Personally getting an MBA was one of the best investments I ever made. My MBA enabled me to understand at a very deep level business in general, finance, and marketing. When I joined a startup that went into hyper growth mode I was able to apply this theoretical learning and build upon it in a very practical way.
"For venture capitalists who pray at the altar of pattern recognition, it would be hard to ignore how few massive tech successes have been founded by entrepreneurs with MBAs on their resumes."
The first two startups that I joined were founded by MBAs. Both had successful exits. One a billion dollar market cap public company. The other a $275 million acquisition. The above quote did not align with my personal experience. It appeared biased to me.
So I went digging around. A good place to start was the Harvard Hurt article itself. To quote:
"It’s possible to turn to research conducted by Aileen Lee for her viral list of ‘unicorns' – slang for the 39 tech companies founded since 2003 valued at $1 billion or more by private or public markets. Only 12 of those 39 companies had co-founders with MBAs..."
Only 12 of 39? That's 30%. I don't know how many MBAs there are in the USA but it is no where close to 30% of the general population. The degree is over indexed in the sample set. Seemed like a positive pattern.
So I decided to do a little more analysis closer to home. I went through Paul Judge's recent list of most valuable or promising startups in Atlanta. There are 25 companies on that list. I looked at the educational background of the current CEOs of these companies using simple internet searches and LinkedIn.
I was not able to ascertain the educational background of three of the CEOs (at least one is a college dropout). Of the twenty two that remained nine have a masters degree in business and fourteen do not. Or but another way, 41% of the CEOs from the list of the most promising startups in Atlanta have a graduate business degree. There was no other degree held by this group of CEOs that was even close to this percentage. I was somewhat surprised to see that science and technology grads only account for six (27%) of the CEOs. There were four that have undergrad business degrees (bringing the total that studied business to nearly 60% of the total), two liberal arts majors, and one that studied law.
While MBAs are not for everyone (I have advised many proteges to skip the degree and get their learnings in more practical and potentially lucrative endeavors), a good percentage of the people that run high potential startups have the degree. Getting an MBA may not be stupid at all. It's fine. Just don't be an MBA. What matters is what you do with the degree. That is what will earn you street cred.
Once again the outline provided starting on slide 10 is golden and a great format. It is basically what I used to help two startups make it to the elite eight of the business launch competition. Might be worth taking a look at if you are in pitch mode.
Google "what is a technology startup." When you do this article I wrote back in 2009 will most likely show up as the second result right below the Wikipedia entry. The Wikipedia entry is a little more interesting to me at the moment than what I wrote five years ago. This is what it says:
"A startup company or startup is a company, a partnership or temporary organization designed to search for a repeatable and scalable business model. These companies, generally newly created, are in a phase of development and research for markets."
Here's why. It does not pass the reasonableness test. If you were to ask members of a startup community if certain companies were or were not startups they would more often than not classify companies that have repeatable and scalable business models in place as startup companies.
For example as I write this I am sitting in the offices of SalesLoft at the Atlanta Technology Village, a building specifically built to to support and inspire technology entrepreneurs. Salesloft participated in TechStars in 2012. Just a year ago Salesloft had no revenue. Now it is seeing high product demand. The company is growing fast. Both revenue and people. They have found a business model and a market. By the above definition they are not a startup.
Does Salesloft sounds like a startup to you? It sure does to me. The CEO and all the employees think they are a startup. But by the above definition they are not. The definition is wrong. The definition intentionaly excludes execution. That makes it too narrow. All successful startups execute. They execute to scale.
And this all may be a matter of semantics within Mr. Blank's own diagram of the startup process the act of scaling the company is included in the startup cycle.
Going back to my Salesloft example they have conducted customer discovery. They have customer validation. They have a repeatable business model. They are in the process of creating customers and scaling the company. They are a scalable startup but not as defined by Wikipedia.
When it is all said and done I think the Wikipedia definition of a startup just needs a little wordsmithing to something like this:
"A startup company or startup is a company, a partnership or organization designed to search for and scale a repeatable business model.
Moving around a few words enables the definition of a startup to include companies such as Salesloft (which it should). It makes the definition of a startup include early execution (which startups do). It makes the definition of a startup pass the reasonableness test (which it must).
This refined definition defines startups better. And that would be a better thing.
