My Advice to Aspiring Entrepreneurs? Build Something!

May 22, 2012 7 Comments

I’ve been connected or introduced to a handful of aspiring entrepreneurs recently, folks that have lots of work experience, but no experience starting a company from scratch.  And the first question is always the same, “I don’t know how to get started”.

Ten years ago my advice might have been different, likely starting with the creation of a well thought out business plan that you use to raise money around based on the concept and research alone.  But today the costs of starting a business continue to plummet, particularly the costs to actually build a Minimum Viable Product or at least a prototype.  Simplified programming languages, open source code and dramatically reduced cloud-based hosting, processing and storage costs through services like Amazon EC2 and S3 have not only reduced the costs to build, but more important have enabled thousands of entrepreneurs to start businesses without the need for an outside cash infusion.    And there is no better way to share your vision and get others excited about your idea than to physically demonstrate it with a powerful product experience.  Gone are the days of million dollar investments required to get a demonstrable product, complete with features and functionality.

So the answer to the question is simple – Build something that you can use to:

  • Get others to actually use and thus prove value and traction,
  • Share with investors to get them excited about your product vision, and
  • Reduce the “cost of money” if and when you actually do raise capital

But what if you as the entrepreneur don’t have the skills to code a prototype or build a product yourself?  Easy, get immediately integrated into your local tech community events or get networked and find a technical co-founder.  Notice I didn’t say go find a engineer and convince them to build you something on the cheap or even free in exchange for “some shares”.  Rather, do your homework on the market opportunity, tell a compelling story and share your vision in a way that gets them excited and committed, even if part-time, to the success of the product which will inevitably require lots of iterations to get “right”.  Why should they be a co-founder?  Because engineers are the world’s scarce startup resource and, in my opinion, often the most underestimated from a strategic standpoint given the importance of technology in company building.

It’s really a subject of a future post and I digress, just go get a technical co-founder and thank me later.

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Avoiding Complacency

May 21, 2012 1 Comment

This past week I sent the email below (verbatim) to my leadership team, not as a critique, but as a challenge.   I really find my own personal motivation goes in cycles and I have to fight through this issue from time to time.  The title of the email was the same as this post, “Avoiding Complacency”.

_______________

Guys, I wanted to share a simple technique I use every week to ensure I’m staying motivated and focused on the right stuff.  To be clear, this is not a critique on our/your work ethic, commitment or anything else other than my normal “challenging” the team to stay awesome.  I recognize everyone is working hard. 

Candidly, one of the issues I personally have to wrestle with is avoiding complacency, becoming “comfortable” in my role and most important, losing a sense of urgency and paranoia that I believe is critical for any startup to succeed – the leadership team simply has to feel an almost overwhelming sense of urgency and belief that if we don’t get better fast, someone else is going to kill us.
 
One of the things I do every Sunday night before the week begins is to answer the question, in writing “In addition to all the crap already on my calendar this week, what am I personally going to do, this week, to move the needle for the company?”
 
We should all take this view and we should push our teams to take this view.  On a weekly basis, its not sufficient for us to “move our existing, albeit important, workstreams closer to completion”.  We each must actually accomplish something, each week, that is foundational to our success, that we can all see as a big step forward, that those looking in (investors, press, customers) would say – yeah, that’s big.
 
Now, is this realistically going to happen each week?  No, but it HAS to be a goal, a focus that each of us holds each other accountable to.  I want us to ask each other this question and I welcome you saying “Rob, what did you do this week to move the needle?”

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The Hardest Decision That No One is Forcing You to Make, But You Should

April 9, 2012 1 Comment

One of the inevitable truths about startups and building a real business from scratch, is that you rarely get it right from the start.  Meaning, most assumptions made in the beginning about the business model, target market, customer profile, product features, etc will change over time as you build, learn and adjust.  And this cycle often repeats itself several times over the course of the first few years.

Although the decisions to change the product in a different direction, or to abandon sales efforts in a particular segment or to completely pivot the business model are extremely difficult, especially since the team is so invested in confirming rather than disproving hypotheses, these decisions pale in comparison to the most difficult decision – letting go of good people, employees who are top or strong performers but now have a skill mismatch.

To be clear, I’m not talking about terminating non-performers.  If you can’t do this as an entrepreneur within the first 90 days of someone’s employment, then you should try another line of work.  I’m talking about terminating, in many cases, top performers in their trade, its just that their trade is no longer a burning, urgent requirement to build your business based on how requirements are evolving.

