Startup: An Insider's Guide to Launching and Running a Business (16 page)

Let’s look at technology: I know many programmers, as well as a lot of technology people, who are extremely good at what they do. These guys know how to
build
stuff. Oftentimes, they are also extremely naive regarding the question of how to actually connect the stuff they build with enough customers in a short enough period of time that they can survive and grow to thrive.

This reminds me of taking biology classes in college. In biology, a funny and recurrent pattern was that when the science of biology just didn’t know how something works, experts would make a declaration like the one in
Figure 3-5
.

Figure 3-5.
An example of an uninformative analysis of a complex process

Does this make you smarter? If you take the time to read this, you realize you don’t actually know very much more about how fireflies’ bioluminesce than you did before, except that oxygen and some magic is involved. Technical entrepreneurs are often similarly inclined to believe that their technology plus
some kind of instant marketing miracle will make their invention into the next big thing based simply on how great their idea is (
Figure 3-6
).

Figure 3-6.
A common, oversimplistic, and false model for describing how a business will connect product to customers

The better alternative is to plan for developing an idea and connecting it with the target population of users—one at a time if necessary. This requires money and expertise. In short, you need people that know how to market and how to sell. That is usually a different group of people than the ones that know how to actually make a piece of technology (or any product) work. This reality-based approach should serve as a
base
for promoting your product and should be reflected in all of your financial and timeline projections. On top of this base, you will then work on getting Oprah to fall in love with you or otherwise cause lightning to strike and bring you all of the fame and glory that you deserve. Chase the lightning by all means, but don’t count on it.

_________________

If You Can’t Measure It, You Can’t Control It

The customer support group for Dell in Austin, Texas, had a huge banner hanging from the high ceiling above the heads of several hundred customer support reps. It read as the heading of this section reads: “If you can’t measure it, you can’t control it.” Amen. What do I recommend you do with this advice?
Test everything that you can for performance. Measure everything that has the potential to feed back into your decision-making and help you to be more efficient.

That goes double for marketing expenditures. Test performance of every dollar that you can when you advertise. For example:

• Web pages
  : Use page-tracking tools like Google Analytics to understand the performance of your web site. Use Google Webmaster Tools to set up tests to determine how to make your web site make you more money.
  
• Customer surveys
  : Engage customers carefully. I have found that surveys are usually answered by your fans, and ignored by the rest. You can skew your perception with surveys, but they can give you valuable feedback nonetheless.
  
• Direct observation
  : Hire a third party to send anonymous shoppers to your store and prepare reports on their experiences.
  
• Behavior tracking
  : Some grocery store chains use cameras and sophisticated tracking to observe consumer behavior in their stores—the product selection and arrangement in each store location is customized to the local demographic by using testing and feedback.
  

Make sure that you are aware of performance trends! Even small changes happening over time should not go unnoticed. They are the feedback you need to be able to adjust and respond to the market. You will learn the nuances of your market, such as changes in sales due to seasonality and external forces
that will cause more or less sales. Knowing the cause, rhyme, and reason behind your company performance is part of your job, captain.

One thing to note with this is that I never want to spend the time to collect statistics, carry out research, or analysis on something that I know ahead of time does not have at least the
potential
to affect my decision-making. I only want to know more raw data about my business if that knowing has a likelihood of informing how I act.

Building a Team

Starting a business is a very personal thing. For me, it begins with some kind of realization or sense of need: a need to make a specific idea become real. This kernel then manifests as thoughts that bubble up again and again without conscious cause or reason. After a while, these ideas begin to gel into a plan of action, and as a series of steps that could be taken. If at some point the thoughts and planning grow to be more intense, and if the ideas pass numerous sanity and feasibility checks, then I might start thinking of concrete steps to make the idea
happen
. You will notice that at this point the nascent business is just a private internal dialog, and nothing more. Once you start acting, the first few steps are things that you can do by yourself.

