Entrepreneurial Leadership and Management . . . and Other Stuff

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08
Mar

Starting Up on a Shoestring

Viewlogic-Initial FundingA few weeks ago, I ran across a box full of photos I had taken a while back. Actually, they were color slides, which should give you some idea of how old they are. Many of them were of people, events and even documents (photos of documents? Don’t even ask, I can’t remember why) from my second startup (actually, my third, but it was the second one I founded). The company was originally named Qualogy Technology, but wiser minds prevailed and it was later changed to Viewlogic Systems.

Viewlogic/Qualogy was started by a gang of five (including me) out of Digital Equipment Corporation. We worked for a full year refining the idea, testing the market and looking for money before we finally got funded. We knocked on many doors, gave fewer presentations, discussed our plan with even fewer semi-interested VCs and seriously talked with only a handful of potential investors. We rewrote the business plan so many times, I think I had every word memorized. We changed our revenue model, sales model, marketing plan and development schedule, but never changed our fundamental idea. We stuck with it because we believed in what we were doing and always thought that we could convince someone with money that we and our ideas were worthy of investment.

After a full year of effort, we finally beat someone into submission found an investor who believed in us and our plan. What did that initial deal entail? A total investment of only $50K (see the checks above – $25K from two VCs). My friend Dave points out that it amounts to a little over $100K in today’s dollars – not much money. In retrospect, the term sheet was crappy – contingencies, ratchets, board control issues and so forth. But none of that really mattered, we were on our way. If we had to make some additional sacrifices to be successful, they were acceptable. It was all about having the opportunity to execute our dream.

In the end, it worked out pretty well for all concerned. While not an insane, Harvard Business Review case study, cover of the Wall Street Journal, blowout success, the company did pretty well. Viewlogic went public and then sold a few years later for a little over half a billion dollars. Before it sold, it employed about 750 people, had direct sales worldwide and roughly $170M in revenue.

These days, I see startups often putting in even a greater levels of effort and dedication than we did in forming Viewlogic. The focus and intensity of these young companies is really outstanding. Frequently, though, I see a do or die mentality when it comes to getting funded at relatively high levels. Entrepreneurs think of big funding events as milestones and measurements of success instead of just being part of the process of initially refining and focusing their ideas and later growing them. Funding shouldn’t be the goal, it should be an accelerant to help a company achieve its real goals.

With that in mind, young companies should always look for alternatives to the classic substantial (relatively speaking) first round. Can they self fund? Can they get to positive cash flow earlier? Can they do some custom projects (adaptations of the company’s product or service) for specific early adopters? Can they simply take less money to bridge them to more success and further funding down the road?

Don’t get me wrong, time is against almost every company. Getting things done faster is important and having money to spend makes that much easier. Starting on a shoestring, with less money, or even no money, doesn’t prevent success, though. And, sometimes, it can even enhance it. It’s worked before.

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 March 8th, 2010  
 Will  
 General Business, VC  
   
 5 Comments
10
Feb

Can Apple Take on the World and Win?

It’s difficult not to respect all that Apple has achieved both as a computer company and as a consumer electronics crack dealer. They have great products and hugely loyal fans customers. Their terrific execution has allowed them to buck the trend of openness by providing what a wide swath of consumers want – a solution that, more often than many others, just works and looks great doing it. Part of the reason that the company has been able to do this is that they haven’t gone it alone. Apple moved from completely proprietary hardware and operating systems to defacto standards (at least at their core, adopting Intel processors and Unix); Parallels/VMWare have opened the Mac up to popular Windows apps; Firefox is the Mac’s primary window to the web world; Adobe, makes sure that Macs have access to the most widely used document and photo formats; and Google inclusion makes sure that Mac users have top notch access to the search giant’s internet tentacles. Apple has wisely leveraged what’s available in the market so they don’t have to take on the entire world at once.

