Focus and Why Less is More
Besides questions about people, what’s often one of the most important execution questions for a startup?
What should we NOT do?
Focusing on one or just a few things is the proverbial strategy of “putting all your wood behind one arrow.” Yet it is amazing how much pressure there is to do more. Often investors will push to do more, you will feel competitive pressures to follow all the things your competitors do, and of course you have a long list of things that you’d like to do.
Yet the good thing is that focusing on doing one or a few things really well has proven time and time again to have amazing results. What if I told you that a product that weighs 137 grams or less than 30 quarters, could generate $10 Billion in revenue? in one quarter? That’s of course the iPhone. And what’s even more amazing, in the fourth quarter of 2010 Apple generated almost $27 Billion in revenue from products that can easily fit on a startup’s conference room table.
Now, it’s easy to look at one of the biggest blockbusters and successful companies and say everyone should do that. Yet when Steve Jobs returned to Apple, Apple’s annual revenues had been dramatically declining -- in 1995 $11 billion, in 1996 9 billion, 1997 7 billion -- and many had written the company off. It owes much of its turn around success to its effort to focus. (Disclosure: I worked at Apple from 1992-1996)
In a 1997 MacWorld speech, Steve Jobs outlined the key things on which the Company would focus:
- Board of Directors
- Focus on Relevance
- Invest in Core Assets
- Successful Partnerships
- New Product Paradigm
Fast forward to 9:10 of the video to see Steve talk about this.
Of course, with any good strategy, people should come first and the strategy should come second and thus Apple’s focus on the board and team. And yet points 2 and 3 are all about Focus. To enable its turn around Apple shored up its strengths and focused on creative professionals and education. It canceled lots of products to focus on few and made them great. It invested in re-building it’s brand. In general Apple focused on its core (no pun intended…) before it did anything new and only then did it have a chance to do new things and to eventually become the most valuable technology company today.
But of course, you’re probably thinking, ”Well that’s easy for Apple to do but we’re a startup. We have to go out and do lots of things to in order to become bigger and grow and become dominant!” Interestingly, if you look at almost any successful startup company, they got there by doing a few things, or even one thing, really well before moving on to do something new.
Facebook started out as a service just for Harvard, and then expanded to other Universities, before eventually opening up to everyone.
Google did great search.
Amazon sold books.
These were all unknown companies at some point.
Focusing on one or a small list of things that really matter and getting success there first is key in a startup because you have limited resources -- not enough people, not enough money, and definitely not enough time. You have to get success in one place before moving on to tackle the next set up of things. And there are lots of other examples from companies with which I have worked.
At Lookout (disclosure: I am an investor and Chairman of the Board), we developed mobile security software. We started with Blackberry, Windows Mobile, and Android. About a year ago, we shifted our focus from Blackberry and Windows and put most of our effort behind Android. And now we are the top mobile security app for Android, and one of the top ~25 applications for all of Android. It was a tough decision to shift our focus away from the other platforms, but we had a small team and decided to put all our proverbial wood behind one arrow. And it’s only now that we are talking about expanding internationally and looking at other platforms.
At ZangZing (disclosure: Co-founder), we’re building a new way for groups to share photos more simply and beautifully. We’re starting by focusing on the web and making sure that is awesome before moving into mobile apps. Some people say we should do it the other way around, but we think once you see what we’ve done on the web, you will understand why… And either way, we could have done web and mobile at the same time, but we have limited resources and decided to do one thing well first.
At Vontu (disclosure: Co-founder here too), we developed data loss prevention security software. We decided to focus initially on helping companies with lots of customer data such as credit card numbers, social security numbers and other personal information. And we focused on the US. And only on the Fortune 1000. And even within the Fortune 1000 only on a few key segments: financial services, retail, and insurance. And as we had success, we then expanded and eventually had customers all across the Fortune 1000 and outside the US. The revenue ramp was great -- half a million, 3 million, 13.5 million, almost $30 million, and on the path to $50 million when Symantec bought the company for $350 million.
In summary, in a startup, don’t give in to the temptation to do more because usually doing less results in more success, more quickly.
Anyway, i hoped you enjoyed the post. A few others you might like about planning and execution are Can you Count? and If you don’t know where you’re going, well, you’re lost.
