What type is your org?

Maybe it'll never reach the dubious popularity of "what's your sign?" as an ice-breaker, but it is not inconceivable that in certain circles checking out your organization's type may be the conversational gambit du jour - thanks to a new book 'The Starfish and the Spider' by Ori Brafman and Rod A. Beckstrom. I read it a few weeks ago (got an early copy at one of the events I attended - nice bennie!) and found it not only a fast and interesting read, but fun to talk about.

Very briefly it's about centralized (spider) and de-centralized (starfish) organizations, with a strong bias towards the ocean-dweller. It covers the Apaches as well as Apache, and makes a case for why the starfish model is hard to stop. Coincidentally, the recent issue of Scientific American (Nov 2006, and I only wish I read the mag regularly) had a forum piece (by Stuart Kauffman) on how biology may deliver insights into adaptable economic systems that physics cannot - and a point about how too much 'central control' could limit the adaptability. There's a common thread between these two: non-hierarchical, de-centralized, loosely structured organizations are more nimble and successful.

It made me think about early stage startup teams. The best ones are flexible and fast, and are usually too small to have much of a hierarchy. They don't quite follow the 'de-centralized' model as they're often just a few people in the group with the center and edges all blurring into one, but they do have 'catalysts' and 'champions' as mentioned in the book. These are the passionate people who make the startup work - and yes, here we go again, passion's in play. The starfish organization builds up around an idea, cause or even technology, with a goal to spread it to a large number of people, possibly changing behavior. Getting people to buy into your vision and make change happen is not done by decree, but by dialog and dedication, calling for catalysts and champions - and guess what, entrepreneurs fit the bill too.

Keeping it legal

Last week, I attended a one-day conference at TiE Silicon Valley titled 'From Garage to IPO: How to build a successful Internet Company'. (Ironically most of the companies featured in the panels were acquired and didn't go public.) There were many interesting insights, everything from how not to name your company to when you can't build your business plan on ad revenue.

But there were two items that stood out for me: one was the number of people who mentioned the passion and dedication of the startup teams. Not just founders/entrepreneurs, but investors and M&A scouts who look for those qualities too before they get cozy with startups. And of course, it came up as a requirement for being able to handle the ups and downs (well, the downs) of startups. Caterina Fake, entrepreneurial celeb, co-founder of Flickr, spoke soberly about the tough times that the team had to ride out. Making payroll was a big issue, even if they didn't have huge salaries, as they didn't take in much money, but the small team stuck it out as they couldn't dream of doing anything different. The reaction of the audience was interesting as it seemed to bring both the slight chill of reality as well as the warmth of a shared experience - there were some wide eyes as well as nodding heads.

The other noteworthy item was the number of times lawyers showed up on the panels. It used to be that panels had entrepreneurs and VCs, and lawyers got involved only when the topics were contracts, intellectual property and the like. But now lawyers are weighing in on a lot more subjects. I think it's a sign of the times. With so many companies in the news because of the their legal troubles, and so many more opportunities to get into legal hot water with copyrights etc., it seems that the entrepreneur has to get chummy with lawyers a lot earlier in the game and for a lot more than just incorporation and stock issuance. It appears that this one area, legal advice for emerging companies, especially technology companies, is not going to be outsourced/offshored any time soon. Sure, the routine stuff may be more affordably handled elsewhere, but there are small swarms of entrepreneurs sitting at mahogony tables being educated on the nuances of rights and ownership and employment laws. Keeping it legal may not be as much fun as designing the product or evangelizing to customers, but it's necessary so you can have some confidence that the rug won't be yanked out from under your feet just when you're getting the moves down.

Can it be taught?

Over the last few weeks I've had a couple of conversations with a bunch of young people from NUSEA, an organization that brings entrepreneurially minded young Singaporeans to the Silicon Valley so they can absorb and learn from the Silicon Valley culture. They're are very energetic, curious and eager to learn as much as they can in their year in the Valley.

When I mentioned this to a friend of mine, he wondered if entrepreurship can really be taught. Of course, there's tons of money being made in entrepreneurship classes, but most of them cover a lot of the how-to's which are definitely teachable. But what makes one an entrepreneur is not knowing how to start a company, but the innate drive to do so. This is a favorite topic of mine covered in many previous posts, specifically Definition of an Entrepreneur, and Are you an Entrepreneur. Fundamental to being an entrepreneur is a willingness to take the risk to go after an opportunity. And following through with it. To me, this seems to be more a trait than a skill that can be taught through books and classroom exercises.