But not so much anymore. It seems that Steve Jobs and Co. have expanded their battlefield beyond just Redmond to the folks at Adobe (Flash, who needs it? Acrobat, we can do that, Lightroom, nah, we have Aperture), Intel (through Apple’s acquisition of PA Semi), Amazon (eBooks, iTunes) and, especially, Google. That’s a lot of fronts to do battle on. Good, aggressive business practice . . . possibly. Hubris . . . likely. While small battles have been brewing for a while with Apple supplying applications that compete on the fringes with several of these players and some of these “partners” pushing onto Apple’s turf, there hasn’t previously been an all-out war. The question is, can Apple maintain its success going it alone? They’re going to have to if they’re going to “go to the mattresses” with all the big guys they have relied on in the past.

A big test will happen this year with tablets. The iPad (the iPhone XXL), will have to rely on the strength of its base of iPhone apps to differentiate it as we will be deluged with a tidal wave of new tablet offerings from a variety of vendors. We’ll see multiple operating systems housed in hardware taking many shapes and forms. Some of these will be strongly supported by Google and will leverage a broad array of Google services, technologies and overall openness. Some will leverage the economies of scale of large PC production to create lower cost offerings with more features. It’ll also be interesting to see what Amazon does at it defends its ebook turf.

I’m by no means saying that the king is going to be dethroned anytime soon, but I do believe that it’s one thing to flank your competition by being different and another to attack frontally going it alone. As a consumer of all the crap these guys produce, I’m loving sitting on the sidelines watching this melee. In the end, it’ll just mean that I get more, better toys. To that end, I’m fully in Apple’s corner for once.

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 February 10th, 2010  
 Will  
 Computers, General Business  
   
 4 Comments
04
Jan

Does the Loudest Person You Hear Give the Best Advice?

I’m fortunate that I get to work with many startups, both independently and with TechStars where I’m a mentor.  There is no better way to learn than through teaching (learning is the most fun you can have, at least for a sustained period) and there are few better students than entrepreneurs.  Good entrepreneurs always want to know why they should do something and not just what they should do.  They test, challenge and refuse to take anything for granted; they’re highly motivated, smart and understand success is not about them as an individual, but about the team they can build; and they strive not only to make their first venture a success but also to become strong, solid leaders and managers that can build many great companies.

So, with all these qualities, it shocks me how often entrepreneurs choose a mentor because they’re the loudest guy in the room.  You know that person, the one who likes to talk incessantly about all of his or her accomplishments and is quick to give advice on any and all subjects.  The person who speaks before listening and has never had any failures.  Yeah, that guy.  Somehow, in the sponge-like desire that good entrepreneurs have to vacuum up every morsel of knowledge, they often attach themselves to the first person who sounds like they know anything.  Unfortunately, that’s usually the one who brags the loudest.

So, here’s a simple three-step plan on how to avoid adopting Mr./Ms. Know-it-all as your savior:

  • First, recognize that you’re your only savior, everyone else is there merely to supply data, offer up some wisdom and, maybe, hold your hand.
  • Second, put yourself in a situation where you can get access to many mentors.  You can do a load of legwork or sign up for a program like TechStars where mentorship (and a boat load of mentors to choose from) is the core of the program.
  • Finally, ask questions.  Don’t grill a potential mentor, after all, you’re looking for free help.  Instead, have a conversation and learn about what the person has actually done – how they’ve succeeded and how they’ve failed.  Make sure they have real accomplishments and real failures (you learn more from failures than successes) and can communicate what they learned in a way that works for you.  If hubris is what you hear, try somewhere else.

I’m no psychiatrist, but the loud braggart in the room is probably making up for something else (get your mind out of the gutter, I was referring to some business deficiency) or has had too much to drink.  Either way, they do you no good.  Be selective, find an adviser with both good advice based on things they’ve actually done plus the ability to communicate they way that works best for you.  You’ll be much happier and likely, more successful yourself.

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 January 4th, 2010  
 Will  
 General Business, Startups, TechStars, VC  
   
 1 Comment
20
Dec

It’s Not the Idea, It’s the Execution

I seem to be running into more and more people who have fallen in love with their idea for a new or improved product or service.  That is, they appear to be so infatuated with it that they think it stands alone and deserves merit because of its strength and uniqueness.  That’s nice . . . and virtually meaningless in a business sense.  Truly great and unique ideas are wonderful things.  Contrary to what many people think, though, they’re just not a prerequisite to starting or running a great or successful company.  Most often, more money and success in the long haul have come from great implementations of ideas (sometimes groups of ideas) than from the ideas themselves.

