Category Archives: Lessons Learned

Posted On August 22nd, 2017 by Crowded Ocean

New startup jargon in startup-land

‘Resters and Vesters’:  talented engineers who have lots of unvested shares of stock in privately held but “hot” startups are said to be “coasting” along and not really working that hard.

DNA data storage: researchers have now demonstrated how data can be converted from the 1s and 0s of binary code to the As, Cs, Gs and Ts of human genetic code. Because of that, researchers predict that the space-saving potential of data stored in DNA will be the solution to the enormous need for data storage. Theoretically, DNA storage could provide a cheaper and more environmentally sound alternative to huge server farms. There is a short shelf life to data stored on hard disks, flash drives, mag tape and DVDs, but data stored in DNA is believed to be able to last thousands of years.

Doxxing: according to an article in Recode, doxxing is “searching for and publishing private or identifying information about an individual on the internet, typically with malicious intent.”

Smart dust: according to the Wall Street Journal, this is “tiny, wireless micro-electromechanical systems that can detect measurements such as light and temperature.”

Foiling: the latest sports craze in Silicon Valley – and favored by many tech entrepreneurs – is called hydrofoiling, or foiling for short. The sport combines a small surfboard with rudder, motor and kite.

Posted On August 16th, 2017 by Crowded Ocean

The Importance of a Mentor for your Startup

In researching our book, The Ultimate Startup Guide, we went back and interviewed a number of our founders, the bulk of whom were first-time CEOs at the time. While it’s a cliché to talk about the importance of ‘knowing what you don’t know’ (a unifying characteristic of our most successful founders), a byproduct of this humility was the importance they attached to having a mentor, both in their earliest days (brainstorming ideas the researching the market) and in their tough moments in founding and managing an early-stage startup.

Knowing what you don’t know

Mentors come in all shapes and sizes. The obvious mentor for the first-timer is a friend who’s just a few years ahead of them in the startup game, someone whose scars are fresh and on-point to what our CEO is facing. Or it can be a more established CEO—someone from their past that they admire and perhaps subconsciously (or consciously) want to emulate.

But sometimes the mentor falls a little further afield, such as the business professor who inspired them in the early going. Or the VC from a previous company who may have stepped back from the action and has time to meet and coach.

From The Ultimate Startup Guide:

We know of one young startup CEO who uses an established organization as a critical advisor. The CEO is a member of the Young President’s Organization, a peer group and network that offers education, support and idea exchange for young company CEOs. That’s a rarity. More commonly, strategic advisors are invited into the tent based upon their past relationships with the founding team or board or specific referrals by friends-of-the-founders.

The advisor role generally resembles a part-time consultant and reports to the founder, or perhaps a board member. The typical relationship between startup and strategic advisor includes a grant of stock options to the advisor in exchange for their counsel. (See the handy FAST document noted at the end of the chapter from Founder Institute for guidelines on the amount of equity.) Advisors typically report to the CEO and often get a lot of latitude and access to the startup team, early customers and board members. And a group of advisors that include marquee names can bring a halo of early shine to a company while still in stealth and certainly through launch.

But, remember: Every advisor you retain is going to require some of your personal time, so walk before you run. Start with one, maybe two advisors. (And making time for your strategic advisor outside of the office in order to cultivate rapport and trust will pay off. But, again, that’s your precious time you are committing.) So, make sure every advisor fills a strategic gap; is a complement to you and your personal style; is well connected, accessible and available to you. Once you’re an established company and you have a number of advisors in key areas—that’s the time to bring them together as an Advisory Board. Until then, recruit and manage them individually.

Finally, don’t overlook the idea of mentors in different fields. A friend who has been a VP of Human Resources (or still is) can be a great resource in staffing (and how to fire, if it comes to that). If asked to, they can help you not just with your current situation but with developing a long-term plan in their discipline that will help you grow the company.

Bottom line: it’s great to acknowledge what you don’t know. Mentors can help you do something about filling that gap in your experience and knowledge.

Posted On August 9th, 2017 by Crowded Ocean

Why startups need a “COO in a box”

For most of our existence, our clients have used the short-hand phrase ‘corporate marketing in a box’ to describe who we are and what we do. While the more accurate description might be ‘Marketing-as-a-Service (MaaS), we’ll answer to either one.

Recently, as more and more services, functions and departments go on an ‘as-needed’ basis, we’re seeing a new function evolve: The COO in a Box. It’s a function that, at least from our perspective, is badly needed at many of our startups.

Think about the standard enterprise startup: it’s usually founded by a core team of technologists, the most business-oriented of whom wants to be a first-time CEO. That’s a lot to handle, especially in terms of learning the ins and outs of sales, marketing, legal, support services, etc. When—and how—they need help will change with each company, but it’s the rare company that doesn’t need some sort of operational support in its early stages.

