Savor the moment!

Sometime after you launch your venture, if all goes well and you haven't given up already, you reach a point where you're not just 'preparing', 'getting ready', 'developing', working on' your product or service, but actually have something that your customer/user can use. It may not be ready for prime time, but you have enough for previews with live audiences (mixing metaphors).

So you do your pilot run, get your first client, release to a 'by-invitation-only' group of users, whatever. No matter how small the customer/user base, this is big. This is the real deal, the first time your idea takes concrete shape and achieves its objective - be used by real customers.

This in itself is a huge thrill. Your startup has made something happen, and the creative urge is a big driver for entrepreneurs. And then, the icing on the cake, the cherry on top - you get great reviews. Your pilot customer is excited by your product, your client sends a glowing email, your users send feedback with smiley faces. OK, you haven't got a million-dollar check or cracked a million users a day mark or any such thing, but still, this is a milestone worth savoring and the excitement is worth spreading.

Here's what you should do:

• Jump up and down, cheer, dance a jig - at a minimum, break out a giant smile.
• High-five your team. They deserve to know their hard work is paying off - and this makes it easier to continue doing more of the same.
• Share the details with your advisors, investors, board members. Everyone loves hearing good news about ventures they have a stake in, even if the news is not about the big money deals. The small wins portend better things to come.
• If appropriate, share it with other customers/users. The halo effect is real.
• Send a quick thank you note to the customer who gave you the kudos. Basic customer relations management.

Of course, in the back of your mind you're thinking about how to get more customers, where you're going to get funding, wondering if this is just a one-off, flash in the pan or a true measure of the worth of your offering. And yes, you should consider those things. But for now, remember you have earned this sweet rush. Savor it. Enjoy. And believe there's more of it to come.

The roles people play

In a previous post, I mentioned that I'm mentoring some teenagers on (and through) entrepreneurship. We're finally getting into real entrepreneurship work, having got past the initial getting acquainted, setting expectations stage. It is challenging for sure (these are not your typical college-track kids), but it is also fun, and one of the most interesting aspects is how it compares with the 'grown-up' entrepreneurial culture.

In our final session of this year, we got together as teams - the 'business' team of teens, and two mentors. Since travel and business pressures can prevent the mentors from making every single session, they're double-teamed (often, this is the first time these kids are exposed to someone who travels on business). The team assignments are made by the teacher taking into account various factors as who's got a crush on whom (teenagers!), who's talkative, who needs encouragement, who's in-your-face etc.

Every team has a CEO, COO, CFO, VP of Marketing, VP of Products/Design - all management and no staff for obvious reasons. In our team, the CFO picked his role and was uncontested as he is "good at math and his mom is an accountant". Can't argue with that line of reasoning. The VP of Design was settled by arm-wrestling with the loser getting the CEO role - which left the VP of Marketing to be taken by a young girl who didn't really know what the COO role was all about, so the kid who was absent got nominated COO.

It is funny how these choices have some parallels to the real world of startups. The person who gets to be CFO or Controller usually likes numbers and finance and it is not unlikely that having a mom - or dad - in finance probably accounts (!) for that predilection. But being in charge of products - that's where the fun is because you get to create things. You can point to something and say "this is my work" - and I can see how this has way more appeal than any other part of the business, especially for fourteen year-olds who prefer to deal with tangibles. In our team the VP of Products and Design is probably the person who is best suited to it in terms of skills, and it's a hoot that she won the arm-wrestling.

As for the CEO role, not too much competition there. Turns out that they didn't feel comfortable with all the presentations that they thought they'd have to make - they have a (Power)point there. I think a couple of them have the skills, especially in problem-solving and strategic planning, but they need to develop confidence in themselves as leaders, much like many adults. And the kid who did take the role, the one who lost the arm-wrestling, decided it could be OK because CEO 'sounds cool'. It sure does, but he lost quite a bit of his swagger when he heard that the CEO is responsible for everything - he hadn't bargained to have to do more than others. We did a trial candle making and selling 'business' just to get familiar with the process, and our CEO was surprised that he had to get involved in the production of the candles as well as setting the price and marketing and everything else. It is going to be interesting to see how he grows into the role.

The startup CEO's responsibilities are pretty much all-inclusive, even if you are delegating a specific piece of work to someone else who's the subject matter expert. If your engineer is taking longer than expected, you have to take the responsibility for not ensuring that the estimates were reasonable or the engineer was at the right skill level or both. Even if a tax accountant prepares your taxes, you have to double-check the returns and make sure it is accurate. Regardless of your legal firm's size and reputation, you'd have to read every line of every contract template to make sure it's what you want to sign up to. So on top of getting funding, building a team, and setting product/market strategy, you're signing up for reviewing copy, doing some QA, responding to customer complaints - and of course, providing pizza and drinks. There's cause to pause before arm-wrestling for this job.

Tips for tough times

Notice a pattern here? Post after post on variations of the economic cold freeze that has us all shivering and desperately seeking the warmth of good news and hope. It's been a month since the election and that vibe has started to fade under the onslaught of daily layoffs. So what's happening in the startup trenches, or at least my little corner of it?

A while ago, before the great September collapse, I'd written a post about three individuals who were considering starting their own ventures. A few months and a few hundred Dow Jones points later, I was wondering how they faring and checked in on them.

The first one is still interested in starting her own venture and has taken the first tentative steps towards it, but the economic conditions are causing her to work longer hours (the do-more-with-less effect seen in every downturn) and she's finding it harder to do anything 'on the side' - but, she hasn't stopped trying. The second one, who's in the Fortune 100 company, is glad to have the job security, but instead of being comfortable with it, has stepped up her efforts on the due diligence to figure out how/when she can launch something. And the young man and his co-founder friend, have both quit their jobs, and are busy vetting ideas. The prevailing economic climate has made them more unsure of funding, but has also made them focus more on ideas that can start generating revenue relatively quickly.