I have been reading and thinking a bit these days about the sources of startup ideas. How ideas that are worth turning into technology startups come to life. The best work I have found on this is by Daniel Gulati who actually conducted some primary research on the matter and wrote it up for the Havard Business Review. Good stuff but I don't think he has it totally right. As I have thought about this it seems there are two primary categories that serve as sources of startup ideas; those that occur naturally and those that are manufactured.
Natural or organic startup ideas just happen in the course of your life. It is almost by accident. The aha moment when you experience some pain, could not find something to fix it, and have a sudden realization that you should go out and solve the problem yourself. This is how Charles Brewer came up with the concept for MindSpring and David Cummings created Pardot (Pardot was a pivot). I believe this the best source of startup ideas. It's just kinda hard to plan an accident.
Another natural situation that occurs is when you are working at a company and discover a customer need that no one is addressing and for whatever reason your employer does not wish to address that particular market. The most obvious of these in Atlanta was ChoicePoint, which was spun out of Equifax. Endgame came out of ISS in the same fashion. ScoutMob actually got their start when EarthLink shut down its municipal WiFi network and some of the laid off employees founded SkyBlox.
The second large category of startup idea sources are those that are manufactured. The most prevalent manufactured startup idea is created of necessity. It is also known as a pivot. The original startup concept is not as successful as desired so the team has to figure out some other model. Examples abound. The aforementioned SkyBlox pivoting into ScoutMob. The Sunday Paper becoming Half Off Depot. Viture moving from a walled user generated video service to a social platform. CipherTrust was a pure message transfer agent before becoming an email security company. I could go on.
Finally there are purposely generated startup ideas. While I have an ongoing list of startup ideas that I think about, just sitting down and coming up with good startup ideas is incredibly hard. It's so hard that I am extremely hard pressed to give examples. I agree with Paul Graham (and his Ideas for Startups and How to Get Startup Ideas are most reads). The best way to get startup ideas is to look for problems. Problems where you have some domain knowledge. Problems where you know other people that might be able to validate them. Problems that you could potentially solve. While problems to solve abound not many of them meet the criteria for evaluating startup ideas.
The catch-22 around startup ideas is that in some ways purposefully generating them seems more challenging then stumbling upon one. Startup ideas are best generated if you are working on something else than trying to generate startup ideas.
One of the things that I have been pondering lately is how I can evaluate startups and startup ideas more systemically. There is good reason for this; I am looking for my next venture. And as I was contemplating how to go about this a thought popped into my head. Evaluate them in the same manner that investors do. Which took me back to a lesson I learned from Merrick Furst, the founder of FlashPoint.
Merrick taught an undergrad entrepreneurship class at Georgia Tech. I sat through some of them. During one Merrick explained a venture risk framework that most investors used even though they generally don't talk about it. The framework included management risk, market risk, product risk, and funding risk.
From an early stage investors perspective all startup milestones should be focused on reducing management, market, technology, and funding risk. And if you are going to be investing the most precious commodity in the world, your time, it is not a bad lens for an entrepreneur to use as well.
Looking at startups and startup ideas through this lens leads to a host of questions to ask to evaluate the risk inherent in the opportunity. You need to get to a point where you can decide if the idea is something that could become a real company. Below are some of the questions to ask.
Is there extreme need/pain being felt by an individual or group?
Do they have money to spend?
Are there enough people feeling the pain, or put another way is the market intuitively large enough to create a meaningful company?
Is there any potential potential impact of government action?
Is management team passionate about the market?
Can a team of A players be attracted to the startup (many of which are asking the same type of questions listed here)?
Doe the team have experience in the space with deep domain knowledge.
Does the team have the ability to leverage personal networks to build the business.
Does the team have strong past professional relationships built on mutual respect and trust.
Does the team have shared values and work ethic.
Can a product be created to address the market need with the team that can be assembled?
Can a compelling step function improvement unique selling proposition be created?
How can long-term sustainable differentiation be created?
Is the business model capital efficient?
Can it get to revenue within one year and a repeatable sales process within two years.
Can the team fund it to cash flow positive or further investment?
You also need to ask yourself if the startup is one where you can have an impact. You have to look at it through the lens of your own personal experience and the value you can bring. For example when I personally evaluate startups or startup concepts I look for a business to business SaaS or SaaS like Internet company with a consumer element where sales and marketing are key drivers to business success. I know I can have a significant impact on these type of businesses.
Your lens is likely to be much different. Know what it is and focus on it.
Look at startup concepts and startups through the lens of investors and your personal experience. If you do you are more likely to find a winner.
