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Category Archives: entrepreneurship

Back To Work: About New Year’s Resolutions

nyeThe entire KidoZen team is back at work this week and I never seen this level of excitement. Obviously, we ended the year with a very good momentum and have super ambitious and really exciting plans for 2014. Like most people, I spent part of my holiday break reflecting about 2013 and setting the goals and plans for 2014.

During that time, I was super happy to discover that I hit over 85% of my 2013 goals, had some pleasant successes in areas I didn’t  plan for and I still manage to do a decent  job on the resolutions I didn’t accomplish. While 85% might not seem particularly impressive, my satisfaction comes from knowing that my 2013 goals were super ambitious. At the end, I believe that’s the only way to set goals.

From New Year resolutions to our monthly/weekly plans at KidoZen, I like to evaluate goals based on the following rule:

  • Accomplishing Over 90% of the Goals: Probably our goals are not ambitious enough
  • Accomplishing Between 75% to 90% of the Goals: We are doing well, let’s keep pushing to get close to 90%
  • Accomplishing Under 75% of the Goals: We are doing something wrong, time to reassess.

As always, the key to accomplish goals is to stay really focused, iterate and adapt.

In terms of my New Years Resolution, I have some super ambitious goals both personally, for my family and I can’t not even tell you about some of the crazy goals we are trying to accomplish with KidoZen. It should be fun ;)

 
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Posted by on January 6, 2014 in entrepreneurship, leadership, startups

 

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Give Thanks to your Competitors: What I Learned from the Starbucks-Square Partnership

Yesterday, mobile payment processing startup Square dropped a bomb on its competitors by announcing a partnership with Starbucks  http://news.cnet.com/8301-1023_3-57488803-93/square-starbucks-aim-to-give-mobile-payments-a-jolt/. The initial phase of this partnership will enable Square to process credit and debit payments in 7000 Starbucks stores. Additionally Starbucks will be adding $25M to Square’s new monster funding round.

Pretty sweet deal for Square huh?

Well, while learning about the details of the partnership, I was surprised to learn that it was Starbucks who approached Square and not the other way around (http://pandodaily.com/2012/08/08/starbucks-approached-square-after-rejecting-every-other-mobile-payment-player/). Apparently, Starbucks had been approached by every other payment provider in the last few months and, not being completely satisfied with those technologies, they decided to evaluate Square which started the conversations towards the partnership.

For Square’s competitors, this has to feel like a punch in the stomach. Square literally benefitted from their efforts trying to land a strategic alliance with Starbucks. This is a classic example of how a failed attempt to establish a partnership can open the door to your competitors.

In the software world, establishing a successful partnership is always a combination of having a solid business model and a compelling technical solution that benefits both parties. Missing any of these two elements can have very different outcomes.

Approaching a potential partner with a great technology solution but a poor business model can completely shut the doors for all your competitors as your partner could assume that there are no viable business models in the space. However, if your partnership model is really compelling but the technology is not as good as your competitors the partnership attempt might backfire and create new opportunities for your competitors with a better technical value proposition.

As a startup CEO, when working on strategic alliances try to evaluate all possible outcomes of including the possibility that you might create new opportunities for your competitors. Similarly, stay aware of the partnerships and strategic alliances your competitors are trying to establish. Their failures could end up creating immediate opportunities for you.

 
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Posted by on August 9, 2012 in entrepreneurship, leadership, startups

 

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The Enterprise Minimum Viable Product: Focus on Viable Instead of Minimum

The minimum viable product (MVP) is one of the great concepts pioneered by the Lean Startup methodology. Conceptually, the MVP includes only the basic set of features that make a product production ready and nothing more. Obviously, the MVP concept has become one of the essential mechanisms to ship software efficiently and quickly incorporate feedback from real customers. However, while the MVP mechanism has proven to be an incredibly effective vehicle in the consumer market, there are some major challenges on develop solid MVPs in the enterprise world.

