Great teams are a feature of the startup scene. Founding groups made up of committed, talented people. On the surface leading this kind of group should be easy. But it does not work that way in the real world. Simple, short term incentives don’t work. Providing the right challenge and setting an overall direction are necessary. Then have the courage to allow everyone to express their own intelligence and ambition. In their own way. The results will be amazing.
Success in a startup depends on the team. New ideas, great product, efficient business model, innovative marketing all count. But is the people who deliver the prize. The best startups have great teams. Full of talent and potential. High motivation coupled with passion and commitment. In theory leadership should be easy in this environment.
Not As Easy As It Looks
The real world is different. A startup is like a group of high performing professionals. The leadership challenge is similar to a surgical team or a big law firm or a global consulting project. Herding cats is the most common metaphor for these types of team. Traditional leadership approaches don't work so well. Natural routes like setting clear goals are not suitable. Aligning incentives and establishing defined roles is not enough.
Here are three reasons why leadership of high performing teams is different:
Ask Don't Tell And Other Startup Leadership Rules
Allow Your Team To Find Their Own Way
To some extent no motivation is needed when you have a team like this. Yet you still want to maximise the potential. The first rule is work. Great professionals needs good work and plenty of it. In my career in professional services, boring tasks were the second biggest problem. Lack of work was the largest by far. Good people hate being idle. Overwork was never an issue. At least in the short term. In the medium and long term persuading people to take breaks was a challenge.
Work also needs to be new and challenging. Even a routine, tedious task which is OK one time. If it is new to the worker it will be tolerated. Doing the same thing over and over is the reverse. No matter how exciting and engaging, the best people lose interest fast. Ask for a repeat might work. By the third or fourth attempt, all motivation disappears. Once a professional has proven his technique and banked the experience, he or she wants to move on.
One other simple rule about work. Ask don’t tell. Command and control never works with talented self motivated people. For any task no matter how important or urgent you ask the person to do it. My old firm employed over 150,000 people. Even in an organisation of this size the global leader would ask the lowest intern about the simplest task. For example to make a photocopy or fetch a coffee. it was never a written rule. But everyone understood the basic respect involved.
So far a startup is in a great position to motivate the team. There is never any shortage of work. And the pace of change makes sure that new challenges are not in short supply. Does this complete the incentive picture?
Not quite. The risk is that a group of individual talents will pull in random directions. Brilliant flashes will abound but nothing will connect. How can the energy and intelligence focus on a collective goal? Set a clear simple strategy and allow the team to find their own way of achieving it.
Leaders need to allow each individual freedom and responsibility. Communication is the critical skill. Each member of the team needs to understand the same end goal. This is not as straightforward as it sounds. When a group of smart committed people listens to the same message at the same time, they each find a different meaning. Set the scene with the group but then take the time to engage each individual. The leader needs to know how each team member thinks and behaves. Adapt the conversation to find the right focus one by one.
If you lead a great startup team you are lucky. Working with great talent is a joy and a privilege. Achieving the impossible with a passionate group is the most fun you can have. Recognise and nurture each individual. Make the whole even better than the sum of the parts.
World Class Small Business Consulting A Startup Can Afford
One of the challenges facing non technical startup founders is outsourcing development work. It is a regular question when I do my small business consulting for startups. So I am delighted to share this guest post from my friend Michael Romilly (@MRomilly) at Waracle. Waracle (@WaracleUK) are trusted by the UK & USA's most innovative businesses to be mobile app developers. They know what they are talking about....
It’s tough going creating software in the mobile age. There’s a tonne of stuff you need to think about. If you’re currently attempting to mobilise an existing web/desktop based software application, the whole thing can seem extremely challenging. Mobile development requires a specific way of thinking and unique expertise, which makes reskilling your existing team of developers challenging. Trying to spin up an entirely new team of mobile developers can also be hard and this is why many brands and businesses turn to an outsourced/agency model in the first instance. This is one of the best ways to get your app into the market quickly and enables you to taper mobile thinking and expertise into your development team gradually over time.
Build, Operate, Transfer
We refer to this approach as a BOT (build, operate, transfer) model. BOT focuses on enabling your company to get a mobile app to market quickly, whilst helping your existing team gain valuable mobile insight from an experienced team of app developers. We refer to this process as ‘positive contamination’ because it offers a commercially and technically risk-managed approach to developing your first suite of mobile applications and diffusing the right thinking and skills into your team. But many brands and businesses struggle to engage effectively with app development agencies because they aren't equipped with the right information.
