Keeping it Fresh

Startups by their very nature are expected to be innovating, bleeding all over the proverbial edge. And for sure, every startup has a green field/blank slate (insert favorite metaphor) and you can be truly different in all areas - product, service, even organization and management.

In the early days there's the heady rush of creating, the willingness to entertain all ideas even if they're spacey and could go the way of poor Pluto, and everything, even mundane decisions like ordering food for late-night sessions, are considered afresh and optimized. And when it comes to the product, the team's wallowing in research, brain-storming, asking the experts (even if it only your PhD candidate buddies in the local university), seeking customer feedback like it is the wisdom of gurus - freshness is so much the norm that you don't even have to think about it.

Unfortunately the patina of 'legacy' comes on quicker than one would like. The moment you have your 30-second pitch and your first 10-slide PowerPoint preso, you think you've got it all figured out. The moment you finish your prototype, it seems simpler to build on what you already have, even if you'd planned it as a temporary artifact to be scrapped when you start building V1.0. You think you've got the innovation part done and now you can start building.

And to be pragmatic, that's exactly what you should do to avoid the dreaded analysis paralysis or all ideas, no artifacts syndrome. But, but, but....you have to figure out a way to keep it fresh, have a window open to new ideas, new technologies, new input, just new slants to thinking, to make sure your product and company are not getting too rigid too soon. This is not easy to do, especially in an early stage startup when you're juggling so many different priorities with so few resources. But my personal bias is that freshness is one of the key characteristics of a startup and it is much easier to make it part of the culture there. As mentioned earlier, in the early days fresh thinking is pretty much a given - the challenge is making it a conscious practice in order to make sure that it doesn't dissipate with every checked milestone.

There may be no one way to do this, and to be effective, it is best to be open to input from non-typical sources. I recently attended a workshop at Stanford on a subject that was in the general space of the venture I'm pursuing, but didn't come anywhere close - but I found it made me think along very different lines and I was able to translate it to a new, richer perspective of the product offering. I am not sure how much of it I will use and when, but the whole experience was worth it just for expanding my thinking. And at the other end of the experience spectrum, a casual conversation with someone I barely knew at a networking event sparked an idea for a cool new feature.

I really hope to keep the innovation going and keep pushing the 'best if used by' date out further in all that I do, and to help me in this, have started reading a couple of books on the subject in my so-called spare time (results in a future post). I remember, when I first saw Apple's 'THINK DIFFERENT' plastered on the side of their corporate headquarters a few years ago, I found it faintly irritating as I felt it should be 'Think Differently' . But there's no denying Steve Jobs (and whoever came up with the phrase) is a genius. It took only a couple of drive-bys for me to get past the constraints of grammar and realize that the meaning is the message, and brilliantly so - a message worth remembering in the pursuit of freshness.

Role playing

You'd think that it is pretty simple to staff an early stage startup (of the software kind) at launch. A CTO/Architect/VPE, a VP of Marketing and a VP of Biz Dev/Sales (though this function could wait until the product is close to being ready), a few engineers to build the product, and a CEO to pull it all together (other functions like hr/finance could be contracted out until later) - that should about do it.

But the script isn't always so simple. What needs to get done and the roles to be played at the very early stage depend on the product/service/delivery and how well-defined it is. Sometimes the venture is built around building a better mousetrap, in which case the roles/responsibilities are clearer. But if you're framing something new, it will most certainly morph based on market, technology, investors (yes, it happens) and of course the team itself, so who you bring to the team and the role they would play is important. It also depends a lot on who the customer will be - selling to an IT manager in a mid-sized corporation will need a different mindset than selling to pre-teen girls (and the person who's credible talking to one may not have cred with the other).

The other factor is how well you know the capabilities of the people you bring on board. Resumes don't tell you the whole story, and are often helpful only when you're looking at a 'standard role' like that of VP of Engineering. If you're aiming for someone who can be hands-on and manage the development, there are a whole bunch of people out there. If you also expect them to so some design, the number shrinks considerably, and if they should be able to talk sensibly to customer groups and contribute to product direction (because, at this stage you'd better have design, development and customer research all working closely together) - your available pool just got to bathtub size, and if you factor in the requirement about joining at the very early stage and working for equity, you've just skinnied it down to a bird-bath. So you have to figure out a way to (1) find this small set of available people and (2) suss out which of them could take on the role of a generalist while boasting a proven track record as a specialist.

And lastly, once you figure out the right person, you have to play the all important name game - what's the title of the role(s) to be played. It has to be both attractive as well as appropriate. Practically everyone thinks they have to be a 'C' something or the other if they join a startup, but does their experience really warrant it? And should the person doing the design based on user-feedback be in 'product marketing' or in 'architecture' as they'll be doing both? Possibly whichever one they hope to do long term, as long as they're aware they have to do both at the beginning (I'm partial to 'product design' myself). And frankly, it would be a great to have a relatively flat organization and avoid all the hassles of which function reports where - though that works only with the right team.