It was a fun night. First and foremost Jim Flannery is doing a bang up job of building a startup community in Athens. It was interesting to see what is happening there and will be even more interesting to see how the community evolves.
While we were not technically road tripping, you put a few people in a car for three hours they are going to talk about stuff. Jacqui told me I had to write about my musings during the trip. Here they are.
Growth Hacking Is A Joke It is just another way to say customer acquisition marketing. And don't even get me started on viral marketing. The transmission of viruses does not typically happen through choice.
So Is Customer Discovery I love The Fours Steps to the Epiphany but I have to tell you that customer discovery is simply the first step in marketing. Marketing defined by the man who literally wrote the book on it:
"Marketing is the science and art of exploring, creating, and delivering value to satisfy the needs of a target market."
The science and art of exploring. Exploring and discovery are such closely related words they are almost synonyms. Customer discovery is just another way to say market research that is a little less intimidating to geeks. The term customer discovery makes marketing research approachable by non-marketers and that does have significant value.
My personal definition of marketing is a bit more straight forward. Figure out what people want and create it. The figuring out what people want is pretty hard.
And a big by the way, the problem with marketing is that most marketers stray from the purpose of the discipline.
Do Things That Don't Scale Somehow or the other we got on the subject of the recent purchase of Jim Beam by Suntory.
A long time ago Jim Bean was one of my customers. So was Maker's Mark (which should be the preferred bourbon of the maker's movement). Maker's Mark in beautiful Loretto, Kentucky. Maker's Mark that sells over a million cases of bourbon a year. Maker's Mark with demand is so high they considered reducing the alcohol strength of the whiskey (it takes a long time to build supply) so that they could keep up with demand. Maker's Mark with the trademarked wax seal.
You know how they apply that wax seal? The bottles are hand dipped by people at the end of the production line. I am sure they could automate the wax application if they wanted to do so. But having those people hand dip is part of the heritage. Part of what makes Maker's special. Part of why I am talking about it now when I observed it more than half a life ago.
Delight does not scale. Sometimes it is better to do things that don't scale. While I have developed my own thinking on this over the years Paul Graham has an excellent essay on the subject.
Atlanta Has Management Talent Someone made the comment that Atlanta has no management talent. I called BS. I could name at least 20 people that are capable of scaling and running a technology business in Atlanta. What Atlanta lacks is viable startup concepts. The city needs better ideas.
Atlanta Has Money If you have a viable concept and a decent entrepreneur or two you can get funded here. I bet we talked about 20 companies that are in the process of raising funds. To be quite frank I seeing things funded here at a stage and valuation that were never seen five years ago. If you want to raise money in Atlanta and can not do so you have to look no further than the mirror to understand the reason why.
So the number one question that I seem to be getting these days is "what are you going to do next?" My three word answer, and I really like three or four words, is "I don't know." What I am really most likely to do is do what I do best, and a better four words, I build Internet companies.
Something that most folks that have not worked with me do not understand from reading FoG is that I am much more analytical in my work than what and how I write here. I am analytically anal.
So the first thing I did when I decided to leave nCrowd was to make a list of the things that I could do next. The final document runs eight pages with career options, the short-term opportunity, upside opportunity, potential obstacles, and how to overcome them. Here's the list of the options that I came up with (in no particular order than how they initially came to me.
CEO/President/COO position at a early stage Internet where I come in and get it ready for the next stage of investment and run the business.
Start a company.
Head of business development/marketing at venture backed technology company.
Independent consulting on funding/marketing/business development issues facing small early stage Internet companies.
Consulting on digital strategies at a consulting company or digital agency.
Marketing position at a mid size company.
Division President position at a mid size company.
Buy a small company.
Options are good.
The most interesting thing about this list is that I asked my wife, Abby, to review the document and my thought process. She had four words for me. The same four words I have said to entrepreneurs time and time again. Hundreds of times.
A couple of months ago the good folks at Hypepotamus asked if if I would participate in their "How I Work" series in which people share their daily routines. I was flattered and of course accepted. I am republishing the full text here with their permission. You can see the original article here.
Three highlights of your career (so far): 1) Well, the biggest career highlight so far has to be joining MindSpring when it was a startup, going through the IPO process, and growing it into a great company for a period of time. I scaled pretty well with the company and ended up running sales and marketing there. It was a special company at a special time and many people that I worked with there remain my closest friends today.