The whole MVP principle is based on shipping the essential feature set to make the product usable, get it in front of customer, study their behavior and incorporate their feedback into subsequent versions of the product. AS you might imagine, this process is not that simple in the enterprise software world in which the complexities of companies can complicate the dynamics between an enterprise software startup and its potential customers.

Having struggled with the characteristics of the right enterprise software MVPs for almost a couple of years now, I can point to a few challenges that most enterprise software startups will encountered when trying to get customers to adopt MVP-type products.

The User is Not the Buyer

One of the reasons that make the MVP concept works so well in the consumer market is because the user of the software is typically the ultimate buyer. Because of this reason, user feedback will directly make the MVP more appealing to potential buyers. This story is quite different in the enterprise world on which the people trying the MVP are rarely the ones making the ultimate purchase decision. In that sense, enterprise software startups need to be able to carefully evaluate the feedback received from an MVP, filtering the noise from the features that will make the product more relevant to potential customers.

Time Commitment

Getting enterprises to commit time and resources to evaluate an MVP-type product can be a really challenging endeavor. Differently from the consumer market, potential buyers in the enterprise are constantly bombarded with different assignments that will distract their attention from your valuable product.

Overfeature Culture

For decades, enterprise software has evolved in the middle of a culture that value the number of features over the simplicity and usefulness of a product. By presenting an MVP version of your product to enterprises, you might run onto a wall of prejudices that tend to associate the number of features in a product with its robustness and enterprise readiness.

Burning Bridges

Given the complexities of enterprise software sales cycles, startups need to be very careful when/how to position an MVP product to customers. If not explained correctly, the MVP might cause enterprise to be disappointed and not consider adopting your software just because they misjudged the purpose of the product at that stage.

In my opinion, there are some fundamental differences between the viability of the MVP approach in the enterprise and consumer markets. Despite the validity of the approach, I think enterprise MVPs can’t be too minimum and must be very viable ;)

 

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Enterprise Software Lessons: Avoid the Early Adopters Sirens Songs

In enterprise software, customer acquisition is the main factor that differentiates winners from losers. Understanding the process of winning customers, the required time, typical sales cycle, parties involved, etc are essential to successfully implement the correct growth strategies in an enterprise software startup. In the early days, enterprise software startups need to do everything at their disposal to win customers and increase adoption of their products.

While the first customers of any enterprise software startup are always the most exciting ones, their behavior can be really misguiding in terms of predicting long term customer acquisition strategies. I like to refer to this problem as the “early adopter’s siren songs”.

In Greek mythology, were dangerous and devious creatures, who lured nearby sailors using enchanting and irresistible songs that deviates them from their normal course. Using this analogy, in an enterprise software startup, you can think of early adopter customers as a bit of a siren song that can deviate the product from its normal trajectory.

Early customers are a great thing to have as an enterprise software startup. These companies are willing to take a chance on your new product and invest in your success. However, early adopters are not a direct representation of your target customer population and, consequently, of your ultimate business models. From a customer profile standpoint, early adopters tend to be more forward thinking, risk taking and innovation hunger than most companies. In that sense, your early adopter customers can send the wrong signals in terms of the customer acquisition models and metrics of your enterprise software product.

As an enterprise software startup CEO, you have to fight very hard to get early adopter customer but you have to drive even harder to get passed the early adoption technology inflection point. Until you get passed that “inflection point” you won’t be able to get a clear picture of the customer acquisition models that work for your enterprise software product. Early adopters are a great sign of the initial traction of a specific enterprise software product as well as the viability of a specific idea but can rarely be considered an indicator of long terms business and execution models. Establishing customer acquisition strategies and projection based on early adopter customer are not only unreal but highly misguided representation of the real adoption and long term business models in an enterprise software startup.

From an enterprise software startup perspective, the transition from early adopters to mainstream customers is one of the hardest thing to accomplish. However, until you get to that point, any metrics , long term projections or business models won’t be based on real facts but on dangerous songs of sirens.