And let me know what you think.
And thanks to Kevin for his awesome focus photo.
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Startup 132: Why an Exit Strategy is a bad idea
My apologies that it has been so long since I’ve written but I’ve been a little busy the past year and a half. I started a new company called ZangZing which is building a new service to help groups share photos. You can sign up for the beta here. I am also on the board of 3 other companies – Lookout, Smartling, and ccLoop – and an adviser to a fourth – MobileIron.
Exit Strategies
I have been meaning to write about the question of “Exit Strategies” for many months.
Not only has there been lots of press about exit strategies with Groupon turning down a multi-billion dollar offer from Google, but in about 1 out of every 2 recruiting interviews, I am asked the same basic question, “What’s the company’s exit strategy?”.
Let me get right to the point. If you work for a company or meet with a startup CEO that says they have an exit strategy, then you should find the nearest exit. Think of a company with an exit strategy as your floor lighting that will illuminate and guide you to the nearest exit – which may be behind you. (OK, after flying almost 1.5 million miles, airplane humor is too easy).
Now some of you might be asking, “But Joseph, you sold a couple of companies. Why and how can you credibly you say that?”
Well, it’s simple. I don’t believe there really is such a thing as an exit strategy. And I have never had one for any of my companies. An exit strategy implies very short term thinking about how Google, or Facebook or some other deep pocketed, cash rich company is going to come along and scoop the company up. And that type of thinking is simply a bad idea. Check out the definition of exit strategy from Wikipedia:
An exit strategy is a means of escaping one’s current situation, typically an unfavorable situation. An organization or individual without an exit strategy may be in a quagmire. At worst, an exit strategy will save face; at best, an exit strategy will peg a withdrawal to the achievement of an objective worth more than the cost of continued involvement.
When you think of a startup, it’s probably not a good idea if the team is thinking about escape or saving face or withdrawal.
Instead of thinking about the exit, startup teams (and potential employees) need to be laser focused on a success strategy. This means thinking (and asking) about the 3-5 most important things that will make the company successful, e.g. Who do we need to hire? What products do we need to build? How do we grow our user base? How do we make money and become profitable?
A success strategy is about building value. And when you are successful and build value, then you will have lots of options including continuing to grow the company, selling the company, taking a company public, merging with another company and more.
So stay focused on your company’s long term success and along the way you will have lots of hard choices about if and when to “exit”. In writing this, it seems so obvious, yet I am continually amazed that so many people think and ask about exit strategies. Hopefully no one will ask about exit strategies in any future interviews and if they do, then I know they are not good at doing their homework. 
Leave a comment and let me know what you think.
And here is another post about strategy planing that you might appreciate. If you don’t know where you’re going, well, you’re lost.
Lastly, you can also follow me on twitter or subscribe to email updates.
Exit sign courtesy of heathbrandon
Airplane exit sign courtesy of joeshlabotnik
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Startup Life 101: The Marathon
Being successful in all aspects of your life – your work, your relationships, your community and your personal life – is not easy especially when working at a startup. Conventional wisdom is you have to work 18 hour days, 7 days a week to succeed. Yet maybe it’s not necessarily the best way to succeed?
http://flickr.com/photos/beforethecoffee/
What got me thinking about writing about this was re-connecting with a professor I knew from the Wharton school, Stewart Friedman. He recently wrote a book and teaches a class titled Total Leadership: Be a Better Leader, Have a Richer Life
I will not do the concepts complete justice but the NY Times summarized his ideas as “Get a Life: 101”. Total Leadership is a process to optimize all parts of your life – yourself, your family, your work and your community – in order to be more successful and ideally more happy. You do this by clarifying and having a plan for what is important in all the domains of your life (self, family, work and community); you then engage with the people in all those domains and make sure they understand what’s important; and then experiment and figure out what are the ways to achieve the things that matter in all the domains in your life. You can read more about it on Stew’s blog too.
This past week I presented to one of his classes and this is the first of three posts about applying Total Leadership to startup life.
Marathon
An important first metaphor used by many and important for applying Total Leadership is that a startup is a marathon and not a sprint.
