Shikarishambu on Software & Related Services

Almost three years back I started at a digital media network startup as the head of their business applications. I was giddy at the prospect of working at a startup. In B-school they talk a lot about startup experience. Back then I was a newly minted MBA with a major in Entrepreneurship and significant experience working for Fortune 500. Plus, the CEO mentioned during the interview process that this role will evolve into the CIO position once the company was big enough. Well, that was enough for me to start there without any increase in pay or stock options (They did promise that they may offer some at a later stage…”the investors…” they said).

Early this year I parted ways. The company had moved from “start-up” mode to “wind-down” mode. Looking back I realize that startup experience is like dog-years – everything that a larger company goes through happens here in a really short span of time. Sometimes, the company becomes a mid-size or even large company in the process. But, most often it is a footnote that is very quickly forgotten. Here is some of my learning.

Business:

1. Be willing to question your own ideas

In business schools this is one thing they drill into you. Often people think that they have created a sure winner. Chances are a lot of people have come up with the same idea and passed on. And, they did it for a reason.

The true cost of installing our service was about 3-4 times what was projected/ assumed in the business plan. The size of the company at its peak was more than the projected maximum. Yet, no one thought it would be worthwhile to do a break even analysis with the new numbers.

2. Evaluate, plan, act and measure

Startups suffer from a different from the big company “I know it” syndrome. Some think that there is not enough time to stop and think (“our competition will eat us alive”). So, they embark on initiatives that have no purpose, plan or a way to check point and commit hara-kiri.

3. Just because the market demands it does not mean you do it

Strategy is about focus, understanding your strengths and weakness and positioning accordingly for success. The startup I was in decided to launch a new service because one market seemed to show lot of interest. The next six to nine months the company spent lot of time and energy creating the service. And, as soon as they launched it they were hit with a lawsuit on patent infringement by a competitor. What more, they soon found out that the way they had priced their core offering (free) did not work well for this service because the cost of rolling it out was a lot higher. In another six months they stopped marketing the service. Meanwhile the lawyer fees alone for the discovery related to the lawsuit had run up to a few million dollars – a very costly distraction.

4. Even if it is 4th and long, have a plan

I find it funny that I am writing this a day after Brett Favre of Minnesota Vikings threw a “Hail Mary” pass with about 4 seconds left that saw them trounce San Francisco 49ers. Favre is gifted and, flawed as evident by his number of touchdowns and interceptions. I would take Peyton Manning or Tom Brady any day.

Our startup laid off some folks in October of 2008. Then, they did it again in Jan 2009, start of 2009. The reason was the market had not improved. Hello, nothing really happens in the last two or three months of the year. So, why did they not plan for it? Last I heard they were still letting go of people every two to three months.

5. Business value of IT depends on what you put in

I am yet to meet an executive who does not think that IT is not strategic to their business. And, I rarely find executives who are willing to give IT managers some of their time leave alone engage with them early regarding a business initiative. So, you want to see how much the senior management values IT, ask for a meeting, provide them the details and see when you get on their calendar. If you happen to get on their calendar in the next two weeks time, your organization may be in the grey area. So, see how prepared are they when they show up for the meeting, i.e. if they show up for the meeting.

People:

1. Loyalty is a double edged sword.

On one hand you get people you can count on. On the other hand you are in a subjective situation – you have folks who might rarely question the line of thinking. So, like lemmings they march off the cliff.

2. Bozo effect is for real

Hire people who are better than you otherwise soon you and your money will be parted

3. Incent people for right behavior

When I joined the startup as the head of IT the laptop I got was a hand me down. It used to be the CEO’s laptop and then the Head of Sales’ laptop. Needless to say there were a number of files left on it, including compensation discussion between the CEO and the Head of Sales. Turns out that the Head of Sales’ base salary was about three time that of mine (and, as I later found out about as much they were willing to spend for IT in a year) while his bonus percentage was about one third of mine. Hey, I am the one in an internal support role. Don’t even ask if the Head of Sales delivered. Hell no, his entire team did not.

4. Be honest

True for all but very important for startups. When you do not have money to throw or time to waste you need to make sure that everyone involved is motivated. The way you interact with your employees and partners become very important.

5. Culture should be built and nurtured. It should not live in just PowerPoint presentations

Everyone wants to build a “unique” culture. However, quite often it does not make it beyond the PowerPoint presentation. I recall asking the CEO what kind of organization he wanted to build and getting a PowerPoint. If you are not ready to talk about the culture and walk the talk you are doomed to fail.

6. Open doors and closed ears just waste everyone’s time

This is another one of those things that executives love to mention all the time – “My door is always open.” Great, even better …if you are all ears. Otherwise, you just wasted everyone’s time. A closed door would have been better.

Process:

1. Less is more.

2. Keep asking – what is your Next Best Alternative (NBA)?

3. And, has this action improved on your NBA?

4. Do not automate bad processes. Corollary, don’t even try to automate “no process” situations

5. Systems cannot and should not drive the process. It can only support it. People should

6. Systems cannot and will not communicate the processes. People should

7. Always, try and have a non system specific process

8. Build for Standard operating procedure (SOP), then the alternatives and rarely for exceptions

9. “Flexible” does not mean unplanned or no rules

10. “Base” does not mean “minimum acceptable by me.” It is the minimum to run the business process and achieve the objectives