by tomnora | Mar 26, 2012 | CEO Succession, early stage, founder, Launch, Scalability, startup, startup CEO, Tom Nora, venture
“Even in the quietest moments, I wish I knew what I had to do” – Supertramp
[This is about the loneliness of the CEO in a startup. A real startup, that has employees and funding and a going operation.]
It’s late on a Sunday night and you’re sitting alone preparing for the week ahead. It will include travel, employee issues, hiring, firing, product design, cash burn, a new facility, the next funding round and some client and partner visits. You have a great team for your little startup, in management and elsewhere. You have a few “startup whisperers” who advise you from afar, your parents are very supportive. Your spouse shows incredible patience and listens to your war stories every day. It’s not that you don’t love this, you do.
But in the end it’s all down to you. No matter how many people surround you, no matter who great your ecosystem is, being the CEO of a going startup is often a lonely job. By definition, in the final step of making many decisions is you alone making them.
- Others depend on you to do this.
- You have more information than anyone else in the company.
- You get more blame and more accolades for results.
- The outside world looks to you first, wants to talk to you.
- No one is equal to you inside the company you need to maintain your leadership.
So it really is you alone.
How do you improve this situation? Draw from all these resources around you, especially external ones.
- Pick one or 2 board members to get closer to, (pick the right ones).
- Don’t ask for advise or what to do, that will confuse you and they contradict each other over time.
- Find an old college or high school friend who’s disconnected from the business. Or a favorite teacher or professor.
- Pay attention when outside mentors magically appear in your circle; I’ve met some of the best advisors at meetups and coffee shops.
- Read voraciously, not just business or CEO books, but history, biographies. etc.
- Try to mentor a potential replacement even if you’re not looking for that; you’ll learn a lot.
- Use external consultants – management, executive, legal, recruiters to discuss ideas. Mark Zuckerberg hired an executive coach so he could learn to be a leader. The Google founders surrounded themselves with a dozen moentors and advisors.
I’ve found in my CEO positions that optimizing this thinking process can make the difference between success and failure, usually does. Please reach out to me if you want to discuss any of this with me. I’m @tomnora on twitter.
by tomnora | Mar 7, 2012 | Angel Investor, Business Development, early stage, Launch, photography, Revenue Growth, Scalability, Tom Nora, venture
Shout Out to Seth Levine – Seth Levine’s VC Adventure – “I’m getting sick of the bull$%!^”
Seth Levine, a successful VC with the Foundry Group, wrote a great blog entry about all the hype going on currently in the startup world. Worth the read. His focus is on people bragging about how amazing they and their startup are when they usually have close to n o t h i n g, which goes against the karma good business and screw it up for those really trying to build strong long lasting companies. If more people like Seth step up with their qualified voice, they could help save us from or lessen the big crash coming.
I’ve been harping about this a lot (too much?) for over a year:
http://j.mp/yyqNQc
http://wp.me/pKMex-1m
http://wp.me/pKMex-2e
Currently Los Angeles is in what could be a startup renaissance or an apocalypse, dependent on how long the hype goes on. Based on Seth’s article, I realize it must be happening everywhere. The signal to noise ratio continues to degrade, but it’s actually moving into the next phase. Investor groups are cutting out the management, bus dev, sales, and marketing professionals, trying to get raw, young engineering teams that have never negotiated a term sheet to give away their IP rights and equity for next to nothing.
Some of these projects will produce amazing companies. But most participants (young developers) will raise their hopes, fail and get spit back out into the cruel world within 2-3 months(!) and become a jaded unemployed 25 year old. Or realize down the road that they gave away a lot for a little. Many investors now advertise that want only developers, they will cover all business/marketing/etc. needs. Don’t put real business people on the actual team. To reuse an overused term – Wait what? They offer them zero to a few thousand dollars and office space. I call it harvesting youth.
Recently there was a developer only coding party where, in a few hours, you form a team, think of an idea, then design, develop, deploy a website. The compensation? All the alcohol you could drink and In-N-Out burgers. Now don’t get me wrong, I love In-N-Out burgers, some of the best in the world. My favorite is the Double Double animal style (see photo). But the sad thing here is that after that party many of the participants think they have a startup.
