Tag: entrepreneurship
I’m sitting on my balcony on the ninth floor of a hotel overlooking Miami Beach thinking about motivation. Specifically, mine. I’m deep into writing the first draft of Startup Communities and – with Amy – decided to plant myself in a warm place for two weeks as I finished up this draft.
We got here late Monday night. Today is the first day I wrote any words on the book. I procrastinated as long as I could and finally opened up the doc in Scrivener and started writing after my run today. I pounded out a solid hour of writing before shifting gears, responding to some email, and writing a few blog posts. I know that I can only productively write for a max of four hours a day before my writing turns into total crap so I’ll be happy with another hour today. I’ll then consider myself fully in gear for four hours tomorrow.
While I was on my run, my mind drifted to motivation. I kept repeating one of my favorite lines – “you can’t motivate people, you can only create a context in which people are motivated.” I’m pretty sure I heard that for the first time from Dan Grace when we were both working with the Kauffman Foundation in the 1990’s and it has stuck with me.
It felt particularly relevant today. There is no external force “motivating me” to write this book. I’m doing it because I want to, find it interesting, challenging, and think it’ll be a useful thing for the world. It’s a cop-out to say I’m “self-motivated” especially since my run on the beach capped off two full days of procrastination where I kept very busy on other work, but didn’t do the specific thing I came here to do. After two days in the environment that I needed to be motivated, I finally settled down and started doing the real work I had come here to do.
If you generalize this, it plays out over and over again every day. The great entrepreneurs I know work incredibly hard at creating environments that are motivating. They don’t pound away at the specific task of “motivating people”, rather they pay attention to creating context, removing barriers, being supportive, putting the right people in the room, and leading by doing. All of these things create a context in which people are motivated.
It could be as simple as a warm day on the ninth floor of a hotel overlooking the beach, which I know is an ideal place for me to write. Or it could be an awesome office environment with incredibly challenging problems. Or it could be a set of people who are amazing to spend time with. In any case, the context is the driver of motivation.
Ponder that the next time someone asks “what do I need to do to motivate you?” Or, more importantly, consider it the next time you are about to ask someone “what do I need to do to motivate you?” The answer might surprise you.
My close friend Ben Casnocha and Reid Hoffman’s new book The Start-Up of You is officially out. And – it’s #1 on Amazon. Not just in some obscure category like Business & Investing: Small Business & Entrepreneurship: Entrepreneurship, but #1 in all books on Amazon. That’s awesomely cool. And well deserved.
I met Ben about a decade ago. He came to Mobius with his dad to talk about his company Comcate. I think he was 14 or so at the time. I fell in love with him in the first meeting and have been a friend of his ever since. He’s been involved in many things that I’ve worked on, including being an early TechStars mentor and we generally get together for a few days (with my wife Amy) every year or so. It’s been a blast to be part of Ben’s transition from precocious young high school entrepreneur to best selling author (and I expect – after Sunday’s New York Times comes out, a NY Times Bestselling author.)
While I’ve known Reid for a shorter period of time, we’ve spent a fair amount of time together over the past four years as fellow board members at Zynga. A few years ago Reid asked me what I knew about Ben. They’d been hooked up and were talking about doing a book together. When Reid described what he was talking to Ben about, without hesitation I said “Ben’s your guy – you’ll love working with him and he’ll do an awesome job.”
The Start-Up of You is the result of their collaboration. If you haven’t bought it yet, go buy it now – it’s excellent and highly relevant to every human on the planet.
Every company I’m involved in keeps track of numbers. Daily numbers, weekly numbers, monthly numbers. Ultimately, all the numbers translate into three financial statements – the P&L, Balance Sheet, and Cash Flow Statement. While these numbers are sacrosanct in the accounting and finance professions, they are lagging indicators for most startup companies. Important, but they tell the story of the past, not what is going on right now.
I’ve formed a view that every young company should be obsessed about three magic numbers. Not two, not five, but three. Before I explain what those numbers are, I need to tell a story of how I got to this point.
My brain works better with numbers than graphs, so over the years I’ve conditioned most people I work with to send me numbers on a regular basis. Words are good also, but I love numbers. Early in the life of the company I request numbers daily. Some of this is for me; most of it is to try to help the entrepreneurs build some muscles around understanding the data and how to use it.
Recently, I’ve noticed a cambrian explosion of data among several of the companies I work with. The number of different numbers being tracked daily is massive. When you walk into their office there are screens full of graphs on the wall. Everyone in the company has access to the trends over time across a number of dimensions. These graphs are pretty, the numbers are dynamic, and there are often blinking lights to go along as a bonus.
