There is hope for us all still

Interesting post from Fred, I have always recognised that running a start up can look for the outside a mess, but hey we are trying to do in 3 years what a normal company does in 20 years....so take heart and keep pushing onward, have a great weekend

From Messes To Successes

By fred wilson

I was emailing with a top technology blogger yesterday and he said about one of his competitors in tech blogging, "they are such a mess". To which I replied, "yes, but our biggest messes have often turned into our biggest successes." And then I realized that I had made a rhyme and that I would have to blog it.
When I look back at my 20+ year history of venture investing, it's certainly true that the biggest successes have been big messes at some point in their life. My most successful venture investment at Euclid, Multex, almost went bankrupt before the Internet came along and provided a cheap way to get it's service to its customers. Geocities, which was our most successful investment at Flatiron, was a total mess in mid/late 1997, about a year after we first invested. And our most successful investment to date at Union Square Ventures, TACODA, was a mess multiple times including when the first build of its software totally failed on them. Delicious also had plenty of messy moments in its brief period in our portfolio. And there are a number of other companies in the Union Square Ventures portfolio that will go nameless in this post that are currently in various states of mess but doing incredibly well just the same.
I am not advocating messmaking with your startup. There have been plenty of buttoned up startups that I've been involved in that have been great successes. Companies like Gamesville and ComScore in the Flatiron portfolio and FeedBurner and Indeed in the Union Square Ventures portfolio come to mind when I think of organizations that have had their act together from start to finish.
But there is something about messes that lead to great successes. I think it often has to do with teams that focus almost exclusively on the product and the market to the exclusion of everything else. They don't build the rest of the infrastructure that it takes to be a stable well executing business and they suffer a lot because of it. But in the process they get the one thing right that really matters. And the fact that they get the one thing right that really matters makes matters worse because the product takes off and they don't have the resources in place to deal with their success. And mess ensues.
The prescription for turning these messes into successes is really pretty straightforward. You need to build the team and bring in people who excel at the blocking and tackling and the PLANNING that most startups don't have the time or inclination to do. And you need to gradually change the culture of the business from one that is all about the product to one that is about the entire company. Sometimes, often times, that means changing the people around. And that's never easy. And it's even harder to change the people around when it was the initial team that made the product so popular in the first place. So you have to somehow find a way to add the "operational" people without drowning out the "product" people.
But I urge all of our companies not to overdo the "operational" thing too quickly. You need to get your act together for sure. But it can and should be a gradual process. You can't go from mess to success overnight and even when you are a success, your company should still always be just a little bit of a mess.

Slainte

Gordon

Running a successful business

Running a Successful Business

Running a business is a bit like doing a jigsaw puzzle. The pieces must fit together perfectly in order to complete the puzzle. If you are missing a piece, or if you have to pound the pieces together, you can't complete the puzzle.

.

Create a Culture

The first piece of the puzzle is the corporate culture. It needs to be created and communicated throughout the entire operation. There are many tools available to help write a mission or vision statement, but I think it's often best to keep it simple -- one or two sentences -- and describe why the business exists. What is the core value or the daily purpose? Write it down and share it with everyone! Next, create an employee manual that reflects the culture. Again, there are many websites and consultants who can help with employee manuals. In this case, I do recommend getting outside council as the policies and procedures described in the manual should be legally sound and abide by your state's employment laws. Finally, reward behavior consistent with the culture and confront behavior inconsistent with the culture. This will insure that everyone is calibrated to the same standards.

Recruit the Best

The second piece of the puzzle is to recruit the best team to carry out your vision. What do the best college sports teams do? Recruit the best players all the time! When a business is short-staffed, that is the worst time to recruit because you are desperate. It is much better to recruit and network all the time, so the pipeline is full when you need it. Just like college sports teams, when you recruit the best you get a reputation for excellence and great players (employees) want to be on your team. Recruiting gets a whole lot easier when you have a reputation for being a great place to work.