So, yeah, the economy is tanking, but at least these three entrepreneur wannabes haven't thrown in the towel yet. Of course, these folks haven't even started yet so they still have the option to go do other things and they're not facing the same issues as an under-funded startup. What do you do when you don't have the money to grow and have to cut-back but still make forward progress? Here are some tips on startup recession survival (on TechCrunch) from the CEO of Redfin. Main message: keep up the fight.

I think entrepreneurs by definition are optimistic. They have to be, to believe that they can create something from scratch (and its not Grandma's chocolate chip cookies). Recessions can make an entrepreneur wary, and most likely weary too, but they'll keep looking for ways to keep their hopes alive.

Educating through entrepreneurship

I'm a big fan of entrepreneurship (duh!) and also of education, and when you put the two together, general goodness ensues. I'd written about BUILD in a prior post - they help under-resourced, under-motivated kids finish high-school and get into college by turning them on to entrepreneurship. I've been a friend, and a huge admirer, of BUILD for a few years now, but this year I felt that I can walk the talk and go beyond donations to actually volunteering as a 'business' mentor to a group of budding entrepreneurs.

The premise, in brief, is that the mentors meet weekly with their team and help them through the business planning process (which BUILD uses as a lever to help their academic goals) and at the end of the year they get to present their plans and possibly win 'seed' funds. We've had a few 'getting to know you' meetings in preparation for starting on the real 'business' work soon.

It's been a really fun and eye-opening experience:
- It's great to see so many mentor volunteers. Understandably, many are fresh out of college, as life seems to get busier as you get older (due to kids and careers in equal measure) until you get old enough to be in charge of your schedule again.
- The kids are very smart. In some ways they're just like the kids in prep-schools in their obsessions, but unfortunately, there is a substantial knowledge gap and that seems to bring down their confidence and they don't think they're smart enough.
- When asked what they'd do if they had $10 million in the bank, every single one would spend a big chunk helping their families and helping others, very few talked about getting specific material goods like a Ferrari.

One of the most encouraging signs I saw was that in every one of the 'business' discussions we had (the last one was on the most profitable way to sell s'mores), the kids are very passionate about quality. They were vehement about not wanting to sell low-quality goods just for increasing the profit (s'mores with less chocolate? nooo!). While almost all of them said they were in this class to learn about making money (which is a great thing), they seemed to have an innate desire to go about it the right way - money is good, but not at the expense of others. Making jokes at the expense of your classmates is perfectly OK though (they seem to be pretty aware of not crossing the line into meanness).

It is inspiring to see the essential goodness even in kids who have less-than-comfortable, or even acceptable, home lives - especially when we're flailing through a financial meltdown caused by pervasive greed and are despairing about the lack of ethics in the business world. There's hope!

Experience may not be required

Hiring for a startup in the early stages sometimes requires you to go counter-intuitive. For example, take experience - it's not always a good thing.

This is not a be-young-or-die creed. It's more about the need to have a certain approach - a 'beginner's mind', which is open to new ways of doing things and is willing to find out what's needed and learn it. And while age alone is not a barrier to the open mind, ego often is.

I'm beginning to believe this approach is critical even for tactical, technical positions, though here experience in specific skills would be a definite requirement. But along with those skills, you'd need to check if the person is walking in with a 'Let's see if what I did before would work here' versus 'I've done this before, I know it all'. For example, how many of us have tried to rescue project management from the set-in-concrete opinions of 'experts'?

But what about the executive/strategic positions? Here the issue is even more pronounced as most executives have a very healthy opinion of their accomplishments. They have their own blueprints, templates and strategies on how to get things done. And these are useful, and often sought after, if they're switching from one corporation to another. They may even be helpful in established startups with stable teams, product and market. But an early stage venture is a shifting stage where you're better off polishing your improv skills and putting your well-thumbed script from past positions in the bottom drawer for a later date. For example, the VP of engineering shouldn't be surprised if there's no backup process and no sys admin to delegate it to either - he should be googling backup strategies and trying stuff like getting his comp sci major cousin to moonlight for a bit.

So how do you figure this out without some fancy psycho-savvy interviewing? Smart interviewing is important, but you can do some smart resume filtering first. Too much experience of the 'wrong' (read 'same') type is a handicap in a startup. You might have a chance if the candidate has a track record for learning/doing in different jobs and a demonstrated ability to work in places with big and small budgets (frugality, the retro startup chic), but even then you may want to go the consult-then-convert route to make sure you have a good fit - way less stressful than hire-then-fire. Startups need to be adaptive and flexible, and if you get the guy who's made a career out of driving nails with his hammer you get nothing but a pounding headache - while the one with a swiss army knife can uncork some wine, slice some cheese, open up a can of olives...

There's hope!

No this is not about the election (though today is election day and I'm voting for hope and hope the majority does the same). It's about the wobbly times we're in. Credit crunch, sinking home values, disappearing jobs, diving stocks and a general feeling of global malaise.

I know there's a ton of ink, digital and otherwise, comparing these times to the Great Depression, which most of us have only read about. But, there's also the comparison to the 70's, which were marked by inflation, high gas prices, political blunders and crashing stock markets. And it was exactly in those gloomy times that the fired-up Jobs, Gates and others launched their now iconic startups.

I'd read that the Chinese word for crisis, weiji, is made up of the characters for 'danger' and 'opportunity'. Wikipedia assures me that it's a common misconception, but there's a reason why it is so - it sounds cool and inspiring, and a lot easier to remember than the other description that I've already forgotten.