A few months ago I stood in the middle of the office of a 30 person company and stared at the flat screen TVs hanging from the ceiling showing an array of graphs. I’m sure my mouth was open as I tried to process the data and make sense of it. I knew this particular company well and could reduce the number of different data points to a small set, but I was completely overwhelmed by the visual display. As I systematically looked at each of the graphs, I realized very few of them mattered much, nor where they particularly helpful in understanding what was going on in the business.
At the moment I realized these were no longer magic numbers. Instead, I was looking at wallpaper. Data porn. The entrepreneurial aeron chair equivalent of 2012. Pretty, but a bad allocation of resources. The 30 people in the room might be looking at the graphs. They might be looking at one of the graphs. But they probably weren’t seeing anything.
This particular company runs off of three numbers. Daily active users (DAU). Live publishers. Trial publishers. That’s it for now. In the future, there will be a daily transaction metric (Daily transaction revenue) that replaces trial clients. But that’s probably a quarter or two away.
I then started thinking about each company I’m on the board of. This rule of three applies. For many of the companies, DAU is one of the numbers. In others it’s daily orders. Or daily revenue. Or daily activations. Or total publishers. Or new publishers. But in every case I could reduce it to three numbers that I felt were the most important to pay attention to.
The absolute number is what matters. The trend is driven by day over day changes. If during the week (assume the week starts on Sunday) the numbers are 47, 67, 69, 72, 174, 80, 53 this prompts the question “what happened on Thursday to drive the number to 174?” If the next week the numbers are 53, 75, 214, 83, 80, 73, 45 this prompts two questions: “what caused the spike on Tuesday” and “why is the week over week trend downward?” Clearly there is seasonality within the week and there is a new high, but the overall trend going into the weekend is negative.
My brain can focus intensely on three variables like this in a business. Once I add a fourth, I have trouble figuring out the relationship between them. This doesn’t mean that the leadership and functional managers shouldn’t track and analyze the detailed data. They should. But they should realize that when they show this to everyone in the company, no one knows what to care about.
Instead, my new approach is to focus on three numbers. These three numbers should reflect “what’s going on right now in the business” and the trend of the numbers should be a predictor of what’s going on. As I think about the companies I’m involved in, I can define these three numbers in 60 seconds – they are almost always painfully obvious. Sometimes I do end up with four and have to make a choice, but I rarely end up with five.
The technology for displaying these three numbers is remarkably simple. They make this thing called a whiteboard that you can write them on. An email can go out to everyone in the company with the three numbers. That’s it.
What are your three magic numbers?
I had a great breakfast meeting at the Cambridge Marriott with Michael Schrage, a research fellow at MIT yesterday morning. We had never met before and I loved the conversation – his brain was bubbling with ideas that are relevant to many of the things I’m interested in, he challenged some of my thinking, and we had a deep and awesome conversation about open source hardware, makers, and MakerBot.
This morning Raj Bhargava (who recently co-founded two companies I’ve invested in – Yesware and SkedulMe) sent me a blog post by Michael titled Tip for Getting More Organized: Don’t. In it Michael makes the argument that the notion of spending time each day organizing your tasks, the concept of email folders, and the idea of productively organizing yourself is obsolete. The money quote at the end is:
“The essential takeaway is that the new economics of personal productivity mean that the better organized we try to become, the more wasteful and inefficient we become. We’ll likely get more done better if we give less time and thought to organization and greater reflection and care to desired outcomes. Our job today and tomorrow isn’t to organize ourselves better; it’s to get the right technologies that respond to our personal productivity needs. It’s not that we’re becoming too dependent on our technologies to organize us; it’s that we haven’t become dependent enough.”
I couldn’t agree more. I spent almost no time “organizing my tasks.” In fact, I no longer have a task list. I have outcomes I’m going after. They fit within a daily, weekly, quarterly, and annual tempo. The daily and weekly outcomes are dynamic – I have to think about them regularly and they change and shift around (I have new ones each day and new ones each week.) I call these my Daily P1s and my Weekly P1s (which I wrote about recently in a post titled Managing Priorities)- the daily ones are the three things I want to accomplish before I go to sleep; the weekly ones are the three things I want to accomplish each week before Monday morning.
But that’s it. I have a daily schedule that is highly structured (and managed by my assistant) so I don’t have to spend a millisecond thinking about who I need to meet with, where I need to be, or what I need to schedule for later. If you know me, you know that I just “go where my schedule tells me to.” I process all of my email with one touch, I write what I want when I want, and I have a strong conceptual hierarchy for prioritizing high interrupt things. I also stay off the phone unless scheduled – if you spend time with me for a day it’s likely that the only time I’m on the phone is with Amy to say “hi – I love you” or have a pre-scheduled call.
