Startup CEO: The GOOD, BAD & UGLY

Being the CEO sometimes really sucks! It really does…

I’m a newbie CEO. In fact most startup founders are first timers. When I started I did not know exactly what was expected of me. Afterall, it’s not the typical job title and description. I looked around and found some marginally useful corporate descriptions. But what I’ve recently found is much more helpful!

The job of a startup CEO is:

“A CEO does only three things. Sets the overall vision and strategy of the company and communicates it to all stakeholders. Recruits, hires, and retains the very best talent for the company. Makes sure there is always enough cash in the bank.”, Fred Wilson

These key responsibilities were reiterated by Jason Goldberg and Jason Baptiste, so there is a solid basis. However, what they don’t tell you is what an enormous challenge it is building and running a startup as CEO.

In my experience over the last three years of being a startup CEO and meeting other startup CEO’s, it isn’t as glamorous as glorified by the press. It’s a job that sometimes really sucks!!

The BAD

Responsibility... What could be worse – everything is the CEO’s fault. Yes, everything! It’s the only way to get a company moving forward. Someone has to make the final decisions. Unfortunately these decisions are often ‘between a rock or a hard place’. And one wrong turn and the startup is toast. To make matters worse the CEO often doesn’t have all the information needed to make informed decisions. There is also too many things to do, in too little time in a startup. It’s all a heavy weight to bear.

Founder CEO’s are not perfect and mistakes will happen. Of course, no one is perfect, including the people who work for the CEO. If the CEO has done their job well, they’ve found ‘grade A’ employees. But employees do not have the undying love a founder has for his/her startup. A founder will often want to keep re-writing, re-designing or re-developing something until its perfect.

However, there’s not luxury of time in startup and employees are not always willing to repeatedly go over and over the same thing. So, the CEO has to let somethings slide. There is no other way. They cannot grow on their own as a one/two-man business. Businesses are about people. People are about trust and creating a culture. And culture is about the founder letting go. So let go!

The UGLY

CEO ego... When things are going well the CEO starts to believe in his or her own words a little too much. They think they know everything! It becomes poison to the company. They start saying everything is down to them. They made this company. The founding CEO worked damn hard and now its time to bask in their own glory.

Wrong!

Yes, their passion and determination was needed to start the idea but in reality their narcissism becomes their cage. And a prison for the company. A business is built upon people, and not just the CEO. It’s all about the people.

The GOOD

Creativity… By now you’re probably thinking it’s all bad to be a startup CEO. There are huge upsides that make the responsiblity and challenges so worthwhile:

1. Opportunity – As an old friend said to me a startup is an MBA for life. Startup’s brings the opportunity to learn so much about: yourself, your friends and customers, your market, your competition, and more. It is a learning fest! CEO’s are in a position to help everyone around them stretch their capabilities and learn.
2. To create – A startup brings the opportunity and perfect platform to make something new. We humans are made to pass on knowledge (learn from each other) and to create. A CEO steers the company strategy and executes a vision to create something new.
3. Love –  We all want to feel appreciated, be in a caring environment and have fun.  As founder and CEO they start and set the tone for the culture of the organisation. However, remember that “as an effective leader you can’t aspire to be loved by everybody”

With such Bad and Ugly things surrounding the CEO it is so easy to see why CEO’s give up and startups fail. Paul Graham said, one of underlying causes for startup failures is usually people getting demoralized. Ben Horowitz puts so well:

“As CEO, there will be many times when you feel like quitting.. Great CEOs face the pain. They deal with the sleepless nights, the cold sweat. The great CEOs tend to be remarkably consistent in their answers. They all say: “I didn’t quit.”

Ultimately a startup is not about the CEO, it’s about the people! And the CEO needs to bring hope. Startups are damn hard for everyone. It is the CEO’s role to create faith and willingness to believe there is a chance that things will come good, against all the odds. And help everyone to keep going!

Loving the Underdog! PART3 – Why we Love ’em

This is the final part to my Loving the Underdog blog series, with previous posts: PART1: The 800lb gorilla and PART2 – City of creation.

I’m continually amazed by the support and help my startup gets from other startup founders and company employees. They seem to go out of their way to help and support us without expecting anything in return. I’ve previously called this support Startup Karma in my ‘5 shocking things founding a startup’ post. This help is core to our economic innovation and creativity. Without startup karma we would be ruled by the same corporations forever!

Getting by with a little help from my friends
Nottingham Young Entrepreneurs Event

Startup Karma surprises and shocks you when it happens. Other founders survived to tell their tale and know exactly how hard it really is. Employees have recognised or have seen what a challenge a startup is. These people introduce you to others, give you valuable advice or become your early customers. They give you assistance when you really need it. They even sometimes put themselves into a difficult position to help. The catch is, startup Karma can’t be forced. You can’t ask for it. It just happens.