But it is an attitude that can be developed. Take the young people from Singapore. They come to Silicon Valley because they've already been bitten by the entrepreneurial bug (couldn't be a travel bug as they have to work too hard while they're here). The spark's in place, and a stint in the Valley could very well fan it into a good-sized flame. They're doing all the right things to fully immerse themselves in the culture - taking on internships, attending lectures, workshops, seminars, and initiating conversations with local entrepreneurs etc. And they go after it with gusto and passion. Though everyone assumes that passion in youth is to be expected, frequently passion for any one thing in youth lasts about as long as a new tune on the top 10. It is impressive to see the young people in NUSEA who've sustained their passion for entrepreneurship for an extended length of time - looks they're on to the real thing. And they're not 'learning' to be entrepreneurs. They are growing and strengthening their entrepreneurial spirit. Entrepreneurs may not be 'made', but they sure can be cultivated. It would be fun to see what this crop produces.

The importance of being ethical

I was having a conversation about the HP brouhaha recently and there was some discussion of whether this was just a big company problem. The problem has many facets to it, questionable ethics being front and center, and that's what I'm focusing on, as the legality issues are just a corollary (in my opinion, if people had made ethical choices, there probably wouldn't have been legal entanglements).

So, would a startup ever run into a problem like this? Granted, startups usually can't afford the big-bucks snooping (never mind it was snooping on your own people) and 'pretext' would probably just be a fancy word for an excuse (or the precursor to an SMS). In my opinion, it is not the size or scope of the act, but its rightness (or wrongness), and it can happen in a startup as well as in a larger company.

A lot of companies, including early-stage startups with eager, idealistic entrepreneurs, have company 'values' and I bet everyone has 'integrity' in there or something that smells awfully close (even if it's like Google's famous 'Don't be evil'). And of course, one would expect that the leadership of the company (the ones who signed off on these values) would be hyper-aware of them and not ever get into a bind like the one at HP. Not to mention, HP has long been considered one of 'good guys', a company to emulate in its 'uprightness'.

So how do things fall apart? (I'm just speculating here, based on my own experiences with 'iffy' issues over many years. ) There are two major contributors to veering off the straight and narrow path. One, you lose sight of the big picture and focus on the single tree that is crowding your vision, instead of the forest. A small (in many ways) example: one of our competitors (another startup) used the exact same quote, and similar sounding text on their website as was on the home page of my last startup (and we were there a few months earlier). Our small team got very agitated and upset and were trying to figure out how to get back at them, or least make them cease and desist. It took a little while to get to the realization that just because they were unethical and didn't have class, it didn't mean we should be the same. We also figured out that the issue wasn't just this particular startup, we couldn't prevent every obscure startup out there from leveraging what we put out publicly on our site - the only way to do it was to be smart about what we said publicly (and yes, we were too small to initiate legal action). Ultimately we reminded ourselves of who we were and what we were about, and dealt with it appropriately.

Two, when you embark on something you've never done before, it needs more scrutiny. Business as usual has the advantage of already being vetted and blessed that it is kosher and fills legal, ethical and, of course, business requirements. When you veer off into new territory (it is safe to assume spying was not SOP for HP), you have to take extra efforts to make sure it won't come back to haunt you. And you have to do it thoroughly - not just from the legal and business perspectives, but the ethical one too. I'm in the middle of negotiating with a couple of different people on doing some IP-related work, and it is taking an awful lot of effort to make sure both our rights are protected. A template covers the legalities, but it is not so easy to get to a point where both parties feel it is equitable, especially when I have to anticipate what could potentially happen in the future. As far as I'm concerned, I'm aiming not only for a positive business outcome, but to believe it when I say it's a fair deal.

But, being ethical is easier said than done. Situations are not clear cut, especially when you're working on retaining your competitive advantage, profitability etc. It's all one gray blur like an MC Escher painting spinning by. So how do you figure out if an action is ethical or not? One trick is to use the gold standard of 'would you like it if someone did this to you'? It's always worked for me. (I'd hate if if someone spied on my calls, however boring and innocuous they may be, so rest assured I won't go there.) Simplistic, but easy to remember. And that, ultimately is the most important thing - you have to remember to be ethical.