2) Another thing that I am proud of is to see people that I have helped along the way have some success. When I look around Atlanta I see people that I taught a little something to go on to bigger and better things. To know I played an important role in someone’s career development makes me very happy.
3) The third thing has not happened yet. I don’t know what it is but the best is yet to come.
What’s your current venture? nCrowd, Inc. We operate online local commerce marketplaces that connects merchants to consumers by offering goods and services at a discount.
What’s your current role? I am the COO. I have been with the company for about two and a half years. I came in as part of a $7 million venture capital round in 2011. During my time at nCrowd I have directly managed sales, marketing, product development, and technical operations. I joined to grow the business and in terms of sales we are about four times the size of when I started.
What time do you typically wake up? Depending on what is going on the product development front some time between 4:00 and 6:00am. Much of development is overseas and if we have something big going on I get up and help out with the development/deployment effort.
Describe your typical morning routine: I wake up before my family, grab some coffee and head straight to the computer. I work for a bit and then gather with the rest of the family to get ready for our day and the kids (I have a 15 and 13 year old) off to school. It is a special day when I get to take them to school and we get a treat. Then off to the office for a dev meeting and more work on that front. Around 11:00 am I start to shift my focus from development to sales and marketing activities.
Is lunch a time for solace or socializing? Why? A little of both. I try to stay connected with my network in Atlanta and lunch is a good time to do that. If I don’t have that type of meeting I typically spend lunch at my desk working.
How often do you check email? Too much. I make a habit not to let email take over my day. IM is even worse than that. Just because something beeps or bounces at you does not mean it deserves your attention.
How often do you check social media? These days about three times a day. Morning. Early afternoon.Night. And when I am waiting for someone/something.
Describe your typical afternoon routine: Afternoons are spent more with the sales team addressing their issues and meetings with outsiders.
What time do you go home?
Either before or after rush hour. If before I work at home for a period of time before returning my attention to family.
Describe your typical evening routine: A little exercise (I play a lot of tennis these days), dinner with the family, and some down time with them as well. More often than not I return to the computer before I go to bed. The last is a bad habit I want to break.
What daily habits fuel your success? Just showing up, putting in a good effort, and doing just a little more than the next guy is a big part of the battle. I try to stay up to speed on industry trends and opportunities to find the intersections of success.
What daily habits hinder your success? I love the Internet but it can sure send you down some rabbit holes.
What tools/tech are essential to you? iPhone, Macbook Air, and of course the Internet. That is everything you need. You have those three things you can do just about anything.
What’s one piece of advice you wish you could go back in time and give to your younger self? It is easy to say now but was hard to do then. Life is too short to spend time doing things that you don’t want to do with people that you don’t like. Do what you love with people that you like. I am very fortunate to be able to follow my own advice.
"The problem with business is that the #1 goal taught is to maximize shareholder wealth. This can't be done without first focusing on maximizing employee, customer and corporate health first. Shareholder wealth is an outdated and shortsighted metric."
I agree with Dave 100%.
Being all about the money does not equal maximizing profit or short-term shareholder wealth. It does not mean putting the money first. The money is a single leg of a four legged chair.
First and foremost a company has to focus on doing an excellent job of serving customers. It all starts with customers. Customers are what create value.
Secondly a company must provide meaningful work for its employees. It must do this for no other reason than without providing such work for employees it will not be able to retain them. If a company can not retain employees it can not do an excellent job of serving customers. Moreover, customers can tell when the employees that they communicate with are not provided meaningful work. They can hear it in their words and see it in their actions. Employees are the brand. Treat them well.
Third, a company has to be a force for good in its communities. It has to be a good corporate citizen. It must do so to provide meaningful holistic work for its employees. Which is required to do an excellent job of serving customers.
Fourth, a company must deliver (or make a reasonable promise to deliver) exceptional returns to investors. Without doing so the company can not be an force for good in its communities, provide meaningful work for its employees, or do an excellent job of serving customers.
So being all about the money is really being all about the community, the employees, and the customers. It all starts with an intense focus and passion for the customer.
The customer comes first. The money comes last.
I would be remiss not to mention that this point of view is heavily derived from the written misison of MindSpring Enterprises, Inc. and the beliefs that I developed during my time with the same company.
Force of Good is licensed under a Creative Commons License. You are free to share, remix, and share alike with attribution.
The opinions expressed here are mine and mine alone (with the exception of comments by others of course). They do not represent the opinion or position of any other person or entity. All postings adhere to my personal values.