Now, I have never actually run a marathon. I actually only like to run if I am being chased. But I do like to ride my bike and I (surprise, surprise!) think startup life is a lot more like the Tour De France (surprise, surprise!). The Tour has multiple stages – all challenging in their own way. It’s a race of 2,000 to 2,500 miles happening over 21 days or “stages”. You start off “easy” riding more than 100 miles a day on flat roads that end in a short sprint, you have mountain stages that climb the highest peaks in the Alps and Pyrenees, you have an individual time trial during which each rider races against the clock, and many other hard rides. And it also happens to be a team sport. The diversity of challenges and duration certainly compare to a startup.
To win the Tour, one of the first keys to success is having a good plan. I recently wrote about planning in “If you don’t know where you are going, then you’re lost” and won’t repeat that post here. Suffice it to say that by first having a plan for what you need to achieve then, and only then, can you succeed in winning a Tour de France or having a successful life in a startup.
In addition to planning (and having a huge heart, strong legs and massive lungs!), another key ingredient for success in the Tour is setting the right pace.
And that’s startup life too. It’s important to work hard but not work all the time. It’s important to known when to work intensely to achieve a key milestone yet to relax and enjoy success. It’s important to have a pace for your work life that is maintainable and sustainable with the other aspects of your life. And to invest time in yourself and your family. Why? Because if you do not have the right pace and burn out, you will not likely make the best decisions, be the best teammate or team leader, and you will not be prepared to deal with the unplanned challenges that occur all the time. That is true for yourself and for how you act as a leader. By leading with an eye for the long term, you will ensure a more engaged team with lower attrition which makes it more likely the startup will be successful.
This does not mean that startup life is easy. It’s one of the hardest things you can do. But there are things you do which can make it better for yourself and as a leader.
Now many of you are saying it’s impossible! You have to work all the time to be successful in a startup! Rumor has it (Ok, it’s in a blog post on the NY Times) that President Obama played basketball or exercised almost every day on the campaign trail. And today as President he gets up in the morning, spends time with his kids, reads the newspaper and gets to the office (The Oval Office that is!) each morning around 9am. If the President can do that, then “yes you can” too. Oh and for all you Republicans out there, Ronald Reagan was known to do the same thing.
In summary, one of the keys to practicing Total Leadership is that you live your startup life with a plan and with a sustainable, long term pace.
Next up will be a post on the importance of Leadership and why “Total Leadership” is not just a marketing ploy to get people to buy into what might seem like a simple time management philosophy.
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A few golden rules for a great Board relationship
Working with a Board of Directors can be, well, scary. Why? Because they ultimately have the responsibility to hire and fire you. That’s really one of their only jobs. You say you don’t have a Board? A Board might be a group of people or maybe just an individual to whom you are responsible to report on your job results. If you think about it like that, we all have a Board.
Many people have asked how I ensured a successful Board relationship at Vontu. To be honest, I tried to keep it simple and follow a few golden rules:
- Keep your expectations in check
- Pick your board wisely
- Tell them what you are going to do and do it
- Communicate, communicate and communicate
Keep your expectations in check
After our first round of funding at Connectify, my second startup, I sat down with each of the board members and asked what were their expectations of me and what I should expect of them. The board consisted of two venture capitalists, two outside “operating executives”, one of my co-founders and myself. The most interesting feedback was from one of the investors who said,
If you don’t expect more than money, then you will be happy.
Needless to say, this was a surprise. I expected to hear how they would help us to recruit the team, find our customers, get publicity, and on and on. If you read many of the venture capital websites, that is what they promise. Yet his advice was quite sage because the reality is, especially with investors, they typically have 6-10 (if not more!) investments and are constantly looking for new ones. The model for venture capital is one of a portfolio of investments in which the few very successful companies deliver the lion share of the investment returns. And at the end of the day, they are investors relying on you to deliver the results. Does that mean that they don’t help? No. Great board members help but you should expect that the help will be somewhat sporadic and usually only on the really big stuff. I was lucky to have a great board but at the end of the day, it was my job to deliver the results.
Pick your board wisely
If you are afforded the luxury of being a founder, adding board members is as important as anyone else on your team. And you should “interview” them and be sure that you are comfortable that you will work well together. Board dynamics are tough enough without having people whose personalities clash. If you have the smartest people in the room, but they don’t have the right “relational competencies” (see previous post, It’s the people, stupid part II) then it’s likely the board will be ineffective. You say you can’t choose your Board? Well, if your board is your job, then sometimes finding a new job with a great manager is the right answer.
