Excellent Meetings and Communications Recommendations from Tesla

An internal Tesla memo from Elon Musk on Tesla Model 3 Production was just leaked to the public. In it, there’s an excellent section on productivity, specifically around meetings and communications. From the memo:

– Excessive meetings are the blight of big companies and almost always get worse over time. Please get of all large meetings, unless you’re certain they are providing value to the whole audience, in which case keep them very short.

– Also get rid of frequent meetings, unless you are dealing with an extremely urgent matter. Meeting frequency should drop rapidly once the urgent matter is resolved.

– Walk out of a meeting or drop off a call as soon as it is obvious you aren’t adding value. It is not rude to leave, it is rude to make someone stay and waste their time.

– Don’t use acronyms or nonsense words for objects, software or processes at Tesla. In general, anything that requires an explanation inhibits communication. We don’t want people to have to memorize a glossary just to function at Tesla.

– Communication should travel via the shortest path necessary to get the job done, not through the “chain of command”. Any manager who attempts to enforce chain of command communication will soon find themselves working elsewhere.

– A major source of issues is poor communication between depts. The way to solve this is allow free flow of information between all levels. If, in order to get something done between depts, an individual contributor has to talk to their manager, who talks to a director, who talks to a VP, who talks to another VP, who talks to a director, who talks to a manager, who talks to someone doing the actual work, then super dumb things will happen. It must be ok for people to talk directly and just make the right thing happen.

– In general, always pick common sense as your guide. If following a “company rule” is obviously ridiculous in a particular situation, such that it would make for a great Dilbert cartoon, then the rule should change.

Four Pivots Needed – Survive and Then Thrive

Recently I was talking to an entrepreneur about his journey. Four years ago they started out knowing exactly what was going to be successful: a specific training product that his last employer could really use. Only, things didn’t go according to plan. It turns out that the employer didn’t actually want the product. The perceived pain was the typical nice-to-have and not the critical must-have.

From there, they pivoted to the a related idea. Failure.

Next, it was another adjacent idea. Failure.

Finally, on the fourth pivot, and 3+ years of work, they started to hear feedback from customers that this new product solved a crucial problem. Success. Product/market fit was achieved quickly and the startup is now scaling nicely.

The early years of a startup is about surviving. A conversation here, an innovation there, and with enough customer discovery and iterations, finally finding a market opportunity. Make sure and survive in order to thrive.

A Failure at Raising Money

Back in 2009, we were in our third year of Pardot and things were looking good, really good. We had just cracked $1M in annual recurring revenue (a big milestone!) and went out to the market to raise money from venture capitalists. Only, we botched the process (actually, it was all my fault). Some of the mistakes:

  • Made the timeline to raise money too loose such that we were at different phases with different investors over the course of several months (best practice is to run a serious process over 4-6 weeks)
  • Made the personal time commitment too loose such that I was still 80% on the business and 20% fundraising when it should be the other way around
  • Met with 29 VCs from Atlanta to D.C. to Boston to Silicon Valley and didn’t do a good job of lumping meetings together resulting in lots of flights with only one or two meetings
  • Personally prepared the financial forecast without outside expertise resulting in a session with a VC where I was being grilled why gross margins were going down three years out instead of up, and I wasn’t prepared
  • Not really understanding how to put more money to work other than pointing to our cost of customer acquisition relative to payback period and saying we’d put most of the money into sales and marketing (a bottom-up SaaS revenue forecast is the way to go)

In the end, it didn’t matter. After doing some spreadsheet jockeying, it was clear that we were better off continuing to bootstrap the business as we couldn’t see a 5-to-1 payback on raising money (e.g. invest $1 and make the business $5 more valuable). Raising money doesn’t ensure success, but if you are going that route, don’t make the same mistakes we made.

What else? What are some more lessons learned from raising money?

Focus on One Solution for One Market

Recently, an entrepreneur reached out to get some thoughts on going after two very different segments of the same market. As an example, think about a product that’s sold to one group for hundreds of dollars per year and another group for hundreds of thousands of dollars per year. My recommendation was to focus on one solution for one market.

The old adage still rings true: most startups die of indigestion, not starvation. Meaning, entrepreneurs are optimistic and eager to chase a number of opportunities, yet by going after multiple markets with multiple solutions, the chance of success goes down dramatically. Building a product that 10 customers love is incredibly difficult, so why make it twice as hard going after two markets or having two products?

Over time, most products and markets do run out of steam and it does make sense to expand. Too often, entrepreneurs give up early on a market and don’t go as deep as possible. If the market is growing double digits for the foreseeable future, it likely makes sense to stay the course. If the market changes, or there’s a new opportunity that’s at least 10x better, changing directions is an option.

Entrepreneurs should focus on one solution for one market and delight the customer.

