What If You’re Not CEO Material? [Excellent article by David Cohen @davidcohen of TechStars]
http://j.mp/y7qE0u
Demise (plancast)
This article written by Mark Henderson of Plancast took a lot of courage. The Uphill Battle Of Social Event Sharing: A Post-Mortem for Plancast | TechCrunch http://j.mp/wCnYov
By putting the words Post-Mortem in the title he made it very clear that the company is failing, a shocking move in our current startup world. So many companies/people/vcs pretend they are succeeding when they are stuck – can’t scale revenues, especially over the past 5 years or so. Once they finally shut it down they often still claim success, or invoke the over-used “pivot” panacea.
By calling it as it is, Mr. Henderson allows a true discussion about what went wrong and other strategies that could possibly change the fate of Plancast and other startups in the same position. He is also helping other startup leaders and investors to possibly follow his lead of raw honesty, so this industry can focus more resources on a smaller number of companies that truly have something special and defendable. That helps people to better learn how to do it right, contribute to bigger better businesses, create profits.
In several of my past postings I’ve touched on this problem. It’s endemic to the startup world right now, and can’t lead to a good future. Of course startups always have a low probability of success anyway, but this current environment of pretending like every company that gets angel or super-angel seed funding is made up of geniuses with genius ideas is a house of cards. Articles like that above could start the process of correcting the market back to realism and eventually streamline resources. Mark has put his ego aside and done a great service to all of us. And who knows, by publishing the companies issues he may crowd source some answers (and funding) to actually save his company.
Here are some of the comments people made about this article:
“I hope TechCrunch publishes more well-composed articles like this in the future.”
“This industry is lacking such honest analysis. Thanks for keeping everything so real.”
“I greatly respect you posting this as a way to help others learn when you could have just disappeared in the startup abyss.”
Ii looks like the beginning of several who will come forward soon. What’s the lesson here? I guess more journalists should launch startups. @tomnora
d e s i g n
The other day I met with a startup in Santa Monica, and noticed a giant etch of the word d e s i g n on the ceo’s glass office wall. Their company isn’t about design per say, but it was refreshing to see the discipline given such prominence. The word design is being kicked around in the startup world a lot more these days, and I think this is a good thing.
Design is the exercise of creating or adding elements of appearance to something. It is defined as “The shape or appearance given to an object, especially one that is intended to make it more attractive”. In the startup world it can make the difference between success or failure if combined properly with great business strategies. There are many examples of great design alone in a failing startup, but great design plus great engineering and business strategies often win. Also, many startups with bad/weak design but great strategies and engineering have been winners. But that seems to be changing.
To say that someone is a visual person is a little silly – everyone is visual. Colors and Shapes and beautiful Movement attract any human, often on a subconscious level. A simple attractive Design for a website or product will change its fate from yet another to the best in a category.
Beautiful design exudes success and confidence, care about details. And most importantly – originality. great design comes from within a person or organization, not copied from outside and implemented. It’s more difficult, but imperative for long term success. Simple beautiful design is proliferating on the web – lots of white space, a small number of large font words, big open boxes for interactivity, cool icons. All of these things enhance the user experience and make them want more.
A recent great experience for me was trying out Codecademy. It has quite thoughtful design elements, many of them not actually visible, but so important to its almost seamless usability.
Style, similar but different than design, is more the process of following great designs, using existing aesthetics. Sometimes this works fine, but it’s not the same as amazing original design. Just look at the continuous march of Apple over the past 34 years. Great design plus engineering plus strategy. Accessibility, simplicity, completeness. They created the template for many other products’ style and design.
UX/IA is also an important part of all digital design now. First introduced in the late 1990s, it’s replaced and expanded on UI as the critical relationship people have when using products. Often it’s a pre-design process, trying to guess how people are going to use things, then use design to optimize the experience.
The new biography on Steve Jobs is a must read for any startup founder. It has the added benefit for readers of discussing in great detail Apple and NeXT design processes, justifications and investments. It also reveals that most of the design ideas were not Steve Jobs, but rather came from several design and marketing gurus he surrounded himself with.
Like I said, it’s great that Design is becoming central to the engineering-heavy world of tech startups, because ugly design sucks. @tomnora
Scalable People
One of the things I tend to obsess about these days is startups that have little or even no real lifespan. Almost every day I uncover another one, some even with significant funding. In greater Los Angeles, now being called Silicon Beach, this problem seems to be more prevalent than in most areas. So many people make their goals to just b a startup, get it started and look for funding, without much thought about multi-year growth and sustainability, i.e. Scalability.
A common area of neglect in this early stage is people – Scalable People. Startup founders tend to add people that are close to them – friends, coworkers, spouses, family, neighbors, roommates, similar age, etc. These folks are very accessible and trustworthy, not much interviewing required, and often will start working with little or no compensation. It’s good to have some of these. The biggest downside is that eventually you will have to extract or diminish the roles of most (not all) of these people.