Here are the two times that we see the COO In a Box as being particularly valuable. The first is right after the launch. Up until that point, our experience is that the team has the capability and focus to do it on their own. Launching a company is an exhausting, all-hands-on-deck initiative, but it also pulls the company together, especially since it has a finite timeline and a nice payoff at the end. The question, post-launch, though, as everyone goes back to their regular jobs is: how are we going to sustain this momentum? That’s when a COO in a Box can help.

The second area usually comes around the Series B timing. The company has launched and had early success. Now it’s time to leverage that success and do the most important thing a new company can do: Scale. Again, the team is probably inexperienced and ill-equipped to scale, but a COO in a Box, if s/he has done this before (and they better have, if they’re marketing themselves as an experienced officer), is the right person to focus and align the company, leaving the CEO to focus on product, long-term planning and vision and the rest of the company to keep the engine going.

 

Posted On July 24th, 2017 by Crowded Ocean

On the radio: startup strategies with Crowded Ocean

Check out Tom and Carol interviewed about The Ultimate Startup Guide:

Listen to KGO Radio 810 Techonomics with host Jason Middleton

  • Part one (11:44 minutes)
  • Part two (19:06 minutes)

Check out more about Techonomics Radio on Facebook.

Posted On July 17th, 2017 by Crowded Ocean

A Manifesto for Startups

The following article by Crowded Ocean partner Tom Hogan originally appeared in AlleyWatch:

When we work with our startup clients to help them position and launch and develop programs for early sales success, one item that we encourage them all to have is a ‘manifesto.’ It’s a core document that explains to the market the original thinking—some of it provocative, some of it just compelling—that went into the company’s founding and original whiteboard sessions. That document can either stand alone on the website or be parsed into a series of articles and blogs.

Taking our own advice, we developed The Crowded Ocean Manifesto, which contains a number of provocative ideas for our startup clients to consider. Here are some excerpts:

Team trumps technology

VCs will tell you they invest in teams first, technology second. Smart, well-functioning teams build smart, well-functioning products. But if something goes wrong, smart teams recognize errors earlier, respond quicker and make better decisions. Smart teams can solve product-market fit misfires. And be guided by the industry data that shows diverse teams (gender, ethnicity, psychological) make better decisions and build more profitable businesses. Make diversity part of your culture from the beginning.

Hire for your core:  outsource the rest

Determine what is core (or ‘essential’ to your success). Be harsh in this determination. Staff to those functions and outsource everything else. On-demand resources are cheaper and usually more experienced than a general in-house hire. For example, the CMO owns building, orchestrating and executing the Marketing or Go to Market plan, but should outsource the specific components, from PR to SEO to content development to event marketing.

Positioning is something you develop with the Market, not something you thrust on it

Your customers—not your Product group—are the ultimate arbiters of what product you should build (and what market you’re in). So as you interact with your early customers, identifying your target buyers and use cases, use that information to develop your positioning and messaging. Then make sure that as Marketing develops and deploys these in core programs, that you continue to check in with your core market and adjust accordingly.

You can create a market segment, but not a new market category

As a startup, you don’t have enough time or money to create a brand new market category for your product. Focus on defining a new market segment and growing from there. Identify the market influencers who can help define or endorse your segment and build market understanding. Don’t try to go it alone.

How you make decisions is critical not only to your emerging culture but your long-term success

Company culture may initially focus on Bagel Wednesdays, free neck massages and a foosball game on site, but it ultimately has to do with how decisions are made—and who makes them. Great CEOs let their employees know what’s going on in company meetings, solicit their input, then ultimately make and implement the decision, communicating to the company clearly and decisively. The company knows that it’s been heard and also has the positive feeling that it’s being led by a confident leader.

You can never have enough content. So plan accordingly

The normal enterprise sale requires a minimum of 7 customer touches. So unless you want your sales reps to be chihuahuas tugging at their customers’ ankles with nothing new in their arsenal, you’ll need to provide Sales with at least 7 pieces of supporting content. Market awareness, inbound traffic, sales preference:  they all start with Content. Develop a steady stream of unique, compelling content that captures the imagination of your target buyer by breaking through the market noise. Whether it’s written or rich media (audio, image, video), your content has to be accessible, shareable and increasingly—it also has to be personalized and brief enough to be consumed in a single sitting.

No one is replaceable, including you

A smart CEO should know going in that the company and market may outgrow his/her capacity to lead it. History shows that by the time a startup has raised its third round of financing, 52% of founding CEO’s have been replaced, most of them fired (or re-deployed) by their own board. Leaders with longevity are self-aware enough to ask for help to close their own gaps. True leaders know they are building a kingdom, not a king. And if they want to remain the king, they listen and learn from their Board and mentors, rather than letting their ‘inner Steve Jobs’ set their leadership style.