Build, Operate, Transfer
One of the key problems is the fact that good mobile app developers are in high demand and short supply. This means they tend to be selective about the projects they get involved with. If your project, or approach is perceived as being risky or under-prepared the likelihood of obtaining a costing and timeline is severely diminished. You need to think carefully about your mobile strategy and follow these steps:
1) Define Your Key Measures Of Success
You should always start with the end in mind. Think about what success looks like for your project. This is one of the first questions any mobile app development agency should be asking.
You should think carefully about the following questions:
It’s not always easy getting this part right. Once you understand what success looks like, you can work backwards from this exact point. Your key measures of success should inform the direction of your project at every step. Starting out with a half-baked vision of what you’re trying to achieve is never going to be enough. If you can clarify your thinking at the planning stage it will dramatically increase the chances of your app being successful. Work out exactly what you want from your app and this will help to inform it’s ongoing design, development and optimisation.
2) Get Buy-In From Your Stakeholders
Before you speak to an app development agency, you should conduct a comprehensive stakeholder consultation. This should enable you to get buy-in from key decision makers within your business. Getting the right people involved early in the process will help accelerate the design and launch of your app. Stakeholder buy-in massively adds credibility to your project when approaching a mobile agency and will dramatically increase your chances of getting a comprehensive quote that includes a costing and realistic timescale.
It’s like anything else, you’ll get back what you put in. The more preparation you do at the front end of the project, the more likely you are to get back a realistic scope document with costing and timeline.
3) Create A Detailed RFP
In order to create a detailed RFP (request for proposal) you need to define the scope of your project. This should all relate to your key measures of success and performance indicators. In terms of developing an MVP (minimum viable product), every feature within your app should be designed with these key measures of success in mind. Your RFP should contain a comprehensive summary of what your app is and what you want it to achieve. You should also think about your existing data systems and outline clearly how your app should be integrated inside your existing business processes. Having this information clearly documented will accelerate the time it takes for a mobile agency to respond to your enquiry and helps add credibility to your project.
Think clearly about which platforms you want your app to target. Is it an iOS app? Is it an Android app? Is it both? Do you want to develop for iOS first and evaluate it’s performance before investing in Android (this is quite common)? These are all questions you’ll need to think about and it’s important to demonstrate an understanding of the market you’re competing in. You’ll need to think about how your app will scale if you’re lucky enough to engage a large number of users.
If you’re currently trying to work out how to commission an app development project, try our app readiness test and one of our business development team members will be in touch to discuss your requirements.
4) Be Clear About Your Timescales (Be Realistic)
For many app development companies, balancing resource is a complex and ongoing challenge, so your project start date and overall timeline will be directly governed by the three previous steps that we’ve discussed in this article. If you have all of the above elements in place, you’re probably almost ready to approach an app development agency. Having a realistic understanding of when your project needs to start and finish will help your chosen app development agency to schedule the required resource according to your goals. You need to think hard about what you’re trying to achieve, be realistic about how long things take (usually longer than you first anticipate) and factor in a buffer in case things take much longer than you expect. If there are external project dependencies and third parties who can influence the momentum of you project, this also needs to be factored into your project timeline.
5) Consider Your Budget
Developing software is complex. In order to get to grips with the cost of the project and your required budget, it’s essential to have an understanding of these associated complexities. You’ll need to be able to demonstrate to a mobile development agency that you have a clear idea of how the software will work and integrate with your existing business systems.
Very often, clients vastly underestimate the cost of marketing. Designing and developing your app is the equivalent of reaching first base. It’s absolutely paramount that you consider how you’re going to market and promote your app and develop a projected cash flow based on the associated marketing activities. The app store is extremely competitive and standing out from the crowd is tougher than ever. You should consider how to optimise your app and think about other creative ways to spread your message.
Here’s something that will help you frame the scope of your project and think about a budget: http://www.kinvey.com/app-cost-estimator
If you’re a business in the market for a mobile app, contact Waracle today to kick start the conversation.