Additionally, especially for startups, it’s really important to have a balanced board that includes part of the management team, some of the investors (but not all if there are lots of them) and some outside board members. That way the discussion is balanced across all the constituents.
Tell them what you are going to do, and do it
This is such a simple idea for a successful board relationship. Actually it’s a great idea for any relationship. Your boss. Your team. Your spouse. Your friends. By setting the right expectations and achieving them, you build trust. If you are a math junkie, its a simple formula:
Success equals Results less Expectations
And to have success, it starts with the Expectations or plan. As discussed in the post “If you don’t know where you’re going, well, you’re lost“, you should make sure the Board agrees with your Wildly Important Goals and the Objectives for measuring their success. They can be consulted on the strategy for how you achieve them but that is ultimately your decision. And try to keep the discussions away from the day to day tactics. Without an agreed upon set of Wildly Important Goals and Objectives, well, the relationship will likely go awry.
Communicate, communicate and communicate
As in most any relationship, communications is another key ingredient. For our Board, we established a rhythm of meeting approximately once a month. During those meetings we would use our Wildly Important Goals and Objectives as the template for how we gave the board updates. And each person on the executive team would review the results from the previous month focusing on top 3 success and top 3 challenges. This way the board always knew how we were doing at any given moment.
This works great for the normal updates, but anything important, typically bad news should be communicated early and often and never wait for a formal meeting. Bad news early and being honest is always the best policy. I remember when we were about to close a $10 million round of funding and weeks before the contracts were signed and the money was wired, I realized we would both miss our sales targets and we needed to let go of a senior executive. I could have waited until after we had the money to tell everyone so as not to risk the funding, but that was not the right way to work. Instead I called the investors, swallowed hard, and told them what was happening. Maybe not so surprisingly the response was one of support. Generally the investors said that by being honest about a short term issue and putting the funding at risk, it made them more comfortable to invest. Granted overall things were going well, but needless to say it made a big impression on the new investors.
In summary, if you keep your expectations low, choose the board thinking about relational competencies, tell them what you are going to do and do it, and constantly communicate, then over time, the board will develop an ever increasing level of trust. This trust means more focused board meetings, support for management’s decisions, and generally less stress. And again, these not only work for a “real” board of directors, but for anyone to whom you are responsible for delivering results whether in your job, community or relationships.
Let me know what you think and feel free to subscribe to receive updates as I post new entries. I promise, no spam. Thanks.
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If you don’t know where you’re going, well, you’re lost.
It’s true. The best laid plans of mice and men often go awry. Lots of startups plan to do one thing and end up doing something else. And that’s ok. However, what often leads to failure, is when a team does not have a well understood, small set of very important goals. Goals that are so important that “failure is not an option.”
Sounds easy and pretty obvious. But it’s actually pretty hard. It’s hard to get a group to generally agree on “Wildly Important Goals” (as named by FranklinCovey); it’s hard to get larger groups to know and understand goals; it’s hard to figure out what to do day to day to achieve the goals; and on and on. President Kennedy did it well in setting a wildly important goal of landing a man on the moon.
It’s hard, but a leader is defined as “someone with followers”. And to have followers you should know where you are going. And more importantly, the team had better know where they are going with you.
Here are some thoughts for what makes good goal setting.
- Focus on what’s “wildly important”
- Build out the strategies, objectives and tactics
- Communicate, communicate, and communicate again
- Review the plan frequently and adjust as needed
Wildly Important
A great plan should only be a few key goals that if you don’t achieve, lead to failure. A wildly important goal should be aspirational and big picture so as to differentiate from the often urgent, yet less important things which bombard us everyday. Ideally, your wildly important goals become a rallying cry for the team.
And they should be simple and short. 3-5 bulleted sentences. That’s it. No long 20 page business plan document. 3-5 bullets that can be written in an email or on the back of a napkin.
Strategies, objectives and tactics
Often during a goal setting effort, there are lots of questions about what’s a goal versus a strategy, objective or a tactic. Someone once gave me this as way to keep them straight.
