Insights of the Startup

"The Invisible Gorilla" And Multitasking

Many of us think we can multitask. We're proud of how many things we can juggle at once. But the reality is most of us are not good at multitasking. According to a study at the University of Utah, only 2.5% of people can multitask effectively. So what are we doing when we juggle many tasks at once? Usually messing up several of them, or at least performing them sub-optimally. Switching tasks requires transition time - time to get back into a specific task and mentally release the previous task. In essence, multitasking is a highly inefficient technique.

In the most famous study about focus and intensity called "The Invisible Gorilla", Harvard researchers created a video that requires viewers to focus on two groups of people passing a basketball and task the viewer with counting the passes of one group. Most viewers can successfully follow the action and arrive at the correct count, but miss something remarkable - a gorilla walking through the action. Viewers are so preoccupied with the task at hand, they miss something right in front of them. Why? They are focused on a singular task. The more focused they are, the less they can manage or process outside the task.

In a startup, you will be tempted to do too many things. If you succumb to this urge, the result is usually failure on multiple fronts. Yes, you will need to do many tasks and activities, but try to carve out discreet time for each task rather than trying to do them at the same time. And focus. When you are working on a problem or activity, give it undivided attention for the duration of allotted time. You will be amazed at your productivity and quality of your results.

In many respects, this concept of singular focus is at the core of another popular methodology described in the Lean Startup by Eric Reis. Eric is a brilliant person who has identified and perfected a very different, counter-intuitive method for improving startup success. One of the concepts is to focus on a key assumption, test it quickly, and refine or pivot. You cannot test multiple assumptions simultaneously and properly learn. And if you try, you will miss "The Invisible Gorilla" - you will miss the obvious. Do one thing, do it right, and it will feel like you are the best multitasker in the world based on how much you will get accomplished.

VCs Get Disintermediated

The problem with being an entrepreneur is that so often your future rides on the whim of venture capitalists. Yes - they are called many things, like "vulture capitalists", "arrogant bastards", or "presidential candidate". But they also have been known to be "partners", "facilitators", and "financial backers" when you match your great idea and execution with similar minded VCs.

However, the butterfly in flapping its wings and a storm is brewing. By now, many of you have heard of Kickstarter and other smaller, but similar competitors. These sites offer an opportunity to donate money to a person or company that has an idea or project that is appealing. A minimum funding threshold is set and if the initiating entity hits or exceeds the target raise, the funds are released and the project commences.

The idea sounds interesting, but why would anyone just give money without equity? For many of the same reasons that people donate to charities - it's interesting to them, they believe in it and want to be involved in some way. Also there are the perks. Often, successful projects offer freebies as a perk - discounted products or other loot. Think of it as pre-selling your inventory to get both early adopters and an influx of development capital. This was the case with Pebble, a smart watch. The project looked to raise $100,000. It raised $1 million in 28 hours. As of this post, the project has raised over $3.2 million with 32 days to go. Yes, they will owe lots of watches, but WOW! This is not the only project with outstanding success. And did I mention no VC firm was interested before the project?

Hmm. So if high tech can now go direct to the consumers, and what they have is truly interesting, why give up equity, control, and beat yourself senseless to beg an audience with venture firms? Is it possible VC firms are themselves being disinter-mediated, the way they made billions on portfolio companies that did the same thing to bricks and mortar retailers?

VC firms are in no danger of going aware any time soon, but entrepreneurs now have some new funding choices that are proving successful. But the butterfly is beating its wings. And a storm is coming.

 

Simplicity - the Best Kind of Focus

It is easy to get lost is complexity - business plans with too many moving parts, external dependencies, radical new technologies. What is refreshing is simplicity. An idea my eight year can get excited about. A business plan on the back of a napkin. An elevator pitch that leaves time for chit chat on the way down.

I was once again struck by the beauty of simplicity in a recent Wall Street Journal article on the Dollar Shave Club. In the ever-escalating razor blade wars, Michael Dubin returns to simplicity: understand your target market (men), sell a staple (razors and blades) as a recurring service, give a few basic options, and instill your marketing with humor appropriate for your market.

