The Ultimate Start-Up Guide

Hard Won Advice from Venture Capitalists

Many of us love to read stories of the beginnings of Apple or Facebook. We imagine what those early days were like and what it would be like to be a part of a small startup that skyrockets to success.

But, of course, statistically most startups fail. Studies show 90% fail in the first two years.

That’s sobering.

 

Why do so many startups fail?

What can the successful ones teach us?

Is there a blueprint for startup success?

 

Tom Hogan and Carol Broadbent founded Crowded Ocean, Silicon Valley’s top marketing firm for startups. They have years of experience working with some of the Valley’s most successful firms. Their new book, The Ultimate Start-Up Guide: Marketing Lessons, War Stories, and Hard-Won Advice from Leading Venture Capitalists and Angel Investors, is packed with the wisdom of their experience working with numerous startups. I recently spoke with them about what makes a successful venture.

 

“Start-ups fail because of lack of execution.” -Charles Beeler

 

Why Start-Ups Fail

Everyone reads about how many startups fail. What are a few of the reasons?

Dog design. According to a recent study of 101 failed startups, 42% cited ‘no market need’ as the reason they failed. In other words, they created their product ‘because they could,’ not because of any perceived market need.

ultimatestartupguidenew2Running out of money.  Obvious but it happens more often than you’d think. Because of parsimony (giving away as little of the company as possible) or optimism (I’ve never missed a deadline in my life), first-time CEOs work from budgets and schedules that assume that everything will go right. It usually doesn’t—and so the founders fold shop.

‘Camel Design.’  If a camel is a horse designed by a committee, a camel product is one where the founders listened to too many people, didn’t trust their initial instincts, and built a product that is a little of everything and compelling to no one.

A single, dictatorial founder. It’s one thing to have a strong vision. It’s another to refuse to tolerate questions or input about that vision, especially when that input comes not just from employees but from the market. One way to track how much of a martinet you’re being is by tracking employee retention:  this may be your first rodeo as CEO, but most startup employees are on their third or fourth.

Underestimating the competition.  Sometimes it’s hubris; other times it’s just not enough time. Either way, most startups don’t respect—or keep an eye on—the competition the way they should.  Give the competition their due:  The analysts who cover your market—and who have probably had nice things to say about the competition—don’t want to look like they’re stupid. Same for the prospects who either own or are considering the competition. So keep your derisive comments to yourself.

 

“Data driven marketing is…one of the best investments an early-stage start-up can make.” -Moe Kermani

 

Translate Failure into Success

How can past failures translate to a positive experience?

It all starts with humility and honesty. Virtually every team has one or more scars from failed past ventures. The key is to admit it to other key team members and then use the lessons learned to avoid making the same mistake a second time. The other element is pattern recognition:  If you can use your past failures to recognize a mistake in its early stages (say, a bad hire), you can take corrective action before the mistake takes root and does damage.

 

“Less is more. If you think you have focus, focus some more.” -Jishnu Bhattacharjee

 

Why Diversity is Important

I love this. Many people think diversity is for more mature businesses, yet you argue otherwise. Why is diversity important for startups? 

Diversity of multiple types is healthy and invigorating for startups, not only to build a strong culture but to build better businesses. All the survey data shows that diverse teams make better decisions and improve profitability. So, just like startups benefit by being able to start fresh at the whiteboard to design a better product or service, we believe startups should try to build in diversity from their founding. We encourage startup founders to focus not only on gender and ethnic diversity, but also to consider hiring staff who bring both big-company and small-company backgrounds and to consider embracing the oddballs and misfits who represent “disruptive” thinkers. When tech titans like Apple, Google, and Salesforce have heads of HR and cross-functional teams chartered to lead diversity initiatives, you know diversity is a big deal, not just because it’s the right thing to do but because it translates into better businesses.

 

“You never really know what the market really is until you go to market.” -Pete Sonsini

 

What is post-launch depression? How do you guard against it? 

What A Caterpillar Can Teach You About Growing Your Business

Master Near Constant Change

 

Many people think that businesses should develop a strategy and stick to it at all costs.

But Sid Mohasseb, serial entrepreneur, investor, venture capitalist, and former the Head of Strategic Innovation for KPMG’s Strategy Practice teaches an entirely different approach: It’s the ability to adjust your strategy, almost constantly, that brings success. The environment is uncertain and changing, and changing with it is vital.

Sid teaches that we must push for more and evolve from one approach to another.

I recently had the opportunity to talk with him about his new book, The Caterpillar’s Edge: Evolve, Evolve Again, and Thrive in Business.

 

Prepare for Constant Flux

Why a caterpillar?

The caterpillar evolves many times over before it becomes a butterfly. It changes form until it turns into a completely different species. The caterpillar teaches us the wisdom of constant and incremental evolution and offers the promise of flying.  To compete, to advance and to win, in our businesses and in our personal lives, we must evolve constantly and purposefully, always.

 

“Things do not change. We change.” -Henry David Thoreau

 

How is the game changing? And how do leaders prepare for the constant flux?

Innovation is constantly approaching from every corner of the world. The speed of change fueled by unprecedented technological advancements and constantly increasing customer expectations are challenging companies to “stay relevant” – competitive advantages are temporary. The game has changed from, “How do I gain an advantage and defend it?” to “How do I change to stay relevant?”

