takes to create a highly successful startup.

I had the pleasure of interviewing Eric Phung.

Eric Phung is the Chief Executive Officer at Lola Digital Media. He is responsible for the overall direction and guidance for the company and its 50 employees.

Thank you so much for joining us in this interview series! Before we dive in, our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?

I grew up in Minnesota as the son of first-generation Vietnamese immigrants. My mother is a nurse and my father delivered newspapers for the Minneapolis Star Tribune. I have vivid memories of my brothers and I packing the Sunday newspaper every Saturday night. For a 4th grader, those Sunday newspapers were pretty darn heavy!

From humble beginnings, my family inspired me to take leadership roles in everything that I do. That is how I approached high school and college, taking leadership roles in all my clubs and activities. I relished serving people and lifting up my peers.

As it turns out, leadership is an essential soft skill, but it is not as tangible of career path to paying expensive bills. So I broke into the finance industry, working in investment banking and eventually moving to the buy-side.

It also turns out that the finance industry is not the most conducive environment for leadership. I soon left to become an entrepreneur, to lead teams and build a business for my investors.

Perhaps due to a subliminal aversion to anything print related from my newspaper days, a few partners and I started a digital media company, and here I am today!

What was the “Aha Moment” that led to the idea for your current company? Can you share that story with us?

Working on the buy-side, I would underwrite plenty of small businesses that came across my desk. I worked to underwrite everything from climbing gyms to widget factories.

After seeing so many of these investments, I always thought to myself, “why can’t I start one of these businesses?” What was unique to these business models that I could not succeed at? I realized what was holding me back was my aversion to risk. A lot of my friends and colleagues in the finance industry are some of the smartest & hardest working people out there, but they work in finance for the safe risk-adjusted return it offers.

I decided to take a risk, and brought together a team to start investing in websites. We first raised money to acquire SoapHub, an entertainment blog focused on American Soap Operas. From there, we realized we have the financial knowledge to pursue a buy and build of the digital media space, and we continued raising institutional capital to pursue that strategy. We have not looked back since then.

Was there somebody in your life who inspired or helped you to start your journey with your business? Can you share a story with us?

Growing up, my mom always wanted a Lexus or BMW. Although we had to settle on a Ford Windstar minivan, I was still happy. Plus, the minivan became my high school ride! So when I raised funding to start Lola, I was moved that my mom wanted to invest in my business.

She put off her dreams of the luxury car to support her children, just like she has always done for all her life. That is my inspiration, to one day buy my mom a nice car and a mansion on Lake Minnetonka.

What do you think makes your company stand out? Can you share a story?

My senior leadership team, who built Lola, come from widely diverse backgrounds. We also operate in the outdoor media space, which is a historically less diverse industry.

Fortunately, the demographics are changing, as more and more BIPOC folks become interested in the outdoors. I would like to think that Lola is moving there from a senior leadership perspective.

How have you used your success to bring goodness to the world?

Most of my team is from Minnesota and our office is in Uptown Minneapolis. When the tragic George Floyd situation happened last summer, we invested money and time into healing Minneapolis as much as we could. We helped with cleaning up store fronts to matching employee donations to BIPOC entrepreneurship funds, taking one step at a time to build the community back up.

You are a successful business leader. Which three character traits do you think were most instrumental to your success? Can you please share a story or example for each?

  • Decisiveness — As a leader you will be asked to be the final decision maker on many decisions. Most of the time, you will not be able to make a decision with 100% certainty, and if you do, you will find that you spend much more time than you need to get to that decision. Make the best decision that you can with 80% of the information that you have so that you can move on to what matters most which is creating value.
  • Leaning on your team — I cannot do everything myself nor do I have grand illusions that I can code for all my sites. But what I am great at is gathering as much information as I can from my team to make strategic decisions. This means working with my colleagues and teammates to diagnose the problem, propose solutions, and consider all viewpoints. Don’t be afraid to delegate!
  • Being Direct — There is not enough time in the day to beat around the bush. Being direct is part of who I am and part of my authenticity. During M&A negotiations, you would be surprised as to how many parties appreciate direct conversations.