Why so ruthless you say?  Because you won’t have room on the payroll for the skills you really need, you will get marginal contribution from top performers that are skill mismatched, and you are increasing risk that you won’t get the traction you need before you run out of money or a competitor eats your lunch.  When you have 5, 10 or 20 employees, every single person must be the best that exists and must gel culturally.  Everyone in the company should demand this level of performance and since “like attracts like”, it makes recruiting only the best that much easier.

Listen, I don’t take any satisfaction for decisions like this that impact people’s lives so deeply, in fact I don’t sleep for nights before it happens, but the consequence of inaction is too large.  The key is to handle these terminations in a dignified, empathetic way.

One last point.  As you look at your team and recognize that there are several folks that unfortunately aren’t cutting the mustard, let go of them all at once.  And when you do it, embrace the remaining team and reinforce that they are the foundation for the company going forward.  In my experience, top performers recognize when there is a lackluster contribution by others and will have more respect for a tough decision that actually breathes more life into the organization by creating cash runway and room to hire the right people.

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The Fine Line Between Seizing Opportunity and Losing Focus

March 15, 2012 Leave a comment

In the early stages of any business, proving that customers are willing to pay for your product is essential.  What makes it tough is that no one knows who you are (no brand), the product is basic (feature-less) and the business model is certainly not stable (not sure if you can make money).  This last point is one of the more difficult things to figure out as a startup – which markets do we serve, who are my customers and how much do we charge them?  You may think that you know these answers early, but in my experience you are rarely right out of the gate.  You run customer experiments, develop hypotheses, test them, then adjust.  This process can take months and really requires discipline to ensure decisions along the way are informed by market feedback.

And just when you think you’ve got the right industry, segment and customer profile nailed, you get an inbound inquiry from a “big fish” in a different market where the application of your product *might* prove valuable.  But, serving this tangential market would require significant investment of time, energy and mind share to create the delivery capability required to be successful – in product, technology and/or people.  The temptation to chase these improbable leads can be maddening, particularly when there is uncertainty about your current target market hypothesis and you have someone who is interesting in exploring a partnership with you that is unsolicited.

My approach to these tangential inbounds?  Only pursue them if there is –

  1. A direct application for your product or technology with minimal customization or feature development,
  2. At least two interested (willing to pay) customers in the same market – which means you may have to do some outreach to uncover the second, and
  3. Enough resources in the company to continue proving or disproving the target market hypothesis without undue distraction.

I doubt there are many big inbound opportunities that meet all three of these criteria.  That said, I don’t want to confuse chasing a tangential market (Losing Focus) with pivoting your business as a result of experimentation and testing in your target market (Seizing Opportunity).  The latter is a process that unfolds over time as you iterate with customers and prospects while the former is a “leap” and significant investment of time and resources to address a perceived or real need in a market you don’t currently service and probably know very little about.

What makes this decision process a “fine line”?  As a startup, there is likely a high degree of uncertainty that you can be successful in your TARGET market, so ANY opportunity that presents itself can be deceivingly attractive.  Don’t be fooled, persist and perservere until and if your target market customers and prospects disprove your hypotheses, thus requiring a data-driven decision to seek alternative paths.

Just make sure you keep the phone number for the “big fish”.

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Back on the Grid

March 13, 2012 Leave a comment

Wow, it’s been an extremely intense past 2.5 months in Startupland.  I haven’t written since December and I really miss the therapy in it.  Why no writing?  I’ve been channeling all my professional energy and mind share into working through a critical stage in my company’s development (which we are still in), and I’ve been hesitant to write about it transparently given the confidential nature of the issues I face everyday.  While I’m a huge fan of complete transparency, it’s not my place to share these details (despite my desire to do so), especially the unflattering, unsexy, fall-on-your-face realities of building a company when partners and customers have access to them.  So I’ve struggled with what to write about and in what level of detail such that its useful and insightful and, most important, so that others can learn from the tough stuff.

But I’m back!  And committed to striking a balance in what I share.  In the past 8 weeks, I literally have 20 topics listed that correlate directly to challenges, learnings, failings, big wins and the emotional roller-coaster that is my life right now.  I can point to several days when I had feelings of unsurpassed confidence and outright despair – in the same day!

I’m anxious to share more and will over the coming days and weeks, at least once each week.

