Entrepreneurial tip of the day: remove the hair from the sink, don't hide from the tough or gross stuff

Every entrepreneur faces numerous challenges.  More often than not the hardest ones people attempt to ignore.  Let me give you a few, for examples:

  • revenue isn't scaling at the rate it should
  • one of your VPs isn't a cultural fit and does a mediocre job
  • traffic to your website comes from black hat techniques and you have white hat advertisers

I could give you LOTS more examples. 

The point of this post is that given that there's lots of hard stuff to face, the sooner you acknowledge the issue, the sooner you can step up to fixing the issue. It's rare -- if ever -- these issues just resolve themselves without direct confrontation.  One skill you need to develop is the ability to step up and bring these issues from the dark into the light and to deal with them effectively, cleanly, and generously. 

It may be easy to hide -- but hiding only makes the problem linger. 

Notes from Founder's only meeting at Founder's Co-op

Last night we had most of the founder's come to the Founder's Co-op office for our second "founder's only" event. We now hold these meetings every other month.  I'd say the event was a win. We met for 2.5 hours and then had dinner.  The meeting started with everyone doing a shot of Maker's Mark whiskey.  I blogged last time how we were going to have an symbolic drink at each Founder's Only meeting -- last time, we didn't have Maker's so we had Patron tequila.  The Maker's Mark set the right tone for the meeting. The agenda was as follows:

  • Everyone go around and give a 1 word assessment of how they're feeling
  • Go around and get high's and lows report from each company. Followed by -- what item would you like to talk about in small groups? or more succinctly, what issue would you like input on from other entrepreneurs?
  • We then broke out into 2 smaller groups: one group was the sales and marketing group, the second group was the strategic prioritization group. 

I met with the strategic prioritization group.  The question we talked about was given the wide range of options of tasks to undertake at a small group, how do you prioritize?  The following tactical steps came out of the meeting:

  • Schedule in your calendar a day a month for the founder's to leave the office and talk about strategy and priorities
  • Every day come in and write down on a piece of paper the highest priority thing to accomplish that day. Get it down before lunch. 
  • If you're making revenue traction, be satisfied with where you're at and what you're doing. It's too easy to get distracted by the company that just sold for 1 Billion dollars and wishing it was your company. It's ok if you're not Groupon or Zynga.
  • It's your job to know where you're headed. 
  • When in doubt, focus narrower rather than expand. 
  • Get dominance before expanding. To do this, you need to define very clearly and quantitatively what dominance means. 
  • Business is hard -- don't expect it to be easy.  Growth is hard. 

The opportunity cost of thinking about opportunity cost -- is real

I spoke to an entrepreneur today who asked me about the opportunity cost of his startup. His company was 2.5 years old and doing about 30K per month.  They weren't growing fast or getting rich and had enough money each month to pay the principals. He told me that he was starting to think about opportunity cost of his time.  

I told him he was 1/3 of the way through a marathon and that I thought we (as entrepreneurs)  were spoiled by the 1990's internet bubble.  The days of quick exits and instant millions are gone.  In my opinion, it takes at least 5 years to build value into a company -- sure there are exceptions and it's wise to look for them. But don't be deluded by the green pastures of an easy path to profits.  Doing a start up is hard and the line between success and failure is all too thin.  It's a CEO's job to quiet the conversations about greener pastures and opportunity cost in his mind -- and to focus on leading his company to a market where margins are good and money can be made.  Getting to break-even so that you can play again another day is a major accomplishment. Don't under appreciate it. 

When I told this to the entrepreneur, he looked at me as if I told him something he already knew. He was relieved (I think) and disappointed because it was still hard work ahead. 

As I've been known to say -- "chop wood, carry water" and "be careful out there" .  

Food as a business trade secret

I'm going to let you in on one of my secrets. Food works. As my mother used to say -- "if you can't beat them, feed them".  And she did that well -- she was a master of sweets.  Growing up, we had a cupboard of Hostess twinkees and suzi q's. Our house was the house all the kids in the neighborhood flocked.  I learned early that food could bring people together.
When I started abuzz, I used to say that "the company that dines together, succeeds together". This was my adaptation of my mothers saying. Since that time, I've used food, meals, coffees, wines as a means of inviting people to break bread, have fun, talk and ultimately do deals. In my opinion, food is an underrated and under discussed business tool -- think about it over a piece of cake. And buy your employee or boss a cup of coffee and see what you learn.