Often leaders are asked to share the best advice they received. But let’s reverse the question. Can you share a story about advice you’ve received that you now wish you never followed?

Starting out with Lola, I was splitting half of my time with my day job and with building my company as my “side hustle”. Friends and colleagues advised me to keep my stable well-paying job instead of committing 100%. My only regret is not committing 100% of my time sooner.

When you are passionate about something, it is worth dedicating 100% of your time to that pursuit. That is why I always advise others to not dip their toes into their interests. Take a full bath instead!

Can you tell us a story about the hard times that you faced when you first started your journey?

I started my journey during peak COVID, having left my career Feb 2020. Shortly after I started, the whole country went into quarantine. Advertising revenue dropped off as brands and retailers shut down marketing budgets. Like every business at the time, we had to seriously evaluate our runway and cost structure. Fortunately, we did not have to make many difficult decisions.

E-commerce was booming, and we were able to see our e-commerce based sites like GearHungry grow naturally by capitalizing on these growing trends, coming out stronger and better positioned at the end of 2020.

I’m more passionate about gear, tech, and lifestyle, and am happy we’ve been able to acquire several gear and lifestyle focused sites including one of my personal favorites, Gearjunkie.

Where did you get the drive to continue even though things were so hard? What strategies or techniques did you use to help overcome those challenges?

My coping mechanism revolves around “It can always be worse”. I have faced personal struggles growing up that have shaped who I am today.

When the going gets tough, I take a step back and realize that it could be worse, this challenge will pass, and no matter what happens to my career or company, I am blessed to be here and proud of what I have accomplished.

The journey of an entrepreneur is never easy, and is filled with challenges, failures, setbacks, as well as joys, thrills and celebrations. Can you share a few ideas or stories from your experience about how to successfully ride the emotional highs & lows of being a founder”?

In regard to emotional highs, it is important to celebrate and share the highs with your team.

The highs and lows can change quickly, so you have to be able to adapt during the lows, and at the same time fully celebrate the high points.

One example of a high turning into a low and back into a high was when we had some investor acquisition funding fall through at the last minute due to some unforeseen circumstances.

At the time, we did not have institutional backing, so we had to raise money in 3 weeks to keep the deal alive.

Raising capital in 3 weeks is not easy, but we got the deal done! 3 weeks of high stress deserves a celebration. We flew the team to Miami afterwards and celebrated in style!

The issue with experiencing emotional lows as a CEO & founder is that there are very few people who understand what you are going through. This is when mentorship and confidants matter the most.

Connecting with other young founders & CEOs is helpful because we are all experiencing the same issues in different environments. Seeking advice from senior mentors make sense because if they have not been in your shoes before, they know of people who have been.

Let’s imagine that a young founder comes to you and asks your advice about whether venture capital or bootstrapping is best for them? What would you advise them? Can you kindly share a few things a founder should look at to determine if fundraising or bootstrapping is the right choice?

Building a successful business can be boiled down to making decisions that increase your chances of success and making decisions that reduce your risks of failure. What I learned is that access to capital satisfies both of these decisions.

You have to ask yourself, if you go down the bootstrapping path, are your competitors also bootstrapping or do they have access to capital? If your competitors have access to capital, then you must raise capital as well, otherwise your company will be left behind.

For those who are afraid of giving up equity, just know that there are avenues to raising capital in the least dilutive way, from SBA loans to startup funding from friends and family.

The only time I would advise to bootstrap is if you are testing into your business model or product.

Ok super. Here is the main question of our interview. Many startups are not successful, and some are very successful. From your experience or perspective, what are the main factors that distinguish successful startups from unsuccessful ones? What are your “Five Things You Need To Create A Highly Successful Startup”?z

In regard to talent, this is as cliche as it gets, but it really is what matters most. At the end of the day, your business model is most likely the same business model as your competitors. The only differentiator is the people.

Take for example advertising sales. We wanted to launch a direct advertising sales strategy on one of our assets. The person we hired ultimately did not work out. Not only did we sink costs into this strategy, but it also delayed the timeline to this revenue stream by 1 year. It was twice as painful because we sunk costs into the strategy AND we missed out on generating sales.