So, yes, this is the time for opportunity too, as long as you can be patient and don't expect the dot.com boom-like fast returns which were fueled on hype (hype is suspect now). You may have to reset your expectations on what people would want/need, but wants and needs are still out there and can still be filled with innovation and enterprise. And there are even investors who're willing to fund ventures now, as long as there's enough substance that they can start to dream too.

For entrepreneurs and intrapreneurs who're willing to work harder and longer, these are times of hope - if they could innovate their way of the 70's doldrums, we sure could do it now!

The sky is falling

It sure looks like it, given the financial news worldwide. Stocks falling, credit freezing, centuries-old bastions of industry faltering. It's not pretty, and no one knows what's going to happen next. So what does it mean for entrepreneurs who're just starting out?

In the high tech world, when top venture capitalists speak, Silicon Valley, and as we (possibly hubristically) believe, the world, listens. They have been well covered in other blogs; TechCrunch has Sequoia's 'doom' outlook, Benchmark's call to frugality and angel investor Ron Conway's cautionary memo - all very interesting and must-read. Most of the focus is on companies that are already funded, not early stage ones that are hoping to get there, but the message is pretty similar for both: don't expect funding. The prevailing mood is dour and the call-to-action is 'hunker-down'. Nothing unusual though - VCs are typically conservative, though they're ostensibly in the business of taking risks - nobody gets fired for preaching thriftness (with impending doom).

But I'm not alone in thinking that entrepreneurs do have an opportunity in this climate and a startup is not a bad place to be in. While the VCs are talking mostly about funded companies, the warning on scarcity of funding is probably even more true for the fledgling startup. Even if you aren't doing a startup which requires funding, you still have to face an environment where customers are not quick to buy anything. so, if you have mortgages to pay off and mouths to feed, I wouldn't recommend quitting to start something. But if you're unencumbered and/or find yourself out of a job, or if you have some spare time for moonlighting, and have an idea that's you're burning to try out, now may be a good time to do so.

Successfully launching a startup in these times comes down to four things. The first is your idea. Is it something that can be done with little money? When do you have to go to market? If it is in the near future, it had better smell 'recession-proof' and that's no mean feat. There are many who think that means saving a few bucks for their customer, but a lower price is meaningless if it is something your customer can do without. What you offer should be obviously of value to your customer/user today, without needing a sales spin or convincing, and should be competitively priced. Then you'll have a chance of gaining traction in the market.

The second is execution. Your awesome value-delivering idea is just that, an idea, not a successful company, if you can't execute on it. And in lean times, execution is about getting stuff done with little money. Which means thinking frugally at every step and finding alternatives. You have to make tough choices and may find your timeline slipping because you don't have the resources, but that is better than slipping on quality. But 'getting stuff done' also means staying focused and not letting your vision slide along with stock prices on Wall Street.

The third item is your team. Even if you only have a couple of people moonlighting on your venture, you'll see upward momentum if they have a 'can-do' spirit and feel ownership in the success of the company. And it is always more uplifting to be with pragmatic, but positive, people than those who gripe and groan - when times are bleak, you don't want your team to be ditto.

The fourth is what kind of an entrepreneur you are. If you're focused, flexible, determined and unafraid to work with little money while diligent about seeking more, you have a much better chance of survival. If you tire quickly of lean budgets and making-do, this is not the time for your startup. The bar is higher during tough times, but not impossible to clear, and if you can do that, you'll still be standing when the sky is raised again.

Got influence?

A few weeks ago, I participated in a panel discussion about using influence to deliver results. It was moderated with ease and distinction by Neerja Raman, a Valley exec, management speaker/author, and now research scholar and proponent of social entrepreneurship. It was a panel of impressive women, all with insightful stories and if you're interested, there's more information to be found at Neerja's blog and Peggy's (one of the panelists).

At the panel, the stories I shared were about managing up and/or out - either top bosses during my corporate stint, or VC investors and customers from entrepreneurial forays. But influencing your team is an ongoing, daily need, not a sporadic activity, and more so in an early stage startup when you have very little history and the culture is still being formed. Sure, when it's only you and a couple of co-founders and you've all worked together before, the influencing patterns are so ingrained in you that you probably don't even notice that you're following them. Whenever you're presenting anything of consequence to your tech co-founder, you will give it a game-changing, revolutionary tinge because that's what floats his boat and he's still got penguin stickers on his car. It's all automatic by now - just like in your family.

But that's not the case when you throw new people into the mix. First, you don't know what floats their boats, revs their engines, juices their hybrids, whatever. Though the beliefs, politics and fashion trends of millions have been driven by a few, influencing is often a a one-to-one game, requiring you to adjust your plan based on who you're trying to influence. That said, there are 'group think' opportunities, though rare in smaller teams, where you know if you can convince one key person, the rest woud follow. So yes, it takes getting to know the individual and his/her hot buttons.

Asking 'what are your hot buttons' is kin to a lame pickup line, and any answer you get is suspect. Most startup folks will say that they're driven by the idea, want to do something meaningful and interesting, and participate in building a company, yadiyadiya. But aside from money and security (usually not the strongpoints of an early stage startup), and the still valid Maslow's theory, people are not influenced by the same things, even in a startup. Some are drawn by appeals to their sense of adventure (we're going to try something new and get to invent it as we go!) while others are more partial to predictability (we're trying something new, but not really - see how it is similar to all this stuff you've done before, and here are 25 reasons why it is a good bet and the giant safety net in case it isn't). In a previous startup, I found the architect always responded to the 'big picture' pitch, while the development manager wanted everything presented in terms of timeline and resources, and didn't really care about anything outside of that. It may appear trivial, but it took some juggling, and quite a bit of time, to present to each one separately. It was a relief to get to the point that, at least for some things, I could present to one and give him the responsibility of convincing the other.

