Moneyball entrepreneur

Ok, that title's a tease.  It's really about the quotes from the movie Moneyball (based on the book of the same name by Michael Lewis) that Dharmesh Shah connects to lessons for entrepreneurs in his entertaining and insightful blog post.

There are 17 quotes in the post, but my favorites are #6 and #17.

• #6 - Your goal shouldn't be to buy players, your goal should be to buy wins.  When you're early in the game you think having the 'right' (aka experienced) people in roles (VP, CMO, whatever) would make life easier, and often it is with the goal of getting funding, instead of doing the work that needs to be done.  I relate to this because I was advised to get 'names' and spent quite a bit of time trying to do that, but realized that it just didn't click, and that I'd rather have someone with smarts and enthusiasm to do what needs to be done.  And that helped me focus too (#2 on the list).
• #17 - We're going to change the game.  The goal has to be something worthwhile to make you want to stick with it through all the uncertainty and set-backs.  It's the passion for something bigger that will fuel you through the downs until you get to the ups. 

The Moneyball mantras are for socially-focused ventures too.  "It's about seeing something that's not quite right in the world, and deciding you want to fix it."   Education and health are two areas where there are a lot of initiatives started by people who see problems and want to do their bit to fix them.  These two areas also have a lot of entrenched belief systems (as in Moneyball) that are getting seriously shaken by new players who are willing to 'think different'.

Even if you don't love Moneyball (as I do), check out Dharmesh's post here - it is thought-provoking for entrepreneurs and just about anyone who's wants to do something of impact (and it makes you want to have Billy Beane on your team!).

Staying true to your mission - continued

I while ago I'd written about Zappo's change to stay true to their mission of customer service (you can read it here). While that is certainly true for the big stuff, like business models, for an early stage entrepreneur it is also important to keep the focus on the day to day happenings that define the company. Unfortunately it is harder to do when you're being the Swiss army knife of your venture and switching from strategist to tactician constantly.

For example, we believe that customer focus is necessary in all aspects of business and the team supposedly has that down. But recently I was reviewing an overview document for a customer pilot - a document that I'd read and given feedback on at least a couple of times before - and since it was ready to go to the customer, I decided to look at it from the viewpoint of one. That's when I realized that while the main content was fine, the header had an internal focus, not a customer one. Instead of being titled something like 'Hot Stuff Program Pilot' where the customer could relate to and get excited by the 'hot stuff', the header was 'Pilot for XYZ Organizations' referring to the type of orgs that would do the pilot. Presumably it was not obvious as three different people, other than me, had reviewed it with the express intent of maximizing customer impact, and not one had caught the fact that all the header was doing was notifying the customer that this document was for them. Until I looked at it the way the customer would, I didn't see that we should draw attention to the program instead so we could have the customer at 'hello' (alright, the header). Maybe time pressures had something to do with it - but startups cannot use that as an excuse unfortunately. True, a larger company would have this kind of stuff covered under rules and guidelines developed by experienced staff who have time for building processes, but startups should, and can, get similar results by remembering the focus that they believe in.

Small things have a big impact, and when it comes to customers/users, the entrepreneur probably has to do some micro-managing (including of one's self!) until customer focus becomes second nature to everyone. The good news about having a small slip-up like this is that it makes for an excellent cautionary tale that everyone can relate to and makes it so much easier to do the right thing. That's another thing for the founder/entrepreneur to do: collect and tell stories!

Power from the people

Lists are ubiquitous and ever popular. They give the illusion of control - if you can just check off these 10 things you'll lose weight, get into your dream college, find your soul mate and build an amazing company from scratch. Ah, if only. But, lists are still useful if you don't treat them as the 'check' kind and I particularly enjoy reading the entrepreneurial ones (by entrepreneurs) to see what truths they hold dear.

For example, I recently read list of tips for entrepreneurs from Kevin Rose, Digg's founder (you can read the list here). While the focus is on web startups, there are many good things on that list and after the first one ('just build it' - can't top that), my favorites are 'hire your boss' and 'demand excellence'.