In regard to capital, the concept of pennywise pound foolish is truly relevant. Understand that there is a cost of growing a business with outside capital and get into the mindset that this is a fair cost. Once you get the capital, you need to spend the capital. Scared money makes no money.

Passion is also important when growing a successful business. I am not passionate about soap operas, and a soap opera site, SoapHub, is the first asset we owned. The last time I saw a soap opera was probably elementary school, when I was home from school sick. Even if you’re not passionate about your business niche, you can still find ways to show others what you are passionate about to inspire those around you.

Although I am not passionate about soap operas, I am passionate about building a business, and I wear that passion on my sleeve. Showing your passion is inspiring to those around you. Don’t be shy! I’m more passionate about gear, tech, and lifestyle, and am happy we’ve been able to acquire several gear and lifestyle focused sites including one of my personal favorites, Gear Hungry.

Successful business owners and businesses also tend to have a long-term mindset. You need to imagine that you will own this company for life. There is a time and place to realize your investment, and when that time comes, you will prepare accordingly. If you think short term, as in I am going to sell in 3–5 years, you will find that you take shortcuts in terms of investment, capital allocation, infrastructure, eventually leading to a business built on stilts.

Taking calculated risks is also important. The whole premise of entrepreneurship is about taking a risk. All growth-related business decisions will involve some degree of risk, and you need to take risks if you want to grow. However, not all risks are made equal. Some risks will involve taking potshots. It is ok to take a potshot on a high growth strategy but understand that there is a difference between a 25,000 dollars pot shot, and a 1,000,000 dollars pot shot.

If you continue to make 1,000,000 potshots with low chances of success, you will have entered the blatant risk territory. Consider what you will invest from a focus, time, capital, and competition perspective, and understand the payoff with all those factors in mind. Then take the risk!

What are the most common mistakes you have seen CEOs & founders make when they start a business? What can be done to avoid those errors?

Going back to my emphasis on talent, you need to hire the best people. One of the biggest mistakes that I have made is hiring family and friends that do not work out. There is absolutely nothing wrong with this, but you need a different threshold of evaluation. They need to be above and beyond better talent than someone you do not have comfort with, and you need to have 90%+ certainty that they are the best talent that you can get.

Despite that, my brother Alex is our Chief Legal Officer, and it is really a joy building a business with my brother because we are both smart and we work well together.

Startup founders often work extremely long hours and it’s easy to burn the candle at both ends. What would you recommend to founders about how to best take care of their physical and mental wellness when starting a company?

COVID really made it horrible to start a company if you work from home with others. Believe it or not, space and separation are good!

Try out physical activities like hiking with friends and family. That way, it doesn’t feel like a chore and you get to spend really quality time with people you enjoy being around with.

You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂

As a 1st generation immigrant, education opened opportunities for me and has led me to the position I am in today.

Education is oftentimes pushed to the wayside because of the perceived 10–20-year payoff vs. short term priorities. While just one step of many, I would push to pay K-12 teachers significantly more, to attract the best talent possible. Like the law of compounding growth, an investment today will pay dividends down the road.

We are blessed that some very prominent names in Business, VC funding, Sports, and Entertainment read this column. Is there a person in the world, or in the US with whom you would love to have a private breakfast or lunch, and why? He or she might just see this if we tag them.

Marc Lore, new owner of the Minnesota Timberwolves. He takes risks, but calculated risks. When you take calculated risks, that is how you succeed. I would also ask him not to move the Minnesota Timberwolves!

How can our readers further follow your work online?

Check out our sites! Now that the world is opening up again, you may be looking for ideas on how you can travel or exercise outside, so two popular outdoor, travel and exercise sites of ours, and, can help you kickstart some travel and outdoor fitness ideas. You can also check out our Gear-based sites, including Gear Hungry, and feel free to send me a message if you have any questions or want to connect.

This was very inspiring. Thank you so much for the time you spent with this. We wish you continued success and good health!

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