- Wildly Important Goal -- A simple declarative statement of something you want to do or achieve. It’s aspirational. A goal most of us can understand might be “I want to lose weight.”
- Strategy -- this is the “how” you are going to achieve it, not the tactics, but the big picture “how”. For example to support the goal of Losing Weight, a strategy might be ”Exercise regularly or Go on a Low Carb diet.”
- Objective -- an objective is how to measure your success. It should be quantifiable and time bound. For example, “Lose 5 pounds in 2 weeks. Lose 15 pounds in 2 months.” And for each, make sure people know who is responsible for achievement of the objective. Accountability is a key ingredient as its how you manage the team as well as an individual and their performance.
- Tactic -- this is the day to day actions you take such as “Eat 2 hard boiled eggs for breakfast or Ride my bike today for 2 hours”. Too often tactics get mixed up as strategy and objectives. For example publishing a white paper or doing a press release are tactics and not objectives.
Even with the strategies and objectives, a great plan should fit on one single 8.5x11 inch sheet of paper. You don’t need to include all the tactics as each person should have their own list. If it is more than a page it’s too much because then it’s nearly impossible to communicate, impossible to remember, and too complicated to manage.
Communicate, communicate, communicate
The reason to do a plan is to lead a team to achieve great things. The key is to communicate the wildly important goals and explain the strategy (how) and objectives (scorecard) for everyone. And once you have communicated the plan, communicate it again, and again, and again. And then email it out and post in on a bulletin board or a intranet site. And refer back to it when dealing with the day to day tactics.
Getting a team to understand, buy in, and own the plan is key to success. If great teams know what it’s important, they will figure out how to make it happen.
Review and Adjust
Planning also means reviewing and adjusting as needed. In success you should celebrate, and in failure, you should reflect and adjust to get better. By honestly talking about failure (which starts with the leader) you may even engender a greater loyalty than in celebrating success.
Whatever the outcome, a set of goals should be a living document that is reviewed regularly. I suggest a regular 90 day review and adjustment of a set of rolling 18 month objectives -- especially for a startup. Most organizations create a calendar year based plan if not an even longer multi year plan. I argue that those are obsolete in the world in which we now live. Markets change, competitors adjust, and you learn new things. A series of smaller course corrections over a shorter period are easier to manage, less disruptive and more effective than a massive change once a year or worse.
In summary, keep it simple, build out the objectives, strategies and tactics, communicate and review the plan frequently.
This little clip from Apollo 13 is a great example of wildly important goal setting along with some objectives, strategies and tactics. A wildly important goal should mean “Failure is not an option.”
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What if Steve Jobs was GM’s CEO?
In the continuing General Motors saga, Thomas Friedman, author of The World Is Flat
Now, I don’t really know what Jobs would actually do. But interestingly, when he came back to Apple he made some great decisions, many of which were actually very “startup like”. I was working at Apple in the early 90′s and can attest to the fact that the place was in a world of hurt. ”Rumor” had it that at one point Apple was teetering on bankruptcy as well so the comparisons to GM are reasonable if not at least instructive.
To start, the Apple turn around is an amazing success story and Steve Jobs did a few startup things to get Apple back on track. They include:
- Focusing on people
- Leveraging Apple’s strengths
- “Keeping it simple, stupid” aka KISS
- Made a few key bets
Focusing on People
Soon after Jobs returned, he started rebuilding the team with some great Apple Alumni and also lots of new people. And he invested in keeping some of the great talent already there. By the way, he also got rid of lots of the non or under performers. Here are a couple of examples on the executive team.
Jonathan Ive joined Apple in the early 90′s. I had the pleasure of working with him on a few projects including one code named “Lindy” which became the Newton MessagePad 110. He (and others that get less limelight) are incredibly talented designers and deserve credit for giving Apple the distinctive look and feel of todays products -- iMac, ipod, iPhone, you name it. He is an example of retaining an incredibly talented person who has truly delivered in Apple’s turn around.
Steve also recruited new people that filled gaps and holes in the team. Some were alumni from Apple, such as Phil Schiller, and others were new such as Timothy Cook, now Apple’s Chief Operating Officer. Cook brought years of manufacturing and operating experience from IBM and Compaq’s hardware business. This is something that Apple desperately needed in order to re-invent its supply chain for the 21st century. There is a great article about Cook in Fortune if you are interested in learning more. Fortune is suggesting that he is the likely internal candidate to become the next CEO of Apple… But replacing founders and CEOs is a topic for a future post.