Why is simplicity nice for the entrepreneur? In a word - focus. The less you have to think about, the more you focus on those few items. And focus is one of the litmus tests for probably success. With focus, you have a chance; without focus, you lose.

 

Choosing Employees for Today and Tomorrow

You're growing, experiencing success and decide the timing is right to hire additional people. Every employee in early stage companies is critical, so truly knowing what you need and why you are hiring that person is critical. One of the first questions you may ask after determining to hire is "Do I need a job-ready candidate?" In recruiter speak, a job-ready candidate is a person who can step in on day one with little or no training and successfully do the job. On the surface, the obvious answer is "yes", everyone should be job-ready. But as you weigh candidates, choose one not that not only meets your needs today, but that can adapt for tomorrow.

Job-ready candidates typically have a very specific match to skills and experience you identified as critical to the job. They often can be more narrow and deep in experience, rather than possessing broad experience, where success across many disciplines and industries indicate the ability to adapt and quickly learn on-the-job. Ask yourself some fundamental questions about the stage of maturity of your business model. Have you achieved traction with your core customer segment? Is your development plan clearly articulated or are there many questions remaining on approach, technology and tools? Are you already committed to a particular sales model, i.e. - direct sales, channel distribution or market through social media? If the answers show the business model is still being worked out, proven and perfected, adaptiveness may trump being job-ready.

That knowledge can steer you to a candidate with broad experiences (lots of technology and dev methodologies for technical people, lots of industry and market segments for business related people). On the other hand, when entering a rapid growth phase where you seek to scale quickly without much individual management oversight, you may be better off with a job-ready person.

Let's compare this approach to one of the most successful companies in the world. GE perfected a system of creating management and leaders with very broad experience, Generating leaders GE style. The most promising employees are purposefully moved throughout the company to develop broad experience bases and identify those who can adapt quickly and be successful anywhere. The ability to adapt and be successful despite a lack of prior specific skills or industry experience is highly prized. Why? Business changes all the time, especially in early stage companies, and you need to build an organization that can anticipate change and adjust in real time. Someone who is job-ready, but lacks the ability to adapt can very quickly become a liability.

People can be both job-ready and adaptive, either proven through experience or possessing the right characteristics. Look for people that not only meet the requirements of the job today, but that can adapt to your business needs tomorrow. For me, I'll take adaptive people who have shown success and initiative in all aspects of their lives.

Time Management for Leaders

Every entrepreneur starts out with an idea and moves heaven and earth to make that idea into a reality. In the early days, leadership can be measured by how well a person thinks, plans and executes. Once some progress has been made, a leader shifts to spend a great deal of time on a fourth activity - managing: people, projects, time lines, fires, finances, and more.

Though an important part of what's required of a leader, managing really is a separate class of expertise from leading. This raises the question, "How should leaders spend their time?" This is especially relevant for leaders in an early stage business that are creating something, not optimizing and protecting an existing business.

A good place to start is examining some facts. A Wall Street Journal article, "Where's the Boss? Trapped in a Meeting." cited research on CEO behavior and time utilization, finding that the typical CEO spends less than 11% working alone. Examine yourself - when do you do your best thinking - creatively solving problems, looking after the future direction of the business, forming seeds of strategic ideas? These types of activities garnered 100% of your time in the earliest stages of a business. Over time you replace your thinking time with necessary busy work, managing the day to day operations of running a company - a worthy activity, but not necessarily the best use of your time.

You should start to see a problem here. When you don't spend enough time thinking, planning and executing, your business suffers. Granted, planning and execution occur through managing your staff - your leverage point within a company, but fundamentally you need to do that most powerful activity - the one that drove you to create a business in the first place - thinking.

Thinking is one of those activities that usually requires focus away from the myriad of distraction that happen all the time - meetings, fighting fires, public engagements, etc... Everyone has ways and places that they think best - in total quiet, in the dead of night, at the coffee shop, or swooshing down a ski run. Whatever your preference, take time to think. Your  business will love you for it.

Success Requires Focus And Experimentation, Part 2

Focus and Experimentation - two seemingly opposite concepts. In part one, I looked at focus. Part two looks at experimentation, a concept that may appear the antithesis of focus, but it's not.

