Archive for October, 2009

Startup short-term & long-term mind splitting

October 30, 2009

I’m fascinated with the 80/20 theory which originated from the economist Pareto. I particularly like idea that 20% of what you do today results in 80% of the future. Visa-vi 80% of what you do today only counts for 20% of the future. The challenge is finding that  elusive 20%  in the here and now. Its especially difficult in the fast moving tech sector compounded by having  too much short-term stuff to do in a startup.  However startups need to be both short-term reactive and maintain a long-term strategy to survive.  The problem is our brains find it hard to handle both thought processes simultaneously. The answer for startup founders is to learn to regularly split and switch their mind-sets or where possible divide the roles between founders.

NormanBates

The character Norman Bates (Psycho) going too far with split thinking

I didn’t agree with Eric Ries Gigaom’s post on ‘Myth: Entrepreneurship Will Make You Rich’. However Eric did highlight the dichotomy of startup founders dealing with short-term v’s long-term decisions simultaneously. The lifetime of startups is very short compared with larger companies. Startups don’t have the luxury of time. The startup needs to continually change to survive.  This results in continually switching between short and long-term planning or reacting.

I recently attended a panel discussion at The British Libary which included Doug Richards (of Dragon’s Den fame) & Nick  Wheeler founder of Charles Tyrwhitt, a specialist shirt manufacturer. Doug’s early tech startup days in LA he was extremely reactive to selling Sun Microsystem whatever the business opportunity presented at his feet.  This is a good strategy. It gets immediate prospect/customer feedback on what they do or don’t like and brings in much-needed immediate revenues to put food on the table. However short-term selling means your only react – jumping from one customer need to the next. This can lead to excessive diversification and no focus within startup.

Nick  Wheeler was determined to ‘stick to his knitting‘. Nick only wanted to sell shirts. He knew, obviously, that there would always be a need for men’s shirts. He knew in his own mind that he would be the ‘best’ shirt maker. This is a long-term strategy and vision. Again this is a good strategy. Its has the potential to bring growth, clear direction and commitment. However too much long-term strategising does not  pay the bills  and if the strategy is wrong i.e. the customers aren’t interested in the product the founders won’t know until it’s all too late. Nick did say ‘they nearly went bust‘ based on his long-term goal. But then I’m sure Doug Richard’s must have sailed close to bankruptcy with his short-term selling.

It’s a difficult balancing act managing short-term long-term goals like so many other peculiarities of running a startup.   It can hurt the brain to keep switching between the two thought processes required for short-term and long-term thinking. You have to learn to cope with the constant flipping between short and long-term thinking. It is vital skill but make sure it does not drive you mad 😉

Advertisements

Entrepreneurs: Beating the employee out of you

October 14, 2009

Being a startup founder is poles apart from being an employee. During my 20 year employment career I’ve worked for small tech companies and large software manufacturers. I’ve now had a web app startup for the last two years. Like many I’ve been taught by successive employers how to behave as an employee. My attitude has had to change with our startup because uncertainty abounds and as founder’s we’re responsible for everything.

FightClub self beating

Edward Norton beating himself out of employment
in the movie FlightClub.

Last year I met Ben Way who started running companies at 15! Ben’s now the grand age of 29. I spoke to Ben about his startup life and he said ” I’ve always known it this way and don’t know it any differently.” Having a startup, particularly one where you are trying to build a product, requires a very different approach from being an employee. You have to change your outlook and the way you manage your time:

  1. Job security – There is none!  Remember what it was like when one of your past jobs was in jeopardy and uncertain abounded. That is what it is like everyday in a startup, get used to it.
  2. Salary – In a startup, particularly if you are building a product, there is no money posted into your bank account every month. Get used to living frugally.
  3. Structure – You don’t have the hierarchy of a company to rely on. You have to do everything. From setting strategic direction to putting out the trash (rubbish)
  4. Discipline – There is nobody telling you what to do. This sounds great, however it does mean you have to be totally self disciplined.
  5. Direction – Too much freedom can be a bad thing. You can become paralyzed by uncertainty. You must maintain a focus on where you are going.
  6. Massive Overload – There is too much to do in a startup. Much more than any other job I’ve ever had. And I’ve worked for small 10 person companies before. You have to prioritize.
  7. Tough decisions – You continually have to make difficult decisions which have significant downstream effects. If you’re a procrastinator stop it and make decisions. Afterall a decision is better than no decision at all.

Many employees dream of having their own company. The reality is that it’s whole new world. In a startup the highs are higher and the lows are lower. It much more of an emotional roller coaster of a ride than being an employee.  The challenge of building a company is extremely exciting. And the ability to create in a startup is immensely rewarding. However the workload, responsiblity and uncertainty can sometimes make the whole process  seem overwhelming. There certainly is never a dull moment in the life of a startup.

The pointbreak of a live demo & product launch

October 5, 2009

There’s been much talk of demo’s and launches over the last  month with TechCrunch50 and DEMOfall09. It’s also been at the fore front of our minds with our startups launch and live demo at FOWA, London. I’ve posted about the pro’s and con’s launching at startup conferences. Launching at an event is an emotional roller coaster of a ride with the preparation effort required, pre-event expectations and then the post launch reality. Looking  back the launch peak is a brief moment in time after a long development  journey and before the journey to acquire real customers begins.

Killer WaveKiller Wave (Source: Telegraph ‘Beautiful but deadly’ )

Great  advice on  live demo and launch for startups includes: RRW and Jason Calacanis – Part 1 and Part 2.

Sean Power: “It may be the single biggest traffic spike you’ll ever experience.”, “After the bump, you’ll feel a tremendous rush of adrenaline, then deep, soul-sucking disillusionment as your traffic dwindles back to its former levels.”

There is so much effort needed to build and develop a product in preparation for a five minute launch demo (forgive me for my reminiscing links to many of my past posts):

  1. Finding the team – Getting a great team together is not easy but it’s key to a successful startup.
  2. Identifying the opportunity – Finding a killer idea first of is near-on-impossible or at least improbable.
  3. Getting the investment – Making the money last long enough to build a working saleable product is a ‘Scrooge’ like challenge.
  4. Building the app – Staying on target and not veering off on another exciting project is tricky.
  5. Polishing the app – This takes time and you don’t have much of it. The devil is unfortunately in the detail.
  6. Making it scalable – To prepare to scale or not to scale is a difficult question. No one knows the traffic and usage you will get.
  7. Preparing a memorable demoIn summary Jason Calacanis says: show the product quickly; give a succinct presentation; temp the audiences; talk about accomplishments rather than roadmaps and show understanding of the competition.

Wow, what a journey!! This is why many startups fail to ever get a product  finailsed and launched. The decisions made during each of the above stages directly affects the outcome of the final 5 minute demo. However  this onstage  peak is only a brief  moment in time and a pause before the start of  a new journey.

After the curtains have closed at the conference its when the real hard work starts. You now have to convince customers and investors. The good news is that your startup will be taken a little more seriously because you’ve got a product. However, doubt will remain and very few really believe you have a good idea that will succeed because you have no customers. You now need to be flexible,  customer centric and have  a renewed determination to succeed.

The live demo launch is yet another emotionally intense thrill ride for startup founders. It is a deadline which gets things done and moves your startup towards the all important goal of getting customers.  “Buckel up because Kansas is going bye, bye.” – For the  5 minute demo anyway and then it’s back to reality 😉