Small Business Consulting A Startup Can Afford - Subscribe To Our SaaS Newsletter
I have just returned from two fantastic days in Algeria. As part of my small business consulting for startups, I was helping the team from Ooredoo (a major mobile operator) that runs the first startup incubator in Algeria. The incubator is part of a joint initiative between the company and the Algerian Government called tStart. My role was to educate them about business plans. It was a great experience and I learned a huge amount from the group that I worked with. You can read more about the trip in my LinkedIn post here.
I have written a fair bit about business plans in the past. (If you sign up for my mailing list I will send you copy of my eBook - The Book of Business Plan Ephemera 2014.) This trip gave me a chance to pull together my thinking and create a bit of a guide for early stage startups. This post summarises some of the highlights. Get in touch if you would like to find out more.
Don't Panic - Its Only a Plan
To start with, don’t get hung up on the term “Business Plan.” People attach a lot of meaning and support it by much technical theory. Most of this is irrelevant when you start. In fact most of it is over complicated BS for any business. The main thing you need to do at any time is think about what is next for your business. That is, make a plan.
At some points someone will come along and ask you to write down your plan. For example, when you apply to an accelerator or incubator, when you pitch for investment and so on. When this happens you need to tell the story of your business, you need to paint a picture of the future and write down what comes next. Simples.
Every business plan, whether for yourself, your team or a pitch is written at a point in time. You can only tell the story of what you have achieved to that point. You can only know the next couple of steps. Be credible, passionate and honest about these things. Don’t stress about all the stuff you don’t know.
Be Upfront About The Journey
From Idea To Your First Business Plan
A startup is a journey. Your business plan will reflect where you are on that journey. A company with no product and no customers that applies to an incubator. It will not have detailed financial projections. In 6 months when you apply for seed funding you might have initial traction and be able to build a model on some limited assumptions. A year after that when you are growing fast your numbers will be even better. Recognise where you are in the journey and reflect in any plan.
Entrepreneurs live with uncertainty every day. The business plan needs to show what you do know. Then you can be ambitious but honest about the unknown. Your plan will be to learn more about your customers so that you improve your business. Investors understand this. If they want more certainty before they invest they will tell you. For example “We will invest when you show real traction.” That’s OK.
Don’t pretend you know something you don’t. In the end anyone who invests on this basis will be deceived.
At the beginning of the workshop in Algeria, I asked everyone what they were hoping to learn over the two days. Several of the team asked “How do you go from an idea to your first business plan?” Good question, how do you start? At this point you know almost nothing. You may have discussed your idea with a few people but no more. Often the first months are a process of adding to the list of things you don’t know. Scary. But also reality.
To go from an idea you talk about over a coffee to a fledgling business your “plan” needs to answer a small number of basic questions:
Once you have these answers you have the outline of a plan. This is what the application form for an accelerator programme wants to know. Time to take the plunge. Either go with the business or not.
Understand and execute Your Customer Discovery
Next steps always need to be specific planned actions. No-one succeeds in business without a bias to action. No-one invests in a team which does not get stuff done. Right at the start these actions will concern two things: building a product and customer discovery.
I am not going to focus on product build in this post but I will be writing soon about product build for non technical people. Founders who code just get on with it anyway.
Just building product is never enough. From day one you need to be out finding out about potential customers. It is vital not to confuse this with sales and/ or marketing. Sales and marketing can only start when you have a value proposition. You can only define this by getting out of the building and talking to potential customers. Listen to their problems and design something which meets their needs. Then go back and talk again. Refine your design and do it again. Repeat until you have something people will use and people will pay for.
You also need to be able to describe the people who will use your product. And the people who will pay which may not be the same thing. Only then can you define a market and a proposition. Now go ahead and sell!
Their is a massive pile of startup literature available. By all means keep reading and learning as much as you can. But time is limited so if you only read a couple of books then this is the area to focus on. Read The Lean Startup (what) and The Mom Test (how) . If you want more detail then read 4 Steps To the Epiphany as well. Make sure you understand Customer Discovery. And how to do it.
Get This One Thing Right: Talk To Real Customers
Every number, every assumption, every estimate in your business plan is built on this. Once you are selling and marketing, you are still doing customer discovery. It feels different but each transaction, each churn, each wow moment helps you learn. When your startup is mature enough to include addressable market or financial forecasts remember this point. Start your numbers from real data based on real customer interaction. No matter how small. Be clear about the assumptions you have used based on this customer interaction. By all means make them ambitious. But start from something real.