The 'hire your boss' bit is about hiring people who you'd respect and you'd want to work for, even if you're hiring them to work for you. And the 'excellence' one is to hire passionate people who are as consumed by your vision as you are. In my experiences both at large corporations and startups, I always had the most success when I hired super smart people who were super committed to doing a great job. They were not always the people with the top college or top company pedigrees, but they definitely had a 'spark' and certain common characteristics: early and complete commitment to the goal, quick at learning, uncompromising in quality and integrity but understanding business constraints, and able to consider challenges as just 'stuff to resolve'. Most of all they enjoyed their jobs and it was exciting to work with them.

I've mentioned this in previous posts about having team members with 'fire in the belly' and 'the right stuff'. An early stage startup needs a passionate team even more than an established one as there's more chaos to be endured, more challenges to be met and hurdles to be jumped which would be difficult to manage with a team that's not emotionally vested in the outcome. But even though you may not have your dream team yet when you get started on the venture, figure out a way to do that without compromising on your management team. It is better to take your time, even if you have to work with consultants for a while, and hold out until you find people who mirror your passion instead of taking on those with extensive resumes but the involvement burner set to low. More than money, your startup is powered by people, the ones who're as crazy about your idea as you are - not to mention, it's way more fun than being the lone crazy in the group!

Beyond the business plan

A few months ago, I'd written a post about the team of teens I was mentoring in presenting their business plan. A quick recap: these are under-resourced high-school students who get substantial support and guidance in making it to college, along with hands-on lessons in entrepreneurship. They're supported by the non-profit BUILD and you can read my previous posts on these teen entrepreneurs here and here. Those 9th-graders have now moved on to 10-grade and have opted to continue with their business idea (and more importantly, high-school - yeah!) and I'm back to mentoring them in their trek from plan to product and having a lot of fun in the process.

So, we're picking up where we left off before summer started - the team had pitched their idea (personalized clip-on charms - no IP to protect here), their differentiators and their business plan, and it all looked viable, so come fall, they were green-lighted to start their business as long as they kept up their academic commitments. But, the three months between summer and fall is a long time in the life of a teenager, and many things changed. Most dramatically, the team's CFO and CMO dropped out of the program and the rest of them were not confident about the product/process anymore.

Surprisingly, this did not cause them to doubt their ability to start their company. A while ago, I'd written about how startups have to be flexible to survive ('The Adaptive Startup') and it is so refreshing to see how these teens are re-shuffling their plans with alacrity. They are not stuck on their old plans and show no inertia or resistance to change. They got two more kids to join their team, reassigned roles, got inspired by one of the newcomers' football charm and are re-doing their 'manufacturing' plans. My co-mentor and I are amazed at how quickly they dropped the one-off, custom-everything approach they were leaning towards when they figured out how much time (and money) that would take and are now measuring everything on a feasibility scale. They're energetically trying to balance practicality with coolness (essential to teendom) and us mentors cheered (silently) when they dropped the idea of buying their own $1000 metal engraver in favor of outsourcing but kept their original designs. Another familiar startup lesson here - focus on your value-add and get others to do the routine/commodity stuff.

As these teens are reminding us, life, and startups, can be unpredictable, and resilience and adaptability seem to trump conformance and control in bringing success - and satisfaction.

Substance and style

Last Saturday was the final business plan competition for the high-school freshmen in the BUILD program (the Peninsula site). It was a gorgeous day at the Stanford Graduate School of Business. And it was smart thinking on BUILD's part, and generous of GSB, to get these kids, most of whose parents haven't even finished school, to visit one of the world's best universities - the kids in my car kept up a steady 'wow, this is so cool!' from the moment we turned into Palm Drive.

The team I was mentoring won points on their clever, viable, idea, their comprehensive presentation and how they had figured out all the necessary details. But, the team was made up mostly soft-spoken, diffident kids and there was no obvious spokesperson who could sell. So, ultimately the team didn't make it to the final round since they couldn't 'talk it up'.

In the final round, the two top contenders had some things in common: smooth-talking CEOs who turned on the charm in introducing the problem and solution through a snazzy Powerpoint, and enthusiastic teams to back them up. One really wowed the crowd with frequent jokes and elicited much excitement among the audience of classmates, mentors, teachers and family. The other team had a couple of jokes, but would have clearly lagged behind in the applause meter. On the other hand, they were the team with a working prototype, a detailed market survey and a believable plan for market expansion. Given the fact that the panel of judges included CEOs and senior executives, it was no surprise that the team with more substance won out over the team with more style.

