In a small, fast-growing market, one of the best and easiest things to do with an inside sales team is to make it a free-for-all such that the sales reps can aggressively go after any business they want that isn’t already being called on by a co-worker. The idea is that there’s huge potential and the reps should have the autonomy to figure out what works best for them, especially in a situation with no cap on commission.
As the market and the team grows, many times it becomes necessary to delineate the sales team based on one or more factors. Here are some of the more common examples to segment sales reps:
- Geographic territories (e.g. regions, state, cities, zip codes, etc)
- Industries (e.g. technology, healthcare, government, etc)
- Company size (e.g. companies at or below 250 employees and companies above 250 employees)
- Deal size (e.g. deals at or below $10,000 and deals above $10,000)
One of the worst things a sales rep can hear is that their comp plan is changing and their territory is shrinking (often happens when a startup is growing fast and adding more reps). My recommendation is to keep things simple as long as possible and introduce more complexity and specialization as feedback and data make it painfully obvious that there’s a better way.
What else? What are some more ways to delineate and segment sales teams?
After finishing the book How to Win Friends and Influence People by Dale Carnegie I now highly recommend it to entrepreneurs. The book has a tremendous number of short anecdotes and ideas about how to be a better person. In the latter part of the book the author enumerates 12 core principles to win people over for your way of thinking:
The only way to get the best of an argument is to avoid it.
Show respect for the other person’s opinions. Never say, “You’re wrong.”
If you are wrong, admit it quickly and emphatically.
Begin in a friendly way.
Get the other person saying “yes, yes” immediately.
Let the other person do a great deal of the talking.
Let the other person feel that the idea is his or hers.
Try honestly to see things from the other person’s point of view.
Be sympathetic with the other person’s ideas and desires.
Appeal to the nobler motives.
Dramatize your ideas.
Throw down a challenge.
Entrepreneurs should put this book on their list and embrace the 12 core principles.
What else? What are your thoughts on the 12 core principles?
Recently I had the opportunity to meet with a startup that is very focused on corporate culture. Now, this is a growth stage company that many would say have moved beyond startup phase but they still had a number of startup elements.
One of the many things that impressed me is how they visually represented their corporate culture throughout their office. Here are some ways they present their culture in a more physical manner:
- Creating a logo or graphic that represents the culture, as separate from the company logo
- Incorporating the visual representation into standard office items that all employees use like pens, notebooks, cups, etc
- Painting the walls and other physical building elements with the graphic
Many companies put their values or mission statement on a wall for team members to read on a regular basis but miss the fact that for a culture to care about these things they need to be alive on a daily basis. By visually representing a corporate culture throughout the office with many different mediums, and walking the walk, the culture is reinforced and significantly strengthened.
What else? What are some other ways to visually represent a corporate culture?
One of the most popular self-help and professional development books available is Dale Carnegie’s How to Win Friends & Influence People. Amazingly, the book was published in 1936 and is still supremely relevant today. As part of our leadership development program, we’re doing a book club with this being the next book on our list.
For leaders, the book is a must read. Yes, it is commonsense but commonsense that needs to be thought through and digested on a regular basis. Leaders are more effective when they are liked and respected — team members generally want to work for, and with, people they like.
From the book, here are six ways to get people to like you:
- Become genuinely interested in other people
- Remember that a person’s name is to that person the sweetest and most important sound in any language.
- Be good listener. Encourage others to talk about themselves.
- Talk in terms of the other person’s interests.
- Make the other person feel important — and do it sincerely.
How to Win Friends & Influence People should be on the list for all entrepreneurs and leaders looking to get better at what they do and how they do it.
What else? What are some other ways to get people to like you?
One of the best ways to built trust in a startup is through transparency of information. The author Jack Stack argues for extreme transparency in his book The Great Game of Business. Transparency, to me, is a great way to get everyone on the same page company-wide, align interests, and engender trust. Communication of information, especially information that changes frequently, is one of the more difficult parts of building transparency into the culture.
Here are some techniques to help facilitate transparency of information in a startup:
- LCD scoreboard in the lobby with near real-time information on progress towards goals
- Simplified One Page Strategic Plan updated and rolled out to all team members quarterly with financial information like revenue
- Bottom-up daily check-ins throughout the organization
- Anonymous town hall questions where nothing is off limits
- Discourse and explanations around company changes as opposed to edicts with no reasoning
Creating an environment of transparency is tough and requires commitment from the top down. These techniques and methodologies help set the tone and promote transparency.
What else? What some other ways to promote transparency of information in a startup?
As I think back to my many entrepreneurial endeavors that failed (e.g. post mortem of a failed product), several clear themes come to mind. It isn’t that any one issue or challenge was the culprit, rather there were a number of items that colluded together. Also, most were within my control and I still failed.
Here are five simple reasons entrepreneurs fail:
- Not giving it 100% - it’s hard enough to succeed when working on something full-time that entrepreneurs working on an idea part-time are even more likely to fail because they won’t make enough progress to figure out how to make it successful
- Premature scaling – resources are scarce so a self-inflicted death is more likely when staff or resources are added before a business model is found (see startups shouldn’t hire a VP of Sales)
- Building product in a vacuum – customer usage is oxygen for a product and too often entrepreneurs add features based on whims that don’t add value to customers while also slowing down future product development (e.g. code debt)
- Lack of resourcefulness – it isn’t easy recruiting team members, raising money (if necessary), signing customers, building partnerships, etc and many entrepreneurs run into a brick wall without breaking through it
- Poor market timing – this is the toughest of them all as it is outside the entrepreneur’s control but sometimes it’s the right idea at the wrong time and sometimes it’s just a bad idea, and it is always difficult to tell
There’s no fool-proof way to be successful but the five simple reasons entrepreneurs fail comes up over and over again. Learn from these issues and increase your chance of success.
