March 15th, 2012 → 2:05 pm @ Norman
Most weeks in the company-building game I have ups and downs, and this week has also seen both highs and lows. I am always mildly surprised by the intensity of my reaction to the low points. Even though I’ve preached to young entrepreneurs for years about the need to accept a great deal of failure and rejection on the path to success, and even though I know from decades of experience that it’s the truth, I still find both failure and rejection inordinately painful. (more…)
February 16th, 2012 → 10:24 am @ Norman
Often technology entrepreneurs can choose between attempting to build a larger business, probably requiring external capital and a significant team of people, or focusing on a smaller opportunity which is easily controlled but typically has less upside. I was reminded of this recently when a software developer came to visit me. He’d enjoyed a successful exit after a typically agonising company-building process, and had done the usual post-exit activities (paid the mortgage off, traveled, bought a nice car, and chilled out). Now he was ready to go again. (more…)
January 11th, 2012 → 11:13 am @ Norman
I bought a car for my children to use to practise driving. My daughter smashed in the rear, then the right hand side. When she came home with the left side stove in, I asked her what had happened. She snorted with 17 year-old derision. “They put the pillars in the mall carparks in such stupid places!”
She had, once more, been cutting corners. She was a reasonably capable driver, and was fine on the open road. When she got off the road, she immediately forgot about careful driving and began to focus on her next objective (usually buying stuff or meeting her friends at the mall). (more…)
December 2nd, 2011 → 9:49 am @ Norman
I’m in the office of a start-up company. The founder is sitting at one of the two desks. His local Sales Manager is at the other. I am perched on a chair with my laptop open. All three of us have our heads down, as we focus on our keyboards. We’re waiting for team members from the West Coast of the US to Skype in so we can prepare for client meetings tomorrow.
We’re all multi-tasking; fielding emails, throwing comments back and forth about the upcoming meetings, and coordinating our diaries. When the Americans join us, we’ll do more of the same, although we’ll primarily focus on establishing the client meeting goals.
I’ve been in business since before the internet, and I relish the speed with which we can now get things done. But I also see how quickly we can now make mistakes. Tomorrow’s client meeting almost ‘turned to custard’ yesterday. As we prepared for the meeting, along with the client, emails were sprayed to and fro. The leader of the client’s team drew some conclusions about what we were offering, and suddenly his emails became laced with concerns… “Could we really capture the data he wanted?”, “Did we really understand what he was after?” We were quickly on the back foot. A new round of emails and phone calls calmed his concerns, but I have to concede that we created the problem by sloppy communication. We’ve had similar problems with internal communication in the past, again a factor of speed. We’re moving fast, and paying a price for that.
Yet I look at the gains we’re making as well. With a very small team we are making great strides in product development, market understanding, and sales. Our business has a long sales cycle, yet our high speed of action means we can operate for an extended period with a small team, which translates to a small budget. The investors love that. Clearly there’s a balance between speed and effectiveness. Too fast, and there will be too many mistakes to be corrected, and strategic opportunities will be overlooked. Too slow and we’ll burn a lot more money to get where we need to be. But the cash cost of slowing down is my lesser concern. I think back to past start-ups I’ve worked on. All the successful ones had high energy and a high pace. For the others, a slowing pace was often the first sign that we were headed for failure.
Today our energy levels are high, and they have remained high all year. It’s easier to drive hard towards our goals than to plod slowly toward them. For that reason alone, I prefer a high-speed start-up building process.
November 11th, 2011 → 8:39 am @ Norman
We all love stories of people with boundless energy who take on the established order, triumphing against the odds. The story of Erin Brokovich stirred us because she was such a person, and it reinforced the notion that you can start off knowing little, learn as you go, and win your day in court.
That same enthusiasm for the untrained, naive underdog pervades the business start-up industry. It’s somehow more thrilling to see a high-school dropout doing well than to see a person with a business degree and ten years industry experience succeeding. That’s natural because all good sagas include overcoming adversity as part of the story… the bigger the adversity, the better the story.
But I don’t build companies to create epic stories. I’d rather see my companies march to success on predictable paths, with highly skilled and experienced teams. There’s plenty of drama in the process of starting a business, and I don’t seek out more.
When I look at the successful start-ups I’ve been involved with, the most successful all had experienced teams, and usually had experienced founders. The failures were overweighted with naivete and lack of technical or business qualification.
One founder explained very carefully to me why youth was a primary requirement in his Games development company. He said they were more creative, and weren’t constrained by the way things had been done before. I think he’d been watching too many televised sagas about untrained business founders; stories which often ignored the boringly experienced people who provided the ‘engine room’ of the company. He went broke… but I guess he gained some experience at his investors’ expense! So, much as I enjoy the Brokovich effect in stories, I’ll continue to stack my companies with as many experienced team members as possible. Not great TV, but good for the bank balance.
October 26th, 2011 → 4:32 pm @ Norman
My mother is dying. I’m in an airport lounge typing a blog between flights as I head to her death-bed. A couple of days ago she said to me, “I don’t know why I bother.” She was referring to how tired she was of being alive, yet incapacitated. And I guess she’s now decided not to bother any more. (more…)
October 10th, 2011 → 1:07 pm @ Norman
David the tiler is laying new floor tiles in my kitchen. His wife, Frances, is crouched outside the back door cutting the tiles. Steve the gardener is trimming bushes in the back garden. It’s cold and windy, and I feel sorry for Frances and Steve. Their miserable work environment reminds me of a time many years ago when I was a Lineman, sitting atop the cross-arms of poles on bitterly cold mornings, and trying to keep my fingers warm as I worked on the wires.