Saying "I don't know" may instill confidence

I got this as some email feedback on one of my VPs.
But I was especially impressed with the VP  In response to at least two of my questions, the VP paused then admitted he either didn't really have an answer or that he hadn't thought about the issue simply because the company wasn't to the point of having to address the subject yet.  So rather than try to BS me with words, or telling me what he thinks I want to hear, he essentially shrugged and admitted to not having an answer.  In an industry like software development that's rife with alpha males, especially in leadership roles, VPs honesty and relaxed nature were refreshing - traits no doubt also recognized by customers, co-workers, investors, etc.
Nice job!

Managing through compensation

I was visiting a friend this weekend. He was asking my advice on a matter related to his small company. The company has 10 employees and one of the employees -- for the purposes of this post, let's name the employee Dillon-- requested a meeting to discuss compensation. In a nutshell, Dillon wants more money and more ownership in the company. Significantly more. He's currently making 225K but wants to be making over 500K. He also wants a solid equity stake in the company. Dillon is 50+ years old. Dillon has been doing an adequate but not excellent job. My friend is afraid to lose Dillon because it would harm progress the company is making. Dillon senses this fear and is really putting an aggressive tone to the salary conversation. My friend is willing to consider giving Dillon a raise but wants his work commitment to increase.
Based upon what I heard, I think this work relationship is going to end within 6 months. Generally, I don't think you can buy work quality or commitment. In my experience, salary has very little to do with work ethic.

CEO driveby

I've learned that CEOs need to be careful about the perennial CEO driveby.
As CEO, I have permission and responsibility to go outside the normal organizational boundaries to make sure the organization succeeds. I can ask what is going on in any part of the organization. Here's the problem with careless use of this right:

  • Simple inquiries can and often are mis-interpreted as a request... or worse yet, a demand to do something.
  • The random question or suggestion in the midst of an on-going process can and often does have the opposite effect -- it can interrupt ....or worse yet, undermine forward momentum of an existing team or manager.

Thus, the name -- CEO driveby.  I've learned the way around this is simple -- don't do it. Resist the temptation. (easier said then done) Make a note of your inquires and suggestions and bring them up during your weekly meeting with your managers. 

Organizational change

I'm quite happy with some of the organizational changes that have taken place at Judy's Book over the last couple months.  The things that make me happy:

  1. Product -- we're making real progress on releasing what I think with be the best local deals site on the web.  The first phase of this release is now in beta and there's more coming in early April.
  2. Organization -- we're acting like a real company. People are playing there positions and we're executing much better than ever before. This is due in part to an alignment of management focus as well as a reorganization that created more structured departments than we had before.

Let's keep rolling...

Individual contributors who want to be managers

I've had 2 conversations in the past month with people who are strong individual contributors in their current role and want to be managers.  One conversation was with a sales person and the other was a developer. I've seen this story before. Excellent sales person hits numbers. The person thinks management doesn't do a good job and that they could do it better. They get promoted because they're the best sales person and move to the management job. It turns out they lack the skills it takes to be the best manager. They lack the organization, the communication, or the leadership skills it takes to succeed as a manager. Moreover, they're less happy with the job than they thought they'd be. They didn't know that managing people can be a real pain in the ass. It's hard work. Yes, it's glamorized and everyone thinks they want to be the boss. But let me tell you -- being the boss is not for everyone. Not everyone is good at it. In this case, my career advice to both the sales person and the developer was you'd be better off, happier, and more successful (money wise) if you stay in your individual contributor role and expand your skills.  Just my 2 cents.

Operations folks

Operations and test folks are your typical unsung corporate heroes. They do not get the appreciation or acknowledgment they deserve for keeping systems and websites running 24 hours, 7 days a week. Our guys -- Kurt, Dave, and Jeffro, do a great job in general and in particular this week have4 been stepping up beyond the call of duty responding to pages at 4AM and making sure the site stays up. Thanks guys.