Paul Newman’s portrays of an alcoholic plaintiff’s attorney chasing lawsuits by attending wakes and funerals, he re-discovers his moral core and perseveres in a complex medical malpractice lawsuit. Near the beginning of the film he is offered a settlement to look the other way and he says “If I take the money, I am lost.” It marks the turning point of his recovery.
Two scenes stand out that highlight the challenges of persevering as an engineer:
Gary Sinise as Ken Mattingly, working in the simulator to determine a cold start sequence that will get the capsule operational without exhausting the remaining battery power.
A team of engineers crowd around a large table that has a copy of all of the material available in the capsule. They need to find a way to adapt carbon dioxide filters from the Command Module for use on the Lunar Excursion Module (LEM) where the crew has taken refuge after an accident has disabled the Command Module. Gesturing first with a squat square filter and a longer thinner cylindrical filter, the lead engineer says, “OK people, listen up. The people upstairs have handed us this one and we gotta come through. We gotta find a way to make this fit into the hole for this, using nothing but that.”
This is an extremely funny movie about the team manning the Parkes radio telescope in Australia, the dish is destined to capture the video for the Apollo 11 moonwalk. Many things go wrong (see official version) and a small team learns the value of both checklists and improvisation. Best line “”Failure is never quite so frightening as regret.”
The Indian is a motorcycle driven by Bert Munro that sets a land-speed world record on the Bonneville Salt Flats in 1967. The “World’s Fastest Indian” portrays a series of challenges that Munro had to overcome to set the record, as many related to raising money and battling bureaucracy (e.g. US Customs) as engineering challenges. The real Burt Munro was born in 1899 and 68 when he set the record, Anthony Hopkins goes a great job of portraying a tinkerer and a problem solver who continually modifies a motorcycle originally designed and manufactured in 1920 to achieve a world record.
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In the course of my networking I meet a lot of people and get a lot of business cards – every once in a while I will get a card that really stands out.
Here are three cards that lead to deeper discussion about their company and products.
Not only is this business card unique, it is a great way to show off that WhereIsNow always has the most current information.
The WhereIsNow service ensures that the contact information is always current.
No longer do you have out of date phone numbers or email. By simply searching with key search = 2 18, updated contact for Daniele Idini is available.
The second one is a unique business card from GeekStack, a company that produces an online trading card game with a science and technology theme. The cards feature the history, people, concepts, discoveries, and events in fields like Math, Chemistry, Physics, Engineering, and Biology.
The final business card is also for GeekStack and makes creative use of mathematical symbols in a typeface logo, it’s a memorable way for Peter Christensen to introduce his company. Front and Back are shown.
Guarantee you, if you were handed any of these cards you would be on their website checking them out. Let me know if you have favorite a business card.
If you have a cool business card mail us a copy and we will run another post when we get a few.
Don’t make an equity investment in your startup so that you can pay yourself a salary. Put enough money in to cover expenses in advance of revenue. Live off of savings. Why: making an equity investment that you take back out as salary means that you are paying taxes for the roundtrip. The combination of Federal, state, and local taxes will cut your runway by 20-30%.
If the company needs more money to cover expenses in advance of revenue then make a loan to the company at a realistic interest rate. Why: if you choose to pay the expenses out of pocket they may not be deductible, if you buy additional stock in the company it is difficult to get the cash back out without paying taxes on it, either as dividends, salary, or bonus. The loan can be repaid and the only taxable component is the interest.
Run consulting dollars through your new firm not your old one. Why: this revenue can be used to offset costs and extend your runway. This also enables you to get on the approved vendor list for a firm you may later want to sell a product to.
Don’t have one founder take a salary if both or all don’t get one. Why: this inevitably causes a disconnect in motivation for both parties.
Have one founder write each check and another sign it. Why: do this from the beginning so that you minimize the risk of misunderstandings and have a simple review and approval process for expenses.
A baker’s dozen of common mistakes that I have seen founders make in preparing, delivering, and evaluating a new product presentation/demo.
Don’t keep giving the same presentation if it’s not working. I am surprised when I ask teams who have presented to two or three dozen prospects, “How has the presentation changed since the first time you gave it?” and I am met with blank looks.
If prospects don’t understand your presentation it’s possible that you are talking to the wrong people but just as likely that there are serious problems with your presentation.