What else? What are some other reasons entrepreneurs fail?
A controversial article and topic like work/life balance in a startup is good fun as people have strong feelings on it. I really enjoy hearing competing opinions and point-of-views. After more debate on the original topic, another item came up: when is a startup no longer a startup?
Devon Wijesignhe offers up that once you are profitable and have at least $10 million in revenue you aren’t a startup:
I agree with him that those criteria could be part of what makes a company no longer a startup but revenue and profitability alone don’t feel right. In fact, I wanted to offer more specific ideas of when a startup is less like a startup and more like a regular business. Here are a few ideas to distinguish a startup from a regular company:
- Product/market fit has been achieved and the focus has been on scaling as opposed to staying alive for at least one year (it takes time to realize where you are)
- Profitability has been achieved for at least one year and revenue predictability within a 10% margin of error has been achieved (one theme is that once the startup is no longer unpredictable, it is no longer a startup)
- Management team and team member depth is strong enough such that any person in the company can go on vacation for two weeks without any issues and everything keeps moving forward
- Growth has slowed down to the point that the approximate maximum business size is foreseeable (e.g. it’ll be a ~$5M business indefinitely based on current factors as opposed to the possibility of being a $1B business)
Part of being a startup is that it feels like a startup internally. That could be a flat hierarchy, quick decision making, people wearing many hats, or a sense of unbridled optimism. Regardless, a startup is no longer a startup when people inside it feel like it is no longer a startup. There’s no right or wrong answer.
What else? When do you think a startup is no longer a startup?
My Fast Company article titled How Southern Tech Workers Build Booming Businesses and Still Go Home at 5 elicited a number of strong responses, many arguing that it makes startups in the South uninvestable and that you need to work more early on in fast moving markets.
True, the article said, “consider that many people in my company, and in companies of friends, leave the office around 5 p.m. or 5:30 p.m.” but that’s more of a focus on work/life balance as opposed to sheer number of hours worked. CNN reported in April that the Facebook COO leaves every day at 5:30pm regardless. Much like it goes on to say that Sandberg checks email and works after the kids go to bed, so do I. Startups and entrepreneurship are very involving, and that’s great, especially because of the passion that exists for it beyond being a job.
I know entrepreneurs that have built successful startups from the ground-up while still being able to attend their kids’ sporting events every night. Even with competitive, fast-moving markets there are enough hours in the day to accomplish a great deal and still spend time with your family. Imagine cutting out TV. How much time will that save? Imagine working 20% smarter instead of 20% longer. How much time will that free up?
Work/life balance and startup success at any stage aren’t mutually exclusive. There are enough hours in the day to be effective and present.
What else? What are your thoughts on ways that work/life balance are or are not mutually exclusive?
Ideally, an entrepreneur would show an angel investor a demo of a product prototype online or on an iPhone, get it, and write a check. Unfortunately, angel investors still look for an executive summary or slide deck as the standard document that starts the investor + entrepreneur dance. The executive summary is best thought of as a business plan boiled down to one or two pages. Business plans should be avoided in favor of business model canvases, so it’s best to only write the executive summary.
Here’s an example format for an executive summary:
- Team – the top three of four members of your team with one sentence each
- Description – what does the business do
- Product – what is the solution or service
- Market – how big and how fast is the opportunity growing
- Customer Benefits – why do companies/people use the product
- Competition – who else is in the market
- Company Stage – where are you currently
- Investment Opportunity – how much are you looking to raise and what are you selling
This seems like a good amount of content, and it is, but each section should be super short and the whole thing should fit on one page. Most people are fine with a two page executive summary, but I prefer one page as the goal is to get the reader exited enough to want a meeting, and the more content you have, the less likely it will get read.
What else? What are your thoughts on executive summaries and what would you recommend?
Today, two different entrepreneurs asked me for advice about raising an angel round, and both are located in the South, making for its own unique dynamic. Even with the negative press about the Facebook IPO, which was very successful for Facebook, the startup world is buzzing with enthusiasm and opportunity. From a trends perspective, social, mobile, and local show no signs of slowing down.
So, for entrepreneurs raising an angel round anywhere, but especially in the South, here are a few recommendations:
- Build a simple executive summary that is shared as a PDF and no more than two pages.
Executive summary sections:
- Customer Benefits
- Company Stage
- Make some very basic financial projections
- Build a working prototype (minimum viable product) and sign a couple paying customers
- Consider the amount of money necessary to achieve a major milestone in the next 12 – 18 months (e.g. it might take $500k to hit $100k in annual recurring revenue in 12 months, so $500k plus some margin of error would be the amount to raise)
- Think through the pre-money valuation, which is typically $1 million plus or minus 50% for most startups, with exceptional startups getting $3M – $4M pre-money valuations
- Network through local technology groups, co-working spaces, lawyers, and accountants for intros to angel investors
- Apply online to local angel networks (e.g. Atlanta Technology Angels)
- Remember that the best time to raise money is when you don’t need it
Raising money is hard. Raising money in the South is even harder. One of the best things you can do is to start developing relationships with people in the startup and technology community well in advance of raising money. There’s no sure way to raise money but the path outlined above works well.
What else? What are some other recommendations for raising an angel round in the South?