To win in a state of constant flux, leaders must shift their minds and change their actions. First, by realizing their addictions (old assumptions, orthodoxies, biases, etc.). Next, by aligning with uncertainty – no plans can be permanent and no decisions are certain. Leaders must learn to live with probability and a portfolio of related plans – always ready to take the path that offers the most likelihood of success. They should also appreciate the reality of their capabilities and aim to build the future in increments; success cycles must be shorter and capabilities (people & systems) have to be created accordingly. Last, leaders must constantly look for the next advantage and aspire for more “Aha’s.” They should look for and discover the next challenge or opportunity, always; innovate, always (create new value), and evolve, always.

 

“To win in a state of constant flux, leaders must shift their minds and actions.” -Sid Mohasseb

 

How to Embrace Change

Why do we so often refuse to deal with change and uncertainty?caterpillar-cover

The refusal is more natural than intentional. We refuse to deal with change because of our fears of unknown (what is on the other side of change) and comfort with the status quo (comfortable routines we are used to and have served us well in the past). Most people embrace change when they i) realize the severity of the problem they face and ii) gain trust that what they can change to is a better state. We often refuse to change because we believe that the status quo does not present a major danger and/or we don’t trust the alternative paths offered by our leaders.

At business school and later at work, we are trained to look for certainty to plan to and execute against – assuming reduced risk. In our personal lives, we are comfortable living with probability and operating in uncertainly – there is a 40% chance of rain, and we decide, based on our risk tolerance, to take an umbrella or not. In our professional lives, we are expected to be certain and execute with confidence in outcomes. People, on a personal level, can innately adjust to uncertainty. However, they are reluctant operating with uncertainty at work because corporations expect and reward the illusion of certainty.

 

“The only thing that is constant is change.” -Heraclitus

 

3 Categories for Leaders to Plan in a World of Change

How to Become an A Player

How to Become an A Player

 

Do you want to be a top performer?

Of course you do.

Most of us want to play at the top of our game. And we want to recruit the best possible players to help us achieve our goals.

That’s the focus of Rick Crossland’s work. Rick is an author, speaker, and consultant. His nearly three decades of experience developing, recruiting, and leading high performers is evident in every chapter of his new book, The A Player: The Definitive Playbook and Guide for Employees and Leaders Who Want to Play and Perform at the Highest Level.

 


“You win with people.” -Woody Hayes

 

The Qualities of an A Player

What qualities make an A Player immediately stand out?

Some qualities that immediately stand out for an A Player are as follows:  accountability for results and integrity.  Pay attention to the meetings you are in over the next week and notice how many employees and managers make excuses for missing goals, or do not take ownership or accountability for solving a problem.  This is why the characteristics of A Players are so important.  The A Players are also scrupulous in their integrity.  Many people say one thing and then never follow through (or worse yet, tell a lie).  A Players, on the other hand, have integrity— they consider someone not following through on their commitment as dishonest behavior.

 


“Talent is God given. Be humble. Fame is man-given. Be grateful. Conceit is self-given. Be careful.” -John Wooden

 

Don’t Blame or Make Excuses

I love your “line of choice” image. When a leader sees someone falling into the trap of blaming and making excuses, what does she do to get the player back on track? 

In our cultures everyone is trained on The Line of Choice.  They’ll politely call out their teammate and ask, “Isn’t that comment below the line?” or “What does an above-the-line response look like?”  Or they’ll use the ABC vernacular and ask, “What would an A Player say?” or “That sounds a lot like B Player talk to me.”

 

Copyright Rick Crossland. Used by permission. Copyright Rick Crossland. Used by permission.

 

How to Motivate an A Player

What motivates an A Player?

One thing great about A Players is the leader does not have to motivate them.  In fact, they are self-motivated.  A Players truly work for passion.  They find purpose in the process itself.  They are not coin operated.  They focus on satisfying customers, making better products, and you know what? The money follows!  In fact it flows much more freely than if they had focused on the money.

 


“A Players are self-motivated, work for passion, and find purpose in the process itself.” -Rick Crossland

 

Ethics Matter

Throughout the book, you reference ethics, morals, and character. You also talk about leaders with some big personal failings. Why do so many people fall into these traps? How do you guard against it?

So many people fall into poor ethics and moral character for a few reasons.  One is that their environment lets them get away with it.   I’d recommend you put your antenna up this week and see how many times people in your organization tell and get away with white lies or half-truths.  Odds are you will be startled by what you find.  Now the question is, are you holding them accountable to clean up their act?  The other root cause is that people suffer from hubris.  Many folks just don’t think the rules apply to them, or they think they won’t get caught.

The way to guard against weak ethical and moral character is to build a culture where there is transparency to our actions.  Societal ethics are becoming more blurred by the day.  Make the adage by Aldo Leopold, “Ethical behavior is doing the right thing when no one else is watching- even when doing the wrong thing is legal,” part of your culture’s DNA.  Build your systems so someone is watching and holding others accountable.  Finally, the leader sets the tone for the ethical mores of your organization.  Part ways with leaders with shaky ethics.

 

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