Do not keep giving the same presentation if it’s not working. That’s not a typo, it bears repeating. Working means that you are not only getting expressions of interest but your sale is actually advancing. I know that when you talk to experienced sales folks that they will tell you that “sales is a numbers game” and you just have to keep pitching until someone decides to buy. There is one very important qualifier to the “numbers game” approach, and that is that you are using a presentation and sales approach that has actually been proven to work in a repeatable fashion.
Give the demo to people you trust who can act as proxies for your target prospects. Ask them how to improve it. If someone introduces you to a prospect, be sure to reconnect and ask them how the prospect felt and what could be done to improve the presentation. The prospect may be much more willing to be candid with a third party that they trust; most folks don’t want to give bad news to you directly.
A lukewarm response is the worst of all. You can’t get any feedback on what to improve–unless you were introduced by a third party you can ask for help– and the sale is not advancing.
You can tell that the sale is advancing if you are learning more and more about the customer’s problem. The prospect gives you data to run a test. They ask for an evaluation license and can give you a timetable and a list of experiments that they want to run. If these things are not happening your presentation is not working.
Before you give a demo, make sure that you can clearly state the prospect’s view of the problem they are hoping to solve with your software. Confirm this by stating it and asking you have understood their situation correctly. Don’t give a demo if you don’t understand the problem that they are trying to solve. A demo is not an opportunity to train someone on your software; it’s an opportunity to offer either a vision of a solution or proof that your software can solve their problem.
If you have raised some money, perhaps in an angel round, do not take your investment presentation and use that to attempt to close business. I know it can be hard to believe that something that was so useful when talking to investors won’t have a similar powerful effect on prospects. But let me be clear: you need to throw your investment presentation away and start from scratch.
Keep copies of each presentation that you give. Always have two people at a presentation. One to give it, the other to observe. They can trade off but one should always be watching the prospect(s) to determine what’s resonating and what isn’t. Take time after the presentation to de-brief and write your thoughts down. Save a copy of your notes with a copy the slide deck that you used.
On the title page for your presentation you should include: key audience member(s), company name and date of presentation; these should also be burned into the footer of each page. Three benefits:
It gives the impression of personalization and prior custom preparation. Doing this should force you to at least think through what’s needed for this particular audience.
It’s the minimum information you will need to keep you various presentation distinct. This allows you to keep an archive of all of your presentation and watch how it evolves over time.
If you are asked for a soft copy of the slide, provide a PDF version of the talk, instead of PPT, with this info burned into it then the audience is more careful about who they circulate it to.
Include your company name, URL, and copyright on each slide. They may become detached from the deck.
Probe for a date or impending event that may drive a decision. Be cautious of people who tell you that they need something “yesterday” since yesterday will never come.
Always have an engagement checklist and implementation timetable (if only at a high level) ready. Rehearse presenting it but keep it in backup slides. Do not have the prospect ask you “what does it take to get started” and stammer out “I’m not sure, no one has ever asked that before.”
Recently, a developer I work with sent a mail around to the (small) team that blew me away. After a glitch with an internal system he sent a mail which read: “Who’s job is it to fix this?”.
When you have someone who can’t take personal responsibility for something that falls directly within their skill set, I’d be wary of their direct involvement in the bigger picture.
Certainly, their opinion is as valid as anyone else’s. Even just ensuring that every section of the business knows what everyone else is doing works well – internal newsletters, some sort of internal social network on yammer or ning etc helps.
My feeling is that there are two types of people – one group just need to be told what to do, the other need to be given the space to develop great ideas (be they business, technical etc). Mixing these types up may be disastrous. If you have too many of the first type, it might be that your hiring process needs attention. I blogged about this in more detail at “How to Run a Company into the Ground.”
In Dave’s formulation there are two kinds of people
A People who just need space to be able to develop great idea.
B People who just need to be told what to do.
I think he needs more than a one bit encoding for people’s values, skills, and task relevant maturity.
Task relevant maturity is a person’s experience with the particular task and prior performance of it. I believe that it was coined by Blanchard and Hersey in “Management of Organizational Behavior” as a part of their situational leadership model (originally called “life cycle leadership model”).
I like Andrew Grove’s “High Output Management“ suggestions for how to select the right management style for the individuals task relevant maturity (from page 175):
Task Relevant
Maturity
Appropriate Leadership Style
Low
structured and task oriented, tell “what”, “when”, and “how”
Medium
individual oriented, emphasis on two way communication, support, and reasoning
High
minimal management involvement, establish objectives and monitoring
Grove has two suggestions for the level of monitoring that “apply quality assurance principles”:
Monitor at the lowest value added stage in the process. For example, review *rough drafts* of reports that have been assigned, don’t wait for a subordinate to spend time polishing them into final form when you have a problem with the contents.