Early stage businesses, particularly technology businesses, don't have all the answers. Often they have very few answers as they may have a technology looking for a problem. Attacking a known, existing market opportunity is far more viable than creating a new market in most cases. But even if you see a well-defined market, entering and serving that market successfully has many unexpected challenges. The way to discover solutions,the path to success and best approaches is to experiment.

Experimentation takes many forms, ranging from formal A/B testing to just plain trying something different. In my current company, we automate immigration forms filling. We have a well-defined, very large market opportunity. The current way customers are served is monetarily expensive, risky and filled with bad results at a high personal cost (i.e. - deportation, separation from family). Despite bringing the holy trinity of business innovation - an order of magnitude improvement in all aspects of "better, faster, cheaper" - customers did not immediately pound on our door to get our solution.

Starting with a known, defined market that was spending billions annually helped us feel comfortable that we would be successful if we could figure out and overcome market adoption issues. We talked with our prospective customers at length - this is your best kind of market research. You should always roll up your sleeves and engage your customers out in the market. Customers will tell you almost everything you need to know - just engage, listen and probe. What we found pointed us at the root of the problem. It gave us focus. But to overcome the core issue, we needed experimentation to see what would work to best solve the problem.

Experimentation comes in many forms. Try different market awareness approaches (radio, supermarket newspapers, bus stop signs, ...). Try different messages. Purchase different ad words. Measure the results. Even if you succeed in solving the main issues your company faces, (for example, overcoming deeply ingrained customer fears), you will still want to foster a culture of experimentation to further refine and optimize parts of your product or business. Heidi Grant Halvorson, Ph.D, touches on the concept of "focus on getting better, rather than being good" in her article, "9 Things Successful People Do Differently", published in the Harvard Business Review. Experimentation is one of the keys to continuously getting better.

Experimentation and focus go hand in hand. Focus keeps our efforts on the right activities rather than shooting blindly in the dark or trying to do too many things at once. Experimentation allows us to solve or continuously improve the things we focus on. When used together effectively, it allows a young company to be nimble and adaptive to however a new market develops. Focus and experimentation ultimately allows us to reach success milestones far faster than alternatives, which can make all the difference in being the 1 in 10 that succeed, versus joining the crowd of failed also-rans.

Success Requires Focus And Experimentation, Part 1

Focus and Experimentation - two seemingly opposite concepts. However, both are required to slingshot your business through the gauntlet of early stage challenges.In some ways, these two concepts are the yin and yang of advice; different, but both fit together nicely. As you go from vision to market entry, you will hear both these concepts discussed by your Board, mentors, and anyone giving you advise.

Focus is the more obvious one and the concept that gets more air time. Why focus? It brings maximum leverage against the problems of starting a business, allowing you to prove your business or some part of it.

When you are looking for early traction, you are opportunistic and will take business wherever and however you can. Every opportunity can look like a new shiny penny, serving to take your eyes off the market you intended to go after. This is not necessarily bad as we will discuss in the experimentation section, but carries certain risks. Your goal is to evaluate if going after the shiny penny gains you anything. Is it worth spreading your focus over a new area?

Let's look at a few examples of de-focusing and the potential impacts.

1. New customer with custom requirements. This is a highly likely scenario if you are selling a software solution or service. The potential customer tells you it will buy your product if you make some additions or customizations. Sometimes you can get them to even pay you for these. The question is whether you gain enough from this exercise, in terms of experience, product robustness, revenue or working capital, or market research to make it worth the opportunity cost of what you could have been doing. Remember that supporting the custom needs of a customer can remove your focus from what the large percentage of your target market needs. It absorbs your time and resources, and ultimately needs to be supported, further depleting your resources. There is an upside, particularly if this is truly one of your first customers or has the potential to be a key customer partner, delivering revenue upside, market intelligence, and an anchor in the market. If it makes sense do it, but know that this is can be the single biggest trap companies fall into. Do it for too many companies and you either turn into a consulting shop or go out of business.
   
   
2. New market segment. A different kind of shiny penny. Each market segment, by definition, has different requirements and attributes. Otherwise it wouldn't be new. To serve a new market requires devoting time and resources. Make sure you either have the extra time and resources, can afford to hire them, or are willing to stop focusing on a different segment. You may be able to sell the same product to different segments, but if you research it, you will probably learn that there are different requirements which require, at a minimum, new features.
   
