Closing deals early and quickly can make or break your startup. It is great to have a pipeline of deals, especially strategic, larger deals that can help you scale faster than you could on your own. However, you have to be able to walk a fine line when signing a much larger partner because of the risk and pressure it puts on your team AND technology. Here are some things to keep in consideration, especially for enterprise:
Push your limits: Large partners are great to have, especially early. Your initial reaction would be the opposite because of the risk involved and the fact that you may not be 100% ready. You have to realize that this pressure is great for your startup because it gets you moving faster than you would on your own. It will help push the threshold of what both your team and technology are capable of if you can balance their demands with your capabilities.
Understand needs: It is critical that you clearly understand your partners needs and intentions. Their needs are more transparent because they will have to explain what they are looking for. However, their intentions are not always aligned with their needs. Since it is uncommon for large partners to work with early stage startups, they obviously have intentions that may not be aligned with your long-term goals. You need to make sure during the negotiation process that you are candid about where you are taking your company to make sure both parties are completely aligned.
Your technology is key: At the end of the day it is all about your technology, which is a huge function of the quality of your team. Large companies cannot iterate and build new technology or platforms as fast as a startup can. That’s the beauty of the large opportunities out there in enterprise. However, you absolutely have to have the foresight to build your team and your technology with the long terms needs of larger partners in mind. You have to make it bullet proof and scalable. Very scalable.
One last thing to keep in mind when working on closing a big deal. Don’t look desperate or too excited. Keep calm and play hard to get. You and your team are the ones with the advantage in that you have either superior or complementary technology. Keep those cards ready.
A lot of people have been talking about product-market fit and founder-market fit. In fact, Chris Dixon wrote a great post on founder-market fit that brought it all together.
I wanted to take this a step further. Over the last few weeks I have read some great posts and witnessed a few things here in the NYC that I think should be shared. This post is mostly inspired by the actions and words of Joe Yevoli, and Scott Britton’s excellent knowledge bomb posted earlier this week.
In addition to having founder-market fit and product market fit, I think its absolutely crucial to have passion-market fit. One could argue that founder-market fit and passion-market fit are one in the same, however, I see them as separate channels that are both just as important as the other. I believe that they both have to exist in parallel in order to truly be successful.
Assuming you have the product and market covered you are left with the founder, who has a certain set of skills along with a certain set of interests and passions. Having the right founder and team is critical and we all know this. I argue that we need to take it a step further. Passion for the product and market you are working on is just as important as the skillset you carry. A great founder without passion for what he is doing is extremely ineffective.
As Joey wrote in his post he did not have a true passion for web video which is why he decided to work on Teamhomefield instead (no discredit to Shelby, I know the guys and love what they are doing). He was more than capable of working on Shelby and helping them kick ass, but he knew he would be even more effective by pouring his energy into a product and industry that he truly, truly loves.
My last point is your passion will influence your actions. Scott really drove home the point to screw the what if’s and go all in. You can only really do this for something you are passionate about. If that passion is missing you will always be jumping out the plane with a safety shoot. If you only have one foot in the door then you should rethink what you want to spend your time doing. Trust me, I experienced this myself for the last 3 years. If you do what you love, you will eventually find the product-market fit that works.
There are several factors that lead to a company’s success: funding, talent, and product/market fit, however, one of the most overlooked elements is a company’s culture and the expectations that come with it. Culture is crucial.
Next to product/market fit, I believe culture is the second most important element for success, but it is often overshadowed by talent. Many companies look for the best talent and then like pieces of a puzzle piece the team together hoping that the culture will magically develop itself over time. That is a dangerous approach. I wish more companies took the opposite approach. While talent is crucial, especially in today’s competitive environment, a strong culture from day one will establish the foundation to attract the best talent.
So what is the right kind of culture? I have thought about this quite a lot and I believe that the following cultural foundations are important to establish from the get go:
- Vision: This is crucial in the early stages. Your vision should be built to excite and inspire. You need to make it a priority that all of your employees coherently understand your vision and are working toward it every single day and in everything that they do. They also need to understand how the vision fits in with your culture. As a CEO or manager one of the first things you should be doing is explaining and communicating the vision to your teams so that your employees understand what it is going to take to hit the nail on the head. This way they are much less likely to waste time and resources on things that won’t get you to the summit. Aaron from Box.net explains this brilliantly here. You need to stick to your long-term vision and don’t change it to make a quick buck. It’s even worse when your employees see you flip flopping.