It sounds like calculating, manipulative behavior, but it isn't really - it is thoughtful and adaptive. It's being an effective leader and understanding that getting the support and buy-in of the team often takes pitching to each member's sweet spot. Which is why anything of significance, while it could be 'announced' in a meeting, pretty much requires individual discussion to get past 'reaction' to 'results'. It takes work though - especially the part about finding out what makes each person tick, and then remembering it every time you've got to make something happen. While there are many leaders who don't bother with these nuances, it is pretty much necessary for those entrepreneurs who are not aiming to be titled 'despot' - or failure.

What helps the entrepreneur is the the passion for the cause. You are so committed to your startup that you'll do whatever it takes to make it succeed, and right there you have more than half the influence you need.

When you wish upon a star(tup)

I should probably be paying more attention to using the right keywords in my post titles - those that would attract startup oriented readers (the one above would get the Disney fans). But where's the fun in that?

Moving on, last week I had conversations with three different people seriously considering the startup jump - that is, starting their own companies, not just joining one. I've written about this in previous posts (look here and here), but obviously this is an ever-engaging topic that bears revisiting. None of them wants to be mentioned by name and understandably don't want their ideas bruited about either, so this will all be cloaked in general terms.

The first is a senior level manager in a smallish company. Not a startup, but fairly small in size, with decent revenues and good growth. She really enjoys her job and is very good at it, but, she said, this is not what she wants to be doing - she doesn't feel satisfied. So she's been looking around, checking into various options, and has come across an idea that resonates with her deeply. It involves a passion of hers and she's figured out a way she can indulge it while making money. Now that she has the idea, she's dealing with is the uncertainty of entrepreneurship. Does she have to quit her job? What if it doesn't work? Will she be giving up moving into the corner office (or close) by doing this, and would she care?

The second is a mid-level manager of a Fortune 100 company. She, along with her coworker, built a nifty little application that's getting rave reviews internally. Her company is not into software so she sees no further outlet for what she believes would be an universally welcomed solution. She's trying to figure out if she can launch a company with this app - with her company's support and sponsorship - instead of letting it (and herself) languish with nothing more than a pat on the back and a bonus.

The last is a young man who's already experienced a big company as well as a startup while still in his twenties. He and his friend want to start their own company because (1) they believe that's the best way to work and (2) they believe they can make it work. And, not to mention, they want to take this walk on the wild side while they're still unencumbered by other obligations. Their startup idea? Well, they're working - and I mean, working - on it. Brainstorming, researching, analyzing dozens of tech ideas, hoping to find the one that brings their 'eureka!' moment. They've already got a game plan on how to do the startup in advance of picking the idea (stay small, stay close, be careful about funding etc.). They're driven by the how, not the what - at least not yet.

What all this means - to me at least - is that more and more people are leaning towards entrepreneurship, and for many different reasons. Strikingly, among the three people mentioned, not one was doing it just for the money, though they do expect some financial rewards. It looks like more people are willing to unleash their inner entrepreneur and maybe that would be the smart thing to do in this economic climate (check out this BusinessWeek piece for one opinion on why entrepreneurs are the answer to the purported perils of globalization). Any and all of would-be entrepreneurs above could be successful, though each has his/her own set of hurdles to cross before even starting the venture - it would be interesting to report back three years from now and see how they fared). But no matter what they end up doing, this entrepreneurial attitude is sure to have an impact - and if nothing else, they have more fun answering 'how's work?' these days.

There's no team in virtual

There's the 'I' and 'U' but no 'team' in virtual. Startups that launch as entirely virtual may find that they're virtually successful - as in almost, but not quite there.

OK, aside from the cute word plays, there is a real reason why startups cannot be all virtual. It doesn't mean that everyone has to be together all day, 12 hours a day and commute for hours to make it happen. For one, that can be a real productivity drain, and for another, it is certainly not eco-friendly. Startups in college campuses or those consisting entirely of single folks sharing a communal apartment can skip this post in smug satisfaction - but the rest of us have to work at balancing the needs of people and planet with milestones and resources (or lack thereof).

Superior communication is how mankind evolved from grubbing for edible worms to savoring warm chocolate cake with truffle in the center (yum...). So it's not surprising that it helps the startup team to pull together instead of haring off in different directions. But communications don't get established by saying 'we need to communicate' and everyone nodding agreement. You need to seed a 'culture of communication' and help it get established so it can be sustained without much effort.

Technology (the output of many startups) has made it really easy to communicate across distances - Skype alone has probably caused a 1000-fold growth in virtual teams. But just because the tools are there doesn't mean that people know how to use them effectively. Ideally you'd want your team keeping in touch the way they would be if sitting across each other in a bull pen, but with the cranked up productivity of sitting in their PJs on a couch at home. Can it be done? Sure - but only if they've built a rapport and can ping a colleague (or the CEO) mid-way through coding with 'this is the short-cut I'm taking - what do you think?'. The team has to feel comfortable asking and telling, and not worry too much about interrupting or wasting time.

And how do you build this rapport? By meeting often, and in person, especially during the early stages. If you don't have an office (which is most likely, pre-funding) there's your living room, the legendary glamorous garage, and the #1 worldwide alternative to the home-office: the ubiquitous coffee shop. It doesn't matter where and it doesn't have to be all the time - but meet often, preferably on a schedule and spend time hashing things until you've not only got the communicating habit inculcated, but everyone's got the quirks figured out and doesn't get huffy at a co-worker's skepticism (she just likes everything spelled out) and remembers to touch base with the CEO on everything because he wants to be in the loop (startup management - that's another post).