Walk the Talk

The third piece of the puzzle is leadership at the customer level. If the business founder is not on-site 40 or more hours per week, there needs to be someone else charged with the role of business leader. In this case, it is also important that the founder writes a job description for him or herself. The founder needs to be consistent with the message the manager is presenting to the team. It is absolutely counterproductive for the founder to come into the business and start making management decisions if he or she is not the full-time manager. For example, if the founder stops in to drop off supplies and notices the bathrooms are dirty, he or she should speak with the manager and not reprimand the employees directly. Also, if the founder stops in to drop off supplies and decides to stay and help out with customers, he or she should be in proper dress code and have all the necessary supplies to do the job. In other words, the founder and manager need to "walk the talk".

Develop Your People

The fourth piece of the puzzle is to continue to educate and train your team and invest in their pursuit of excellence. Make continuing education an integral part of your operations. Ultimately, every business is about the people who serve the customers, so you need to commit to education at all levels, especially developing leadership and management skills. Set goals for each team member; review performance on a regular basis, and; reward success.

Marketing and Promotion

The fifth piece of the puzzle is making customers aware that your business is available to them. Create a plan and a budget, and execute. In my business, grass roots marketing and PR is the secret weapon to success. We encourage our franchisees to visit every daycare center, preschool, karate school, gymnastics center, dance school, etc. and spread the word . A business' first year goal should be client acquisition, so heavy discounting and couponing is critical to success. With a strong "call to action", your marketing message will drive traffic and client counts.

Business Analysis

The sixth and final piece of the puzzle is analysis. For every activity, there should be a way to measure its success. Remember, you're in business to make money, so while ROE (Return on Effort) may be personally rewarding, if it doesn't have a compelling ROI (Return on Investment), it's not an activity worth continuing. As you analyze your business, you should understand the financial benchmarks that lead to success. Find comparable businesses to which you can compare your financial statements. You should analyze your overall results (P&L), as well as individual activities such as recruiting, marketing, staffing, etc.

(From an article by Joanna Meiseles )

This article was targetted at people starting a franchise, but the key fundamentals are well captured, the only add I would give at this stage is that the first year of a buisness is all about securing and developing customers, if you don't have a strong customer base you have nothing for the future.

Slainte

Gordon

Concerns on the short term performance of the Venture capatalist

I have been looking at the "Credit bust" and the Big banks performance and what there impact on the VC market and debt finance for early stage / Start up companies will be ,and I have seen a number of articles on the stagnation of the VC market and the IPO / AIM, anyone have any comments, I have experienced neither , but it could be sector dependant.

Private equity ‘to stagnate’ By Nick Britton

The private equity industry is heading for tougher times, according to a survey of business leaders conducted by consultancy McKinney Rogers. Respondents expect the market to show zero net growth over the next 12 months and grow ‘only a little’ for two years after that. The credit squeeze is cited as the chief cause, with 71 per cent of respondents believing it will have a large impact on the industry, while some 68 per cent think that general economic uncertainty will affect private equity’s growth.
Regulation of one kind or another, including Sarbanes-Oxley and MiFiD, is expected to contribute to poor growth by around half of the survey’s respondents.
The study, which interviewed 58 business leaders in four continents, chimes with the popular belief that Asian markets will be less hurt by the credit crunch. Respondents in the Asia-Pacific and Africa expect the tightening of credit to have less impact on private equity investment than those in the US and Europe.
On balance, respondents feel that private equity firms make companies ‘leaner’ and more competitive, with 47 per cent agreeing and 23 per cent strongly agreeing with this statement.
However, two-thirds of respondents believe private equity firms put making ‘large profits’ ahead of employees’ welfare, and 57 per cent state that the industry should address its ‘negative’ public image as a matter of urgency.

Cash raised in AIM IPOs falls 70 per cent

The value of initial public offerings (IPOs) on AIM in the first quarter of this year was £339 million, 70 per cent less than in the same period of 2007. Overall, companies on AIM raised £1.13 billion, 60 per cent less than last year’s £2.815 billion, according to research from advisory firm Grant Thornton.
Philip Secrett, international director of capital markets at Grant Thornton, says that the beginning of the year has provided ‘one of the most challenging backdrops for [AIM] since its inception’.
Secrett adds: ‘The surprise with [AIM’s first quarter performance] is not that it has suffered as a result of the credit crunch and resulting equity market turmoil, but that its constituents were still able to raise over £1 billion.’
The number of new companies listing also dropped to 34, down from 54 in Q1 2007.
Secrett says several sectors remain popular among AIM investors, especially energy and commodity firms, which accounted for over half of the cash raised through IPOs during the quarter.
He concludes: ‘AIM continues to be open for business, but only for those companies with stories that are in line with the very specific demands of investors at present.
‘Investors are now sitting on their hands, and while they may be more willing to participate in secondary issues for AIM-listed firms they already know, raising substantial sums of money for new companies will only be an option for a select few.’