The reality is few people really want to work for a faceless corporation or company – see my post “Running a start-up is like being punched in the face repeatedly… but working for a large company is like being waterboarded.”. In our hearts we want to feel free to choose the things we want work on. The things that motivate us. In a big process driven organisation you are often told exactly what to do. Your creativity and entrepreneurial spirit is gradually worn away.

We see the potential, the creative spirit in younger companies and sometimes we’re in a position to help them along the way. We believe in hope. ‘They just might beat the big guys..’ This little v’s big scenario is played out time and time again in business and in stories. Think:  Apple v’s IBM in the 80’s; Virgin Atlantic v’s British Airways; and Dyson v’s Hoover. Over and over again the cycle continues.

So why do we love and want to help the underdog so much..?

1. Passion – It is easy to become enthused by the passion and determination of the underdog. They believe, have faith and are willing to sacrifice much.
2. Control – Individuals, especially in the West don’t like the idea of being dominated by large companies or organisations. We have a long history of fighting for independence and freedom. Underdog’s help keep freedom.
3. Making a difference – We all want to make a positive difference to the future. By helping the underdog we can influence the future. And we know helping the big companies will have little effect.
4. Influence – By helping the underdog you can have much more say into how the product or service works.
5. Innovation – The underdog is far more likely to innovate. They have no choice. A differentiated product/service has to be produced. This is good for everyone, especially those that have helped them on the way.

Of course, every dog eventually has its day. When a successful underdog inevitably becomes the dominant player the tables are turned and the whole cycle of little startup v’s big company then starts over again. It’s the great virtuous circle of our evolutionary economic system.

Me, I love being the underdog! It gives you something to fight for.

Startup short-term & long-term mind splitting

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.

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 😉

Entrepreneurs: Beating the employee out of you

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.

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.

What the heck is startup brand identity?

We’ve been thinking about startup branding for a while. I recently touched on branding when I posted ‘Do startups really need branding straplines?’ and concluded that top level marketing straplines embody the vision of the startup. This brings clarity of purpose, consistency of understanding and direction. It seems to me that ‘brand identity‘ is a vague and fluffy term.  However branding is not just for the big boys. It’s also great for startups. Brand identity helps brings credibility to a startups customer, investor and partner relationships.

“It’s the Real Thing“

Startup branding certainly isn’t anything like coca-cola with their big budget corporate brand personality. However  both big company and startup branding is about personality. Branding is very, very, very important for the big companies. It’s worth an awful lot to these giants. It is also really important for tiny little startups like our new web monitoring service. Branding sends out a consistent recurring and reliable message of what the company and product stands for. Customers love consistency. They want to know what they are going to get and they will be satisfied. This builds brand and product/service trust.

In a startup brand personality means the founder’s personalities. Like it or not its about  the founders character’s!  The startup is a reflection  the founders values, beliefs and the way they behave. Startups have the ability to be much more human and friendly than the big faceless corporations. This means startups can use their founders personalities to their advantage. They can be so much more human, personal and engaging.  This is particularly effective in the new world of social media. However startup founders need to have a clear message on what they stand for and who is their the target audience. The founders also have to live and breath the brand for it to be real.

My friend Aaron Fulkerson, the CEO of MindTouch, has taken branding
to the extreme by tattooing the company logo on his leg!!

Most business relationships, whether B2B or B2C, are based upon trust. Potential customers need to know that a supplier will deliver on their promises and they will be around in the future. The challenge for startups is  that branding and trust takes time to build up.  If the founder chops and changes  messages or brand personality too much this trust will not buildup. It takes patience and persistence on a single course to buildup branding identity. This is what makes it so valuable for both the big companies and startups alike.

Do student interns work for startups?

Interns are an attractive option for startups. The benefits are clear. They’re low cost, eager to learn and need the cash. We have two developer interns working for our website motioning startup right now. The alternatives to interns are either expensive freelancers/contractors, low cost but inflexible off shoring resources or permanent staff.  I’ve posted before about finding and working with freeelancers or off shore companies. Despite the benefits care needs to be taken in finding the right interns and setting an effective working relationship.

Potential interns? ‘The Young Ones’ students (Source)

Our experiences goes against Seth Godlin’s and Loic Le Meur’s. Seth believes “internships are overrated” and “we (employers) are doing them a favour”. We’ve found this is not the case if you find the right people,  pay them and work together on clear objectives.

1. Finding the right people – We directly approached 12 Universities and assessed 20 students. Our criteria was  they had paid work experience; were skilled in our development platform and they showed strong initiative.  We were lucky to find two motivated interns who had worked at Google and a London digital agency. We also thought it was better to employ two interns rather than one. With two they can share ideas and work out problems together.
2. Paying  interns – Despite being a cash strapped and starved  startup we think it’s better to pay interns. Paying them changes the nature of the relationship because they are expected to deliver on objectives. Also interns who have paid experience expect to be paid for their next project.
3. Clear objectives – Like all employees they need managing and trusting. Student’s aren’t dumb. Treat them as adults. Let the interns set their own objectives and work with them. If you’ve found the right interns trust them to solve problems and they probably will deliver.