The word startup used to be about very unique technologies being deployed in very unique ways, creating new markets and capabilities in the world. Having knowledge and experience had value and a balanced team was required. Balance, humility, hard work. Facebook and Google had plenty of business people deeply involved. In fact, Mark Zuckerberg is a great salesman, and a pretty mediocre programmer. Now almost anything is a “startup”, and almost everyone is “doing” a startup. And bragging about it before it happens. We’re spreading resources over way too many businesses, knowing most have no change. I know it’s a risk game, I’ve been in it 25 years, but there should be some intelligence invested in the outset. One VC recently told me that his investors don’t care if he does no due diligence, as long as he “brings them another Facebook”.
Real startup successes are measured by growth, revenue, shareholder value, making something from nothing, ROI, longevity. Not just this weeks buzz or a $25,000 seed round. They devised with strategy, ingenuity, an ecosystem. Long term employment, new jobs.
The good news is that this hype period will end, probably soon. Then the remaining companies will be much easier to watch and enhance and benefit from. @tomnora
by tomnora | Jul 19, 2011 | founder, Scalability
From July 2011,,.
California. Most of my 25 year career has been in California; about half of those in Silicon Valley. I’ve been involved with several amazing companies throughout Northern and Southern Cal; I have expanded, launched, M&A’d, relaunched, liquidated, succeeded and failed, you name it.
I’ve also had the good fortune to operate and sometimes live in several other fledgling tech corridors – Cambridge, NYC, Portland, Boulder, Santa Fe, Austin, Dallas, SLC, Frankfurt, Paris. In every case these other places aspire to be a self sustaining baby Silicon Valley of their own – Silicon Alley, Silicon Prairie, Silicon Coast. But they don’t quite make it. Some come close, like New York or now Boulder but it’s still not quite the same.
The term Silicon Valley is now a misnomer – it has moved way beyond silicon and way beyond the original Santa Clara valley to spread all over California. The new hot spots are San Francisco, Los Angeles, San Diego, the east bay, etc.
San Francisco
San Francisco has actually successfully co-opted the Silicon Valley magic and even surpassed it in some ways (Twitter, Salesforce.com); it’s again a very hot place to be right now and this will continue. Talk about scalability! If you plop your company here, great things could happen. It wasn’t always that way – in the 80’s and much of the 90’s San Fran was a sub-par runner up to SV, trying to catch up. Great PR and finance firms, but not many startups. Houses were cheaper, you couldn’t get good engineers, etc. That has all changed. Now companies have bidding wars for office space amid a major national recession.
There’s a magic and complex dynamic to the combination of things that make California so different. Just say the word and people take notice. There’s a seriousness, a buzz, confidence, reliability, completeness, professionalism. An assumption that you’ll more likely make it there.
Southern California
The “Silicon Basin” – – With the convergence of social media, the Internet, and digital entertainment, Southern California is now humming as a great startup region. In 2003 Electronic Arts actually moved their headquarters from Silicon Valley to Playa Vista, an crazy move at the time, and accelerated their growth as a result. Several smaller software groups, vfx studios and creative design labs are now benefitting from the movement south. Yahoo, Microsoft, Facebook, Google and others are growing their employee base and presence in L.A. Venture Capital from Northern and Southern Cal is flowing into the L.A. basin. It has the key catalyst – several excellent universities spitting out young engineers and business people. It has a strong and growing angel investor base, tapping one of the largest concentrations of individual wealth in the world.
There are exceptions to the California phenomenon; several amazing companies have emanated from these other areas, always have, and many of these ecosystems are now of course self sustaining, but they’re not the same as California. Countless companies have moved there for this advantage, reference Mark Zuckerberg/Facebook. Good move. If you’re somewhere else, it’s because you’ve made a tradeoff, a compromise. I know as I’ve done it myself several times and I’m glad I did. I’ve rooted for other places to approach California’s ecosystem, but I know they’ll never come close.
