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.
Channeling the inner entrepreneur who views life as a startup. Musings about people, their spirit, the startup ethos and the entrepreneurial attitude, with an emphasis on education and social ventures. The 'how-to'? Not so much. But definitely the why, the what and the whatever.
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.
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.
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.
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