Over the past three years, my team and I have been on a mission to empower and support entrepreneurs in the earliest stages of starting and operating their companies. The following musings are shared to support the efforts of founders, and help startup operators to avoid or reduce stressful situations.
1) “A Team” Members Only
When evaluating co-founders, employees, or anyone that will be in the trenches with you, make sure that they are folks you’ve either worked with, reference checked, or have spent a fair amount of time with prior to “getting hitched.” Spend the time up-front to avoid the pain later. There are many people who polish up nicely for an interview, but the end of the “honeymoon period” can quickly become problematic if they are not a good fit for your culture. Especially in the early stages, too much churn and turnover can be devastating. Even if an individual is skilled, if they are harmful to culture then they are harmful to the company, period. If you find that team members are not truly “A” players, let them go ASAP. It is human nature to perform at the level of individuals in our surroundings. Don’t ever allow a “B” or “C” team member to infect “A” team players. Trust the facts and fire fast. “A” team players also like to know their position so make sure to outline and evolve roles and responsibilities as your organization grows and changes. Shape your culture properly and your team will follow.
2) Patience Pays
Patience pays dividends in waves and when you least expect it to. In your quest to conquer whichever part of startupland you are after, plan and move at the right pace. Remember that startups are a series of marathons, not a single sprint. Though you will have to sprint at times, pacing yourself is critical because the secret to the “overnight success” is that it takes many long days and nights to achieve. A good rule to follow is that everything takes twice as long and costs twice as much; even though it takes less time and money than ever before for certain industries such as software. You’re going to need to remind yourself to be patient when things get complicated, which they often do. If you move with too much haste you can burn out your resources and make bad decisions. Human nature dictates (especially for creative types) that we seek to constantly improve that which we have created. Improve to a point and balance patience with meeting product ship dates as customers are not as patient as we would like for them to be.
3) Find and Maintain the Zen
Life is not easy and startup life will sometimes feel like walking uphill barefoot in the snow for longer than we would hope. It is essential to stop, clear the mind, breathe, and relax at intervals, even when you feel there is no time for it. Yoga, reading, cooking, and playing with my children all help to make up my happy place, and I embrace them often. On occasion, I enjoy just stopping the mind (which is never an easy task) and clearing everything for a moment. It is often in these moments that you can understand a problem with renewed clarity. For times when the mind goes blue or darker, PLEASE bookmark this Wikihow and share it with others; How to Calm Yourself During an Anxiety Attack because someone you know probably needs to read those tips today!
4) Embrace Frugality
It is not enough to simply be conscious of cash flow, you should attempt to be purposefully frugal in the early days of starting and operating your company. Bloated and inefficient processes are not essential in the early days and please do not treat your startup like the 1,000+ person company that you might have worked for. One of the smallest but most wonderful benefits of being a member of startup hub 1776 in DC is that they have caffeine along with peanut butter, jelly, and bread in the kitchen every day. When the bank balance does grow, it is even more critical to be disciplined and to use cash sparingly yet wisely. Treat dispensing cash like drinking water in the desert, because even if you aren’t in the dunes, nobody expects to be lost and thirsty when they end up there.
5) Short on Time
Speaking of frugality, if you don’t make a point to view your own time as a precious resource, others will gladly take it from you and find ways to make use of it. This will require active management and respect of your own time. It is important to remember that everyone’s time is equally valuable, so ration yours wisely, with care and respect, and treat others the same. Perhaps think of time in chunks during each day or certain days per week; one hour set aside for employee one-on-ones, set times to follow-up on emails or to make calls, etc. There is no investor or business maneuver that can replenish this resource so use it wisely. Share tips with other founders but try to collaborate on insights, tools, tips, and tricks with others via email or chat vs. meeting in person. Anytime you can simply cut and paste your advice, or your update, do it.
6) Pitch Perfect
When preparing for a pitch to an investor, a pitch event, or a demo day, treat the entire situation like a destination wedding. Be as prepared as you can possibly be. Double check that everyone knows your meeting place and time, find out if they have a projector at their office, or if a tablet in a coffee shop will work for their eyesight. Details are critical. Dress the part based on the environment you are heading into. Send your current and potential investors ‘Save the date’ cards for a demo day far in advance. Request that advisors bring their angel friends, and get folks excited by sharing updates about the company in advance of a meeting or event. Also, be realistic and don’t expect to pick up your check on the way out after your initial or early meetings with investors. When you view a pitch event or demo day as your conduit to connect great people to other great people, the mission becomes easier and success becomes more likely. The pitch is simply an initial step in the courting process, a first impression, so get it right.
7) Revenue is the Ideal Source of Funding
When it comes to filling up the bank balance, nothing feels better than customers that pay. Revenue is more than just a means to make thing happen, it is often times the catalyst for your business to hire employees, scale your operations, and to obtain funds from investors (if needed). More ideal terms will be offered when there is proof that your product or service is needed and essential to others. Focus on closing clients that pay by delivering what it is that they need. Treat sales as the process that is must be. There are a lot of tools available to support your efforts, and if you do not yet have advisors with revenue horsepower, and/or sales people on board, make that change ASAP! Enlist mentors and investors who have extensive and relevant sales experience and engage them to help to guide you. Once you find a sales model, pricing, and process that works, don’t just stick with it, scale it!
