Agile vs. Burndown Software Development

Matt Bilotti has a great post titled How We Build Products at Drift. The crux of the article is that there’s a new, and better, way to do software development: burndown. Today, in the startup world, agile is the most common software development methodology. Only, it’s centered around the two week sprint, and the reality is that the customer feedback loop is much faster than two weeks.

Here’s the breakdown on agile vs. burndown from the post:

  • Measure of success
    • Agile – Thoroughness of story, agile points and velocity
    • Burndown – End user feature adoption & retention
  • Means of determining prioritization
    • Agile – Product backlogs and sprint planning
    • Burndown – End user validated design mockups and prototypes.
  • Speed
    • Agile – Story-based sprints (weeks)
    • Burndown – Micro-sprints (days)
  • Release focus
    • Agile – Multiple features grouped into a single release version
    • Burndown – A single version of a single feature per release
  • Flexibility
    • Agile – 2-week sprints are planned, executed & generally inflexible once agreed upon
    • Burndown – Every day priorities change and so do the current and upcoming sprints

Feel like the agile software development methodology isn’t quite right for your team? Consider trying out some of these burndown concepts.

What else? What are some more thoughts on agile vs. burndown methodologies?

Quarterly Employee Check-in Process

With it being near the end of the quarter, it’s a good time to revisit the idea of a quarterly employee check-in or lightweight quarterly performance review. When the startup is small, this can be overkill, but as it grows, this is critical. At Pardot, we kept things simple and answered these four questions every quarter in a Google Doc:

  1. What did you accomplish this quarter? (List top 5-10 accomplishments)
  2. What 3-5 goals will you focus on next quarter?
  3. How can you improve?
  4. How are you embracing the company values? (Please provide specific examples.)

Pretty easy, right? Once the doc was done, the manager and direct report met for 30 – 45 minutes to talk through it, and the manager provided any coaching or feedback.

Entrepreneurs would do well to implement a quarterly employee check-in process as the startup grows.

What else? What are some more thoughts on a quarterly employee check-in process?

Raising Venture Money While Still Keeping Options Open

Continuing with yesterday’s post 99% of Entrepreneurs Shouldn’t Raise Venture Capital, there is a case that I left out: entrepreneurs should consider raising money when VCs offer simple terms that keep future options open. But first, a story.

Earlier this year I was talking to an entrepreneur that was growing a nice seven figure SaaS business. There was a desire to raise money and grow faster, but the current market opportunity wasn’t large enough to warrant institutional capital (remember: the size of the VC fund necessitates the size of the minimum exit), coupled with the desire to keep options open in the event an opportunity arose for a < $50 million exit. After talking to a number of VCs, it was clear there was interest to raise money at a fair valuation and do so with a term sheet that didn’t have blocking rights (meaning, the entrepreneur could choose to sell the business and not have to have the VC’s permission).

The entrepreneur chose to raise money on simple terms while keeping options open.

So, 99% of entrepreneurs shouldn’t raise venture capital, but a tiny percentage of entrepreneurs that might not otherwise raise money, should consider it if they can do so on their own terms.

What else? What are some more thoughts on raising venture money while still keeping options open?

99% of Entrepreneurs Shouldn’t Raise Venture Capital

Raising venture capital is glorified in the news and blogosphere resulting in many entrepreneurs believing that they too need to raise venture capital. Well, 99% of entrepreneurs shouldn’t raise capital, and here are a few reasons why:

99% of entrepreneurs shouldn’t raise venture capital. Think that doesn’t include you? Think again.

What else? What are some other reasons that 99% of entrepreneurs shouldn’t raise venture capital?

15 Posts Every Seed Stage Entrepreneur Should Read

Recently I was talking with an entrepreneur that had a seed stage startup and a number of questions. After the conversation, I realized that I didn’t have a good link to share with a number of resources for seed stage startups. Well, here are 15 posts every seed stage entrepreneur should read:

  1. 9 Simple Weekly Metrics
  2. 5 Sales Tips
  3. Budgeting for the $300k Seed Round
  4. Don’t Hire Consultants to Raise Money
  5. The Value of a Sales Assistant
  6. 5 Common Mistakes After Raising a Seed Round
  7. 7 Tips When Starting Out
  8. 8 Metrics Questions to Raise Another Round
  9. Startup Value Creation is Back-Loaded
  10. Resist the VP of Sales Temptation
  11. The Four Stages of a Startup
  12. Simplify it Down to Selling or Building
  13. 6 Steps to Building a Culture of Accountability
  14. Develop a Meeting Rhythm
  15. Build a Simplified One Page Strategic Plan

The seed stage is especially difficult and challenging. Entrepreneurs would do well to join a peer group and carve out time to learn from other entrepreneurs.

What else? What are some more posts every seed stage entrepreneur should read?

3 Quick Thoughts from Eric Paley on Venture Capital

Eric Paley has a great post up on TechCrunch titled Venture Capital is a Hell of a Drug. As a successful entrepreneur and investor, he offers up a number of great ideas. Here are three quick thoughts:

  1. Venture capital increases risk for founders
    1. You limit your exits
    2. You increase burn to dangerous levels
  2. VCs need billion-dollar exits — you don’t
    1. Capital has no insights; it’s just money
  3. Exit value is a vanity metric
    1. Practice efficient entrepreneurship
    2. Smart people, dumb money

Head on over to TechCrunch and read Venture Capital is a Hell of a Drug.

Selling Personal Equity During a Financing Round

Continuing with yesterday’s post Plan for Equity Dilution Over Multiple Rounds, there’s another element worth mentioning: entrepreneurs often sell some personal equity during a financing round. Selling personal equity, as different from the company selling equity, is often called “taking chips off the table.” Since the entrepreneur has taken a significantly below market salary (if any salary), and now he or she is signing up for at least 3 – 5 more years, the natural desire is to de-risk things and sell some equity.

Here are a few thoughts on selling personal equity during a financing round:

  • Many investors won’t buy founder equity unless there’s at least a few million in recurring revenue (often, much more revenue, or being near cash-flow breakeven, is required)
  • Entrepreneurs can usually only sell a small amount (e.g. ~5% of their equity)
  • Investors are more motivated to buy founder equity if they have a target ownership percentage (e.g. they want to buy a minimum of 20% of the startup, but with existing investors there’s only room for 18%, so they buy 2% more from the founders)
  • When there’s a more competitive funding round (e.g. competing term sheets from multiple investors), it’s more likely that the entrepreneur can sell some personal shares

Entrepreneurs selling equity and “taking some chips off the table” during a financing event is fairly common once institutional investors get involved (e.g. after the seed stage). Entrepreneurs would do well to know what’s possible and what the current market will bear when it comes to selling personal equity.

What else? What are some more thoughts on selling personal equity during a financing round?