The rest of the time, when you're not meeting face-to-face, set it up so that you're in touch every day with every one by chat, con calls, whatever it is, pick the medium and use it often so everyone gets into the rhythm and isn't wasting time decoding the message (a la teens and texting). And of course, there's always the getting together over lattes, dim sum, pizza and beers - more of the rapport building.

Sometimes it may seem that all the touch-feely stuff is taking away precious time from the serious work of building a product. But you aren't just building a product, you're building a company - and without adequate communication you may end up building something you don't want. Think about it - you have a vision for something new and innovative that you and your team are trying to build. You can't really expect that the vision can be documented in sufficient detail to provide a comprehensive blueprint - and if you're spending enough time to attempt to do so, maybe a startup's not the right thing for you. Communicating the vision requires constant refinement, from the big picture to the tiny pixels. And along with the product vision, there's also the myriad operational details of what to do or not, choices to make or not, that are not obvious and won't become standard operating procedure for a long time (until, let's face it, you're big enough to afford structure and bureaucracy). So keeping everyone on the same page (even as you keep turning it!) is essential and not fluff stuff. That's not to say you can't be efficient about keeping connected, but remember to provide a venue for questions, debate and casual what-iffing too. The creativity of the communications in the early days is a big part of the fun of launching a startup.

Virtual+frequent+communication. Yup, there's a team in there. And fun too (I'll stop now).

What to do with those other ideas

I just saw a new comment added to an old post on what to do with an idea - its a question actually, and answering it seems like the thing to do.

The original post was about answering a question from a fellow traveler and walked through the 'doing the due diligence' and vetting the idea before building anything. But this question, from Anonymous, is 'what if the idea is not for a product, but for marketing or advertising?'. Anonymous doesn't give any any more background info, so I get to have some fun hypothesizing (and take a break from spread-sheeting).

So, where's Anonymous coming from? I'm guessing s/he is not currently in a position of power and influence which would make this question unnecessary - probably just one of the rest of us. But what Anonymous is currently doing and wants to do also have an impact on how this question is approached.

• Works in an established company and has an idea for marketing/advertising a current or upcoming product. Anonymous must do what any 'intra-preneur' would do: build the business case and build contacts who can champion the cause with the ones with power and influence ('investors").
• Works in a startup. Ditto, except it'll be at 3X speed, and you shouldn't have to build contacts in the startup (if you aren't drinking buddies, you should at least be watercooler ones) and you may beef up your story if you have some outside experts weighing in. Key point, do the homework and build the case - and you'd better be really motivated, as you're probably putting in crazy hours already.
  
• Works/studies somewhere else and has a great new idea for marketing/advertising and wants to start a company with that. Same process. Though this is a service, not a product, it is still something to sell to customers (whoever they may be), so Anonymous has to go through the same steps of scoping the market, value proposition, pricing etc. and maybe pilot (aka give it away for free) with a couple of customers before deciding this is a keeper.

There is an undeniable pattern here. Regardless of what the idea is about, and size/stage of the company involved, the first thing to do is build a business case. To sum it up (in an advertising homage): do the due!

The last lecture - another view

If you've not been totally oblivious of the goings-on in popular media (yes, that could happen even if you're not in Bora Bora watching nothing but the waves), you must have heard of Randy Pausch's last lecture. If you haven't, you could go over to the store and pick up a copy of the book version from the bestseller shelves, or find various clips on YouTube. But, do yourself a favor, take the hour or so you'll need to see the full lecture, not just the Oprah sound bites. Yes, it is geeky (he's a professor at Carnegie Mellon after all), but that has its own charm and is part of who he is. Go to his website http://download.srv.cs.cmu.edu/~pausch/ - it's bare bones, but you can view the lecture as well as get the all-important backstory.

What's so special about this last lecture? After all Randy doesn't say anything we wouldn't find in self-help books or the secrets to success from movers and shakers - though he has lived an impressively accomplished and fulfilling life in a relatively short time. Much of the impact is from knowing that he's dying, though he doesn't dwell on that, and instead breezily moves past it with self-deprecating humor. It's the distillation of lessons from a life well lived by a very smart and caring person - the kind of person who'd make a great mentor.

So what's this got to do with entrepreneurship? Quite a lot actually. Even though he is an academic, he exhibits many of the characteristics of an entrepreneur and almost every piece of advice he gives would resonate with those of an entrepreneurial ilk. My personal favorite is the bit about brick walls being there to prove your dedication and how badly you want something. For startups, the road is not only rocky, but brick walls pop up at seemingly every turn. And not only do you, as the entrepreneur, have to bulk up to swing the metaphorical jack-hammer, you have to get your team to do the same - preferably on their own, without waiting for the caped crusader to do it for them. If you - and your team - are truly committed to your venture, you don't see just the brick wall, but you also see the cracks, the toeholds, and the myriad ways you can get past it.

Of course, like everything else, it is easier said than done, and practice does make it more automatic. One reason the last lecture hit home is that recently our team did a roadmap and targeted a mini-launch based on a date driven by the market and our business goals, and what we believed to be the must-haves in the product. The team then went off to do a detailed scheduling exercise and came back with a date that was over 2 months out from the original target. As it was all well thought out and reasonable, they felt that it was 'reality' and I should be ready to face it. I probably sounded like a woolly-headed new age flake when I responded with it being just one reality, not the one that I was willing to accept, and that my aim was to figure out how we were going to make the target date because that milestone is super-critical to our success. I was confident there was a way, though it might have appeared I was delusional. To keep it short, and sweet, with some discussion, juggling and a dash of 're-thinking' we got to the target date with an acceptable deliverable - and a hefty boost to the morale all around.

So check out the last lecture. But for a few who may be squeamish about it's earnestness, most will find it an inspiring packaging of life lessons. Much of it applicable to startups too. And a reminder that when you really want something, the goal should define the path and not vice versa.