The important thing is that this is not just about the founder/entrepreneur's challenge in building the team, it is about the challenges that each individual team member has to take on. If you're expecting your marketing person to handle all aspects of marketing, advertising as well as sales, biz dev and managing product definition, s/he should know what's expected and should want to get on this ride. If the startup's an ensemble group, it helps enormously to have willing actors who at least know what their roles are about and what the cues are going to be before the enter the stage - and yes, it's an improv, with the ensemble making up the script as they go along.

The power of equity

Everyone knows that you need to give out gobs of stock for the early-stage team, the first 3 - 5 members who're willing to get your idea off the ground. Of course, if you were able to pay them a good salary and can convince them their jobs are secure for awhile you wouldn't need to do so - but lacking a cash compensation, which is standard ops for most startups, it's the equity that will bring them in. Nothing new there.

What are you really offering with equity? The stock is pretty much worthless when you just get started (even on paper the so-called fair market value is only a fraction of dollar). But there is the hope and potential that it will be worth a Carrera, some beachfront property and, most importantly, a letter of resignation - if you and your team are able to deliver.

I recently had an 'a-ha' moment: equity is not only a way to attract the right person to your team, it is a way to dissuade the wrong person from joining your team.
Though you have less invested and created little of value at this stage, paradoxically the impact of a wrong hire is highly significant (later on, with more people on board, you have a little more wiggle-room if you've made an injudicious choice). When you're making an offer to someone who'll be part of a five-person or smaller team, both of you know that he will directly impact the future value of the stock. So this person has to feel confident in her ability to deliver - and if she has any doubts about that, she'll know that all the many thousands of shares may amount to nothing more than shredder-fodder. So, assuming that you're working with someone with smarts and a desire for success, she'd most certainly withdraw if she's less than 100% confident in her ability to deliver. And that is a very good thing.

Of course, this will not work as well in a consulting or 'try and then buy' approach, because both parties are avoiding commitment and consequently are unlikely to take on anything of significance. And of course, you still have to go through the usual due diligence. But, as the final test, offer enough equity to make it worth their while - and the ones who're unsure of themselves will walk away, while those who're confident they can make the magic happen, will leap at the opportunity. I've seen it work - the early stagers know that the pot of gold at the end of the rainbow is only as real and as large as they can make it, and if they can't do it, they'll veer off to another yellow brick road (to merrily mix metaphors).

Something in the water

I just got back from a visit to India and one of the most interesting aspects of my trip was the close-up with entrepreneurism there.

First, there's a huge boom in startups in the tech arena in India. This is not new news. It is pretty well covered and there seems to be a news story every week on yet another US-based VC firm that's setting up an India office (ditto for China by the way). But what really interested me is that now there are more startups that plan to sell in India, and then maybe expand globally. Granted, the US in general and the Silicon Valley in particular, may have the edge in conditions for launching successful startups - check out Paul Graham's views and Guy Kawasaki's too for fun - but the Indian entrepreneurs aren't sitting around drinking chai and waiting for the conditions to improve. They're jumping right in.

Second, entrepreneurism is booming in all areas, not just tech: services, healthcare, education, transportation, you name it. And of course there are numerous and much-needed non-profits for various social causes where financial gain is clearly not the raison d'etre. Just casual conversations with friends and chance-met strangers were enough to show me the amazing pervasiveness of entrepreneurism.

Which led me to ponder: does the environment in India have something special to develop the entrepreneurial spirit? True, with a population of over a billion, even if one percent had an entrepreneurial bent, it will have a huge impact. But I see a general hustle across many demographics, even the taxi driver who makes less than $100 a month was hatching some schemes for his own business.

The most striking aspect of all the new stuff that's happening in India is that it's happening at all - given the unreliable infrastructure. An entrepreneur here in Silicon Valley would worry about the big stuff: team, funding, market and the like, but not so much about power outages every other day, transportation strikes/political riots that paralyze all movement, and folks having to spend hours to get to work through blistering heat, torrential monsoons and interminable traffic jams. Yes, the infrastructure is much better now than it was a few years ago, it is improving constantly, and the big guys have put in all kinds of redundancies, but you'd never take it for granted. And yet, the Indian entrepreneur just barrels along, and somehow makes it work. One of the instances of this supreme optimism that I found particularly striking was in healthcare. Enterprising doctors take the leap in bringing the latest in medical technology to India and making it successful enough to attract patients from all over the world. Lack of knowledgeable staff, decades-old facilities, flaky infrastructure, bloated bureaucracy - it would have been very easy to look at all this and conclude 'no way'. Most investors here would do so. But not so in India. What looks like an insurmountable obstacle is just another item to be taken care of - no big deal, some hard work and chutzpah will take care of it.

These entrepreneurs are really starting from scratch most of the time and are unfazed by it. Double the risk, double the work, but single-minded focus. And I have a theory on why it is so. In India the entrepreneur is still hungry. With a billion plus people, competition is fierce (it seems to start in kindergarten), and shirking from an opportunity just because you have to take care of everything yourself would make you a loser. If you're an entrepreneur visiting India, go ahead and drink the water (so to speak). Maybe you'll get hungry too.