In fact, many of the most successful products and companies have become successful because of their masterful implementation of the ideas of others.  Did Toyota invent the car?  Microsoft, the operating system?  GE, the jet engine?  Dell, the computer?  Merck, gene therapy (or even erectile dysfunction drugs)?  Apple, the cell phone?  You get the idea (no pun intended).

Your business will, of course, be based on an idea.  My point is that 1. it’s likely not the most important part of the business (unless you’ve found the cure for cancer and even then, it’s questionable as a guarantee of business success) and, 2. the idea doesn’t even have to be yours.  In the end, the idea your building your business on and all of the ideas you come up along the way associated with the actual execution of that business are subordinate to the quality of the execution of those ideas.

I’ll take it one step further.  I might be biased having only had about three unique ideas in my entire life, but I’ll go out on a limb and say that business success is singularly about execution.  I always ran my own companies driven by this belief.  I used to constantly frustrate sales people who worked for me.  They would do everything they could to hide our secret sauce from the competition at trade shows and at user sites.  My view was always to let ’em see what we were doing.  If we couldn’t execute our own ideas better and faster than someone else, then we wouldn’t survive in the first place.  Let’s face it, they’re gonna find out what your product does and they’re probably gonna figure out how it does it.  The important thing is that you can put it all together and deliver it better and faster than anyone else can.

Don’t get me wrong, good, independent ideas are part-and-parcel to great execution.  It’s not that unique ideas are bad things in any way.  It’s just that they’re not worthy as a standalone basis for a business.  They should be building blocks, not the entire foundation.

So, if you’re wondering why venture capitalists are fascinated in hearing you out, but then pass on the deal; why customers aren’t begging you for an audience based on your Powerpoint presentation; why your friends want to know who’s going to actually build this thing; why your mentors are asking you how all the time and not what anymore; it’s probably because you’ve spent too much time making mad, passionate love to your business idea and haven’t considered that in the end, execution is all that really matters.

If my podium was a fortune cookie instead of a blog post, I might say: Luck and fortune favor those who can execute.

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 December 20th, 2009  
 Will  
 General Business, Management  
   
 Comments Off on It’s Not the Idea, It’s the Execution
22
Sep

You Go Where You’re Looking

When beginners attend auto racing or high performance driving school, they are taught that drivers tend to go where they’re looking and, where they look is usually only 10-15 feet in front of their vehicle.  I see this all the time as I’m riding my bike.  While cycling on the right side of a shoulder, a passing car will wonder into the shoulder right where I’m riding even when there’s no oncoming traffic.  I know that the driver is looking at me, even thinking that he/she should avoid me.  Nonetheless, because they’re looking at me, they tend to steer that way (just because you’re paranoid . . . ).  High performance drivers are taught to look much further out and to strategically optimize their driving around a point further ahead and to let their natural tendency to steer where they’re looking take them to where they want to end up, instead of just reacting to what they see directly in front of them.

Things are similar with startups.  It’s often easy to get caught with your head down, focused on near-term problems and opportunities while ignoring the big picture and where the new enterprise should be headed.  As with focusing on what’s happening on the road directly in front of you, when you solely focus on the myriad of short-term problems you have to deal with, they will consume your thoughts, energy and time.  You will be constantly drawn towards them.  Soon, the startup’s strategy will become less strategic and more tactical.

