Category Archives: Startup management
Save the typical heroic founder stories for others. Read Shoe Dog.
It is honest. It drills deeply into being an entrepreneur.
Rather than a selection of carefully-maneuvered strategic moves, building NIKE is a constant sequence of operational hassles, existential threats and near-death catastrophies. Rather than the work of a genious-born natural entrepreneur, succeeding is to a large part luck, coinsidence and hard work. In other words, NIKE is just an ordinary startup that happened to grow big.
NIKE’s co-founder Phil Knight, an introvert who hates negotiating, has difficult time explaining why he puts everything in line. Sure, he wants to build something. In the beginning, which means NIKE’s first 15 years, there is no other reason than to “win”. What “winning” means to Knight? He cannot define it other than “winning” is opposite to “losing”. He is afraid. Avoiding losing is the engine that keeps him going.
In the end, his net worth at $10 billion, Phil meets with Buffett and Gates, wondering that the guys are worth 5 to 7 times more, and sure they have done everything they need to do in their lives. Or have they? Back home, Phil takes his yellow pad and starts thinking his “bucket list” of things to do before it is too late. Is the only meaning of life to avoid losing and work with something that feels play?
From the book, one can distill a great list of qualities for startups that can be successful. Maybe not so surprisingly, based on my own experience of building (and sometimes, only trying to build) couple of companies, and being part of investing in close to 100, I agree on the list.
Here is comes. The list of commonalities in all great startups based on the NIKE story:
- Money is never a motivator. On contrary, one actively needs to fight against its bad influence.
- Extreme, geek-like dedication to the product. “Shoe dog” means a person who hacks together better shoes 24/7.
- “Never stop. Keep going.”
- Focus on sales and customers. Nike is known for iconic brand and advertising, but it certainly was not how it all came to light.
- Starting small before becoming big.
- Sticking to your values no matter what.
- Hiring people based on real skills and commitment; not how they look, behave and polish themselves.
- Unique culture, that can also be really odd.
- It takes long to build a company. Phil started the business in 1962, and was the CEO for 40 years.
The strength of the team is critical in any startup’s success. Most investors believe in strong teams, like Ron Conway: “We believe in investing in people.”
The same goes for investors: although strong investors cannot make your company, the weak ones can break it. Sounds familiar? Yes.
We just issued a press release on The World’s Strongest Founder/Investor Competition. Why?
“In the industry, everyone agrees that strong founders and investors are key to any company’s success. Until now, the industry has been missing objective metrics on how to compare founders or investors”, comments Timo Ahopelto, Founding Partner at Lifeline Ventures.
“Today, the three top grossing App Store apps are from Finland. In addition, the region is nurturing awesome Web, cleantech and health startups. We at Lifeline Ventures are thrilled to further demonstrate the strength of the founders and investors in the region with this annual competition. I would not be surprised if the first winners in both categories came from the Nordics”, adds Petteri Koponen, Founding Partner at Lifeline Ventures.
The World’s Strongest Founder/Investor Competition is open for founders and investors at the Lifeline Ventures Conference Space at Slush 2012 next to the main entrance. This year, the strength is measured with the combined weight of maximum bench press and dead lift. The competition is arranged in co-operation with WODConnect and CrossFit Espoo.
Read also the official Slush 2012 release on this competition via PR Newswire.
The best advisors don’t charge for being advisors. Instead, they want to invest in your company.
The best advisors realize that everyone needs to be at equal risk and reward. They are entrepreneurs who want to show real commitment by becoming part of the cap table with their own cash. In their own minds, this justifies the time commitment. From the entrepreneur’s point of view, it ensures the needed mindshare. If you only get attracted by the army of consultants, “with experience you need to help you strategically”, it is a signal that something is not correct with your company.
This is what I have seen at Lifeline Ventures with the companies we work with. The better the company and the advisor, the more likely the advisor is to propose an investment. The worse the advisor and the company, the more likely the proposal is for cash compensation and free-of-charge options. In my opinion, cash and free options are fair for real work, responsibility and quantified deliverables – but not for advice. The best advice is free.
We have also seen that the best CEOs we hire to our companies come with cash. They typically invest from EUR 100,000 to EUR 300,000 at the latest round’s valuation, for two reasons: they want to put themselves at risk, and want to have an opportunity to earn from the value creation. They believe in the company they join, it is not just another job. Again, based on what I have seen, the better the CEO, the more likely there is a significant investment attached.
When you ask, startups usually are “just about to complete” something big. A new product, a new sale, a new partner.
However, most never complete or finish anything well. There are no end products, just things in progress.
This is deadly.
The end product each day –mentality focuses your team to deliver. It has two parts:
- First, “end product” means that you always deliver something tangible and complete. As an example, you don’t create ideas how your next product will be like, but you present the full product spec. End products take company forward, while half-made drafts only create unnecessary internal meetings and debates.
- Second, “each day” means that progress is constant and delivery cycles are short. I personally believe on daily deliverables. Working in a startup means enjoying the brain dash to get things completed at a constant pace.
Having the End product each day –mentality installed into your startup is very powerful. The entire team will have a culture that focuses on accomplishing, not doing. This is a bigger thing than personal effectiveness alone.
This is the third part of Startup Management Series based on my experiences and the culture we institutionalized at CRF Health. The earlier parts discussed “Deliver or die” and “There is no place to hide” principles that are inevitable for every successful startup to follow.
There is no place to hide
Tons of strategy books have been written about measuring performance and making people accountable. I propose that startups need to take this to the extreme: everyone’s performance is fully visible to all, with no place to hide.
This creates high performance culture: the ones not performing drop out without needing to fire them, while high performers enjoy the continuous learning and an environment that moves on. Also, if executed well, the ones leaving will get a good reference: they were part of the high-performing team and in any event are well above the standard.
In this culture, it is ok to fail. Failing is different to low performance. Consequence management needs to be clear and quick. If you allow people (and especially yourself as a manager) to hide, it will spread.
Any downsides? It is difficult to implement in a sophisticated manner, and can easily kill creativity – and even create fear. Performance means different things by environment, and that needs to be taken into account carefully. You run Navy SEALs different to a symphony orchestra.
My experience is that the most competent and creative people will love this – and ultimately demand it to stay and be happy.
When we started CRF Health in 2000 – currently the global eDiary leader (yes, really, “global” and “leader” are not the traditional marketing jargon here) – we set three management principles.
Deliver or die is the first one.
In 2000 there were 200-300 eDiary startups in the world, and today there are three left who share the market: At least our princples did not prevent us from becoming #1.
The deliver of die -mentality is in the heart of every successful startup. Strategy and unique ideas are important, but ultimately, they are only the platform to deliver. One should consider all strategies, slides and spreadsheets being invented. You should also consider at least two or three teams doing exactly the same thing as you are, somewhere in the world at the same time – and as excited, as competent and as advanced as you are.
Strategies and slides do not win in the startup market. It is about being two to three times faster, better and more agile in execution, never accepting compromises. This hard-sounding mentality needs to be become the DNA of everyone in the team.
When a startup has the deliver or die -mentality, it is difficult not to succeed.