Signing the First Customer

Yesterday I had the opportunity to interview Craig Hyde of Rigor at our Simply SaaS Forum. Of course, I asked one of my favorite questions: how did you sign your first customer? Craig recalled spending eight months full-time building their product before signing KontrolFreek as their first customer for $50/month. Now, it wasn’t much money, and frankly, KontrolFreek wasn’t sure it was even worth purchasing. Then, as timing would have it, the KontrolFreek site went down and Rigor promptly notified them using their digital experience monitoring platform. Rigor showed when the site started to degrade as well as when it came back online — all data delivered to their ecommerce vendor to enforce the SLA and work to ensure it doesn’t happen again. After that, KontrolFreek was a customer for life and Rigor was off the races telling that story and signing up customers.

For Pardot, our experience signing the first customer was different in that the product was built around our sister company, Hannon Hill, from the beginning. By being in the same office, we could ask questions face-to-face and move fast listening to the feedback and desires of the marketing and sales teams. While things started slow, as they almost always do, once it got moving and we figured out that the product created 10x the value of the alternative (status quo), high growth followed.

Signing the first customer is critically important for a number of reasons:

  • First, by exchanging money — even a modest amount — the relationship becomes real and the feedback becomes serious. Make sure and charge something so that it’s a bonafide customer/vendor relationship.
  • Second, too often entrepreneurs build their product in vacuum without feedback and input from the customer. By following the customer discovery process and signing a customer quickly, the product is going to achieve product/market fit much faster.
  • Third, while entrepreneurs believe in their vision, it can be lonely as that vision is untested and unconfirmed. The sooner that first customer buys into the product, and shares great feedback, the more confident the entrepreneur is that he or she is on the right path.

Signing the first customer is one of the first micro-milestones in a startup, and often one of the most important. Entrepreneurs should start talking to potential customers even before starting their startup, and work to close a paying customer as quickly as possible. Remember: nothing happens until something is sold.

Two Routes to Starting Great Startups: Audience Building and Consulting

Earlier this week I was at SalesLoft’s annual Rainmaker conference and couldn’t help but be in awe of the palpable energy from 1,000+ attendees. People were smiling, talking (go figure with a bunch of sales people attending a sales conference!), and genuinely excited to be there. After reflecting on the event, it reminded me of the early days of SalesLoft at the Atlanta Tech Village.

From the start of SalesLoft, Kyle Porter, the founder/CEO, focused on building a passionate audience of modern sales professionals through public speaking, blogging, and interviewing of sales leaders. Site traffic, email subscribers, and Twitter followers grew tremendously. Only, the company didn’t have a product sales people wanted — the first product was a nice-to-have and not a must have.

Despite limited commercial success with the first product, the passionate audience was there and growing. So, if the product isn’t working but there are a ton of fans of the company, the next step is to ask the them what they want. After many conversations, and more product iterations, sales engagement was identified as the next major opportunity in the sales technology market. Today, SalesLoft has thousands of paying customers and is one of the fastest growing startups in the country.

Now, contrast it to another amazing startup: Terminus. Terminus is the leader in account-based marketing and was founded by Eric Spett. The first year of Terminus was completely focused on consulting for marketers with an eye towards finding a product opportunity and turning it into a SaaS platform. And, that’s exactly what happened.

Consulting is generally a tough way to start a startup because it’s easy to get comfortable with a decent paycheck and not have the time to build a compelling product. Yet, consulting actually works well in that there’s a professional that needs a problem solved, and is willing to pay money to solve it — the perfect environment to do customer discovery. In the case of Terminus, as soon as the market opportunity was clear, the shift was made away from consulting and to full-on product development. Today, thousands of marketers use the Terminus product.

Ultimately, there are many different paths to success. Too often, entrepreneurs get enamored with their initial idea and don’t evolve it fast enough to meet the needs of the market. Building a passionate audience and doing consulting work are two different routes that get close to the customer and help accelerate success.

Founding Team 3H: Hustler, Hacker, and Hipster

Continuing with the idea of Team, Stream, and Not a Meme, it’s clear that it all starts with team. No matter how disruptive a trend or product that’s 10x better, without a strong team it’s going to be difficult to build a great company. Only, what’s the ideal founding team? Enter the hustler, hacker, and hipster.

  • Hustler – The consummate sales person that’s always pitching a new opportunity. Think about that guy or gal that’s selling candy at a markup in elementary school because there was demand and they couldn’t help but fill it.
  • Hacker – The builder that loves creating new products, for fun and for profit. This person is constantly tinkering and whips up a new prototype in 24 hours with ease.
  • Hipster – The user experience expert that wants to delight the customer through every product and company interaction. Every detail has to be authentic and true to the brand.

The hustler is typically the leader (CEO) save for the occasional hacker or hipster that comes up with the initial idea and brings it to life. Someone has to make the key decisions, and it’s critical that one of the founders be in charge.

Entrepreneurs would do well to be intentional about their founding team, and look for complementary skill sets like that of the hustler, hacker, and hipster.

What else? What some more thoughts on the founding team 3H of hustler, hacker, and hipster?