Conclusion

Is a Manifesto always right? No. But any company or organization needs to stand for something, to take a position on core issues and live by those beliefs. If the market (and that can include your own employees and Board as well as those you’re selling to) shows you the errors of your way, seek a new way. And when you’re confident that you’ve reached a new level of certainty and execution, modify and re-publish your Manifesto.

Posted On May 25th, 2017 by Crowded Ocean

How startup chiefs work with a demanding BOD

One of the most delicate—and important—parts of a startup CEO’s job is how to manage your Board. If this is your first startup, it may feel like they’re managing you, and you might feel like that’s the way it should be. But repeat startup CEOs will tell you that, if you manage your Board properly, you’ll have a valuable ally, a strategic resource—and you’ll view BOD meetings with something other than the fear that grips first-timers.

Find out (and then set) expectations early

In researching our book, The Ultimate Startup Guide, we talked to over 25 VCs and a like number of founders. One of the key components that emerged from these interviews was that most VCs will tell you that their CEOs over-prepare for BOD meetings. And if VCs could see what we see—companies virtually shutting down (at least the management team) for a week or two prior to a BOD meeting—they’d be even firmer in their convictions. But first-time CEOs want to have all bases covered, so they try to anticipate, then prepare for, each question or objection. Either offline or in the first real BOD meeting, CEOs should raise the topic—find out what the VCs want and how they want it presented. Many of them will tell you they want topics raised and discussions—rather than complete presentations—on each. If so, hold them to it and run more relaxed, collegial sessions.

Respond, don’t react

The best advice we can give is this: when it comes to dealing with your Board, be responsive, not reactive. Your Board members are experts in the business of running a startup and cracking a market, but they don’t know your market as well as you do (in most cases) and they’re not as good in marketing as they think they are (in almost all cases).

But like all of us, VCs and Board members want to know that they’re being listened to and respected. To that end, we recommend that in each BOD meeting there is someone tasked with taking notes and recording every point raised by a Board meeting. Then, once the meeting has concluded, get the internal team back together and consider each of the major points and what your response is. Then craft a concise email to the Board summarizing your decision (or pending action) on each point. It shouldn’t be the day after the BOD meeting—it will look like you’re intimidated and that you haven’t given these topics enough thought—but it should be within the week.

Will this turn your Board from a bunch of intrusive know-it-alls into purring, pliable kittens? Hardly, but you’ll earn some respect, you’ll get them off your back (to an extent) and you’ll get more time to run your company, rather than over-preparing for the next BOD meeting.

Posted On May 16th, 2017 by Crowded Ocean

Building a startup: ten startling facts

High growth startups are very different from other businesses. And they die remarkably young. In fact, nine out of ten startups fail within their first 24 months of operation.

Since our founding in 2008, we’ve worked with more than 50 companies and 45 startups. What makes startups so unusual? Let’s take a closer look:

  1. 25% of startups were started by immigrants  Source: Reuters, 2016
  2. By 2013, the median time to IPO was 7.4 years  Source: NVCA, 2014
  3. By the time startups raise the third round of financing, 52 percent of founder CEO’s have been replaced  Source: New York Times, 2012
  4. More than half of U.S. unicorns – startups valued at $1 billion or more – have at least one immigrant founder  Source: Wired, 2016
  5. VC firm Andreessen Horowitz funds about 20 startups a year out of 2000 warm referrals  Source: The Macro, 2016
  6. The Y Combinator accelerator is more exclusive in its acceptance rate than Stanford University  Source: The New Yorker, 2016
  7. Only 20% of the Inc 500, the fastest growing private companies, raised outside funding  Source: The New Yorker, 2016
  8. Americans in their 50s and 60s make up a 24.3% share of entrepreneurs who launched businesses in 2015, up from 14.8% a decade ago. And, 70% of startups founded by people age 50 or older last longer than 3 years, versus 28% for those younger than 50  Source: Wall St. Journal, 2016
  9. The majority of startups die after an average of 20 months and $1.3 million in financing  Source: New York Times, 2016
  10. In a 2016 survey of 700 founders, 31% said they didn’t intend to IPO and 69% expected to be acquired  Source: First Round, 2016

Posted On May 10th, 2017 by Crowded Ocean

Consider 3 Levels of Startup Blogs

Prior to launching, a startup may have a few blog postings, most of them either commenting on the industry at large or trying to recruit new talent by either profiling the company culture or giving potential employees a glimpse of the underlying technology. But it’s at and after launch that it’s time to get serious about blogging. And to our clients we recommend a 3-tier approach.