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Toss Your Org Chart

December 24, 2011 Leave a comment

Org charts suck in a startup.  While they provide clarity around who makes decisions, they also communicate hierarchy and “I’m more important than you” during a time when most of us are wearing many hats and need to be accountable for deliverables across functions.  And if you have less than 40-50 employees, reporting relationships and “who does what” is pretty obvious to everyone on the team, so my negativity towards org charts are really for companies at or below this threshold.

At an early stage, reporting relationships are far less important than defining the handful (most definitely 5 or less) key objectives or focus areas for the company in 90-180 day increments.  Meaning, the only thing the majority of folks should be focused on is what will drive success over the next 3-6 months.  I’ve written in a previous post about the need to focus much longer term and determine strategy in order to determine what those key near-term objectives should be, but let’s assume you know them and need to get everyone focused on what to do, who’s accountable for what objective and which employees work on which objectives.  I’m a big advocate of creating a “one sheet” that lists on one side key activities and who’s responsible and metrics on the other side.

However, one of our founders came up with an awesome visualization that completely replaces the need for an org chart and provides instant clarity on 1) the key focus areas for the company, 2) who’s ultimately accountable for each area (the lead), 3) who the team members are that will work on each focus area and 4) team members that may have more than one focus area (to ensure their time is allocated properly).  This is our visual for BlackLocus with the names and key deliverables scrubbed a bit.  Everyone in the company is assigned to one of these 4 key focus areas. It’s no coincidence, however, that Jesus is accountable for Revenue!

I absolutely love this approach.  Could our priorities and who is leading and working on each priority be any clearer?  Those of you who know nothing about our company know instantly what our near term focus areas are.  Great work Rodrigo!

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Don’t Go It Alone, Get Out of Your Bubble

December 10, 2011 Leave a comment

Since I’ve moved to Austin and joined BlackLocus roughly 6 weeks ago, I’ve probably had 30+ meetings with individuals outside the company.  Why?  Because without exception I learn something from every one of these meetings that will help me be a better leader and reduce risk of failure during this critical phase of the company’s development when there are foundational decisions we are making every day.  You may be thinking, “Geez Taylor, why don’t you just put your head down and get to work instead of networking your way out of business”.  There’s clearly a balance here and I’m not suggesting that you should network for networking’s sake, but rather identify folks that have specific and relevant experience dealing with the issues most pressing right now in your business.  And by the way, it need not be successful experience, there is a ton to be learned from other people’s mistakes.  Wouldn’t you rather learn from someone else’s setback than your own?  Whether its the need to raise money, or perhaps figure out a go-to-market strategy, or even how to tackle a tough engineering problem, there are likely people in your extended network that are ahead of where you are today and have navigated, either successfully or unsuccessfully, the urgent problem you have to solve.  In either case, that perspective is valuable as input into your decision.

Now there is a consequence to seeking multiple points of view and getting so much data as input.  Ultimately you have to formulate a point of view, have conviction and make the tough decision.  And doing so with so much external data can be more difficult and confusing particularly if there are a lot of disparate viewpoints on the same issue or problem.  But that’s what leadership is!  Putting your ego aside, realizing you aren’t the master of everything, seeking external viewpoints and data, then distilling it all and having the courage to make a decision and execute against it.

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Early Stage Priority Confusion

December 2, 2011 Leave a comment

During the early stages in a stressful, lonely place I call StartupLand, it can be overwhelming determining where to focus scarce resources, both people and money.  There’s endless product issues to address – customer features, performance, reliability, scalability – and if you have a Minimum Viable Product and a bit of luck there are existing customers to support and retain.  Add to the mix the need to both acquire more customers and add other strategic partners to complement your product.  Don’t forget recruiting, if you are funded and enjoy the ability to grow your team, sourcing and interviewing talent can literally take up 30-50% of everyone on the team in the early days.  Oh, and your Board and investors will require some care and feeding through reporting and monthly or quarterly meetings.  That’s a lot to juggle if you have a small team (5-15) trying to tackle each of these priorities.

So how and where do you focus scarce resources?