Here are a few short-term issues that I see grabbing the attention of startups all the time:

  • features, features and more features – yeah, you have to add features to your product, you simply can’t (and don’t want to) add every requested feature all at once.  There are two problems that come to mind here, one is that if you don’t step back and ask yourself if the feature moves you toward your strategic goal before implementing it, you run the risk of wasting very precious time and, two, if you focus all your attention on features at the expense of architecture, you can build a house of cards that will fail miserably later.  Each feature should be weighed in the context of the product’s goals before time is spent on it.
  • reaction versus response – when a startup has only a handful of customers, it’s easy for it to get distracted by the feedback it gets from any one of them.  It’s easy to react to every call, email and tweet regarding the product and to try to address the needs or wants of the few people who seem to be paying attention.  It’s important that the startup keep in mind, as with features, spending time with early users is valuable inasmuch as the feedback is taken in perspective.  Is the customer the target customer, for example?  If not, you may spend your time reacting to feedback that doesn’t help you land the kind of customers you’re trying to get.
  • the technology itself – loads of startups end up getting caught in the vortex of the underlying technology at the expense of marketing or gathering customer input.  Often, because that’s what the founders really know well.  The product is required, of course, but is just not sufficient.  Simply put, it is highly unlikely you can engineer a perfect product that will dazzle your customers and meet their needs on its first pass.  Product development is much more than technology development and needs to include data from the market and from potential customers.  Only when you have a complete package of technology, target customer input and market information do you have a real shot at delivering a successful product.

There are many more factors that cause startups to eschew strategy for tactics.  A founding team needs to set a course based on a point reasonably far ahead and not optimize around what is happening now.  That, of course, doesn’t mean that it can ignore what is taking place near-term.  A good driver uses his/her peripheral vision to observe what’s happening close to the vehicle.  Similarly, a startup needs to treat short-term tactics seriously, but only within the scope of the longer-term strategy.  Longer term isn’t 10 years.  That’s just not reasonable or even possible.  But a year or two is reasonable with even a few brain cells reserved for thinking out even further.

Keep in mind, you steer where you’re looking.  Steer the company toward a point in the reasonable future while keeping an eye on what’s happening today and you’ll find that you will encounter fewer mistakes, less rework and a smoother path to success.

 September 22nd, 2009  
 Will  
 General Business, Leadership, Management  
   
 10 Comments
06
Jul

We Don’t Need No Stinkin’ Business Plans?

Reading Don Dodge’s post titled, “Business plans, business models, who needs them?” this weekend made me rehash many of the discussions I’ve had with VCs and entrepreneurs about the need for business plans over the years.  In the post, Dodge makes the claim that investors don’t read business plans and, in fact, they “invest in people, not business plans.”  While I mostly agree with this – I actually believe that there is a confluence of people, time and place that drive most investments – I think the argument against business plans misses a key and fundamental point: business plans aren’t for the investor, they’re for the entrepreneur or team developing the idea into a business.

In my opinion, it’s the process of business planning (which generally involves writing stuff down thus, creating a business plan) which has all the value and it’s value is huge.  Understanding, researching and testing the product/service, market (customer), differentiation, channel and competition (see my post titled Business Planning – The Big 5), is critical and, shockingly, overlooked frequently.  People tend to fall in love with their ideas and don’t bother thinking through what problem they are really solving for their target customer.  Even when they do, they often don’t spend the time to test their hypothesis with potential customers prior to looking for funding.  To me, this is what business planning is all about.  How can a team even create a slide deck or answer questions from investors if they haven’t done this level of business planning?

In his post, Dodge uses the example of Twitter getting funding without a business plan or even a business model, for that matter, as an example.  While I don’t think Twitter is representative of most (any?) investment cases, it does offer up a reasonable counter-argument to my point above.  If you build something massive and pervasive on your own dime prior to seeking funding, you can do just about anything you want and still land investors.  Generally speaking, though, it’s a bad idea to plan on this route.  It doesn’t happen very often.

So, while I fully support the concept that business plans as written documents may not get you far with investors, the process of business planning, that yes, will likely include written material (documents, spreadsheets, drawings on backs of napkins), will.  A business is way more than an idea.  Successful businesses are about execution and you can’t execute effectively if you don’t know where you’re going.  The argument against business plans is more about with what and how you present your idea to investors than it is about how you develop your business in the first place.  A well thought through business is simply more likely to get funded than one which is not.  That takes business planning.

Make sure you read Paul Kedrosky’s post on this subject, The Twitter Lesson: No Business Plans Please, which Don Dodge references in his post.  He makes some very interesting points on the downside of sharing too much data with potential investors.  Very interesting.  He does not, however, make the point that you shouldn’t have the data, just that you might not want to expose it too early.

