Friday, August 7, 2009

Real Definition of a Startup

I was reading an article at TechCrunch about the real definition of a startup, and it got me thinking.

Having spent the past 20 years (OMG!) taking startups to the next level, marketing-wise, here's my take on what an actual startup is:
  • smoke & mirrors
  • R&D's undelivered promises
  • deadlines not met
  • constantly shifting product specs
  • salaries paid on ad hoc schedule
The company can be any size, but generally under 100 people. Maybe funded, maybe bootstrapped, certainly runs lean, doesn't have a lot of processes and a (mostly) flat heirarchy. I saw a lot of changing business models, which is VERY difficult for established companies to do with their entrenched staff and systems (particularly if there is a labor union involved). Changing divisions from cost centers to their own P&Ls dramatically changes the way a company does business. Reorganizing a sales department's income structure, incentivizing new business over old, to improve a sales funnel - that will significantly change an older business to a startup structure. One company that definitely wasn't a startup brought me in to work "under the radar" and I was told by my boss, "It will be easier for you to be forgiven than ever get permission here." I worked as a (mostly) lone wolf, with no support except my boss and the Board, and implemented significant change that was certainly not liked by the staff and their union, but propelled the organization into the top recognized in their industry, winning many awards. (I didn't win any friends, for sure.) Without my experience in startups, I couldn't have accomplished what I did there.

Startups have their place and a lot of people can't work there. Startup staff need to be able to take up the slack, bully their way through projects to make things happen. Leaders need to be able to present their mission effectively and build teams. Let the brilliant people do what they were hired for and get out of their way.

The startup mentality is hard to implement because of the cultural attitudes of middle management. people don't like to take risks. They have a fear of the unknown. People are incentivized to make things difficult - a good example would be the endless amounts of paperwork to be reimbursed for your travel. (I've given up on getting paid on that one.) Many owners want to call all the shots and don't give their executives any authority but all the responsibility. Executives need to be able to assemble a decent team, eliminate waste (in staff and processes), and implement decisions on the fly according to changing business conditions. In one company that I worked for, that meant eliminating half the staff. In another, working nights to be in constant contact with my clients on the other side of the planet. Without the freedom to make these difficult changes would have meant failure, not just for me, but for the company. Excellence comes from providing talented staff with the right tools at the right time for the right purpose, and providing measurable incentives for measurable deliverables.

The tech bubble inflated salaries, offices and arrogance (if I ever hear "Focus on the eyeballs and the money will come" again, I'll have to kill that person.). The burn rate on some of these dotcoms was sheer greed and ego. These "kids" had an idea and a presentation and no idea how to make money. I was typically hired for my experience and then had to listen to these kids tell me that one year of dotcom experience was worth five years working in brick and mortar companies, and to do it their way. But I love revenue. I wanted to focus on making money. They didn't.

They were only successful because of one thing. What I saw was lucky timing - in an emerging market early to become the leader. What I also saw was exit strategies - IPOs & buyouts were the preferred methods - actual earning of revenues was work and took waaaay too much time.

Bitter? Not really... well, except when I meet the rich ba**ard at a function and learn he's still rich, and I'm still not. :-/

But I love a good startup with a good idea. I love the potential of growing a business. I'll always take the "road not taken" because that will always be the more interesting path on which to tread. But tread lightly if you take this path, being fleet of foot, flexible, ready to make a move at a moment's notice is important to your success.

"The world is moving so fast these days that the man who says it can't be done is generally interrupted by someone doing it." -- Harry Emerson Fosdick