By being ruthless about both prioritizing and sequencing those priorities where maximum traction can be proven in the shortest period of time.  And by traction I mean proving that customers will buy your product at a price that has a path to sustainability.  In my experience, it means allocating resources in 2 primary areas in the early days:

  1. Harden the Minimum Viable Product.  Specifically, ensure the product 1) has only the most basic feature set, defined as the minimum set a customer is willing to pay for, and 2) is minimally performant, reliable and scalable meaning just sufficient in all 3 categories to retain customers and enable a six-month window of customer growth.  Probably the single biggest pitfall to avoid is allocating resources to make your product more feature rich than it has to be simply because you think your customer must have those features, all at the expense of making a more basic product work flawlessly.  Your customers probably don’t need those features yet and if you have any paying customers, then you’ve proven they don’t.
  2. Get and maintain momentum in sales/customer acquisition.  If one customer is willing to pay for your product as it exists today, then find another one willing to pay.  Then another.  There is nothing that defines traction more effectively than increasing customers and revenue.  You can be unprofitable and raise money with customer traction.  You can offset costs and hire more people with customer traction.  The world of possibilities to tweak, market and scale your business open up with customer traction.

At the end of the day, these are the only things that truly matter for an early stage startup.  Build the most basic product that you can sell, and then sell it.  And if you can sell it, then don’t build custom features, in fact don’t build any features beyond the product you can already sell until you have more resources on board.  Don’t harden the product for performance, reliability and scalability that you’ll need two years from now, harden it enough to get through the next six months of sales.

Sure, there’s lots to do from this point, but until #1 & 2 are achieved, nothing else matters, so don’t be tantalized to spend the cycles working on other high value, but optional workstreams.  Be ruthless.

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Why Are You Here?

November 21, 2011 2 Comments

It’s a question that should be expressly discussed and understood by leadership team members in a startup, particularly amongst the founders.  It was the first agenda item at my first leadership meeting at BlackLocus and it ended up setting the tone for the rest of the day.  From that 15 minute discussion, I feel like I know my team members more deeply and can now focus on helping them achieve their aspirations.

Why is this question so important for me to understand in an early stage company?  Because I’m getting ready to go to battle with this handful of individuals and I must understand the level of motivation, commitment, passion and what drives someone to participate in the inherent ambiguous, stressful and all-consuming experience that a startup demands.

I’ve participated in a handful of these discussions in the past and they go one of two ways.  The abysmally useless way is when you go around the room and everyone says something to the effect of “I just want to build a great company” or “I love startups”.  The refreshingly transparent way is when you create a safe environment for full disclosure of both ego and monetary goals.  It’s perfectly OK to say, “I want to make a shitload of money by building a valuable company”.  In fact, that’s exactly what I said when it was my turn.  Its about creating a culture of transparency, honesty and mutual respect from the get-go.

A week later, I still remember precisely what each of my colleagues want to achieve from this experience.   One of the most honest and interesting aspirations I’ve ever heard came out of this session.  One person wanted to build a successful enough legacy to be invited to give a University commencement speech.  Not only is that honest, but its so cool and inspiring that I want to help them achieve it.

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BlackLocus Wins “Best in Show” at Under the Radar

November 10, 2011 1 Comment

We’ve had a great two days at the Under the Radar Conference in Mountain View, CA.  It’s a commerce-focused event, featuring roughly 30 emerging companies in 5 categories that pitch in competition format to an audience and a panel of judges.  Today I had the opportunity to pitch BlackLocus under the “Measurement” theme to a panel of 3 judges including Liz Gannes, Senior Editor with All Things Digital, Will Lowry, VP AT&T Platform Partners and Mark Silva, SVP Emerging Platforms Anthem Worldwide.  The session was moderated by Rafe Needleman, Editor at Large for CNET News.  To see the 15 minute pitch and Q&A session, click here and go to 3:45 in the video if you want to skip the panel intros.

The good news?  We won the Audience Choice Best in Show award among the 30 companies and the Judges Award for our category!  We also met some leaders in companies that would be extremely valuable partners and most important, we connected with some large, Fortune 200 retailers that are prospective customers.  All in all, a great use of our time and money to participate.

The other good news (disguised as bad news)?  Along with positive exposure and press comes an onslaught of demands that stress the team to deliver on.  It’s a constant battle at this stage, how to prioritize activity and only that activity which has the highest return when there are dozens of things we know need to be done.  And priorities are not always obvious, these decisions require some stakes in the ground but more important, they require measurement, learning and adjustment to turn on a dime as information becomes available from customers and partners.

I’m returning to Austin today and looking forward to debriefing with the team and getting everyone energized about the path ahead of us.  Strap in, its going to get nutty!

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