- Meritocracy: This is such a buzz word because so many companies claim they have a culture where the best performance is always recognized, especially much larger, less inefficient ones–aka corporate America. In order to make this work you need to truly reward those that go above and beyond, understand your vision, and help the company grow in everything that they do. Your best developer should be head of development, your best sales person should be heading sales, etc. Leadership should flow both top down and bottom up. Rather than hiring someone with experience externally to head these areas, I think its best to promote within–promote someone who has been there and built the business from the ground up.
- Survival of fittest: I am a big believer in developing a healthy competition in the workplace. You need to motivate your employees to strive to be the best and establish a culture where only the strongest will survive. Things move fast and there is no room for dead weight, especially at a startup. I am not saying establish an environment where everyone is constantly watching their backs, but you need to set the precedent that performance will be rewarded and that you will part ways with those that just aren’t getting it. There is a fine balance here. Obviously you need to let your employees fail along the way but if they are not learning from these failures it is time for them to go.
- Fight constraints: Be willing to run into those brick walls in your way. It’s inspiring for employees to see their CEO or manager do what it takes and find a way to make it happen. It may be exhausting to fight these constraints, but you need to create a culture that is willing to tackle adversity and come up with unique solutions to problems that at first seem insurmountable. Encourage your teams to try and come up with these solutions and always communicate and share their strategies.
If you can succeed in building the right culture and an environment where the best people are rewarded and recognized then finding that product/market fit, recruiting the best talent, and raising money will become that much easier.
I would love to hear everyones thoughts on what other factors you think are important as well as what to take into consideration when building the right kind of culture.
I attended a biz dev event last week that was put together by Alex Taub (@alextaub). It was probably one of the best events I have recently attended and I suggest if you haven’t attended before make sure you go to the next one.
The topic was about BD vs Sales and the panel included Steve Cheney (BD at GroupMe), Eric Friedman (BD at Foursquare), Jane Kim (BD at Hashable), and Wiley Cerilli (CEO of SinglePlatform). The BD vs Sales topic was extremely informative, but one thing that really caught my attention was when Steve briefly discussed that he plans on never directly applying for a job again.
I found this to be one of the biggest lessons I took away from the event. The entire job search process has diverted away from the core of what is most important: developing relationships with professionals and peers in the industry of your interest. Why is that? Because it makes it easy–almost too easy. The resume drop has become the industry standard, yet it is the most impersonal and least effective way of getting that dream job.
The Monster.coms and several other job search platforms have made looking for a job an emotionless and pragmatic process that has forced many companies to adopt a similar stance. Every job that I have found has always been through warm relationships that I have had with my peers. I know the job market has been tough the last few years so I suggest that if you are looking for a job you should be out there building relationships, networking, and marketing yourself. I see so many people hopping on job boards, applying to 100+ jobs and then sitting back hoping they magically get an interview. This just does not work for most people. You need to put a face to the resume and build a network with both the company and industry where you want to launch or extend your career.
My final piece of advice: you should be out there building your reputation so that when an amazing opportunity comes along someone in your network can say “Hey, I know a great guy for this position.” Personal introductions are so much more powerful than a resume drop.
Im starting a new series of short, daily posts as part of my contribution to VentureBent. Therefore, starting today I will be posting about what I learn while living and breathing the NYC tech scene.
Lesson #1: Take a break and step away. I recently took a mini vacation to Florida and really disconnected from everything. I still checked twitter and read the occasional blog here and there, but it was really refreshing being away from the startup scene, the meetups, and the hustle for a few days.
We all know it’s important to hustle, market yourself, network like crazy, and attend as many different meetups and events as possible. I have been doing this for the past 6 months straight and I have started to get really burnt out and exhausted. I have met amazing people and learned so many things, yet it was great removing myself from the city and the startup world for a few days. I have come back more energized and looking forward to the next six months.
Many of us, especially aspiring entrepreneurs or those working on a startup, think it’s all about working 24/7, all nighters, and red bull fueled brainstorm sessions. However, the farther I get down my path to becoming an entrepreneur I am learning that it is critical to take a break and refresh yourself mentally and physically. If not you’ll end up burning out, losing focus, and your productivity will plummet. One thing that has helped me a lot is sticking to a strict workout schedule. Its a 1-1.5 hr slot everyday where I can take a break from everything around me.
So my biggest piece of advice today is to find something that allows you to remove yourself for a short period of time from whatever you’re passion is. It really helps and you’ll feel great when you get back into the swing of things.