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 July 6th, 2009  
 Will  
 General Business  
   
 8 Comments
23
Jun

Kodachrome is Dead. What Can You Learn From Its Death?

Way back before digital photography, when dinosaurs roamed the surface of the planet, families packed themselves into smoky living rooms to watch trays full of color slides projected onto uneven plastered walls.  These photo viewing sessions along with some of the most outstanding print photography in history were brought to you by Kodachome, Kodak’s long-lived transparency film.  Kodachrome, created by Eastman Kodak in 1935 (specifically, by scientists Leopold Godowsky and Leopold Mannes, known as "God and Man" inside Kodak), has been around longer than any photo product in history.  Today, Kodak announced that it is “retiring” Kodachrome.

When I was young and dipping my toe into the very deep waters of photography, I primarily used black and white print film which was my stock in trade because I could process and print it myself.  When I wanted color, I used Kodachrome and it’s younger sibling, Ektachrome.  The colors in Kodachrome were great – much better than color prints at the time.  In retrospect, slides held up way better than prints as well and are much easier to scan into their digital versions.

The passing of such a product is a reminder about how things have changed and how companies need to be dynamic and change with their markets – hopefully leading them.  Kodak has made the switch to digital (they still, of course, produce plenty of film), but in the change, lost the market leadership that they once had.  While I’m sad to see such a landmark product die out, it makes me excited to think about all the potential replacement products in all markets as inevitable change happens.

Nintendo lost its utter dominance of the home electronic game market when Sony, then Microsoft beat them at their own game, using new technology.  Nintendo then reemerged from its failure with another breakthrough product, the Wii.  What’s going to happen now to wristwatch sales as virtually everyone under 25 uses their phone to get the time?  How about compact camera sales?  As cell phone cameras keep improving and software processing on phones gets better, who will want to carry both a compact camera and a phone?  You get the idea.

What about your market?  What fundamental and underlying changes are happening that you can take advantage of?  Don’t think only technological, societal changes are even bigger driving forces.  Whatever they are, get there first and you’ll have a substantial advantage.

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 June 23rd, 2009  
 Will  
 General Business, Photography  
   
 8 Comments
20
May

Just Answer The Question Already!

I’ve already been in four or five meetings this week that went way too long (and longer than scheduled) as a result of one, simple problem; at least one person involved in each meeting was incapable of answering a question without retelling the history of everything that led up to that point and, sometimes, forecasting the future of everything to happen from that point on.  Virtually every time this happened, someone else in the meeting either lost patience (often me) and cut the speaker off or abruptly asked them what, in fact, was the answer to their original question.  To no avail.  The behavior persisted.  I suppose it’s a style thing.  One that drives me up a wall.

Hey, if you’re giving a presentation and you’re working within the allotted time, go for it.  Talk about how your kid did at her piano recital that week or the status of the fungus growing on your toenails.  People in your audience may not like it but, sometimes, weaving a tale creates the groundwork for the best presentations.  And, if you’re within the scheduled time, the audience is likely to give you some latitude – especially if you’re entertaining.  If, however, an interactive discussion is taking place, say your piece – precisely – and relinquish the floor.  Filibusters are not allowed in business conversations.  They waste everyone’s time and I can promise you, will eventually get you killed.

It certainly doesn’t have to get to just “yes” and “no” (although sometimes, those are perfect answers), but you have to get to the point quickly.  Otherwise, the people around the table will stop caring what your answer is and will focus more on how annoying you are than the point you’re trying to make. 

Brevity is highly underrated.

 May 20th, 2009  
 Will  
 General Business  
   
 10 Comments
06
Mar

Does Being Nice Take More Effort? Is it Worthwhile?

I think I could write an essay on the breakdown of civility in modern society based on these questions, but in this case, I ask them to question the business advantages of simply being nice.  It’s interesting that being nice to one’s customers is actually a differentiator these days.  Of course, it shouldn’t be, and that fact alone probably keeps many from even trying.  In reality, though, very few businesses practice being nice.  As a result, doing so can actually be a huge advantage to any business that touches it’s customers directly.