Why startups are innovative - Reason #3

I'm sure there are a couple more important reasons, but this is the one that I'm thinking about now, so #3 it is.

Outside-in thinking. AKA thinking outside the box. Yes, that one, the one that's fast becoming an old saw, hammer or what-have-you, and is a foundation for many high-priced classes teaching organizations to innovate (does anyone still not know how to connect the dots?). Though tired, it is tried and true and most of us believe that's exactly what we'll be doing.

But there's the inevitable knowing-doing gap. Thinking outside the box can't be mandated, and you can't always rely on peppy (Dr. Pepper-stoked?) facilitators leading your team through mind-expanding exercises like associating recruiting to horses (honestly, I did one of those!). To be truly effective you need creative thought not just during dedicated brain-storming sessions, but also when dealing with to day-to-day demands, be they figuring out the right wording for an email to an angel investor or designing a stop-gap solution to a user problem. That's how a startup gets to be excellent, and not just another venture.

What helps, a lot, is an environment that is conducive to unconstrained thinking. One with constant exposure to fresh thoughts. To people who don't think just like you - at least not all the time (watching Top Chef, ok, but Top Model, huh, why?). And having a marked absence of silos is a big factore. A silo, even if one could be established, would surely crumble in a startup due to the small number of heads and the vast quantity of hats to be filled. Not having a silo means you are not isolated with others who are in the exact same function/department, so you are automatically exposes you to other perspectives. Wow, if the finance guy can routinely listen to the product marketing and the development teams (of one each!) haggling over features, just maybe, every now and then, he has an idea that blows the problem away. Often, it doesn't even have to be an idea, just a question, asked from a different point of view, is all it takes to spark a creative solution.

It is not at all far-fetched to think that the architect's casual idea can spark something for marketing or a tester's question changes the user interface. But many assume that technologists can't get inspiration from other functions like marketing because they're, well, non-technical and can't help solve tech issues. Not so. What the outside-in thinking is all about is to get you out of your current rut and look at the big picture, the forest, the planet even - and that, instead of yet another tech deep-dive, may be what you need to see the solution,. If nothing else, it may re-frame the problem and it may not be such a big deal anymore.

Lastly, it's not just that startups are able to solve problems quicker - the solutions are often more creative than they would be otherwise. as they are informed by the diverse experiences of the entire team. Being small is both a bane and a bounty - startups never seem to have enough staff to get everything done, but they sure rock at innovation.

An entrepreneur's take

I've been thinking about this off and on over the past few weeks as the Yahoo-MicroSoft saga was unfolding. There were a lot of opinions out there, some predicting the disappearance (so to speak) of a Silicon Valley Internet legend, but many others wondering about the wisdom of CEO Jerry Yang's refusal to just take the offer. But not being an obsessive blogger, and being somewhat preoccupied with other stuff like work (what's that about?), I hadn't gotten around to sharing my thoughts. Then the MicroSoft offer was taken off the table, ostensibly, and there was another crescendo of opinion, now focusing on the loss to the shareholders, and the predicted futility of Jerry Yang's stated desire to have Yahoo succeed independently. And yesterday I happened to catch a rather sentimental column on the Merc News, one of the few that bemoaned the possible loss of an iconic pioneering company, and I decided that it's time for a post.

First, what's best for the shareholder may not always be what's best for the customer/user, especially when the company is a public giant. In the early stages it is fairly safe to assume that if you do what's right for the customer, you're generally building shareholder value, so Jerry Yang and David Filo could just focus on what they delivered to the user and assume the rest will fall into place. But as you get to the 800-lb gorilla stage, things do change, especially in M&A situations. I'm not a Yahoo shareholder and if MicroSoft's acquisition would have had noteworthy impact on my outstanding mortgage, or savings for my daughter's college, or even paid for a longish luxury vacation, I too might have been irked by the deal falling through - just might though, not sure. But I am a user of Yahoo, as well as Google and MicroSoft, and I use each for different needs. I prefer having different options to choose from and, needless to say, I believe they do better by having to compete. I was so not looking forward to having Yahoo be just another part of the Redmond behemoth which is busy trying to balance its enterprise offerings against the consumer future. The user/customer will be better served by an independent, successful Yahoo.

Secondly, as an entrepreneur, I can totally understand a founder's reluctance to just take the money and run. Based on history, the prognosis for an acquired company, especially the big, established ones, is not very encouraging - the preferred outcome is full assimilation (resistance is futile!), and the persistence of a separate identity is costly. Sure, most startups define success as an acquisition, but the Yahoo folks went the IPO route and have already made their millions (billions). If they're still going in to work everyday it's because they are passionate about the company they've built and they care about its future. So it is not at all surprising that they want to dig in their heels and not fold right away. After all they have the entrepreneurial mojo and could possibly innovate their way to being high-fliers again.

Of course, this is a minority opinion. And other forces, like the the Icahn effort, may make this whole thing moot. Yahoo is an awesome company (and seems to be a nice place to work at too), and this is just one entrepreneur giving props to the guys who built it and understanding where they come from. Maybe it's not too late to buy some stock...

Trust, fund

Actually, despite the cutesy wishful thinking title, this post is about trusting funding sources - or anyone with a vested interest, and some level of control, in your venture.

About a week ago I read a post about an entrepreneur who had a really bad experience with the VC who was on his board. Click here to read the story - it is not a pretty one. But there is more to it than just an investor who didn't play nice (wonder what he learned in kindergarten?). Unfortunately many first-timers find this out only by going through the knots-in-the-gut-that-are-way-past-Pepto experiences - hindsight being better than Lasik and all that. I don't know the whole story, but an entrepreneur would do well to exercise some caution.