But before long you will probably need to enlist the help of other people to really get it going. Beyond getting started, your business is going to need other people to understand the idea and the vision behind it. Beyond that, your business will need other people to agree to
take it on as their cause
or purpose as well. If at some point you don’t have other people standing in for you as supporters of the business, then your chances of getting anywhere are very slim. In my work in startups, I have found a number of best practices and frames of reference with regard to building a team, managing it, and keeping work productive and fun. I will share some of them with you here.

Your Network Will Determine Your Success

Having a phenomenal business idea and a plan to match will not mean much without assembling a diverse network of people to help you. When I first started out in business, I did not yet understand this lesson. I had confidence in my plans, confidence in my own intelligence, confidence that I could overcome any technical hurdle that presented itself. What I did not have was the support of an experienced and diverse group of people—I was practically on my own. Looking back, I realize now that I had let fate determine my network. Specifically, my small group of friends and confidants was virtually the same a year into my first business as it was on the first day. I did have conversations with businesspeople when the opportunity arose, but I did not seek to transform that contact into any kind of relationship. Furthermore, I did not actively seek out connections that would make a difference for me. When happenstance did present a knowledgeable person to me, I did not try to establish any kind of continuing communication with them. These were mistakes of the first order—big ones.

What I did:

• Toughed it out on my own (but I learned a lot—the hard way)
  
• Did not join professional groups (I thought I was too busy)
  
• Let chance dictate whether or not I would get an opportunity to talk to helpful people again once I met them (plain stupid)
  
• Believed that there were not any resources available to me, even if I were to seek them out (false)
  
• Believed that people would not really be interested in helping me, even if I were to ask them (false)
  

What I should have done:

• Sought out qualified people as friends and associates that could advise me
  
• Joined professional groups
  
• Kept in touch with incidental contacts that were good sources of advice
  

At that time there was no Internet—so
social networking
was not even a known term. It was offline, analog, and old school. With technology being what it is today, there is no excuse for that kind of isolationist approach to anything.

Don’t work in a vacuum. You need to mix and network with people. You must

• Know customers.
  
• Know competitors.
  
• Know industry folks.
  
• Know unrelated folks—look for synergies.
  
• Use LinkedIn, Twitter, Quora, Facebook, and other online networking mechanisms.
  
• Attend industry events.
  
• Speak at events.
  
• Build your
  personal brand
  and establish yourself as a hub in your business or subject matter community.
  

_________________

The Best Employees Would Do the Work Even Without the Job

My current venture has been particularly good with regard to employees. In some sense, we have grown a dream team of individuals who work well together and whose output is imbued with tremendous quality. The way I put it is that most of my team members are doing for the company what they would be doing on their own, even if they weren’t being paid for it. We have a great arrangement where they do what they love (for the company) and get a salary.
They are motivated to do well, and they enjoy themselves. They even get paid for it. Everybody wins, and I fiercely protect the psychological environment that allows this to take place.

I encourage you to look for this kind of employee. The signs are clear. Look for people that are already doing their skill as a career, and, in their job interview, find out what they do in their spare time. I am always very interested in finding employees that
live
what they do in and out of the office. For example, the best programmers are the ones that are at home on the weekends doing what they do as their office job. For instance, tweaking server configurations in their living rooms, or performance-testing data structures. When I hear things like, “I was benchmarking a queue system on my Linux cluster at home this weekend,” I know that this is the right kind of person to be doing queue systems for the business during the week. No doubt. In cases like this, what you have is an employee who
is
something, not a just a person who
does
a something. It is a subtle difference, but very profound.

_________________

The Psychological Contract

Motivation and enthusiasm from each individual in a company is important. Your employees need to feel the importance of success for the company from within themselves, not simply be held in check with company policy and performance guidelines. This can only happen if you have nurtured the
psychological contract
between you (your company) and them. This is a long process that permeates every single interaction that occurs between employee and company.

The psychological contract is the basis from which an employee will decide

• How much quality to put into the job
  
• How much loyalty to put into the company
  
• How much energy to contribute to the team
  
• How much off-hours time to devote to thinking about your company’s success
  
• How much care with which to handle your customers