I had a great time presenting at OpenCamp this weekend. It was an amazing crowd for a first outing, numbering more than 600 registrants. And from where I sat, everything went without a hitch.
Below is my preso. For some reason, SlideShare isn’t picking up my notes, so I have them placed below. It’s not ideal, as the list doesn’t sync with the slides as well. I hope to get the version with notes on SS ASAP.
- After a day of highly technical presos here at OpenCamp, I want to talk a bit about the “softer” side — the sorts of lessons we learned while building our media company here in Dallas. First, I want to find out: Who works in a startup or is thinking of doing a startup. (Was pretty much 3/4 of the room)
- A little snapshot of us for those unfamiliar.
- We had advisors and investors who thought that our plan was so innovative that we could take a Keynote preso and some spreadsheets and get VC money. I should have known better, but everyone wants to hear that you can execute your plan without suffering. We wasted 8 months doing nothing but peddling PowerPoints and pitching — a huge waste of time when we should have been building. This adage was true in 2004, and its 10x more so now.
- Even in the hallways today, I’ve heard people chattering about splitting up equity in ventures they hatched yesterday. Take it easy. Certainly get good legal advice, but I’ve found that making the split early only means you’re going to be wrong. Set up a structure with flexibility, but don’t get yourself in a position where the first person out gets the best deal just because of the snapshot taken the day you had an idea.
- I can’t stress this enough. And you know it and have read it on countless industry blogs. But you also know that you could just do so much with a million dollars. Fundraising dilutes your equity and sucks away time and energy that could be spent building a business. If you can’t build any piece that will prove something without cash, maybe you should be trying something else.
- This is the cover of our original business plan. And although we’ve had to make myriad tactical shifts, I’m proud to say that this reads pretty much as right for our business as it did then. Know what your core values are; know what you want the end result to look like, but don’t get too married to any other part of it.
- This ties into the earlier slides — you can’t learn anything from a product that isn’t in the marketplace. All you can do is dream more about your assumptions and what *might* happen. Once we finally learned the earlier lessons, we surveyed our assets and decided that we could launch one vertical within our local platform without additional capital. From decision to launch was less than three weeks. If only we’d gotten smart earlier.
- Startups are fragile things, and usually without a lot of resource. You have to pick your shots. Do one thing amazingly well instead of ten half-assed. The latter hasn’t ever made a good business.
- I thought I was being very wise when I quit my six-figure job and warned my wife “It might beas much as six months before we have enough cash for me to pay myself.” (Pause for laughter.) It was 20 months and then with less than 1/3 my old salary. When you go into the woods for the weekend, take enough food and ammo for a week.
- The asterisk is that this doesn’t apply if your business *is* the technology. But most people in this room seem to be in the business of distributing content. So while you don’t want to be too promiscuous, don’t get too religious. The pace of technology is such that today’s tool might be tomorrow’s trash. Legacy problems of a platform shouldn’t slow you down.
- I hate bowing at the altar, but if you’re in the content biz, it’s about your organic results. Period. We did lots of grassroots and social media tactics, but nothing paid as well as building great SEO into our CMS and then filling it with relevant content. If I only had $1 to spend on marketing, I’d spend it on organic SEO.
- People will go to extraordinary lengths for a cause. If your business is a cause, people will do things like stick around despite missed payrolls.
- A big part of what we’ve done relates to our content partner model, syndicating from other local partner media companies and blogs. The ones that have consistently been the best partners are the ones who are most like us — young companies trying web-only niche content.
- This is the ad that Ernest Shackleton used to recruit for his Antarctic voyages. We used it on our help wanted pages. And we made sure, even beyond the extent normal in a small close-knit group, to be transparent about everything — business model, cash on hand, investment prospects. When we missed payroll, people had more than two months warning, and regular updates on progress. So there was no surprise announcement on payday. I think that’s a big reason people stuck around.
- It’s a big mistake — one that I made — to not take care of your health, family, etc. and not get any recharge. We did try to do little things to take care of our staff though.
- One of our investors once called us “the cockroaches of local media.” And we did outlive many other companies in our space who started at the same time and with more bankroll. When people ask why, I sometimes answer that we were too dumb to know when to quit. But there is something to be said for hanging on and toughing it out, especially if you’re just a little ahead of the market.
- Many startups see a romanticism in just focusing on the product and letting organizational chips fall where they may. But that can be really distracting at the wrong times: tax time; when an acquirer finds a key formula error in your financial projections; when in due diligence you can’t find the disputed cell phone contract.
- This is one of the best lessons I learned. Always share your story, your passion, your energy with everyone you meet. I picked up our biggest investor over a dinner conversation at a business organization dinner. And an “adversary” hired to do due diligence on us became a great friend and someone I’ve gone on to do business with over and over again.
Early stage startups tend to push off dealing with this until funding or sale and it’s a mistake. There are basically 4 types of employee in this kind of company:– True believers– People who expect to get rich in spectacular fashion on IPO/Sale– People willing to endure risk for flexibility– People who can’t find work anywhere elseThe trick is that when the situation changes, the individual motivator does not. So what happens when you sell at a modest price to a highly rigid company that might not buy into all your core business tenets? Are you more likely to lose people once things are “safe?”
Early stage startups tend to push off dealing with this until funding or sale and it’s a mistake. There are basically 4 types of employee in this kind of company:- True believers- People who expect to get rich in spectacular fashion on IPO/Sale- People willing to endure risk for flexibility- People who can’t find work anywhere else
The trick is that when the situation changes, the individual motivator does not. So what happens when you sell at a modest price to a highly rigid company that might not buy into all your core business tenets? Are you more likely to lose people once things are “safe?”
- That ties into another lesson. If you have problems within the organization, don’t chalk them up to stress of startup and carry them with you into the new situation. Doing so just risks damaging your new relationships as well as the old.
- Within reason, whatever your problem, focus on sales. Sales brings cash. Sales brings leverage. Sales increases value. Sales brings a clarity to which problems to focus on.
- Once you bring in a majority investor or acquirer, you have to understand that it isn’t your company anymore. Your job is no longer to purely defend the original vision, but rather to do what is right for the owner(s). Your role may still be a key leadership role, but it’s different. You’re only one vote among many, and it’s hard to learn that transition.
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