• First, no one else, absolutely no one else, has the same drive and level of interest in the survival and wellness of your venture as you do. Investors, board members, advisors, partners, customers, even spouse/gf/bf/mom/dad, may genuinely want you to succeed, but their perspectives and stakes are different from yours.
• Go with your gut. If someone rubs you the wrong way, don't take money or advice from them, and most of all, don't put them in any position of influence or control in your company. If your personalities are not in sync, there's no point trying to force fit a match.
  
• If integrity and fair play are important to you, expect it from everyone who's involved with your company - not just yourself and your team.
• On the same lines, take your time and do the due (diligence that is). Investors have their checklists and talk about investing in 'people'. Have your own checklist to assess who you want to invest in your venture and/or be on your board.
• Don't depend on any one person or entity. Having alternatives (as long as they're not all buddies, partners and of the same ilk) provides balance and a better chance of rational behavior.
• Lastly, learn to just say 'no' sometimes.
  

Advice on advisors

If you're an entrepreneur building a company, one of the first things you do is seek an advisor or two, someone who will, at a minimum, be a reliable sounding board and preferably, in tune ;) with you. There's a lot of pressure to put together an impressive board with a view to generating funding - 'window dressing' as one investor put it. Impressive often translates to big names in big companies, which may mean very busy people who may not have enough time to help you navigate the entrepreneurial shoals.

If you're putting together your AB (or BoA) there's plenty of advice out there - it's going to be an expenditure of effort and equity and it's worth your while to do the homework (check out this blog for some common-sense guidelines).

But my post is just about the fundamentals: find people you trust, find people you trust to tell you the truth and find at least one entrepreneur who can relate to where your are at and what you're facing.

Trust. That's critical. Don't go with someone you've just met over insipid wine and crumbly crackers at your local entrepreneurial network mixer. Advisors have to be people who know you well (and vice versa) who would have a vested interest in your success (outside of the meager equity you're likely to give them). And do make sure that the advisor will have time for you, or support you in other ways (introductions, money for example).

The truth. I believe, (like Mulder), it's out there. But it doesn't always go down easy, so you need to find an advisor who's very comfortable with telling like it is. That is not as simple as it sounds, as many advisors, who probably are your friends too, hate to be the ones bursting your bubble, notwithstanding the fact, that as a gung-ho entrepreneur, your bubble is all kevlar. You need someone who's capable of telling you that your revenue model looks unsustainable or your presentation is too pedantic. And occasionally, you also need someone who can tell you that your speaking style is wimpy and doesn't inspire confidence or your sartorial style is more Project Runway than project management. Maybe you can find a friend or family member, outside of the AB, who you can rely on to boldly go into touchy-feely territory and protect you from yourself.

Finally, have at least one person whose 'been there and done that' is close to your 'here' and 'this'. It is imperative that you have an entrepreneur who relates to your situation. If you're in services, a product gal can't understand your timeline, and if you're bootstrapping, talking to someone who launched with a few mill from a top-tier VC will just drive you to drink. I was recently introduced to this young guy and was talking to him about doing some development work for us. I found out he's moonlighting as a consultant while building his company. He had an advisory board, sure, but they were all execs in big companies, and no one knew enough to tell him that he shouldn't jeopardize the valuation of his company while bootstrapping (there are ways to do it right). Yes, I did advice him on the specifics at that time, but his story drove home the point that he needs an entrepreneur on his AB.

In case you're interested, my advisory board has people that I've known for a while and absolutely trust. I do have an entrepreneur on it, but a social one, because that's the area that is new to me, not so much the standard startup stuff. They all help in different ways, and I'm getting better at asking for that help too. And, I'm fortunate that I have experienced and successful friends who provide great insight on myriad issues relating to people or perspective or just about anything that's snagging my sails. I can go on and on - maybe in another post.

Remember that the advisory board is a great way to get expert guidance as you build your company, and what's behind the window is a lot more important than the window dressing.

Learn to love the gray

I guess this is one of those things that fit into 'life lessons' not just startup ones. But there is a tendency for an entrepreneur to think that things would be different in his/her startup as she/he is in control and will know exactly what should be done. After all, the books have been read, workshops attended, mentors questioned, so everything should be crystal clear, right?

First, being in control is all relative. There's plenty that's outside of your control. Getting the flu. Your prospective angel investor doing a 6 week trek in Burma. Your part-time sys admin taking a full-time job elsewhere. The economy tanking. Oh yes, the economy.

Then there's the other life lesson of focusing on the big stuff. Know what the big stuff is? Check. Customers, profitability, team. Or customers, product, funding, team. And of course stuff like integrity and excellence, if you actually think about it. But what if these are in conflict? You'd like to think that is not possible, but it could and does happen. Giving the users what they want may take more time which may impact your profitability or your team may crack under the pressure and escape to calmer shores. So which one wins?

There is no one solution when this happens, and it will happen frequently. It seems to be more traumatic when you're in the early stages and you and your team are still feeling your way. The longer you are in business, the better you get at coping with this - as a team, not just as an individual. In any case, the solution is going to require compromises. It is going to be 'give a little here, get a little there', and you have to not only accept, but, as the guardian of the team spirit, you have to enthusiastically champion something that is less than what you originally hoped for. You have to love the gray, and remember a little glitter could turn it to silver.

Knowing your strengths

Most entrepreneurs don't do '100 questions that reveal your career' kind of stuff before they start their own businesses. Usually it is a gut thing, probably a cocktail of nature, nurture, social trends and/or college buddies that bubbles up and gets you drunk on the startup allure. But there are times that you sometimes wonder if you're in the right line of work. And of course, those times are pretty much only when things are a little bumpy - introspection is a four-syllable word that's mostly forgotten when life's a beach.