So if Steve Jobs were CEO, my guess is that he would first focus on people and figure out who is great and should be retained and who should be brought in, either GM alumni or other folks, to fill in needs and gaps. This includes who should be replaced within the existing leadership team. And he would push this process deep into the organization to go beyond the executive team and focus on the whole company.
Leveraging its Strengths
When Jobs became at first interim CEO and then full time CEO, Apple had its share of challenges and lacked many of the strengths it has today. It did not have an iPod, or an iPhone and its computers did not have the cache they have today. But Apple did have some strengths and Steve played to them. Interestingly, many of its strengths were what many people thought were its weaknesses. One key strength to start was simply that it was different and its loyal user base was graphic designers and non mainstream PC users. It was not a Windows PC. Apple strengthened then built off of that position. It did this both in advertising and then in its products. Remember its ad campaign, “Think Different”? Read the text of its introductory ad which reaches out to those who challenge the status quo and don’t like rules. This was all about leveraging its strengths in its core customer base.
A key startup trait is don’t try to be all things to all people. Leverage your strengths and dominate one area profitably. This is what Apple did to start. They went back to their roots and leveraged that strength.
If Jobs were CEO of GM, he would do the same thing. Leverage a key strength. Without knowing all the details, my guess is that Jobs would focus on strengths of a few key brands -- Cadillac for high end luxury sedans, GMC for the best trucks you can buy, Chevrolet for mainstream affordable cars and Corvette for sports cars. And then the question is what to do with the rest…
Keeping it simple, stupid (KISS)
One of the other things Jobs did was to simplify and GM needs to do the same thing. When he came back there were lots of Macs with lots of configurations and Apple was still funding Newton which was bleeding money. I promise more detail on Newton later… What he did was focus and keep things simple. Apple simplified its product line by focusing on the high end graphic designer and workstation market and also the education and home market with the launch of the iMac. And it killed Newton and the whole effort to have other companies manufacturing Macintosh clones.
GM needs to do the same thing and cancel or sell off a lot of the stuff that is not making money. Start by killing Buick and Pontiac as they are simply re-labeled cars from other brands. Kill Hummer as it was a nice fad car but not a long term profitable market. Sell off Saab. Shut down or sell off Saturn as allegedly it has never turned a profit even though it has a pretty good brand.
Get back to a core strength and dominating 1 or at best a few key markets. Downsizing will be tough as lots of people have something to say about it (see previous post about GM and the friction in its infrastructure) but if GM does not then it will simply continue on its decline and eventually go completely bankrupt since after the US Government, no one else will step in to help… Now if it did all this, then what would be next?
Make a few key bets
Once Jobs got Apple healthy again, he started making a few key bits though not all at once. They included launching its own direct sales channel -- both apple.com and the Apple stores. This was a big bet because it had relied on others to sell its products and now was going to compete. It then launched the iPod and as it famously delclared, “Hell Froze Over”, and had the iPod support Windows. (GASP!). Apple too had to think differently and by supporting Windows with iTunes, it greatly expanded their market for the iPod. That one decision not only made the iPod a success but got many people that had never purchased an Apple product to consider a Mac and has driven sales of the Mac too.
If Jobs were CEO of GM, after making sure it had the right people, leveraging its strengths, keeping things simple, he would likely bet on just a few things -- a break through new product such as the Chevy Volt and maybe a new distribution channel.
The Chevy Volt is an attempt to make an electric car that works with today’s electric and gas infrastructure and is affordable. You can read more about the Chevy Volt here. It has the potential to be the kind of breakthrough product GM needs.
With respect to sales and distribution, isn’t it about time that I can go online, configure the car I want, give my credit card for a deposit and have the price be $1000 over their manufacturing costs, and then have the car delivered to my garage?
And of course, I am sure if Steve Jobs was CEO of GM, the cars would have amazing industrial design and be a delight to both drive and simply admire. GM could use some pizzazz too.
I don’t know if this is what Steve would actually do, or if it would even work, but it is fun to dream. Isn’t it about time that GM started to think different? Very differently? Let me know what you think…
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