This morning, I stopped by Bed, Bath and Beyond, a store in a segment that’s simply falling apart in these tumultuous times.  I was greeted at the door and as I moved around the store, at least four different floor people smiled and said hello, with two of them asking, in an unobtrusive way, if they could help me find what I was looking for.  There was one cashier on duty dealing with the single customer in front of me when I was ready to check out.  Immediately, another cashier came to her register so that I didn’t have to wait.  The cashier asked me if I found everything I was looking for, smiled and wished me a good day.  BFD, right?  Yeah, it is.  I’ll go there before I shop some other store for similar goods the next time.

Contrast that experience with my next stop, the Post Office.  OK, this is probably an unfair comparison, but my guess is that the USPS is in a fight for its life as a business these days.  Yes, the USPS has competitors as well.  The person behind the counter never looked me in the eye, was rude, and never said “thanks,” good day,” or even “rot in hell.”  Nada. 

I had a similar experience once I got back to my office.  I had to resolve an issue on the phone with AT&T concerning my bill.  After I finally got through to a customer support rep who made it sound like I was standing between her and her tenth cigarette of the morning, I was told in curt fashion that I was “obviously” reading my bill incorrectly.  Ten minutes later, she admitted that they had problems with the last billing cycle and my issues were similar to the problems others were seeing.  Why did it take 10 minutes of haggling to get to that point if she already knew?  To top it off, she stated, without apology, that she couldn’t help me and I had to go to a store to resolve the issue.  My loyalty as a customer after this experience – zero.

How hard is it to be nice?  Not very.  Sure, dealing with complaints and questions all day is tough but, if the people you’ve given the job to aren’t cut out for it, don’t have them do it.  Find people who can at least act nice.  Your customers will appreciate that your company is a more pleasant one to do business with.  This feeling builds loyalty for almost no cost.  Or, you can let your employees be assholes to their customers who will in turn write nasty stuff about you on their blogs so that everyone they know will share the same ill will toward you that they do.  Ouch.

 

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 March 6th, 2009  
 Will  
 Customer Focus, General Business  
   
 18 Comments
17
Feb

TechStars Comes to Boston

Over the last few years, it has become increasingly difficult for Boston-based fledgling startups to get a leg up; to get, well . . . started.  It’s mind boggling, really.  There is so much talent and there are so many good ideas, it’s just been shocking to witness teams and ideas die on the vine.  Some of this is about the availability of money, of course, with many New England VCs choosing to invest in larger or later stage deals, but more of it, in my opinion, has been about the environment.  While there are some avenues for startup entrepreneurs to get help and advice, they are few and far between and often hard to get access to.  Recently, Y Combinator, the last bastion of Boston-area startup aide chose to leave Cambridge for sunnier digs in the Bay Area.

The good news is that TechStars has been planning a move to Boston for the last six months and has just announced that will be in full operation this summer.  TechStars has been hugely successful in Boulder.  Its success has been because the program is based on mentorship.  TechStars has a terrific group of mentors (yeah, including yours truly) that guide, teach, coach and help new entrepreneurs accelerate their ideas into real companies.  And, of course, there’s money involved.  TechStars invests a small amount of money to kick start each of the companies in the program.

Does it work?  Hell yes!  Last year, TechStars Boulder’s second year of operation, 393 teams applied for 10 slots.  The high number of applications were driven by the success of the companies involved in the program – 12 of the 20 that have been through it have received follow-on funding and 2 of the companies from the first year (2007) have already been acquired.  See more here.

TechStars Boston will be managed by Shawn Broderick and backed up by Boulder TechStars co-founders David Cohen and Brad Feld.  A long list of Boston-area Mentors has already signed on to participate including, Colin Angle, Dan Bricklin, Don Dodge, Eran Egozy, Chris Heidelberger, Nabeel Hyatt, Warren Katz, John Landry, Rich Levandov, Bijan Sabet, Ronald Schmelzer, Bill Warner and me.

TechStars Boston will be located in Cambridge and is now open for applications for its ten summer 2009 slots.  Applications are due by March 21, 2009.

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 February 17th, 2009  
 Will  
 General Business, TechStars, VC  
   
 1 Comment