So, I wasn't introspecting per se (I know I'm doing what I care about, in spite of the occasional bumps), but a friend of mine was eager to share her experience with others and got me to take the Strengths Finder quiz. This test (available online at www.strengthsfinder.com) is built on the theory that you're better off knowing your strengths and building on them, instead of trying to fix your weakness (you take care of those by partnering with those with complementary strengths). Sounds reasonable, and I was willing to do the test to find out what my strong points were while I was desultorily watching TV one night (a rerun of Torchwood, a campy, over-the-top Brit X-files clone) . It was fast, easy, and I found my strengths, but also something that I didn't expect. I found out that I am exactly where I should be - doing a startup. It was so spot-on that it seemed like I somehow gamed the test, though I know I couldn't have as I was on a tear to get it done in the shortest possible time. Looks like there's some substance to this quiz after all.

Anyway, it came back with the five top 'themes' for me: strategic, futurist, connectedness, ideation (creative word-making here), activator. I was thrilled to find it sort of boils down to what I'd decided was important to me as I'd written in my previous post many months ago: create, connect, care. If you're ever inclined to find out more about yourself, I'd recommend giving this a try (as my friend did to me). It may tell you what you already know, or it might point out new directions to consider. Doesn't hurt, and may actually help, or at least give you fodder for discussion with your cohorts. Validation of my career choice is very satisfying. Now to get the same for the product and market....

The adaptive startup

Shift to succeed. Actually, that should be ‘shift to survive’ since survival is success for startups.

Course corrections keep a startup afloat and moving forward instead of bobbing in place, or worse, getting up close and personal with rock-bottom. Every entrepreneur and his/her team would of course insist that they’re aware, and unafraid, of making corrections. But like many other good intentions, these could very well get reduced to minor acts of marginal significance (much like a chapter in a book devolving to a blog post to a Twitter tweet to a Facebook status update…).

The reason is that course corrections are hard to do. Even for ‘mere websites’ where you can make a change and publish it right away to your user base, a shift in features or market is not easy to undertake, especially for a startup with limited resources. Things get easier when you’re bigger and have enough revenue to support changes – but when you lack a cash goat, let alone a cow, it may be tempting to think you’d be more damned if you do than if you don’t. And a shift may be needed any time during the first few years, from the time you’re sketching out a business plan until you’ve established a steady and growing revenue stream, and beyond. (Even the big guns have to pay attention to shifting fast enough and hard enough to stay ahead of the competition, and sometimes their problem is that they're too big and set in their ways to move.)

Shifts can represent a narrowing of focus or an expansion, and both can be difficult. For example, even in our early user-trial stage, we’re hearing the need to add more features to just one specific area. It’s great to get this feedback and know what is really needed, but that means a drag-n-drop to trash of most of our plans and a new hunt for resources with specific skills. While it may be a shorter leap from a marketing perspective, development teams usually get seriously frazzled when asked to set aside what they’ve slaved over so far (and got very emotionally attached to) and move to something else, especially if they feel it is unproven. But, there are few guarantees in a startup, and you just have to keep the focus - build what your customers/users want! - and get on with it. For much the same reasons, more established startups may shift by adding whole new offerings that could change the game, not just the way it's played. In a previous post I'd written about Sharpcast and their founder CEO Gibu Thomas as a quintessential entrepreneur. At that time they were just readying their beta which was about auto-sharing and syncing photo albums across different devices, and they'd got plenty of advance praise. As one of their beta testers myself, I really liked their product, but could see a lot of other, more urgent, uses for that functionality. They are sharp people (pardon the pun) and figured out what grabbed their users very quickly, but I can imagine that delivering it, while supporting what they already had out there, was no easy task even with funding. It took some time, but they now have a new offering available in beta, which has already garnered great reviews (see the ReadWriteWeb post here). Looks like they're on to a good thing.

But is all change good? Shouldn't you hold on to your original vision instead of just 'selling out' to what could be a temporary trend? That is why course corrections are hard, you don't just do them - you have analyze and define them first, and as an entrepreneur you do have to ask yourself if your vision can encompass the change or if this is nothing like what you imagined, not in a good way. And when you do figure it out, you still have to sell it to your team, and they may balk, which is a good thing because it will force you to understand and communicate why it is the right thing to do. Shifts can be required in operational areas too (how you host for example), not just product or market strategy, and the more open-minded and alert you are, the more likely you are to see the need for course corrections, though thankfully they're not always large in scope.

Startups = change, and it's best to embrace it and thrive.

Reminders for the new year

New Year's resolutions. I don't make them and haven't done so for ages. Resolutions seem like stuff you feel you have to do, not want to do, and typically you perceive them as something hard. When I look at the year ahead, I prefer to think of all the things I'd like to remember to be or do pretty much on a daily basis, channeling the inner entrepreneur who usually comes in loud and clear but can occasionally enter a no-coverage zone. Hence the reminders.

The other thing is that if you have twenty-five items to be tracked they are just a to-do list and not in the realm of attitudinal or behavioral nudges. Short, memorable and already a part of your 'way', some entrepreneurial reminders for the new year:

• Keep the faith. You may need to do a course adjustment or two, but hold on to your passion and shake off any creeping doubts - you are an entrepreneur, and this is what you should be doing.
• Stay focused. There might be stresses about funding and what investors may think, and whether you're missing something by not showing up as the next big thing on the blog lists, but those are not core to your mission. You know that the only thing that you should focus on is building a business that will delight your customers/users and staying afloat. Everything else will fall into place with that.
• Pay attention to people. They are not just investors, engineers, marketers, or users. They are individuals and need attention.
• Feel the joy. You're an entrepreneur because you love being one - don't forget to revel in it.

Hmmm, these look like they could work for most folks, not just entrepreneurs. All good. Universal truths work better.

Salud!