Our experiences of interns so far is great. Yes, it does take a chunk of management time to get them up and running. But that’s OK, because if they’re good you will get that time back later on in the summer as they become more productive. I know several other UK startups including EveryCity and Huddle who also have employed interns. And they think interns are great too. Sam at Chinwag posted his positive experiences of their intern at Chinwag.

Our interns Dave King and Phil Howell have done an incredible job for us. I dread to think how far behind our software development would be without them. From our experience I would highly recommend interns. They bring new fresh ideas to the project and they’re eager to learn. But like all recruits you’ve got to find motivated, responsible and self disciplined individuals for it to really work. You can’t just blame them if it doesn’t.

The source of entrepreneurial determination

My MBA in Entrepreneurship didn’t refer much to  the importance of determination. Yet I believe that being determined is a key quality for entrepreneurs. Since I’ve been immersed in the real world of startups I found this idea to be very true.

Rachel Elnaugh calls it the “pit” which you have climb out and Seth Godin named it the “dip” that you must see beyond. Paul Graham says its “The most important quality in a startup founder. Not intelligence– determination.” (point 5). But what does it mean to be determined?

The Terminator movie

The Terminator machine has absolute determination to achieve its single objective. Entrepreneurs derive their determination from:

1. Focus – There is alot of talk in business schools about vision and strategy.  A vision brings something to aim for. Laurence Peter said “If you don’t know where you are going, you will probably end up somewhere else.” With so much to do in a startup it can be overwhelming. Time can easily to burnt on doing things that don’t really matter.  Determination brings the focus needed to work on the things that do matter.
2. Belief – Because startups have limited resources they have to believe in their vision.  The founders have to be determined  to energise  enough new resources to reach their goal. Mahatma Gandhi,  “If I have the belief that I can do it, I shall surely acquire the capacity to do it even if I may not have it at the beginning.” If  founders don’t believe in what they are doing no one else will and others aren’t going to help.
3. Committed – There’s is no getting away from it. Startups are hard work . The entrepreneur has to  fully commit and be determined to make the startup work. Peter Drucker said “Unless commitment is made, there are only promises and hopes; but no plans.”  The entrepreneur has to sacrifice other parts of their life’s to make it work.
4. Consistency – Most business is based upon trust. Potential customers need to know that a supplier will deliver on their promises and they will be around in the future. The trouble is trust takes time to build up.  If the entrepreneur chops and changes too much this trust will not buildup. Patience and persistence on a single course is necessary. Build momentum through each successive achievement towards the startups overarching goal.
5. Think skinned – Entrepreneurs are well known for their determination and tenacity. They have to be thick skinned to survive the startup emotional roller coaster. Everyone will give advice and “hundreds of people will tell you your idea is rubbish” says Richard Reed the co-founder of Innocent Drinks. They may even think the entrepreneur is insane. The entrepreneur has to be determined to press ahead if they believe in an idea.
6. Flexible –  There is no point in flogging a dead startup idea! Once a new venture is started it can be difficult to see the difference between a set back or an idea that will never fly. Seth Godin believes that successful entrepreneurs know the difference between a dead-end and  natural dips. A startup vision and plan needs to be broad enough to accept change.
7. Lucky – Entrepreneurs need to be lucky people. However, as  Ernest Hemingway said, “You make your own luck”. If the entrepreneur is  determined and locates themselves often enough in the right place where things can happen, they eventually will.
   

James Dyson is a classic case of determination. In 1983 his new idea was rejected by all the major house hold vacuum cleaner manufactures. He had the focus,  belief and commitment to manufacturer the new idea himself in 1993. During 2005 Dyson took a massive a 20.7% US marketshare compared to Hoover’s 15.6%.

Determination keeps us going when we loose all hope. Its when everyone and everything seems to be going against us. Determination is the spirit of innovation, entrepreneurship and being human. As Thomas A. Edison said “I have not failed. I’ve just found 10,000 ways that won’t work.”

New Aware Monitoring blog: One v.small step for man, one giant leap for us

Here at Aware Monitoring HQ we’re moving rapidly towards the beta of our new website/web app monitoring service. We’ve been very busy building the app. It takes longer than you want or expect to develop a web app. But that’s  quite normal. We released our launchpage six months ago.  Since then we’ve been very quite.  That’s about to change.

An Apollo rocket launch

We’ve set-up a new Aware Monitoring blog to keep you upto date with our final beta steps and launching the app. This will be our fifth blog: this one (obviously); Simon my co-founders blog;  E20portal.com home page and the E20portal.com blog – our adventure into the world of Enterprise 2.0.  Exciting times ahead!!