I once had an early employee at a startup I took over who was sales, marketing, receptionist and payroll. Early on we were lucky to have her doing all those things, and she received great stock options for being an early employee. But as we grew there was no doubt that we needed to replace her in most areas with a professional team that could scale with the job. Every change we made pissed her off and she fought for her position, which was counter-productive to our growth. She eventually left with some bitterness, but that went away once we went public and she could pay off her mortgage entirely.
You also have to mix it up as early as possible with real professionals that can scale when the company grows- people who “think differently”, have different experiences, drive initiative that none of you have even thought of, and want the company to be much bigger. These days a popular add in Los Angeles is someone from Silicon Valley; it adds a realness to the group and gets investors excited.
I’ve been on all sides of this situation – I’ve been the founder trying to attract the best people, and just as often I’ve come in as the “suit” to a small group of founders and early employees. It’s more work and trickier to splice the 2 groups together than to just use your inner circle, but it’s the only way to grow now and later. Please contact me if you want to discuss your startup. @tomnora
The “Pre” Startup is adding air to the bubble
There seems to be a lot of this going around these days – the “I’m just about to start a startup” category of entrepreneurs, or “I just started a startup” when they haven’t. It’s also become the new euphemism for unemployed.
Here are the justifications and logic process for so many claiming they have a startup before they really do, and in many cases actually getting some funding:
- people feel like they might as well start their own business since nobody is hiring
- funding is more prevalent than ever for early early (read “ideas”) stage companies
- the barriers are now very low for actually forming a business, as is the cost
- micro funding ($25K)
- no formal certification or education required
- many new angels spawning from Google, Facebook, etc. millionaires
- angel investors are supporting these early unqualified launches; many are F&F/parents who believe in the dream
- amazing shining examples of success and IPOs, even though they a 1 in a thousand
- it sounds cool, or used to before everyone started doing it
- many people never before involved in startups want in
There will be significant fallout from this no doubt, but no one knows when.
Not that there’s anything wrong with many new businesses per say – here are some good results of such a rush
- some of these will be the next homeruns (and base hits) in the startup world
- lots of jobs being created, even if short term
- first time startupers will get invaluable experience, whether they succeed or fail
- many more people are learning software development
However, the fallout from all this will set us back a few years again …
- many misled, unsophisticated angels will get burned and sour to good investments (not sophisticated angels, they know the risk)
- whenever investors jump in late (now) many bad things happen
- innovation is heavily suffering right now – almost anything is a business model
- when many vaporware and vapor-businesses crash or fade away they leave damage, possibly fueling the recession (remember 1999-2000? 2008?)
…but will take us back to a more solid footing.
The American Dream of entrepreneurship is one I hold dear, but to apply it to a technology based startup requires a few basic principles – a real business model, hard work, technical excellence, outside expertise, sustainability, market focus, strategy, and more hard work. Eventually it also needs revenue growth and profits.
Hang on tight the roller coaster is taking a dip soon, I predict by mid 2012. It will shake out many people into the streets wondering what the hell happened. @tomnora
Are You a CEO?
Are You a CEO? Is Your Boss a CEO? Are They The Right CEO for Your Company?
There are those who work as the CEO and those that don’t. The trick is in knowing which one you are.
Are you a CEO? Are you the right CEO for your company? This seems like a silly question at first, but one of the most important for a startup foundation team. In most one-person startups by default the founder is CEO; it’s difficult to resist the temptation of the title. But not all founders do this.
If the CEO not the optimal choice but doesn’t want to admit it, beware, your startup could become an exercise in ego instead of a successful growth/job machine. There’s no formula or perfect background for the “perfect” CEO, and there are many degrees of success; in the end the proof is in the pudding. No one would have guessed Gates or Zuck would have been so successful, but they made it happen. Jerry Yang had many of the right ingredients, but somehow can’t make it as Yahoos CEO. Terry Semel was a great studio head but not a tech CEO. Meg Whitman got slammed trying to run for governor but she was and is a great CEO.
I see many non-CEOs trying to be one in my consulting work. This problem has to be fixed early in the life of a company once it becomes “real”. The first momentum a company has must be nutured like water in the desert;
The purpose if creating a startup is to create something that didn’t exist before – something out of nothing, and thereby create wealth, new money that can be distributed within and outside the company. Even in a non-profit this is true. That goal doesn’t work with the wrong leader at the top. How do you know? Usually you’ll feel it, from the people inside and outside the company. I often play “Shadow CEO” for early stage CEOs, which bridges the gap in experience for many leaders who lack experience but have the skillset. The difficulty comes when the current CEO just isn’t right to scale the business but wants to hang in, often for some very good reasons, but still the wrong choice.
It takes courage to remove yourself as a CEO, but I’ve seen and assisted in the process a dozen times to goos results. Please contact me if you know of any of these situations; they (usually) fascinate me.