8) Honesty is the Only Policy
First and most importantly, don’t ever lie to the person in the mirror, it’s the most harmful thing you can do. Second, never lie to co-founders, business partners, or investors about anything; everything will be brought to light someday and karma will have its way with you. Third, never lie to your team or your customers. For example, if your product is not quite there, work with all of the stakeholders to improve it but do not try to convince those stakeholders that it is something that it is not. Finally, if you lie to investors, you should plan to move far away in the near future as funding circles are tight and dishonesty is a deal breaker. “The honest man has nothing to fear” might not always be true but at least it’s one less thing to stress about.
9) Communicate with your Investor “Spouses”
Make sure that you are comfortable with the prospect of a long-term relationship with the people that invest in you and your company. Communicate progress regularly and candidly. As an insight: many of the companies in our portfolio that are doing very well, have always communicated regularly and efficiently. Monthly emails and the occasional call or text go a long way, and the journey is likely longer than you think, so share information and inform everyone along the way. Secrecy and isolation with your team, both internal and peripheral, rarely pays off. Treat the relationship with investors as the legal entanglement that it truly is and enlist your skills of communication, compromise, and document everything up-front. Think of your investment terms as a prenup because you are going to be together on this journey and everyone should understand what they are getting into and what the possible outcomes could be.
10) Partnerships Pay
Maximize partnerships with industry leaders, and if you don’t have them, seek them out. As the original investor in IntroHive, I was pretty jazzed when Salesforce invested recently in the social selling enterprise platform. The IntroHive team has done a great job to scale their product and they continue to make the most of the strategic relationship by focusing on and fully embracing the sales channel and tools provided by Salesforce. Recently, the IntroHive team capitalized on DreamForce 2013, where “social selling” was one of the highlights of the conference. Making the most of this partnership has undoubtedly been of significant benefit, yet this kind of relationship is often overlooked or underestimated by veterans and novices alike. Seek partners that have inroads to an already established set of customers. Please make sure to leverage advisor, mentor, and investor relationships to gain access to potential partners. Strive for the win-win-win where all parties, most importantly the paying customers, want to continue or expand the relationship.
11) Hiring Should Lead to a Culture of Ownership
Do not shy away from hiring former founders that have learned tough lessons recently, as someone is not likely to make the same or similar mistakes if they’ve just made them. Don’t overlook young guns either. Hire coders right out of school and bring them in as stakeholders as early as possible. If you take the view that a startup is a crew of collaborating entrepreneurs, rather than simply employees, your success will be far more likely. Leverage stock options as currency and make sure to vest those options over a reasonable period of time to ensure that your team members are in for the long run. Treat everyone with respect, reward them, and outfit them appropriately as nothing makes someone more proud than to wear their logo on a comfortable shirt, hoody, or pair of shoes that they did not have to pay for. On that note, it is simple to purchase both men and women’s fitted t-shirts these days, so do not try to ask women to wear men’s clothes. Get with the times and treat everyone equally at all times. Enlist daily standup meetings which should prove to be one of your most powerful and easiest management tools to implement. I’ve not seen a company grow as smart and as well managed to serve the needs of their clients and themselves as Social Tables has over the past couple of years. Founder and CEO Dan Berger has made his company an employer of choice and Social Tables has quickly become one of the top companies to work for in DC! Part of this success can be attributed to the clear and concise approach to open communication and positive culture that Social Tables has created. Maintaining a free dialogue across all levels isn’t just a “nice to have”, it’s a necessary element.
12) Pivot Properly
If you find yourself using the word pivot too often, you might consider putting your pivot party on hold, please! It is not appropriate or effective to pivot just because you’re A-D-D sees the “shiny-new-feature” that feels like it could be an entirely separate product. Whether you believe in being ‘Lean’ or not, there are absolutely times when you should repurpose the technology that you have already built, and obtain customer validation prior to building. Certainly do NOT shift your entire product focus before completely testing the market and trying to sell what has already been built. Test the response of potential customers before you build, not after. It seems that the “pivot” has become an attempt for some to run away from the challenges that are necessary to achieve success with what has already been built. Leverage what you have, just improve on it.
13) Purge the Negative and Do Not Look Back
Don’t let anyone or anything stay in limbo. Fire employees and contractors that are not performing, and move on from that which brings you down. This might sound like no brainer advice, but rarely do take action to end things in a timely manner, even when we know that we should. Remove the clutter of your inbox (yes Mailstrom, I am working on it) and free your mind to focus on the task that is before you. Rockets jettison their boosters as they climb higher, just as you should jettison unnecessary baggage and stressful matters that could be purged. Write a list of the things that are troubling you and causing you or your business pain. Purge that which brings you down. You will not regret it.
Guest author Jonathon Perrelli is an early-stage technology investor who spends a good portion of his time with Fortify Ventures portfolio companies, and as an active participant in the evolving startup ecosystem in the mid-atlantic region. Passionate about entrepreneurship, Jonathon is also a Co-Producer of Startupland, a documentary series created to educate and inspire founders globally (set to release Spring 2014). He serves as an advisor to 1776dc, mentor and judge for Startup Weekend and Lean Startup Machine events, mentor to Millennial Trains Project, and is a frequent speaker on topics related to fundraising, accelerators, startup ecosystems, and building emerging technology companies. Follow him on Twitter: @perrelli