 

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What Entrepreneurs Can Learn From Dwayne Wade

I had a thoughtful post about enterprise software prepared for today and then something happened last night: The Miami Heat won its second NBA title! So I decided to write a cheesy post :) Don’t worry, we are not going to talk about basketball :)

I was barely paying to the post-game interviews because everybody was talking about the same: effort, team work, sacrifices…..However, there was something in Dwayne Wade’s interview that made me stop what I was doing to listen. Wade was being interviewed by ESPN when he was asked to compared this title with his first NBA championship in 2006.

“I’m speechless,” Wade said. “Winning the championship in 2006 was amazing. But I didn’t go through nothing yet. Now six years after that, I’ve been through a lot in my personal life, and I’ve been through a lot in my professional life, and this means so much more.”

Wade also mentioned that in 206 he was happy to win a title for his veteran teammates and recognized he didn’t realize how hard was going to be to win a second one.

In case you don’t follow the NBA. Dwayne Wade won his first NBA title in 2006 as part of the Miami Heat team that included super star Shaquille O’Neal, current Miami Heat captain’s Udonis Haslem and veterans like Gary Payton and Antoine Walker. After that year, the Miami Heat went through a rebuilding period of having some of their worst seasons in history but finally the team was able to sign all-stars Lebron James and Chris Bosh and started a path that took them to two consecutive NBA finals and the title last night.

Listening to this interview, I couldn’t avoid relating it to what, a lot of times, we experience as young entrepreneurs. When triumphs comes to us too easy, when we win customers without even trying, when our talent is recognized everywhere, when all we experience in our companies is growth, when we sell our first company or product; we take the risk of not appreciating the effort that takes to be at the top and, more importantly, we can lose perspective about the values and motivations that drove us there in the first place.

Those values are quickly tested in difficult times, when you win only 15 games in an NBA season, when you lose a big client, when you have to part ways with some of your key employees, when you go through a personal crisis that can start affecting your work performance…. At that point, is when you have to rely on values and convictions as much as on talent to get back on top.

When you experience those dark days, your new triumphs and recognitions will come to you in a different path. You start realizing that, as Reid Hoffman promotes in his latest book, entrepreneurship (and I am not referring to start companies) is a philosophy of life and not a job. You start realizing that you climb mountains because you love to climb and not because you want to get to the top. You realize that you play basketball because you love the game and not to win championships. Those championships will come, just in a different way.

 
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Posted by on June 22, 2012 in entrepreneurship, startups

 

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Does Enterprise Software Needs Sales People?

The sales staff is one of the traditional elements of enterprise software companies that has been heavily questioned by the new generation of companies in the space. A lot has been written about the new software acquisitions models in the enterprise and how companies today don’t need to rely on traditional sales mechanisms. Companies like Atlassian claim they have acquired tens thousands of customers without a single sales executive and passionately promote that model as the cornerstone of the new generation of enterprise software.

These days, enterprise software sales staffs are associated with the old boys, the Oracles, IBMs and SAPs of the world. Sales guys are not cool, they think about money and not about changing the world and they are expensive. These days, enterprise software can spread viraly, purchased with a credit card on subscription basics. Factoring all this, do we really need sales people in an enterprise software startup?

The answer is: ABSOLUTELY YES!

I have thought about this problem for a long time and tried different models. At this point, I couldn’t be blunter about my opinion on the subject. To achieve scale, an enterprise software startup MUST have a sales staff. What we do need is a different type of sales guys and new and innovative sales models.

Let me try to explain.

While you can certainly establish an enterprise customer based without a sales staff, it’s almost impossible to achieve a decent scale following that model. Selling to large enterprises can be a lengthy and complex process that needs the patience and dedication of a sales executive. When selling to large enterprises, you need to deal with procurement departments that have been trained to get any possible discounts in your software, IT departments that tend to be adverse to changes and new technologies and rigorous compliance and policies that most of us find ridiculous. Having a solid sales staff can and will help to win those large accounts that, otherwise, will require the full attention of the management team.