Check more frequently depending upon his task relevant maturity and how dynamic the environment that he is operating in.
Grove’s book has a number of excellent suggestions for management techniques that are very applicable to the challenges bootstrapping entrepreneurs face.
I had two other thoughts on Dave’s example.
Everyone benefits from checklists. Even experts benefit, consider an experienced flight crew doing a pre-flight checklist each time they prepares for take-off. Checklists free up your focus for the hard problems and the real risks and uncertainties that the organization faces. As an organization grows, formal policies make for a predictable customer experience (certainly a key element of any brand promise). It doesn’t mean that they should be followed blindly.
Skill deficits can be addressed, values conflicts are often difficult to resolve. I think it’s also important to distinguish between experience or skill mismatches to task needs, which can be addressed with appropriate management and training, and values conflicts between and individual and team or firm culture. That latter are much more difficult to address. The developer asking “whose job is this?” in Dave’s example may be experiencing a values conflict as much as a lack of task relevant maturity.
Unlike Dave’s static model Grove suggests that training that increases employee task relevant maturity increases management leverage and reduces the amount of time that needs to be devoted to managing a subordinate. I think that this is something founder’s sometimes have trouble with, learning how to train and delegate so that they can continue to scale the organization can often feel like loss of control.
Note: Grove’s model is simpler in some ways than the situational leadership Tell, Sell, Participate, Delegate model but his stress of the need to establish objectives and monitoring and his focus on increasing managerial leverage make it a better approach for startup entrepreneurs in my opinion.
“A business should be run like an aquarium, where everybody can see what’s going on–what’s going in, what’s moving around, what’s coming out. That’s the only way to make sure people understand what you’re doing, and why, and have some input into deciding where you are going. Then, when the unexpected happens, they know how to react and react quickly. ”
I’ve never understood this bright line boundary between the patchwork of people that make up a technical group, and the patchwork of people that make up a business group. Presumably, the technology being developed is part of what makes the business viable; it isn’t just a bunch of people playing with text editors on company time, while the grown ups — the business folks — do everything that earns money.
It serious just seems like an artificial division to excuse the two groups for not listening to each other.
This becomes even more painful when you are one of the people who wants to be involved in whatever makes up this nebulous “business side”, and are told to go back to writing code.
My view: the business is everyone’s business, and any time you start developing bright line boundaries to either protect turf, enforce a hierarchy for its own sake, or excuse non-involvement, the least of your problems is one of your techies wanting to play with technology that seems superfluous to the untrained eye.
It reminded me a few paragraphs from an E-mail I sent to a client recently.
You have created a significant business opportunity with your accomplishments: you have happy customers, strong technology, and the demonstrated ability to close new business.
But I see the need for closer cross-functional coordination between sales, marketing, development, and customer service with clear agreement on both near term and long term strategy.
These four teams need to work together more closely to leverage your significant strengths and accomplishments. Closing new business opportunities and increasing penetration at existing customers is going to take more communication and continuous collaboration.
I think there are several things that work against effective cross-functional collaboration:
Time pressure: trust is built over time and developing a working consensus on a course of action takes extra time until everyone is in at least rough agreement on goals, roles, and process.
Different perspectives: software is easy to change and update; customers are much less forgiving and typically not interested in the reasons that you let them down.
Shared improvisation requires rehearsal, and rehearsal takes even more time. But you often don’t have a second chance with a customer.
It requires you to admit your dependency on others with fundamentally different strengths. Many founders in particular have very strong skills in at least one or two areas and can fall victim to favoring their strengths instead of taking advantage of different approaches that require other people with talents that the founders lack.
Software is the promise of a relationship but relationships are much more ambiguous than test results, transactions, or program output. Different groups live in different world with different score keeping mechanisms.
Figuring out the right team and company scorekeeping mechanisms and building trust and shared improvisational skills all take time. But I agree with Ed Carrel that the business is everyone’s business.
“Kierkegaard on the Art of Helping Others to Understand”
The helper must first humble himself under the person he wants to help and thereby understand that to help is not to dominate but to serve, that to help is a not to be the most dominating but the most patient, that to help is a willingness for the time being to put up with being in the wrong and not understanding what the other understands.
