lessons learned
“Acting Like a Startup”
Over the years, I have heard comments like, “We operate like a startup,” “We act like a startup,” and “We are an overnight success that was 10 years in the making.” These statements are often euphemisms for “We are small and not growing as quickly as we would like.”
There are numerous estimates of startups in their first few years. One of the best descriptions I have found is from Failory, but Investopedia and LendingTree have similar but differing take on the statistics and root causes. All three articles linked to are worth reading. The net result is that the outcome of failure is much greater than success, especially over time. So, “acting like a startup” is not necessarily good, even when true. You want to act like a successful startup!
Understanding the data and various causes for success and failure are great inputs to business plans. I have been a principal with successful startups, both early employees and founders. Understanding the data and various causes for success and failure are significant inputs to business plans focused on long-term success. As a Founder, there are a few points that I believe to be key to success:
- You have specific expertise that is in demand and would be valuable to an identifiable number of prospective customers. How would those customers use those skills, and how would they quantify the value? That understanding provides focus on what to sell and to whom.
- A detailed understanding of the market and key players is needed to hone in on a niche to succeed.
- Understand your strengths and weaknesses, then hire the most intelligent and ambitious people who complement your weaknesses and strengths.
- Understand how to reach those potential customers and the messaging you believe will compel them. Then, find a way to test and refine those assumptions as necessary. Marketing and Lead Generation are very important.
- Have a plan for delivering on whatever you sell before you get your first sale. A startup needs to develop its track record of success, beginning with its first sale.
- Cash flow is king. It is far too easy to run out of money while looking at an excellent balance sheet because of receivables. Understand what matters and why.
- Founders need to understand the administrative side of a business – especially the financial, legal (especially contract law), insurance, and taxes. Find experts to validate your approach and fill in knowledge gaps.
- Consistency leads to repeatable success. You standardize, optimize, and automate everything possible. Wasted time and effort become wasted opportunities.
- Finally, there needs to be sufficient cash on hand to fund the time it takes to find and close your first deals, deliver and invoice the work, and then receive your first payments. That could easily be a 3-6 month period.
Those are the foundational items that are reasonably tangible. What is not as concrete but equally as important are:
- Having or developing the ability to spot trends and identify gaps that could become opportunities for your business.
- An agile mindset allows you to pivot your offerings or approach to refine your business model and hone in on that successful niche for your business.
- Foster a sense of innovation within your business. Always look for opportunities to deliver a better product or service, improve the efficiency and effectiveness of your business, and create intellectual property (IP) that adds long-term value.
- Focus on being the best and building a brand that helps differentiate you from your competition.
- Become a Leader, Not a Manager. Create your vision of success, set expectations for each person and team, and help eliminate roadblocks to their success. Trust your team to help you grow and replace members quickly if it becomes clear they are not a good fit.
Steve Jobs once said, “It doesn’t make sense to hire smart people and then tell them what to do; we hire smart people so they can tell us what to do.”
Winning is hard, so focus on the journey. Making your customers’ lives easier and allowing your employees to be creative while doing something they are proud of will lead you to your destination. But when things start going well, don’t sit back and convince yourself you are successful. Instead, continue to focus on ways to improve and grow.
Success means different things to different people, but longevity, growth, profitability, and some form of contributing to the greater good should be dimensions of success for any vision.
Never Panic!
Panic is not a good problem-solving tool, regardless of your position or role. It is especially bad when you are in charge of people or brought in for your expertise. Panic leads to a myopic view of the problem, hindering creativity.
The point in my career when this became readily apparent was when I was working for a small software company. We had a new product (Warehouse Management System) and were launching our third deployment. This one was more complicated than the rest because it was for a pharmaceutical company. In addition to requirements like refrigeration and lot control, there was a mix of FDA-controlled items requiring various forms of auditing and security and storage areas significantly smaller than previous installations. It was a challenge, to be sure.
A critical component, “Location Search,” failed during this implementation. About 10-12 people were in the “war room” when my boss, the VP of Development, began to panic. He was extremely talented and normally did an excellent job, but his reaction negatively affected the others in the room. The mood quickly worsened.
I jumped in and took over because I did not want to be stuck there all weekend and mostly because I wanted this implementation to succeed. I asked my boss to go out and get a bunch of pizzas. Next, I organized a short meeting to review what we knew and what was different from our prior tests and asked for speculation about the root cause of this problem. The team came up with two potential causes and one potential workaround. Everyone was organized into three teams, and we began attacking each item independently and in parallel.