I hope the last paragraph is clear. Please let me know if it is not. This is the biggest mistake I see in startup plans. Too often I see a statement like “Gartner estimate the global market for Girl Scout Cookies will be $100 billion. We will take 1% of that market in five years.” No. When you have real customer feedback that shows your product solves a problem. And that problem is relevant to the market Gartner (or whoever) has forecast then you can use external validation. Not before.
Choose The Best Startup Business Model For Your Company
Traction - There is no Number 5
Enough ranting. Once you start to have customer data the next big piece of the jigsaw is your business model. In simple terms this means how will you make money. Investors love this part!
There are many proven business models you can use. I have written about the six most common here. Each provides a powerful language to explain your business to investors. Good investors are familiar with the mechanics and metrics of a proven business model. It helps them understand your business and shines a,right on your vision, strategy and so on.
But you need to choose the right model. Sometimes this obvious. If you are selling stuff online you will have an eCommerce business model for example. Often it is not. You need to understand how customers value your product and how they like to buy. Then develop a business model that works for real customers. Use a proven model but build it into the specific approach which suits your business and your customers.
Slack is a great example of this approach. Its business model looks like a simple SaaS freemium model. It varies in two important ways. The benefit of paid plans is usage (history and integrations) not features. You only pay for active users. These small changes have helped it become a Unicorn in record time.
Once you have a business model and some real customer feedback you can interest investors with one more thing. Traction. Few external investors show interest without at least some sign that you can succeed in the market. The more signs you have, the greater the confidence of your audience. But it must be real. Traction only comes in 4 ways:
These are in order of importance - number 1 is worth more than number 2 etc. There is no number 5. Traction only comes from real customers.
And Tell Them About The Team
The biggest single differentiating factor for investors is the team. The same principle applies if you are planning just for your own business. Having the best people doing the right things is the recipe for success. This hard to capture in a written plan but there are a small number of things investors will look for:
Final point. In a business plan written to pitch for investment, tell investors what you are asking for. How much money. For what share. How will you spend it. You may get offered more. You may get offered less. But take an opening position.
That’s all. The picture below shows you the list of what you need. Not long and not scary. Good luck.
Customer Onboarding often determines the success or failure of SaaS companies selling to SMEs. Look at onboarding as a strategic priority. Within your end to end sales and marketing process. Experiment and test to find the right tactics. Keep the need to generate sustainable LTV front of mind.
A Golden Opportunity
Another energetic and intelligent discussion in the SaaS Scotland Group two weeks ago. We focused on Customer Onboarding. The founders had a great selection of ideas and suggestions as you can see by looking at the ideas page. The session reinforced a key point. Customer Onboarding is a critical element of the SaaS end to end revenue process.
At this stage a SaaS company has a golden opportunity to do three things:
Onboarding and SaaS for SME Success
It is rare for companies to achieve this nirvana. Generating leads at low prices is still doable. People sign up for free trials en masse. But then the theory breaks down. Potential customers either don’t convert or don’t even bother using the free product. Those early sign up numbers evaporate before any revenue appears.
Soon the focus turns to onboarding. Startups ask questions like:
Or even, are we signing up the right customers?
The success of startups selling SaaS to SMEs is often determined at this stage of the recurring revenue model. Many entrepreneurs start out with a dream view of the whole process. Generate leads online. Sign people up for a free trial. Build automated onboarding processes. Convert triallists to paying customers at a sensible rate. Add up the numbers and SaaS looks like a great business.
SaaS Is Not That Easy
5 Strategic Priorities
These are valid and important questions. But they are questions of tactics. The answers will vary by company and by product. There is no repeatable formula for success. Remember some core strategic principles when addressing the challenge:
An Opportunity Not A Burden
In the course of my small business consulting I often hear startups that struggle with onboarding. Sometimes it sounds like teams see this as a burden. Onboarding is a great opportunity to engage direct with your customers. Often it will be the best chance you get. Take the wide view of sales & marketing. Treat onboarding as an equal priority with the rest of your sales and marketing process.
Kenny Fraser is the Director of Sunstone Communication and a personal investor in startups.