I am interested in your experience over the last few months ?

Slainte

Gordon

Corporate Culture some thoughts

Where does it come from and why do we need it?

Some CEO's believe they can define the corporate culture of their company - we argue that they can't.The reason for this is that corporate culture - like any other type of culture is a product of behaviors, norms, values, history and leadership style. If you want to develop a certain corporate culture it doesn't help you writing it down in a powerpoint presentation - you have to live it out.Just look at your family. The culture you have in your family isn't written down - it is something you learn to fit into as a child by looking at the other family members and other families. It is no different with organisations. If you have to write down your culture it usually means you don't have it. KLM has a slogan for the time being: "KLM - The reliable airline". An airline is only reliable if you as a passenger has experienced them as reliable. In that case there is no need to write it down. On the other hand you have experienced the airline as unreliable the slogan will only contribute to build an untrustworthiness.

The Corporate Culture is extremely important

You can't define it and you can't change it over night, but it is extremely important for your company. It is the corporate culture that prevents your people from leaving the company on a rainy day. It is the corporate culture, which is the foundation for the service you give to your clients and by that the customer loyalty and profitability. If your people are proud of working with the company they express trustworthiness and authenticity which has a positive influence on both customer satisfaction and the employee satisfaction.Obvious you might say, but then please explain to me why so many companies don't get it right. It is not only about financials. You are profitable if your clients are happy, and they are happy if our employees are happy and they are happy if there is a general accordance between what you say and what you do as a manager.

How do you develop the corporate culture?

And sometimes it might be a good idea having someone from outside to draw the cultural baseline based on the customers- and the employees perception of the company. You will most like become aware of core competencies and values you didn't' know you had.When we have determining the corporate culture baseline, we have an excellent starting point for a change process. We can change the corporate culture in a company by implementing changes to the leadership style, communication strategy, appraisal systems and by assessing the cultural friction within the organisation. We measure the results on customer- and employee retention

Interested in hearing others stories on Culture and changing it

Extracted from an article by Dr. Finn Drouet Majlergaard

Slainte

Gordon

Sage words on not trying to know everything

A friend shared this with me...sage words indeed

I don't know.

Why is it so hard for people (including both entrepreneurs and VCs) to say these three words?This past week I had two distinctly different meetings with entrepreneurs. They both were successful serial entrepreneurs. Both were exceptionally smart. Both had good ideas.The first entrepreneur, however, thought that they were expected to know the answer to every question. There wasn't a question I asked that he didn't have a definitive answer to. He knew what their pricing model would be. He knew why Google would never compete with them. He knew what their consumer churn would be three years out (despite the fact that they hadn't launched yet). Whenever I tried to discuss the different risks in the business, he told me why they didn't exist. The second entrepreneur, had a different approach. He definitively stated answers when he had them, but when he didn't know he said so. When asked about his pricing model, he said "well, we're considering a few different options depending on the outcome of some tests we're running..." When asked about cost of customer acquisition, he said "well we don't know what our numbers will be...but here's our model based on other comparable companies." When asked about risks, he identified several -- and then we discussed how to reduce/eliminate them.I've come to believe that a key investment criteria is founder credibility. And, I think the second entrepreneur was far more credible. No one expects a pre-launch company to have all the answers. (In fact, we get scared if you think you have them). As I've previously discussed, rather than have an entrepreneur sell me on why they are 100% correct, I'd much rather understand how they are attacking the different risks facing the business.And, by the way, the same applies for venture capitalists. I often feel that during company pitches -- and board of directors meetings -- we're expected to have an immediate opinion. Should we double our marketing budget? Should I hire this person? Will this strategy work? While it's OK to offer opinions and thoughts, I think it is also appropriate to acknowledge uncertainty. Why do people feel pressure to have an answer for every answer?I don't know...

written by Josh Kopelman, Managing Director of First Round Capital

Slainte

Gordon