Mandatory Reading For All Entrepreneurial "Business" People

One of the most annyoing things about business school were my many classmates that had "an idea for a start-up" that never did anything to realistically pursue the idea.  Many of these classmates were just poseurs.  Others had personal constraints (family, fear, debt, etc.) that precluded them from taking the first step - which is perfectly understandable.

I think that the underlying problem for a lot of these people and - quite frankly - most business people with an "idea" is that they don't know how to take the first step.  

Turns out that most business folk don't know that ideas are worthless...and that getting from "idea" to "product" requires incredible amounts of work, thought, patience, etc.  Getting from "product" to "company" is about 10X as difficult.

Too many that think that the first step is writing a business plan and then hiring some contract developers. Too few realize that the correct first step is a technical co-founder.

I sent this article by David Albert - An Open Letter to Business People - to some of the entrepreneurial faculty at UNC Kenan-Flagler Business School with the hope that they would share it with every MBA student with an idea that "just needs a developer":

So you have an idea for a startup? Awesome! The world needs more people like you. You're going to have to start by finding a technical cofounder. This is hard because you're not a programmer, so I'm going to teach you how to do it.

You'll notice I said "technical cofounder" and not "developer." That's important. If you decide to pay someone a few thousand dollars for a web app made to your specifications, you will probably fail. Why? Because your idea is not very good yet. You're going to have to iterate a whole bunch of times before your idea succeeds. You need someone who's going to be in it for a long haul. You need a technical cofounder.

I posted this today because my friend Patrick Vernon sent me the following email:

By the way, I can’t tell you how often I share this article. I’m forwarding it again this morning to a former student with a “great idea.”  :)

Three Tips For Early Stage Board Meetings

My friends Matt and Brad started a company called Windsor Circle and recently raised $350k to build e-commerce integration software.  Matt led his first board meeting a couple weeks ago and, prior to the meeting, emailed me and another local start-up CEO - Doug from Spring Metrics - to ask about "the three things to keep in mind" for early stage start-up board meetings.

Here is a summary of my response to Matt's message:

1.  Be careful that you don't spend too much time talking about product minutia.  We spend maybe 10 minutes of every board meeting talking about the product.  It is usually a description of what we've done and what we're doing next...and how it will help us generate more revenue.  

This might seem counter-intuitive to lean-start-up-product-driven entrepreneurs - Doug actually disagreed very strongly in a follow-up email.  The reality is that we OBSESS over our product and our customers at Argyle.  Aside from prioritizing projects, product development is the part of our business that I worry about the least.  (This is a testament to our product team - Adam, Mike, & Josh.)  So I prefer to use our board meetings to talk about business-building issues.

2.  You shouldn't show your board a number, forecast, etc. unless you can explain in detail where it came from or at least explain the assumptions you made when you derived it.  I've gotten called out on lazy numbers a few times, so I've learned this one the hard way.  This mainly applies to forecasts and goals - actuals are generally pretty easy to explain.

3.  You'll get MUCH more value talking about the future than reviewing the recent past.  The standard metrics and reports are important and it is obviously very important to understand how these numbers drive your business.  But it is also very easy to get caught up in details that don't matter nearly as much as pending decisions around fundraising, recruiting, partnerships, customer acquisition, etc.

I'm no expert in board meetings.  And I'll be the first to admit I was pretty terrified when I led our first board meeting back in October.  And I'll further admit that I've got MUCH to learn about being a CEO and running an effective board.  But I think we do a pretty good job focusing on key issues at the board level.

Directors, VPs, & CXOs

These days, we're spending more time thinking about new hires and organizational structure.  In particular, we're thinking about the hires we need to manage the different functional areas of our business - sales, marketing, client services, etc.

We actually have a list of the functional areas and a list of the people - some we know, some we don't - that we think might be a good fit for the role.  For each of these roles, we try to fit the prospective hires into one of three seniority buckets:

Director - younger person that might currently be a Director elsewhere and have his eyes on the VP job.  We would expect this person to get his hands dirty at first and grow into a leader/VP type.  Probably has a chip on his shoulders, probably hungry to work hard.  Big risk, potentially big reward.

VP - more senior person that is more about managing, less about doing.  She is probably already a VP...or maybe a Director looking to step-up.  More experienced.  Less risky.  More expensive.

CXO - very senior person, definitely with a track record, probably a game-changing hire.  Very expensive...but also most likely worth the price.  Biggest concern is cultural fit given our stage.

(I'm a stickler for accurate titles - so this stuff matters to me.)

There are obviously trade-offs across each - compensation, risk, experience, cultural fit, scalability, etc.  And as is often the case, I tend to liken trade-offs to sports.  

On one extreme is an inexpensive young player with all-star potential and big ambitions - you might draft Kevin Garnett...or you might end up with Gred Oden.  On the other end is very expensive veteran player that is a known quantity with a track record - sometimes it works out perfectly, just like Kevin Garnett going to the Celtics.

Ultimately - I think - it comes down to the person.  As our "people we'd like to hire list" migh imply, we'll look for the right person for the role - regardless of experience - and then figure out a way to make it work.