Yesterday, David and I had a coffee break together. He told me that he’d thought about expanding his tiling business but didn’t want the added risk that came from employing staff. Steve also prefers to keep his business a ‘one-man-band’. In their efforts to minimise their hassle and risk Steve, David and Frances have become dependent on other people taking risk… and succeeding. This year the farmers are doing well and, thankfully, spending. Without the risk-takers… the farmers, manufacturers, and entrepreneurs, times would be very tough for David, Frances, and Steve.
It’s appropriate that risk-takers, including entrepreneurs have the opportunity to earn a lot of money from their efforts. But it’s more than ‘appropriate’… it’s also necessary. Without the ‘excess profits’ (to use the economic term) from entrepreneurial activity few people would bother taking all the risk and enduring the hassles of building innovative businesses. And without the successful entrepreneurs, there would be less work for David, Frances, Steve, and the many thousands of other people who benefit from discretionary spending by value-creators.
There’s certainly nothing novel in the idea that the excess wealth created by entrepreneurs ‘trickles’ through the economy. But I was reminded of it again today. If I was still a Lineman, then David, Frances, and Steve would be worse off… and I’d have cold fingers.
September 26th, 2011 → 10:20 am @ Norman
My wife and I sat in the conservatory this afternoon, enjoying a cup of coffee and watching the light sparkling on the water of the harbour beside which our house is nestled.
She asked me about an entrepreneur I am working with… what was he like? I probed her questions to understand what she was really asking. She had seen the drive, energy, persistence and other desirable behaviours shown by the entrepreneur; but she also saw his weaknesses. He sometimes seemed out of synch with other people’s ways of seeing the world, leading to communications problems and to people distrusting him. He was impatient and had unrealistically high expectations of other people. He talked of what could be as though it already was… did that verge on lying?
I reminded her that entrepreneurs are typically an unbalanced bunch. Nobody can be everything to everybody, and it’s unrealistic to expect someone as focused and driven as a high-growth entrepreneur to be ‘normal’. Nor would many ‘normal’ qualities be of much use: Great patience, and acceptance of the frailties of others are admirable traits in school teachers, but they won’t get a high-performing team assembled and able to deliver dynamically developed products with inadequate resources and against near impossible deadlines.
She accepted my answer, but I felt she was waiting for more. So I said, “Take me for example…” Her reaction showed me that I’d hit on what she was really thinking about, so I continued, “…. Look at the way Stephen [name changed] behaved when I was building company X. He was afraid that he’d be held responsible for any failure, so his focus was on avoiding blame, and ass-covering. I was focused on sales, and on building the team. It was inevitable that he’d see me as a cowboy who wanted to drive forward regardless of the risks, while I saw him as an anchor slowing us down. So friction was inevitable [actually, it came closer to open warfare].
She thought about this and nodded… so I ploughed on…”Now which one of us was normal? Stephen was making deep pronouncements about managing risk, was demanding endless reports, and refused to make decisions until he was very sure he was right…. pretty normal behaviour. I was making decisions on the fly, with less supporting information than I would have liked, was taking calculated risks, and was asking the team to trust that my plan (being developed as we went) was going to work… not very ‘normal’ behaviour.
Entrepreneurs aren’t normal… no wonder that even our wives don’t understand us.
August 25th, 2011 → 10:44 pm @ Norman
Several of the companies I’ve invested in have missed their sales targets and are chasing follow-on funding right now. The Boards have different problems and different approaches to their situation:
Company A has failed to get its product sold in the market, and lost the confidence of some investors. The Board still believes in the business’s future, and has explained to shareholders that they have a new strategy for entering the market. Still, the shares are being offered at a heavily discounted price, reflecting the company’s failure to date.
Company B also got into trouble in the market. In their case, some poor management, compounded by a large European partner going bankrupt left them out of cash and without a significant sale. The Board hesitated to ask investors for more money to back a relaunch. Instead, directors worked for many months to find a new way to leverage the company’s intellectual property… and removed the managers. They now have a new story for investors but have had to heavily discount the shares for the new round.
Company C lost both of the two main market opportunities they were chasing. In each case the deals were lost at the end of a long sales cycle. But, unlike Companies A and B, Company C had continued to develop an impressive sales pipeline, lodged extra patents, built a strong team, and achieved a surprisingly good brand position (for a startup with no sales!).
While Companies A and B are begging investors for more money, Company C is able to say, “Well, we missed our sales goal (and are hence out of cash), but look how strongly positioned we are!” Company C is delayed, but still on track, and investors will still be asked to fund at the rate of the previous round. (more…)
July 15th, 2011 → 12:40 pm @ Norman
Where is Sir Lancelot when you need him? Where’s the organisational champion who’s going to drag my company’s product into his business…
I’ve just come from a meeting with a man who controls a large national budget, and also with a driver of national policy. They’re such important executives that I’d even pulled out my suit and tie for the occasion (not something I do lightly)! I looked just like any salesman, and even had powerpoint slides. It was a two-on-two meeting, with us being there at their invitation… all good so far… and it got better. (more…)