Of course, these 9-th graders didn't really have the opportunity to form their own teams, and the teams were not evenly balanced on competence and charisma, yet they were remarkably easy-going and accepting, in fact, celebratory, of their classmates' success. But all of them learned a lesson that's critical to any startup team making a pitch: what you say is as important as how you say it. And passion is a key element in the 'how' - if you don't show overwhelming enthusiasm for your idea, you can't expect anyone else to buy it.

It may sound corny, but there were no losing teams in this competition. The goal of the program is to build self-confidence and develop skills that help in business as well as school and make college real for kids who grow up thinking that it is out of their reach. I could see the difference: the kids who were nervous speaking to anyone they didn't know last fall, now got up and made a great presentation. They spoke with confidence and answered questions without faltering. (Note to BUILD folks: remind judges to drop bizspeak like 'did you factor the cyclical nature of the demand in forecasting sales' for the much-easier-to-understand 'do you sell the same number every month of the year'). On the way home our team was pumped: they were talking about colleges they'd like to go to and how they should start their business anyway, even if they'd didn't win the competition, as they think all their friends would love to buy their product - and oh, by the way, would it help them get into college? Hats off to BUILD for involving the community and bringing entrepreneurship to help in education - as mentors, we felt really good that we had a small part in bringing about this transformation, and I personally enjoyed getting a fresh perspective on teens and startups!

Focus on fundamentals

Last night, the teen team I mentor at BUILD (see here for more info from a previous post - is worth your support!) presented at Round 2 of the business plan competition. There are two more competitions to go, the last one being the biggie, but this one was exciting and illuminating on many levels, and as usual, there are many lessons for us grown-up entrepreneurs.

First, there was plenty of drama before the competition. My co-mentor and I were concerned that the team hadn't quite completed the presentation - this was their first attempt at Powerpoint, the lingua franca of business pitches - but we'd given all the feedback we could, and both of us prefer it to be their own effort, not overly influenced by our own business experiences. In other words, we didn't show them how to do sales projection graphs in Excel, for example. And we found out there was more confusion when one of the parents felt that the product was not properly designed (it's an accessory for teens) and got involved in re-doing the whole pitch the night before, but it was too late as the original pitch had already been turned in and that was the one that would be projected.

There was little we as mentors could do minutes before the presentation other than assure the team that the original pitch which they had worked on was good enough, and that they were all familiar with it, so to just go ahead with it. They were the last team to present, so the tension kept mounting. All the previous teams had colorful slides, with sales projection charts and all. We kept repeating that the team shouldn't worry about their plain slides though they weren't convinced - but when it came time to make the pitch, they went up there showing none of the tension and did it and won!

Based on the judges feedback and what I observed, here are some reasons why I think they won, all of which are applicable to any business:

• The lack of color and flash on the slides did not matter, but the content of the slides did. Our team had only a few bullets per slide and they were in simple words (side note, for most of our team, English is a second language). It's good to have clarity in your pitch (though a little color wouldn't hurt).
• The product and manufacturing/distribution process were described clearly and step by step, so everyone could understand it. In fact, the judges even complimented them on the simplicity - which implies the viability - of the process. People trust what they can understand.
• They focused on the important stuff - the product and how they would make it, sell it and what the financials would be. They missed some extras covered by other teams, like what they would do with the profits, but they nailed the core elements of what it takes to build the business - the stuff that matters.
  
• The team projected confidence, both during the pitch and in the Q&A. Even when questioned on things that they hadn't considered before (like 'barrier to entry'), they thought on their feet and answered with conviction if not accuracy. You trust teams that believe in what they're selling, and if you're sold on it, the chances are potential customers will be too.
  

The win was a big deal, and though this is not the final 'funding' pitch, it has a huge impact. As I've mentioned before, these teens are not your typical college-track prep school kids with PhD/MBA parents. They are 'under-resourced' and jumping through a lot of hoops to just be at these sessions, so the win yesterday was a huge boost, and I hope it makes college seem more attractive and attainable now. Winning is sweet, and as one of them said to me later (she's one who was calls herself shy and worried how she could ever speak in public), "You know what, when the judges were asking all those questions, I felt so happy!".