A tiered approach might sound like overkill for a young company, but keep in mind our two goals: 1) create the broadest image of the company, and 2) distribute the responsibilities of blogging across the entire company.

Business-centric blogs

The first tier business-centric. This is the purvey of the CEO (and perhaps one or two others on the management team). It’s a look at how you see the industry, market and technology trends, global issues, and where the pain points and opportunities are within it, and what you plan to do about it.

Combine business and technology

The second tier is a high-level approach to your technology, methodology and architecture. The authors are the CTO, head of Engineering, even the head of Products. It is technical in nature but is targeted at a C-level decision maker, and so has a blend of technology and business.

Deep dive into tech

The third level if for the troops. It can be a deep dive into the specific feature or technology that they’re working on—which shows both the excitement of working there as well as another glimpse into the technology—or it can be a note about the culture (Forget daily donuts: we have gaming lunches every Tuesday and Thursday.)

It’s up to Marketing to build and administer this schedule, but if you do it right you’ll have a rolling 3-month calendar without taxing your writers more than once during that period.

 

Posted On May 3rd, 2017 by Crowded Ocean

How Decisions Are Made Shapes Startup Culture

In his annual letter to shareholders, tech titan Jeff Bezos, Amazon CEO and founder, described his practice of “high velocity decision-making” that help sustain the growth and competitiveness of his company. The article published last week by Quartz summarized Jeff’s guidelines (including the unusual observation that “many decisions are reversible”).

Decision-making style shapes long-term success

One of the major predictors of long-term success is this: how decisions are made and communicated to the company. Not only are these initial decisions critical from a business and technology perspective, they establish a cultural tone at the same time.

Ask any employee and he or she will say that they not only want to be involved in these early decisions, but due to their investments in the company—time, reduced salary and quality of life issues—they deserve to be involved in these decisions.

Startups are always on, always moving: it’s a pace and environment not given to deliberation or self-analysis. It’s an over-used analogy with startups but making decisions is like changing a tire on a moving car—it would be better to pull off the road and do it right, but who has the time?

Disagree and commit

In his letter, Jeff Bezos emphasized the value he places on the phrase “disagree and commit” to propel swift action by his team (and to overcome any bias for consensus.) In the spirit of Jeff’s focus, we would emphasize the following tenets to make your style of decision-making a strong component of your startup culture:

  1. Get as much diverse input as possible. It’s been proven that the more diverse your group—in background, ethnicity, and gender—the better the output. If you’re smart, you’ve already got a diverse team; now is the time to reap the benefits.
  2. Instill “ownership” across the entire team to motivate employee engagement. Ownership is a trait that startup leaders need to foster and reward, but only if it’s genuine. Even if a CEO is seriously top-down in his/her decision-making, we encourage them to find areas of genuine ownership, however narrow, for each employee.
  3. Over-communicate to the entire team what you’ve learned in customer forums or open forums (even team lunches or celebrations) with all employees. Be sure to communicate back to the company in another open forum–creating the sense that employees been active participants in the process all along. It’s the founders who have to be active communicators to glue their team together.

 

Posted On April 25th, 2017 by Crowded Ocean

Tweets versus coding: lessons for startups

When we meet with a startup led by technical founders, it’s common for us to discover that the majority of the team have profiles or pages on channels like LinkedIn but they are far from active there. In fact, if they have a Twitter handle, it’s probably dormant. Consequently, we never assume that social media is considered by the team as a channel to engage with customers. And startup teams are typically so busy coding and wooing customers in the early days that social media—even if it’s viewed as important (and many tech startups don’t share that view)—is considered a priority for another time. So, what are the lessons for startup teams about when and how best to employ social media?

Taking a phased approach to building your social media program

There’s a phased approach to building smart social media habits that’s very doable and productive. As we outlined in Chapter 14 of our book, The Ultimate Startup Guide, we recommend that during the early days startup teams appoint a single owner of social media. Just as a startup needs a Chief Content Officer to really “own” (but not necessarily produce) all content, your startup needs someone to own your social presence. Choose someone on your team who already has a natural affinity for communicating and connecting via social channels. That’s the person to tap early on to be a rallying point, teacher and role model across your team in the early days of your startup. Remember that it’s temporary. With growth (and revenue!) can come additional staff, a PR agency resource or a dedicated contractor to staff your social media program as you grow.

Name an owner of your social channels         

After appointing an owner, step two is to determine your goals and your audience. And then, step three, prioritize the social channels that will support your goals. The top three channels for many startups tend to be: Twitter (for connecting with prospects, partners and influencers), Youtube (for sharing rich media content_ and LinkedIn (for recruiting new talent and for connecting with customers.) And, down the road, maybe you’ll want a couple of flat screen TVs – one in the lunchroom and one in your lobby – to display tweets and posts in real time to keep your team connected to your customers.