Today’s post is from guest blogger Doug Wheeler, a 25+ year veteran executive in the technology industry. Enjoy!
Having spent more than 15 years in the startup school of hard knocks — including some that made a mark (or I’m hoping will soon – go DocuSign!) and others that fizzled out — I’ve learned a great many lessons and earned a Ph.D. in venture-backed startups. I’ve also become a better marketer, executive, leader, teacher and human. Startups gave me a much-needed dose of humility, but also taught me how to create real value, make measured choices quickly, and the importance of recognizing and valuing people by what they do — not talk, title or reputation.
Several years ago, a colleague of mine sent me a guest post from GeekWire that talked about ‘full-stack marketers’ and the value of having marketing people with broad skill sets in startups. Great article. And, I would add that startups need full-stack people in every position. At the time of the original article, we had just sold TappIn where we began with three people, starting from a music store warehouse in Fremont. It would have been almost impossible to grow the company (and then successfully exit in 11 months for $17 million) with a team of “never-done-it-before-one-trick-ponies.” After that positive experience (my thanks to Chris Hopen), I wrote an article called School of Hard Knocks. Four years later, I have refined some of my learnings.
If you are thinking about joining or leading a startup or early-stage company, these lessons are for you — in hopes you don’t have to learn them the hard way.
1. Cash is still everything. Cash is more important than you. Really! No matter who you are — founder, CEO, CFO or whatever. You must understand how your business will create value and earn cash (and how much). Your business can generate cash from customers or investors, but you better know how you are going to fuel company growth with cash and manage it to get the best mileage. It’s no fun running out of fuel before you get to an exit.
2. Revenue and revenue growth can hide a multitude of illnesses. This is true at almost any stage or type of company – especially, if you are part of a company that depends on a large percentage of your revenue from a very few customers. Take care of those customers like your life depends on it – because it does. Until you have other revenue streams in place, make sure the company can survive if you lose those customers. Keep in mind, if a large percentage of your revenue goes away, you are going to face a mob of angry investors.
Side note: No matter what size company — public or private — I have yet to meet an investor who didn’t think they could easily solve your expense problems.
3. Absolutely no one – and I mean no one – is irreplaceable. This includes founders and executives. You are what you contribute. In startups (or any company, really), you must be a valuable resource of content for business experience, salesmanship, marketing, making great connections, product knowledge – something! Then, you must be able to communicate and inspire others. Being ‘really smart’ or having a ‘great rep’ and then sitting in the corner and not leading by example doesn’t help a damn thing. I have a bias here that I’m going to get heat for – if you are currently in a large, well-funded division of a big brand company, please do not join my startup. Start your own, learn some lessons and then call me and I’ll welcome you with open arms.
4. Change not churn – there’s a difference. It isn’t important, necessary or even desirable for everyone to know or react to everything all the time. Don’t wreck the productivity, momentum and goals of the organization with every thought, turn and twist that comes into your head from a customer call, business development meeting, late night premonition, wine-induced brainstorm, plane ride to your next airport or discussion with the board. Of course, there will be changes and the joy of working for a smaller company is the ability to change rapidly. However, it is critical for everyone to understand his or her contribution and how it moves the business up/forward every day. These goals need to be stable. If you are churning your team with new initiatives, goals and objectives – you won’t have any because your team can’t align and execute. Thank you Thomas Edison: Vision Without Execution is Hallucination.
5. Don’t wait to be perfect – go already! No matter how much planning, market research and development you do, you are likely wrong about something anyway. Get the 80 percent solution (ok, 90 percent) done, adjust as you learn and focus on execution, execution and more execution. Your market response and customers (or lack thereof) will guide you.
6. Startups or new ventures are fun, but also hard work and high-risk. If you and your team really knew everything that was going on in your market, your competitive position and the real opportunity, you would most likely have never started, invested in or joined the company in the first place. Get over it, roll up your sleeves and go take your share of the market before the money runs out.
7. There should not be On the Job Training (OJT) in early stage companies. If you haven’t done it before, you are a liability. However, if you have direct experience, it’s more valuable and 10x lower risk because the company can’t afford the time for you to learn. This is especially true of the management team. In the end, it won’t matter how hard you work, how confident you are, how great you think your vision is, how really big your market becomes or even how much money you’ve raised. If you lead the company in the wrong direction and make a series of poor decisions, you will waste cash and time, which are both precious in companies with very finite resources. This frequently (but not always) results in your investors finding someone else who does have experience.
8. It’s OK if the President or CEO do not have the highest salary. It’s about doing something you love, small team changing the world, creating a market, making an impact, honing a skill set, chasing equity for an IPO – all good reasons. Keep that in mind when hiring, managing and motivating your teams. A hint for new founders and executives: It’s GREAT if the VP of Sales or one of the sales team members is the highest paid person(s) in the company – even if they make more than you. If you build the right compensation and margins into your plan, high commissions mean great sales. Great sales with reasonable margins generally mean you are generating cash! It’s been my observation that the best companies only have two kinds of sales people — rich and new.
9. No long good-byes. I still struggle with this one. Don’t waste ten seconds worrying about someone voluntarily leaving the company. Wish them well for nine seconds and then log in to LinkedIn and start soliciting your contacts for a replacement. Sales, marketing, development, finance, support, administration and IT – you name it. You can hire contractors or temps to do damn near anything while you find another best fit.
Sounds harsh, I know. Having said that, never forget or minimize the value of people who perform well and stay with you. It’s called loyalty. It’s critical your teams understand they and their contributions are valued and respected. I recommend 90 percent listening and doing/10 percent talking as a good way to demonstrate that you value and respect your team.
10. Never, ever work with or hire jerks. This never changes. I don’t care how big the opportunity is or how brilliant they are (or think they are). Life is too short, you spend a lot of time together and therefore the price is way too high. Just like Kindergarten, if someone fails to ‘work and play well with others’ don’t allow them in your sandbox. The older you get, the more true this becomes.
Make no mistake: I love the startup/early-stage world. However, there are some very real risks. If after reading this you still want to take your shot, go for it!