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.

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...

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.

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).

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.

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.

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.

More, or less

One of my managers from many years ago was very fond of the word 'interlock' - especially in the context of 'achieving interlock' between marketing and development or sales and engineering. His was a world of departments of a few hundred people each and budgets in mega-millions, but I believe it is a big challenge in an early stage startup too.

We're all intimately familiar with the balancing act between time, resources and scope, delivering a wobbly visual regardless of which metaphor you choose. Scrunch it down to the startup when all you have are minimal resources who most likely are on a steep learning curve (in a startup it's hard to totally avoid the bleeding edge) while trying to deliver the prototype or beta or whatever, and do it so the customer/user will be blown away - which means an ever-increasing scope of course. And you need it to have happened yesterday so you can get the traction and funding you need to get out of the bind you're in (or so you think).

This makes for some exquisite tension in the team. Yes, you're all passionate and all committed to delivering a quality product that'll take the world (or the little piece you're going after) by storm, but time's a-slipping even when the team's putting in 18-hour days, so what's an entrepreneur to do?

I believe now's when you need your values and focus, the stuff you can measure your decisions and actions by, and makes it easier for your team to accept.

• Customer focus. This is why you don't settle just for what's technically faster or easier to deliver, but what will really make a difference to the customer. It's why you should weigh every option and reject it if it would take away from the user experience.
• Excellence and integrity. The reason you don't want to put out a shoddy piece of work, even if it is only a prototype.
  
• People focus. It's one thing for everyone to work hard because they want to make a deadline, but there are times when you may have to move the deadline because working long hours continuously only burns people out (and also diminishes quality and productivity).
• Staying hungry. If you, like Steve Jobs, believe hunger keeps you sharp, you don't want to go too soft on either your deadlines or you deliverables. And for many startups, hunger is real - they need to make their deliverables, and do it fast, in order to get funding which will help them eat (OK, so no one's starving, but maybe the team hopes to dine on something better than a large 1 topping pizza - $3 off with coupon). You need to be zipping along, not coasting.
  

In reality, there's no easy answer. The most experienced entrepreneur, with the best-intentioned and committed team, will run into this conflict, again and yet again. There might a whole slew of adjustments and compromises to be made, but it can be done successfully. The trick is to remember to keep your values front-and-center, and hold on to your cool too.

The stealth mode startup

I'm betting 8 out of 10 startups begin by being in the 'stealth' mode (that's based on a scientifically conducted multi-year study of course). Most of the entrepreneurs I run into, who've just launched companies, are quick to claim they're stealth, or 'under the radar' - that's true for moi too - and it can persist for quite a while.

So why do entrepreneurs like me go 'stealth'? It's primarily because they don't want anyone else ripping off their idea. This presumably changes when they've got enough funding, staffing and traction that it doesn't matter - or more likely, when publicity is required to build traction. Of course that begs the question, is your idea that easy to rip off? Don't you have some deep, complex IP that takes six PhDs six years to construct? Not so much in the web world, and not even in the enterprise arena. And entrepreneurs are a paranoid bunch - and often need to be so. (I admit to sometimes using the 'stealth' term as a cop out since I don't really want to discuss it with a given person or group - a negative vibe thing.) So 'stealth' is understandable, accepted and occasionally considered glamorous and attractive, especially if you're stealth even after VC funding.

But there's a down side to stealth. There's not enough info about your venture to get people excited. And you and your team are constantly weighing what to say and to whom. Investors don't do NDAs, and standard business practices don't always favor the early stage entrepreneur. You can pick who you pitch to, but can't bet they're in the clear - for all you know, they might be doing due diligence on a competitor, and you're it. (That's another topic though.) What about potential candidates? In a tough market, what you do is an important part of the mix. How much can you tell? I did a previous post on this - TMI - and this is continuation on the musings.

The website is another big challenge. Usually people look at the website to get an idea of the company - not just what it is about, but what it is like. Most stealth ones say very little. Are you missing a key hiring edge? This is a question my team is struggling with right now. How can we make ourselves interesting without revealing too much. Not very easy to do, as we can't even look at other similar startups to see how they've handled it (they're in stealth, duh). But we're at least decided on what it should have: much ado about nothing.