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Archive for March 10th, 2008

Mark Cuban Gets It: Fine Tuning the Startup Culture

Posted by Bob Warfield on March 10, 2008

Lots to like in Mark Cuban’s response to the whole startup rules meme I recently wrote about.

A few quick ones:

– Sales Cures All. Know how your company will make money and how you will actually make sales.

Amen.  One of my mentors was recently at a startup that was hand wringing about whether to get going selling or to keep giving away product and fine tuning.  He basically said that in order that they could still look themselves in the face in the mirror each morning they were going to sell $1M of product that year.

–  Know your core competencies and focus on being great at them. Pay up for people in your core competencies. Get the best. Outside the core competencies, hire people that fit your culture but are cheap.

Yep, it isn’t about saving money and working people to death.  It’s about spending capital wisely, and spending it where it matters.

–  An expresso machine ? Are you kidding me ? Shoot yourself before you spend money on an expresso machine. Coffee is for closers. Sodas are free. Lunch is a chance to get out of the office and talk. There are 24 hours in a day, and if people like their jobs, they will find ways to use as much of it as possible to do their jobs.

Amen again. This is a point I made too.  In fact, I love being in a downtown environment where it is easy to take a walk and get a fresh perspective.  When I worked in downtown San Jose, I used to take most of my one on one meetings walking to or from Starbucks or Petes.  It seemed to help people relax, let their hair down, and share what was on their minds more effectively.  It also pumped up the energy levels to have a quick change of scenery.

– No offices. Open offices keeps everyone in tune with what is going on and keeps the energy up. If an employee is about privacy, show them how to use the lock on the john. There is nothing private in a start up. This is also a good way to keep from hiring execs who can not operate successfully in a startup. My biggest fear was always hiring someone who wanted to build an empire. If the person demands to fly first class or to bring over their secretary, run away. If an exec wont go on salescalls, run away. They are empire builders and will pollute your company.

Once more I agree.  Communication is the biggest thing for startups.  Got to communicate to get everyone rowing in the same direction.

I had an interesting open office situation one time.  The boss wanted the execs seated together instead of with the teams.  Sounds like it would be bad for communication and just a convenience for him, no?  That was my first take.  I was wrong.  Good managers have to communicate with their teams, they’ll get it done.  They won’t necessarily communicate that well with peers, however.  In this case, it was a good thing.  It brought all the functions closer together.  Interesting dynamic.

–  Make the job fun for employees. Keep a pulse on the stress levels and accomplishments of your people and reward them. My first company, MicroSolutions, when we had a record sales month, or someone did something special, I would walk around handing out 100 dollar bills to salespeople. At and MicroSolutions, we had a company shot. Kamikaze. We would take people to a bar every now and then and buy one or 10 for everyone. At MicroSolutions, more often than not we had vendors cover the tab. Vendors always love a good party :0

One more vote that too much workaholism can be a bad thing.  Treat people like part of the team, not as employees.  Some companies go way overboard about who is a founder or not.  To the point it is exclusionary.  There is value in celebrating founders, but I want to celebrate founders who are not managers.  I like the idea of letting everyone one have “Founding Team Member” on their business card if they were around at all before the first revenue comes in.  That whole period is a founding period, not just the guys that came before the VC’s.

In terms of events, be creative.  We had a fun event that was our “Engineering Oscars”.  We created some interesting categories, 8 or 10 I think, got a keg, had people walk down the runway, and gave each winner a new iPod.  Try to do something fun at least every 6 months.  And always celebrate success:  closing a round of funding, blowing out you numbers, shipping a new release, it all needs to be recognized.  Plenty of time to agonize on the next challenge!

Posted in saas | 1 Comment »

Is Startup Software “Bought” or “Sold”? Startups Discover Demand, They Don’t Create It… (And Zoho HCM is Out!)

Posted by Bob Warfield on March 10, 2008

Got an email note from Zoli Erdos, whom I read religiously, about a new SaaS HCM offering from Zoho that’s being launched this morning.  Cool!  Love to see more SaaS entrants.  I believe fervently in the model.

Zoho has been a fascinating company to watch because they produce so much.  Here is a startup sized company that is just cranking out products right and left.  And they’re quite good too!  The thing is, there is so much activity, at times I’ve wondered what they’re up to.  What ties it all together?  Zoli’s note this morning had the answer, at least an answer that I latched onto.  In it was a short passage that speaks volumes:

…there are no marketing and sales plans.  It will just be released out on the wild, like all other Zoho apps.  I am known to be a fan of the “pull-model”, software “bought” rather then sold, …

I too am a big believer in the “pull-model”.  I don’t believe startups can create demand.  They are too weak, they don’t have enough money, and demand is way to expensive for them to create when you look at how conventional companies go about creating demand.  Instead, startups discover demand.  I like to use an analogy for what demand discovery is like that’s fairly graphic.  I liken it to breaking through the window on a jet airliner.  We’ve all seen the movie clips where one minute things are pretty calm and then the window gets broken and suddenly there are hurricane force winds and it’s all anyone can do to keep from being blown out into the void.

When a startup is searching for the right product/market fit, they’re tapping on various windows with a hammer.  The window itself is brittle, and not all that hard to break.  It represents getting the word out to a large enough critical mass that you can tell whether the hurricane will develop.  Most windows have dead air behind them, so you have to keep looking.  If you hit on the right one, you’ll be catapulted into a growth crowth that will take all your energy just to keep up with.

Coming back to Zoho, they’ve clearly figured this out.  They’re tapping on windows like crazy, and by all accounts they’ve found several promising ones.  Perhaps this new SaaS HCM application will be the latest.  Check it out.  The first 10 users are free for your organization.

Zoli, in a follow on post asks whether it isn’t crazy for an enterprise app to be launched simply by announcing it, without sales or marketing.  I don’t see this as all that crazy.  I’m not saying you don’t need sales and marketing, but I do think it can be brought to bear prematurely, particularly for startups where cash is king.

This comes under the heading of marketing and sales being “tragically knowable.”  Many companies do tests of messaging before putting wood behind the arrow.  Traditionally, this is done in secret, with focus groups and one way mirrors.  But why keep things secret?  The web lets us move faster and with less friction.  By launching the package without much fanfare, Zoho gets to see who wants to be an early adopter.  They can look for themes among that crowd and then amplify those themes with sales and marketing to bring more along.  I think it is an interesting way to change the order things are done in.

The biggest risk for startups is lack of information.  They should be far enough off the beaten path that they’re not just doing what the big players are doing.  To combat the lack of information they have to get out there and collect some.  When you’re dealing with uncertainty, setting up a Darwinian system with lots of cheap experiments works.  Monitor the results, double down on what works, and try some more experiments.  Eventually you’ll find the right window.  You will discover the demand that’s waiting for your startup and its products.

Posted in strategy, venture | 2 Comments »

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