We identified the root cause, which led to an ideal fix a few days later and a workaround that allowed us to finish the user acceptance testing and go live the following day. A change in mindset fostered the collaboration and problem-solving needed to move forward.
But this isn’t just limited to groups. I was a consultant at a large insurance company on a team redesigning their Risk Management system. We were using new software and wanted to be sure that the proper environment variables were set during the Unix login process for this new system. I volunteered to create an external function executed as part of the login process. Trying to maintain clean code, I had an “exit” at the end of the function. It worked well during testing, but once it was placed into production, the function immediately logged people out as they attempted to log into the system.
As you can imagine, I had a sinking feeling in my gut. How could I have missed this? This was a newer system deployed just for this risk management application, so no other privileged users were logged in at the time. Then, I remembered reading about a Unix “worm” that used FTP to infiltrate systems. The article stated that FTP bypassed the standard login process. This allowed me to FTP into the system and then delete the offending function. In less than 5 minutes, everything was back to normal.
A related lesson learned was to make key people aware of what happened, noting that the problem had been resolved and that there was no lasting damage. Hiding mistakes kills careers. Then, we created a “Lessons Learned” log, with this as the first entry, to foster the idea of sharing mistakes to avoid them in the future. Understanding that mistakes can happen to anyone is a good way to get people to plan better and keep them from panicking when problems occur.
Staying calm and focused on resolving the problem is a much better approach than worrying about blame and the implications of those actions. And most people appreciate the honesty.
As the novelist James Lane Allen stated, “Adversity does not build character; it reveals it.”
Are you Thinking About Starting a Business?
The last post on Starting a Business was popular, so I thought I would share a key lesson learned and then provide links to previous posts that will provide insights as you launch your own business. If you have any questions, just post them as comments; I would happily reply.
The COVID-19 pandemic has created a great deal of uncertainty and opportunity. For many, now is the ideal time to explore their dream of starting a business and jumping into entrepreneurship. That can be exciting, fun, stressful, financially rewarding, and financially challenging, all within the same short period of time.
Being prepared for that roller coaster ride and having the ability and strength to continue pushing forward is important. Something to understand is that “Things don’t happen to you. They are the Direct Result of your own Actions and Inactions.” That may sound harsh, but here is a prime example:
When I was closing my consulting business down, I trusted my Accountant and Payroll company to handle all of the required Federal, Wisconsin, Ohio, and Colorado filings – something they stated they would handle, and I accepted at face value. Both companies had done a great job before, so why would I expect any less this time?
About nine months later, I started receiving letters from Ohio and Colorado about filings due, so I forwarded them to the Accountant and Payroll company. I thought this was “old business” and was being handled, plus I had moved on. It was probably just a timing error, something easy to explain away.
Skipping forward nearly three years, I had been threatened by the IRS and the Revenue Departments from both Ohio and Colorado. I started with a combined total of nearly $500K in assessments. Slowly that dropped to $50K, and then to $10K. I spent countless hours on the phone and writing letters explaining the misunderstanding. It wasn’t until I finally found a helpful person in each department willing to listen and tell me specifically what needed to be done to resolve that situation. My final cost was around $1,000. I was relieved that this fiasco was finally over.
I blamed both the Accountant and Payroll Service for these problems for the longest time. Ultimately I realized that it was my business and, therefore, my responsibility to understand the shutdown process – regardless of who did the work. I would have saved hundreds of hours of my time and several hundred dollars by gaining that understanding initially.
I was not a victim of anything – this situation directly resulted from my own inaction. It did not seem very important at the time, but my understanding of the situation and its importance was incorrect, and I paid the price. Lesson learned. It was my business, so it was still my responsibility to the very end.
Below are the other links. You don’t have to read them all at once, but it would be worth bookmarking them and reading one per day. Every new perspective, idea, and lesson learned could be the thing that helps you achieve your goal a day, week, or month sooner than expected. Every day and every dollar matters, so make the most of both!
- Comments on and a link to an on Curt Culver about Entrepreneurship.
- Comments on and a link to an HBR article about Start-ups and Entrepreneurship.
- Innovation, Intelligent Failure, and Failing Productively.
