by tomnora | Oct 13, 2011 | Business Development, CEO Succession, early stage, founder, Revenue Growth, Scalability, startup, startup CEO, venture
This is an obvious one, but a point too many startups forget or ignore in early stages.
The purpose of a for profit business is to generate revenue, period. Avoiding this fact and/or not planning on it, focusing on it In most cases, the goal is to increase revenues continuously over time, i.e. scalability. It’s even more desirable to never have a dip in revenues, but this rarely happens.
There are tons of articles about many things about the startup world these days. Equity discussions, how to pitch, what’s hot, success and failure stories, etc. But very few articles about how to begin, grow and sustain revenues, what that process looks like or what to do when they stall.
There are also almost as many startups as the number of people I meet these days. Everyone has their own startup, which is usually little more than a reserved url, a $10 commitment and an idea. But can they produce revenues, increasing revenues over time profitable revenues? Can they create jobs? Stay in business for 10 years?
Google just announced their most recent quarter numbers: 26% increase in revenue year to year to $9.7 Billion. Now that’s a revenue focused company, pretty incredible for a 13 year old company to be growing that fast in a bad economy. Google’s original business plan didn’t even include their current main source of revenue – advertising. But they adapted quickly and haven’t looked back yet. Their admirable amount of revenue allows them to do so many powerful things their competitors can’t as well as contribute enormously to philanthropic causes. Not every startup will be a Google of course, but if you figure out how to continuously scale revenue or even maintain zero growth revenue, you can provide viable employment, profitability, benefits and even give back to society a bit.
So how do you do it? There are several components that must work together like a system that incorporate your products, your values, your people, outside advisors, investors and more. Having a great idea of course is key, but that alone won’t sustain you. This is where many startups trick themselves. “We have an amazing idea, so we will succeed. You must monetize properly, plan for hiccups, see the future. Most of all, Revenue has to be nurtured and protected priority #1.
I’m happy to discuss this more, just send me a DM at @tomnora or post on this blog.
by tomnora | Sep 15, 2011 | Business Development, early stage, founder, Launch, Revenue Growth, Scalability, startup, startup CEO, venture
http://sfist.com/attachments/sfist_jeremy/garage.jpg
Many dream of being the instigator or part of the “Startup Launch”: First Discussions, Initiation, Developing a business and product(s), and most of all Success. What many dreamers don’t realize is that all of these steps are the by-product of the core reason the startup is being formed – a great product or service. It’s not a TV show where Ashton Kutcher claims he’s an “Internet billionaire” and no one questions it; in the real world great startups become great companies by focusing on Execution of ideas into products and services. A startup becomes a sustainable enterprise by repeating the process over and over.
An idea in itself isn’t worth much, and this applies to the tech world more so than most other segments of industry. Because of the vast amounts of publicity lavished on Mark Zuckerberg, Steve Jobs, and the Google twins, many fashion themselves as making a few key steps and then finding themselves on the cover of Time, or at least in a million dollar home.
I often encounter people who have great tech ideas – friends, colleagues, employees, neighbors. Many are very good ideas; almost all of them drift away into the ether, unless someone else executes one of them. Then my friend will inevitably say “I had that idea! They ripped me off!” Or they tell me that I should execute their idea and then give them a percent of the “winnings”.
Ideas without execution are just talk, I’m a culprit also, for many reasons. I used to try to explain this to people when they approach about a tech idea, but it usually just bursts their bubble and they don’t quite hear the message. The act of execution tests whether the idea can become more – it causes validation, formation, proof of concept, exposes fatal flaws, creates adjustments, essentially turns it into reality or the discard pile. This process IS the company, extremely important and often misunderstood.
There are countless examples of startups that begin as one thing then morphed into something different – HP, arguably on of the first Silicon Valley garage startups, was first successful with an audio oscillator, which they built after very little planning or product thought. Their process was correct.
So your original idea is likely to change some anyway through the process. Other people will help take it over the line; welcome them. So please contact me if you’re anywhere along the startup road, and Ill try to help you turn your ideas into things that the world wants.
personal: @tomnora
business: @cowlow
by tomnora | Feb 9, 2011 | founder, Revenue Growth, venture
First revenue are a major validation milestone for a startup after much sweat and tears. You’ve gone through initial idea, sat at coffee shops or peoples houses brainstorming, discussed and executed the company formation, started building a product, are going through your launch, interacting with first users and maybe even have gotten some press, but none of that compares to people paying for something you’ve created from nothing. It also is the first “organic” fuel for the building process for your company.
Recent developments in web business models have made this hurdle much lower. For example Googles AdSense, Facebooks virtual economy, micro-payments and wide use of the Freemium web model. But it’s still quite a nice feeling to see revenues coming into your enterprise, and makes you want to figure out how to build upon it.