I love the notion of focusing on outcomes rather than organization. For as long as I’ve been an adult, I’ve been hearing about, reading, thinking about, and experimenting with different technology to be “more organized and productive.” I’m an aggressive user of whatever exists and when I reflect on where I’m at in 2012 I definitely feel like I’ve gotten to the place where I’m spending almost all of my time and energy on outcomes and achieving them, not on organizing myself.
If you are someone who spends 30 minutes or more a day “organizing yourself”, I encourage you to step back and think about what you could change and how that might shift you from focusing on organizing to working toward outcomes. It’s liberating.
I’ve been a big supporter of the Startup America Partnership since its inception at the beginning of last year. The organization is now a year old and is starting to really have some impact. I’m psyched about the groundwork they’ve laid down and their plans for 2012.
One of the initiatives I’ve been very involved in is Startup Colorado which we launched a few months ago. I also gave my first Startup America webinar today to a bunch of entrepreneurs who are members of Startup America Partnership about fundraising. And there’s a lot more coming to entrepreneurs who are members of the Startup America Partnership.
So – sign up now. If you are a Colorado-based company, this will automatically get you into the Startup Colorado infrastructure as well at the Startup America Partnership. If you are in any other state, you’ll be part of the whole Startup America Partnership as well as your state when they launch (if they haven’t already).
My simple appeal to all entrepreneurs in Colorado – please sign up. There is no cost to you. There are tons of benefits. It helps us more efficiently connect with you and engage you in the Colorado startup community and we want to show the world how powerful the startup community is in Colorado. Plus, I’m now in a heated match for the number of startups – competing with David Cohen and the other TechStars Managing Directors (David Tisch, Katie Rae, Andy Sack, Nicole Glaros, and Jason Seats.) You wouldn’t want them to show me up, now would you.
Sign up. And help everyone in America win as we create more and more entrepreneurial companies together.
For a number of years, my partner Jason Mendelson has been teaching an extremely popular course at CU Boulder Law School with Brad Bernthal titled Venture Capital – A 360 Degree Perspective. While it’s a course taught in the law school, it’s (not surprisingly) become popular with the MBA students at CU Boulder.
Brad Bernthal, Phil Weiser (the Dean of the CU Law School), and I have been talking about a new course to complement VC 360 called Entrepreneurship, Innovation, and Public Policy. We’ve decided to take a crack at a cross-campus course (law, engineering, and business) that focused on contemporary issues around entrepreneurship, would be a great introduction to any student who wants to immerse herself in entrepreneurship, and would enable us to create some unique content around this topic.
We envision a two hour a week course (over seven sessions) that has a heavy reading, class participation, and writing component. Our goal will be to put this up on the web as well to provide content (and potentially interaction) to a much wider community.
Following is a first draft of a syllabus. I’m looking for two types of feedback: (1) comments on the syllabus and (2) suggestions for web services to use to package this content up for broader distribution.
This one credit course, available to first year law students in their second semester as well as a select number of graduate students in the Business School students and School of Engineering, will explore a set of cutting edge questions around entrepreneurship. Students in the class will be required to write a ten page paper as well as participate actively in the course (including on a class blog). Since class participation is a core part of the course (counting for 20% of the grade, with the other 80% based on the paper), any missed class must be made up by writing a 1 page reaction paper.
1. Being an Entrepreneur. Reading: The Start-up of You: Adapt to the Future, Invest in Yourself, and Transform Your Career (Hoffman, Casnocha). Five Minds for the Future (Gardner).
2. Leadership and What Makes a Great Founding Team. Reading: Do More Faster: TechStars Lessons to Accelerate Your Startup: (Cohen, Feld). Leadership Lessons From the Shackleton Expedition (Koehn).
3. Building and Scaling A Business. Reading: The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses (Ries).
4. Entrepreneurial Communities. Reading: Startup Communities: Creating A Great Entrepreneurial Ecosystem In Your City (Feld). Kauffman Index of Entrepreneurial Activity 1996 – 2010.
5. Financing Entrepreneurial Companies. Reading: Venture Deals: How To Be Smarter Than Your Lawyer (Mendelson, Feld). Improving Access to Capital for High-Growth Companies (Department of Commerce – National Advisory Council on Innovation and Entrepreneurship)
6. Entrepreneurial Leadership in Government. Reading: Alfred Kahn As A Case Study of A Political Entrepreneur (Weiser). Start-up Nation: The Story of Israel’s Economic Miracle (Senor and Singer).
7. Entrepreneurship and Innovation Policy: Reading: Accelerating Energy Innovation: Insights from Multiple Sectors (Henderson, Newell).