“Use Wikis for Team Projects”
Wikis dissolve voice and authorship. Use them where there are rewards and incentives at a team level, where a team is being held accountable for a result.
A lot of bootstrappers start out by selling their product or services to friends or people they know and/or have worked with in the past. One of the early thresholds a team crosses is making the transition to “selling to strangers” (see the “Startup Maturity Checklist” for some relevant questions) and they can get tripped up on a number of points.
Two key challenges
Free Consulting: strangers may want to learn more about the technology area you are addressing and request one or more sales calls while they listen attentively. The net effect is that you are offering free consulting to someone who has no intention of buying. Tipoffs: always encouraging, “tell me more.” They talk very little about their own challenges but are very interested in your offering or the technology arena that you are focused on.
Column Fodder: potential buyers at large companies may need to solicit a minimum number of bids in addition to the team that they want to do business with. This means that they will put you through the exercise of generating a bid just so that they have three, even though they have no intention of working with you.
Here are four steps to take to immunize yourself against the default assumptions you made when selling to friends.
Balance time invested against size of deal, probability of a win, and competing alternatives. Establish a marketing budget in hours in advance (e.g. default might be 15 minutes for an inquiry, 60 minutes for a phone call) and adjust it as your understanding of deal size, probability of a decision, and probability of a win evolve.
Always put an expiration on any quote or proposal, if nothing else it gives you a reason for one last E-mail/call.
The first payment is always the most difficult, if appropriate ask for a token payment after you have expended some marketing effort to assess interest level.
If you are not certain of interest in getting started, float a later date (e.g. six weeks instead of two) for the follow up and see if they pull it in. If you are not having conversations every week or two then the deal is in percolate or nurture mode and is not active.
Just a quick reminder, the early bird rate ends next week for our Jan 12, 2010 Idea to Revenue workshop in Redwood Shores, CA. If you are in formation or the early days of your startup this is a good opportunity to spend four hours on your business with your team members. We help you ask each other the hard questions so you can leave with a one page plan for your next steps. This will sell out, register now.
He posts on Hacker News from time to time and in response to a question “Should Your Startup Have an Advisory Board” posted a very cogent set of tips that have yet to make it to his website. So that his answer is not lost to bit rot I am including it here.
I have worked extensively with startups in Silicon Valley since 1984 and have seen every shade of advisory board, ranging from those set up for pure window dressing to those used extensively by founders for insightful continuing advice.
The latter usually arise from pre-existing relationships between one or more of the founders and the advisors. Normally, the advisor is someone who wants to assist the founders and whom the founders accordingly want to reward by small equity grants via the advisory director role. These types of advisory boards, in my experience, tend to be of significant value to early-stage startups and are well worth the small equity grants involved (which, by the way, tend on average to be more like .1%/yr of service rather than the higher number suggested by the author of this piece). The informal nature of the relationship also avoids many of the hassles associated with trying to have such an advisory board meet from time to time in some formal manner. In essence, what you have with such boards is a healthy working relationship from which all parties benefit.
The “window dressing” variety of advisory board is often as phony as an undersized glass eye that spins randomly with every blink. This often involves the so-called industry luminaries used to make the startup look much more impressive than it really is. In essence, such advisors hire out their names (and, yes, they will insist upon larger equity grants and often for some form of cash compensation as well, as for example for every meeting attended). While one can never say categorically that such advisors do not add value to a startup, their primary function is to add name-value and hence the value of their contributions apart from name value tends to be limited. There are exceptions but, in my experience, not many. In general, these types of advisors are a clear mis-match for most early-stage startups, though they often help later-stage ones needing “company profile” dressing for IPO, etc.
By the way, founders still occasionally confuse the role of advisory director with that of a board director. There is no connection whatever between the two roles. The former is basically an outside consultant only and has no management-level authority; the latter, of course, has tremendous management authority (and corresponding liability risks as well, which the advisory director does not).
Here are some blog posts where I talk about the value and appropriate use of an advisory board or kitchen cabinet:
Nov-23-2008 “Unfamiliar Pain”
If you don’t have a kitchen cabinet or board of advisers that you are accountable to, I would encourage you to create some mechanism for independent outside advice from folks with relevant experience. I have several other independent consultants that I compare notes with, we also take turns kicking each other in the ass encouraging each other to make hard decisions and do the things we know we need to do that are getting neglected. We having a meeting with all of our partners together for the first time in early December. I hope to use this as both a joint planning and joint accountability mechanism.