   In my current company, we are fortunate to have multiple segments within our core market. We developed three different product solutions, all based on the same SaaS platform, to address the differences in the segments. There are many similarities, but ultimately, each solution requires unique support: product development, testing, marketing programs, support processes, training materials - the list goes on and on. Make sure your company has the bandwidth to handle multiple markets, or be prepared to make some hard choices to regain your focus. This is something that allows your company to be successful.
   
   
3. New strategic partner. What makes them strategic? How long before the value of the partnership can be realized? What are the risks of putting some (or all) of your eggs in this basket? Strategic partners can be fantastic. They also carry a heavy risk of taking your focus away from other activities - activities you are fully in control of. Strategic partnerships usually move at the pace of the bigger partner - slower than most start-ups would like or can afford. Strategic partnerships are also highly political. They usually impact many parties at the partner and become lightning rods for political wrangling. This takes a seemingly straightforward partnership and turns it into an uncontrollable beast that devours your company as your hope to reach the pile of gold at the end of the rainbow before your funding runs out.

As the Y wing squadron leader says in Star Wars, "Stay on target" or you will get destroyed by the distractions.

Focus on advancing your company, proving the concept and showing there is a market. Once you do that, your attention turns to execution and growth, two areas much easier to apply and maintain focus.

Stay tuned for Part 2 of this article, which switches the focus to experimentation. Despite what may initially appear as conflicts to focus, experimentation allows you to remain focused and get to success quicker.

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Harry Weller makes some interesting points. Remember that you are the one who got your company to this point. However, at some point, 98% of start-up CEOs take another role or move on --- usually it is in the best interest of the company and the value of your stock. Managing the daily execution of a growing business is a very different skill. The gratification from that role often appeals to a different kind of person than an entrepreneur. Don't leave too early as you are the driver - the passion in your vision. But don't stay too long either, or you risk having your emotions cloud your business decisions.

Your Board Should Be One of Your Best Assets

"I wish I never invested in your company." Ouch! Those words hurt as I talked with an investor and Board of Advisor member. After offering him an investment refund, I discussed the situation with him. I said, "I couldn't get what I needed from your company. What would you have done?" He quite simply said, "I would have asked me for advice."

(Note - this person invested and I agreed to use his company's technology in our solution. A discussion for another time - "Caution - Taking investment with strings attached").

Once your company secures professional money, whether from venture sources or professional angels (not family and friends), you will most likely have a Board of Directors, and often a less formal Board of Advisors, to help watch their investment, provide guidance and deliver unique value, such as access to their networks or strength in some aspect of business or technology. Too often, the relationship either deteriorates into one of uselessness, antagonism or it never achieves its potential value. There are many reason, usually stemming from the CEO's failure to manage expectations and to strike a healthy balance between engagement, advice and oversight.

As the CEO, particularly a first time CEO, the Boards should represent an incredible opportunity to learn and interact with people who have seen it, and often have done it, many times before. A strong Board, properly managed and engaged, can help you avoid pitfalls or figure out unusual or challenging dilemmas. These are people I once read that you are gladly willing to take out to dinner and pay just for the opportunity to interact with them. If you don't have that kind of relationship, if you dread Board meetings, you must ask yourself why.

• Are you afraid of them? Don't be - they can be your ally, even during tough times.
• Have you failed to keep them in the loop all along, especially during tough phases of the business?
• Have you engaged them for help in areas in which they can deliver unique value?

Remember that all of these Board members are there because you either asked them to be there or because they invested money. In either case, they are there because of you - they believe in you and the business you are creating. They get excited and energized just like anyone else. If you ask for their help and they can add value, usually they will help. Even if they can't help figure out a solution, at least you've involved them, rather than marginalized them.

Don't assume anything. Just involve them and many possibilities open before you.

Study: What Recruiters Want Today In Executive Candidates

Study: What Recruiters Want Today In Executive Candidates

Recruiters look for these attributes because the are required to succeed at a high level in modern, border-less business. Invest personal time and effort cultivating these qualities.