Learning from big & small startups successes

Just as you and your startup needs to learn from failures you should also learn from success. This is not as easy as you think. The vast majority of startup successes are small and subtle incremental steps. The startup that hits upon a instant meteoric rise to fame and fortune is rare. These are the ones we hear about in the news. We can learn from the small incremental successes within our startups, from our competitors and from the well publicised successes of others to build greater success with our businesses.

Startups reach for the stars (Source)

Five sources of learning from success:

1. Others successes – Learn from other startup founders, business managers, sports people, etc. Much of  where, when and how they succeeded will probably be different from your situation. Success is  often anchored to a  time and a place. However the fundamental principles of success remain the same. Understand these and use them. These principles are all around us: in books, the Internet,  at conferences, etc. Listen and learn from them.
2. Successful startups – Where are other startups in your industry succeeding and growing in the current market? Understand their strategy: offering; route to market; and messaging. I’m not necessarily suggesting copying them. Use and adapt their successes to your own startup and target market.
3. Investor advice – They are often brutally harsh but also honest. Get out there amongst the investment community. Speak to Angel’s and VC’s. Their opinions are based on experiences of what  they’ve seen work successfully. They may tell you your strengths and how you can play on them.
4. Successful competitors – What’s working for your direct competition? Find out where they are  achieving success and improve on what they do or how they work. This could be their messaging, channel, pricing, etc. If the market is growing fast and big enough you could even simply copy them and share the success.
5. Your own successes – Startup successes are often very small and subtle. Listen and look out for them. These small successes need to be connected to a startups overall goal and purpose. In this way they can be  built upon, nurtured and grown into much bigger successes.  Experiment with new ideas from others and learn from where they work.  Jason Fried of 37 Signal fame believes rather than just learning from failure “you should put most of your energy into studying your successes.”

In the classic book Good to Great Jim Collins refers to the flywheel analogy. The flywheel is slow and heavy to start and requires many small pushes. But once moving it has powerful momentum. This idea also applies to startups. Understand the fundamentals of small successes. Build momentum through each successive achievement towards your startups overarching goal. These early successes can easily be forgotten or missed. Look out for them and be persistent. Also be patient and keep focused on moving forward. As Benjamin Disraeli said “The secret of success is constancy of purpose.”

 

The Never Ending SaaS/Web App development Story

The development of a new SaaS /Web app often takes longer than you want or expect. The problem is the devil is in the detail. And it takes time to get the small things right. Unfortunately most bootstrapped startups have very little time to get customer traction and revenues before the money runs out.

The main causes of website/ Web app  development delays are an unrealistic  project scope, not enough time for the finishing touches and late engagement with potential customers. From our startup experiences of building a website monitoring SaaS/web app keeping focused and realistic can go along way in saving time.

Developing  the dream (The Never Ending Story movie)

The five main reasons for SaaS/Web development delays:

1. Lack of resources – Obvious I know. After a lack of paying customers this is the biggest problem for most bootstrapping startups. Insufficient resources combined with an overly optimist project scope result in development delays. Startups need to be realistic  and minimal with their first version.
2. Feature creep – Developing software is dangerous. Its so easy to dream of what it could do. ‘Would’nt it be nice/cool’ features just keep being added into the work list once started. The downstream  effect can be very painful: constant delays in releasing, a half baked/unfinished app being released or the app never sees the light of day. Keep it simple!
3. Bug, bug & more bugs – Despite the tedious nature of regression testing and bug fixing it has to be done. As Paul Graham says,  “Users hate bugs, but they don’t seem to mind a minimal version 1, if there’s more coming soon.” We’ve found that fixing immediate code problems in-flow is the most effective way to to minimise bug fixing time in the long run.
4. Those little things – They take much more time than you think. Ryan Carson referred to them as Teaspoons: “You know when you are doing the washing up and you think you have done everything but then get to the bottom of the bowl and find 15 little teaspoons hanging around, and they take ages to finish! That’s us… lots of niggly little fixes, tweaks, minor design improvements.” Startups must allow the time to finish the job.
5. Customer engagement – Rather than adding in features you like or think would be useful get the app out with potential customers. Let them lead the way. Beta testers and potential customers will show you new unidentified needs. This way time is not wasted on unneeded features. Remember Release early and release often.

Towards the end of developing a new SaaS/web app it sometimes feels like you are taking one step forward  and then two back. Finishing a product is not simple. It’s time consuming and requires a big final push of effort and resources.

Once an app is out it’s only the start of the development story. An app is never really finished. It can always be improved, refined and optimised. It’s a continuous process. Enhancements, new minor and major features  will be needed to keep customers satisfied and to stay ahead of the competition. Its a Never End Story!