The Previously Strong Startup Employee That Is No Longer Effective

Which Way...

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Last week I was talking to a successful entrepreneur who was lamenting that she had this previously strong employee that had been with her for over two years. Unfortunately, this quality startup employee, who got along great with others and was a corporate culture fit, was no longer effective as the organization tripled in size. These are the toughest situations.

Here’s my advice when a previously strong employee is no longer effective:

This situation needs to be handled thoughtfully and directly. Everyone knows when a team member is no longer effective but they also want to see the person treated fairly and professionally.

What else? What other items should be considered when a previously strong startup employee is no longer effective?

Venture Atlanta 2011 This Week


Georgia Aquarium

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Venture Atlanta has its annual event October 25th and 26th this week at the world’s largest aquarium. The great event has been expanded from one day to two days so as to showcase more startups, especially early stage and seed stage ones (boat analogies for startups). This year, 40 startups based in the state of Georgia will present with several of them having already raised venture capital and looking for another round.

Here are a few questions to ask when hearing the companies pitch or from reading their website:

  • Do I understand what they do?
  • Do I understand how they make money?
  • Do I believe there’s a large or growing market for what they do?
  • Do I believe they’ll be successful?
  • Would I invest in the business?

The goal for startups presenting at a conference like this isn’t to raise money on the spot but rather to gather enough interest to get a meeting with investors. Startups need to create a hook in the mind of the investor and desire for the investor to want to learn more.

What else? What other questions do you ask yourself when you listen to a startup pitch?

Notes from the Georgetown Baker Scholars Panel

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Yesterday I had the opportunity to be a panelist for the Georgetown Baker Scholars event on entrepreneurship in Atlanta. Baker Scholars is a prestigious program  for undergraduates interested in business. The event was attended by 25 junior and senior undergraduates that traveled down from Washington D.C. for two days of programs in the Capital of the South.

Four entrepreneurs including myself shared their career paths and stories of entrepreneurship. Here are a few notes from the event:

  • Of the four entrepreneurs, two started companies during college and have never worked for anyone
  • One entrepreneur knew they wanted to start a company but waited until they had eight years of real world experience
  • One entrepreneur started making a product just to learn how to do it, enjoyed it, and built a great business from it
  • Three of the entrepreneurs didn’t have co-founders
  • Three of the entrepreneurs had immediate success within a year of starting while one required four years
  • The common theme among the entrepreneurs was a desire to be their own boss

The event was a great way to expose some bright students in their early twenties to the entrepreneurship path and I was happy to be a part of it.

Consider Blue Sky Opportunities When Pivoting in a Startup


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Recently I met with a startup that has decided to pivot their business model. After six weeks of talking to prospects and potential business partners they realized it wasn’t going to work. Yes, a prototype was built, something even less than a minimum viable product, and the appetite for it was negligible.

With a decision made to pivot, the initial thought was to do something around the original idea but in a different manner — something between a pivot (hard change) and an iteration (soft change). Once I heard this from them I pushed back. They have a clean slate, there’s no reason to stick with the original area, and they should spend some time doing unfettered brainstorming.

My recomendation: come up with 100 blue sky opportunities on a white board, whittle them down to 10, and marinate on those for a few days. After that, compare the 10 with the initial idea, pick one, and move forward with customer development.

What else? What other things should be done when pivoting in a startup?

What Percentage of Revenue Should be Spent on Marketing?

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Today I had lunch with a successful marketing executive. Mid-way through the meal he asked how much we spent as a percentage of revenue on marketing. Not sales and marketing, just plain marketing. Not knowing the answer off the top of my head I did some mental calculations and came up with 15%. We spend 15% of our revenue on things marketing related (salaries, campaigns, trade shows, content, PR, etc). Being a marketing guy, he was impressed as 15% was much higher than what his company spends on marketing.

The most successful SaaS companies spend significantly more on sales and marketing as a percentage of revenue than you would expect.

It isn’t that SaaS companies aren’t investing in other aspects of the business. Rather, SaaS markets are growing so fast that there’s a disproportionate amount of money spent on customer acquisition to capture market share. spends 54 cents on sales and marketing for every dollar of revenue (source). Growing fast and acquiring customers is expensive. Marketing for SaaS companies should be a meaningful percentage of revenue.

What else? What are your thoughts on marketing as a percentage of revenue for a SaaS business?

The Power of Peer Groups and Startups

Le centre de Peer

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Peer groups are one of the many aspects of entrepreneurship and the startup world that took me years to appreciate. When I say peer groups I don’t mean networking groups. Rather, peer groups are small sets of people that often meet once a month, if not more, in an environment of trust and confidentiality. Peer-to-peer experience sharing and learning is incredibly powerful for entrepreneurs in all types of businesses.

Here are some benefits of peer groups for entrepreneurs:

  • Most issues have already been tackled by someone else, so the same mistakes don’t need to be repeated
  • No more being lonely at the top as there are many people out there in similar positions
  • The emotional roller coaster of entrepreneurship has high highs and low lows that are best when shared with others
  • Life’s a journey and these peer groups provide a special setting to develop deep relationships

The most common and popular non-profit for these peer groups is the Entrepreneurs’ Organization (EO) for companies greater than $1 million in revenue and EO Accelerator for companies between $250k and $1 million in revenue. I highly recommend these organizations as well as peer groups in general.

What else? What are some other benefits of peer groups?

Rental Car Companies, Shady Consumer Tactics, and Company Values

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Recently I rented a car from one of the major rental car companies, and just like every other time, they had their shady consumer tactics. Here are two of the most common shady tactics used:

  • They ask if you would like basic or premium insurance without letting you that ‘none’ is an option and most major credit cards provide rental car insurance at no charge (I know about this credit card coverage first hand as my wife got into an accident with our rental car a couple years ago and the credit card company took care of everything).
  • They offer for you to pre-pay for gas at a reduced rate and casually say to bring back the tank empty if you do. They mention this because they’ll charge you for an entire tank even if you have gas in it. Unfortunately, they aren’t straightforward that you’re pre-paying for an entire tank regardless of usage if you go with this option.

As a startup, it’s important to articulate your values and outline it for everyone to see. If you want trust and respect, tactics found at this rental car company wouldn’t be part of your organization.

What else? Have you seen other shady tactics used at rental car companies?