StartUp: Learning Entrepreneurism – New Course at CU Boulder Digital Works
As entrepreneurship in Boulder continues to grow, Boulder Digital Works is offering a new course with Robert Reich (co-founder of OpenSpace, OneRiot, and the Boulder New Tech Meetup) called StartUp: Learning Entrepreneurism. This is the first BDW course open to anyone in the Boulder community to join BDW’s graduate students.
StartUp begins with the premise that entrepreneurship, rather than being the result of genius and magic, can be learned. StartUp takes the students through the actual conception, development, and launch of an original product or service during the semester. This course puts students inside the mind of the entrepreneur and immerses them in the daily leadership and innovation challenges of the startup environment. While its primary focus is the startup and what it demands, this course is also a clinic in thinking, decision making, and mental agility that will benefit any area of business – not just startups.
Download detailed information and an application for StartUp: Learning Entrepreneurism if you are interested.
Many of the companies that we invest in are the leaders in their respective markets. Often they create the market. Sometimes they appear out of no where and dominate. And sometimes they are in a brutal fight every day with another company or two for market leadership. We don’t care which case it is – we just want to be investors in the companies that are #1 or #2 (and have a chance to be #1) in their markets.
Jack Welch taught us the power of being #1 or #2 in your market many years ago and the VC business reinforces that over and over and over again with relative exit values. The VC cliche is that the market leader gets 50% of the value, #2 gets 25% of the value, #3 gets 10% of the value, and #4 through #263 get the remaining 15%. While these numbers move around (I’ve been in situations where #1 got 90% and in situations where I got lucky and #17 got 25%) they are directionally correct.
Whenever a market leader I’m an investor in is threatened by a competitor, I’ve encouraged them to call a Code Red like they do on ER. In a Code Red situation, every who can is focused on the threat for a short, intense period of time. If the company is less than 10 people, this is easy. But if it is 50 people or more, it’s really hard. And – at 1000+ people, it’s a magic trick to get it right.
When the CEO calls a Code Red, there is often a negative reaction from parts of the organization ranging from sales, development, to operations. Often some people in the organization don’t believe or understand the need for a Code Red. Other times they’ve been through so many unnecessary fire drills in other companies that they don’t believe the Code Red is real. They simply don’t see the same threat the CEO sees. Or they feel undermined by the CEO.
Part of the CEO’s job is to call a Code Red correctly. If you call it every other week, it’s not a Code Red, it’s shitty management and leadership. If you never call it, you’ll one day find yourself no longer the market leader. There’s no right tempo – it’s random, but as with many things you’ll know the moment when you encounter it.
A Code Red can’t last forever. It has to be incredibly focused on the specific threat you trying to address. It has to be clearly communicated across the entire company. It has to be quantitative – once you’ve effectively neutralized the threat, the Code Red is over. This might be in an hour, a day, a week, or a month. But if it lasts much longer than a month, something else is wrong.
I know some people who like to use DEFCON 1 instead of Code Red. I don’t – it’s too nuanced – who cares about the difference between DEFCON 3 and DEFCON 1 – you are in a critical situation. Make it binary.
I know some managers who hate the idea of ever being in a Code Red situation. This is unrealistic view to take in a startup or fast growing company. Once you are a visible leader, people will be gunning for you, imitating you, or coming out with products that disrupt your business. Welcome to being a market leader – own it and when a Code Red occurs use it to propel your business into an even more dominant leadership position to build on. And – for every employee in a company having a Code Red – take it seriously and crush it – the rewards will be quick and obvious and the downside of not dealing with it sucks.
On my run yesterday in Central Park, I was thinking about the characteristics of some of my favorite companies. Suddenly a phrase popped into my head about what ties all of these companies together – they are the silent killers.
When I look at the Foundry Group portfolio, we’ve got a bunch of them in it. They don’t spend a lot of time trying to get written up in TechCrunch. They often aren’t based in the bay area. Their CEO’s don’t run around bloviating about what they are going to do some day.
They just do it. And suddenly they are $10 million, or $20 million, or even $50 million revenue companies. Before anyone has really noticed. Without any real competition. They are the unambiguous and dominant market leader.
Sure – their customers and partners know who they are. Other entrepreneurs, especially ones who work with them in some way know who they are. Smart technical folks know who they are. And the geographic community that they are in know who they are since they are often the leaders of their startup communities.
But they sneak up on you. They don’t waste their time hyping themselves. They don’t run around trying to get VCs interested in what they are doing. Rather, they just do. Their twitter streams are filled with substantive stuff. Their blogs are about their product and how it is used. Their people are everywhere they need to be, and spend almost no time being places they don’t need to be.
These are the silent killers. And I love them.