If you want maximum scalability for your business, you should be in California. If you the best capital providers, the best people, the highest valuations, you gotta be in Cali. You could get more advantages from a couple of visits to a coffee shop in Palo Alto than spending a year in some other town. @tomnora @cowlow
by tomnora | Feb 25, 2011 | CEO Succession, Revenue Growth
Long Term Stable Growth
There is much fascinating debate these days about Google(GOOG) vs. Facebook, reminiscent of some of the greatest battles in Silicon Valley over the past 40 years. In these two we have a classic Silicon Valley clash of the titans, meaning we can’t predict a winner, or even if there will be one. This battle has very high stakes for both. Googles current valuation is $200 billion; Facebook is estimated at $50 billion – both big numbers that have continuously soared since their early days. History says the eventually one or both of those numbers will go down, based on which of these two has the leadership to maneuver through the battlefield into more stable, balance long term growth.
First, Google
Google is the older, more mature of the 2, with a much wider footprint, domination of the Internet users life, a new way of thinking by maximizing freemium and claiming karmic high ground. The New Silicon Valley. They have also sustained growth for a decade, distinguishing them from 99% of Silicon Valley startups.
Of course, google has all the inherent problems of many years of success – bloat, too many products, too many markets, too many layers of management, too many employees, too much employee turnover, major fixed expenses, bureaucracy, fading of their “hipness factor”, aging architecture and growing insecurities about their position as King of the Hill. Classic. As long as net income continues to grow, they can overlook or rationalize these problems, but the negative effect of the above issues will eventually hit them; it hits everybody. The magic trick is to come out the other side better. Swapping out their CEO could be a good or bad thing, but that’s often a nervous reaction on both sides of the boardroom table. Google is also too dependent on one source of revenue, ads, taxing one of the oldest rules in the book “Don’t get too much revenue from one place”.
So I believe Google will hit a wall and wobble over the next 3 years. They will make changes, restructure, sell some toys, start looking at numbers very carefully. The first phase will no longer work.
Now baby brother Facebook
Facebook, on the other hand, is the classic up and comer, the position Google was once in. Not just a lucky little brother, but an extremely competent, precocious adolescent that has invented something totally new from what existed. They have thus far methodically monetized and structured their revolution for long term growth better than pioneers like Netscape did in the 1990s. they discovered something that everybody wants, and Mark Zuckermann is proving to be a true long term leader.
But they are a revolution currently, and revolutions eventually end, settle back into normal life. Facebook’s challenge will be to make that transition without stumbling. How will they diversify past their main product once it gets a little tired and some day surpassed? Can they? Facebook’s success has come from a multi-year rollout of membership to their club, one product. Brilliant product. Nothing has grown around the world like this since Coca Cola. There is still plenty of territory to roll out to, but the clock is ticking. What is the follow-on act? This is a tough one to pull off. They may do it, I don’t underestimate Zuckerberg and his team, but it will be very difficult not to become another MySpace or Yahoo.
Google vs. Facebook = Expansion vs. Rollout
So who will win the growth war here? Even if they’re smart enough not to harpoon each other these two companies will be very busy over the next 2-3 years surviving and continuing to grow.
They both have a strong chance, but if I had to pick one it would Google.
Here’s why: Google has a diversified platform with many market leading products (because they are better products) in very competitive markets – Search, Mail, Mobile, App Dev Tools, Image, Storage, Video, Statistics, and Advertising. Google had to overcome existing leaders in every one of these markets.
Facebook, on the other hand, invented their own product and market, and nobody has been able to catch up, not even Google. But in many forms their piece of the pie chart will decrease over time as different services reinvent their market for them. They must shift from rollout to diversification, or face the bell curve.
Like Google, Facebook also is overly dependent on ad revenue, breaking the same rule of growth and stability, and we don’t actually know how stable their revenue/profit curves are. Whatever the numbers, Facebook will have to reinvent itself and break some molds soon without hiccups in their revenue growth. I’m rooting for them, but this seldom happens. Unless you’re Google.
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.