- Acting Like an Owner – Good Preparation for Becoming an Owner.
- Profitability Through Operational Efficiency.
- What Are You Really Selling?
- Continuous Improvement and a Growth Mindset.
- The Value Created by a Strong Team.
Presentation about Starting a Business and Entrepreneurship
It is interesting how often you see ads for some franchise offering that touts, “Become your own boss.” While that may not be all bad, it is just the tip of the iceberg. The presentation below is intended to provide insight to people considering starting their first company. This was from a one-hour presentation that glosses over many things, such as the need for registrations and insurance, but it could be helpful for a first-timer.
One of the first and most important lessons I learned when I started my consulting company long ago was that paying attention to cash flow was far more important than focusing on my balance sheet. Once you understand a problem, altering what you do to manage it becomes easy. For example, using fixed pricing based on tasks where we received 50% up-front and the remaining 50% upon acceptance of the deliverable smoothed out cash flow, which was a big help.
So, take a look and post any questions that you may have. If one person has a question, many more will likely do as well! Cheers.
The Value Created by a Strong Team
I participated in an amazing team-building exercise as a Board Member for the Children’s Hospital Foundation of Wisconsin. We were going down a path that led to a decision on whether or not to invest $150M in a new addition. The CEO at the time, Jon Vice, wisely determined that strong teams were needed for each committee in order to thoroughly vet the idea from every possible perspective.
The process started with being given a book to read (“Now, Discover Your Strengths” by Marcus Buckingham & Donald O. Clifton, Ph.D.) and then completing the “Strengthsfinder” assessment using a code provided in the book. The goal was to understand gaps in perception (how you view yourself vs. how others view you) so that you could truly understand your own strengths and weaknesses. Then, teams were created with people having complementary skills to help eliminate weaknesses from the overall team perspective. The results were impressive.
Over my career, I have been involved in many team-building exercises and events – some of which provided useful insights. However, most failed to combine the findings meaningfully, provide useful context, or offer actionable recommendations. Key areas that were consistently omitted were Organizational Culture, Organizational Politics, and Leadership. Those three areas significantly impact value creation vis-à-vis team effectiveness and commitment.
When I had my consulting company, we had a small core team of business and technology consultants and would leverage subcontractors and an outsourcing company to allow us to take on more concurrent projects as well as larger, more complex projects. This approach worked for three reasons:
- We had developed a High-Performance Culture that was based on:
- Purpose: A common vision of success, understanding why that mattered, and understanding how that was defined and measured.
- Ownership: Taking responsibility for something and being accountable for the outcome. This included responsibility for the extended team of contractors. Standardized procedures helped ensure consistency and make it easier for each person to accept responsibility for “their team.”
- Trust: Everyone understood that they not only needed to trust and support each other, but in order to be effective and responsive, the others would need to trust their judgment. If there was a concern, we would focus on the context and process improvements to understand what happened and implement changes based on lessons learned. Personal attacks were avoided for the good of the entire team.
- Empowerment: Everyone understood that there was risk associated with decision-making while at the same time realizing that delaying an important decision could be costly and create more risk. Therefore, it was incumbent upon each member to make good decisions as needed and then communicate changes to the rest of the team.
- Clear and Open Communication: The people on the team were very transparent and honest. When there was an issue, they would attempt to resolve it first with that person and then escalate if they could not reach an agreement and decided to seek the team’s consensus. Everything was out in the open and done in the spirit of being constructive and collaborating. Divisiveness is the antithesis of this tenet.
People who were not a good fit would quickly wash out, so our core team consisted of trusted experts. A friendly competition helped raise the bar for the entire team, but when needed, the other team members became a safety net for each other.
We were all focused on the same goal, and everyone realized that the only way to be successful was to work together for the team’s success. Win or lose, we did it together. The strength of our team created tremendous value – internally and for our customers that we sustained for several years. That value included innovation, higher levels of productivity and profitability, and an extremely high success rate.
This approach can work at any level but is most effective when it starts at the top. When employees see their company leaders behaving in this manner, it provides the model and sets expectations for everyone under them. If there is dysfunction within an organization, it often starts at the top – by promoting or accepting behaviors that do not benefit the whole of the organization. But, with a strong and positive organizational culture, the value of strong teams is multiplied and becomes an incredible competitive advantage.
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