Revenue can change many things for you and your company – valuation, respect, confidence, negotiating position, attraction of other revenue and cash, retention of your equity, and the ability to attract key people and partners. If the revenue is significant, as in a major partnership that pays six figures or more, it can set in motion the next phase of your strategic planning.
Preparation, a Chief Revenue Officer
Also, you must be tactically ready for this step before it happens – know exactly how you want to accept revenue, prepare all required forms, build template legal agreements that may be required, seek help from experts where needed, have your banking in order.
But how to get these first revenues? Aside from the low hurdle examples above, there are many other ways. These days almost everything involves the web and automation, but there is an all important factor – human to human contact. Call it sales or marketing or bus dev, but the important piece is dedicating yourself to spending some time face to face with those you hope will be your highest consistent paying customers. Not “unpaying” users or beta testers, but strategic customers, partners, influencers, those who will take you to your first levels of success beyond investors. This is how you “get it going”, how you start the revenue ramp upwards.
For many startups this face-to-face part of revenue development is where they spend the least amount of their time, for hundreds of reasons, but mostly because they aren’t comfortable with this part of the process. If you can overcome that issue, you’ve overcome a major hurdle to growing revenues. The impact of hearing live from another human about your product is immeasurable, proven over generations of business.
One way to vastly increase your company face-to-face hours per week is to early on have a dedicated partner/co-founder who does only this – “Chief Revenue Officer” – talks to people, gets out there, constantly hunts for new money for the company and articulates the vision. In the beginning the rainmaker is usually the founder/de-facto CEO, but not always. Some startups bring in someone pre-revenue to take responsibility solely for getting the first revenues. I’ve actually been that person at a few startups; it’s a great job for the right person, whether you call it sales, business development or even CEO. The key is getting the right person/people, indoctrinate and empower. And get that first revenue.
by tomnora | Jan 27, 2011 | Revenue Growth, Scalability, venture
REPOSTED 2013
:: An ominous title for a blog post, but “Grow or Die” has been one of the most basic rules in the high-growth startup world for decades. And by growth I mean revenue growth.
The first trick is to offer something that the world will need more and more over the next few years (growing market), without that it doesn’t matter much anyway; your product/service/thing must “catch on”. This can be somewhat manipulated by your successful marketing execution (i.e. why one iPhone app succeeds vs. another).
If you do have something compelling, you’re either running as fast as you can to catch up to something bigger or to stay ahead of those below you. Lack of growth will encourage others to come along and knock you off the track, attack you; they will smell blood. Inconsistency in growth can do the same thing. Millions are currently watching boastful high flyers like Zynga, Google, and Facebook to see if they stumble. If you’re not offering something in a growth market, it doesn’t matter so much; you become either a zombie/lifestyle company or shrink slowly then die.
If you’ve got something hot, the idea is to spread your footprint quickly and prevent others from knocking you off (first mover). Growth means bigger and more complex barriers to entry – more advertising, products, support and security for your users/buyers, advanced services, etc. And protection form death. And gasoline to create more growth.
Flat to negative revenue growth is a real red flag, especially for early stage companies. Your stakeholders start to wonder what is going wrong? Did we build the wrong product? Are we becoming passé? Time for a new CEO? And all those other depressing clichés. If you’re venture funded, things get kind of ugly -unhappy board members, cut off from communications, down- rounds to keep you going, or no more funding.
Many early stage founders aren’t sure how to handle this requirement for success. What about users? Eyeballs? Hits? Press Mentions? Those are all nice and should be designed impact revenues, but usually aren’t a real measurement (unless you’re Twitter). Revenue growth must be the core strategy and drive all other strategies.
Continued growth becomes more and more difficult for larger companies, you must “feed the monster” as it grows. Many companies are currently hitting the wall after strong growth, like MySpace, Yahoo, Dell, Fedex. Even Google is starting to struggle due to a slowing growth rate, and attracting attention for this problem – losing employees to Facebook, trying across the board 10% raises, switching out their CEO of 10 years.
But the focus here is not big companies, it’s startups in their first years of revenue. Companies that hit their “first millions” then get stuck, and often panic. I was once VP of Sales for a startup that went from zero to >$10 million in one year, then back to zero the following year. Talk about panic! That’s an extremely contracted timeline for up then down the growth curve, but the general trend is not that unusual in startup land – up then down quickly. In our case we didn’t have our internal house in order, and didn’t know how to handle our sudden success – no strategic planning and thereby no adherence to such a plan.
The bottom line is that continuous growth, at a good rate, is imperative for long term scalability. If this is a hole in your business strategy, don’t ignore it. Put your heads together, hire expertise, call your advisors, revisit your business models, sacrifice sacred cows, and respect this key piece of your success.
But make sure you deal with it.