Having said all that, I do believe that effective enterprise software sales are fundamentally different from the traditional models. Market phenomenon such as globalization and economies of scale, technology movements like software as a service, software distribution models such as app stores, cultural movements such as the “consumerization of the enterprise” are just some of the factors that we can leverage in the new generation of enterprise software sales. As an enterprise software company, there are a few tips that might help you improve the dynamics of your sales organization in this new world.

Leverage Fremium Models

As I mentioned in a previous article, fermium models do work in the enterprise. A fermium model will help you increase your customer population while allowing your sales team to focus their attention on those customers with the potential to convert to a paying model.

Selling to the Buyer

One of the main problems in enterprise software is that the people testing the product are not the ultimate buyers. Involving the decision makers early on in the evalution process will do wonders to expedite your sales.

Make it Simple

I know it sounds cheesy but, as an enterprise software company, you need to obsess to make your software as easy to acquire as possible. A simple and transparent sales model will streamline the software acquisition processes for your customers.

Disclose Pricing

Complimentary to the previous point, part of making a sales process as simple as possible is to provide your customers with all the information they need in order to evaluate the product. Pricing is one of those aspects that a lot of companies tend to only disclose after they have gotten in contact with the potential buyer. That’s completely ridiculous, disclosing your pricing model will make it easy for your customers to evaluate your software and will avoid unnecessary negotiations.

Find a Champion in IT

In any enterprise software sales process, there is a huge difference between sales that require the involvement of the IT department and the ones that don’t. Rightfully so, IT groups tend to be extremely conservative when adopting new technologies and can be very demanding from the software compliance and policy standpoint. However, IT groups can also be your biggest champion if the value proposition is clear enough. If your sales process requires IT involvement, my advice would be to get then involved at the very beginning of the process and find a few champions within the IT organizations that can help you navigate the complexities of the process.

 

 

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Startup Moneyball: Talent, Passion, Experience, Perspective, Work Ethic

Hiring a great team is one of the most difficult aspects of a technology startup. However, attracting the right people is not nearly as difficult as building an environment on which their talents can blossom and contribute to the company. Despite the hundreds of books written about team building, I still think there is no magic formula for assembling a great team. Having said that, I think the quickest path to build a spectacular team is to simply hire great people.

When thinking about the mechanics of building a great team, I can’t avoid tracing the parallel to the moneyball science. In its 2004 book Moneyball: The Art of Winning an Unfair Game, bestselling author Michael Lewis tell us the story of how the Oakland Athletics(OA) General Manager Billy Bean and a group of baseball enthusiasts applied an accounting method for assembling a baseball team. As a result, with a very small budget and using underrated players, the OA were able to win as many games as the top franchises and even make the playoffs.

While the moneyball science is based on factoring baseball elements such as home runs, stolen bases, hits, etc in a the software startup world we can apply a similar formula to build a great team. In my experience, a great team in a small software startup is a combination of factors such as talent, experience, passion, perspective and work ethic.

Even though is not an exact formula, you can use the following equation to relate to a great team.

Startup Team= %Talent + %Experience + % Perspective + %Passion + %Work Ethic

As a startup CEO, your job is not only to find the right combination of the aforementioned factors but to provide an environment on which they can nurture and applied to the productivity of the overall team. Let’s think about each factor individually.

Talent

In order to be successful, it is key for a startup to attract the right groups of talent. Whether you are referring to great programmers, analysts or business development people, having a uniquely talented staff will allow you to efficiently execute in your specific products or strategies.

How to nurture talent? : Skill is the natural complement of talent and the best way to nurture it. As a startup founder, make sure you are providing an environment and culture and that allows your team to acquire new skills to improve their talents. A classic example is facilitating your best programmers (talent) to learn and apply a new programming language (skill).

Experience

Regardless of how talented you are, there are things that manifest itself throug experience. Having experienced folks in staff helps the team to avoid common mistakes and to focus on the things that really matter.

How to nurture experience? : The best way to nurture experience is to surround your team with the right group of advisors that will help guide them through specific decisions. In that dynamic, the less experienced team members will quickly be exposed to a new pool of wisdom based on the experiences of the other folks.

Perspective

Talent and experience are not everything. When facing specific circumstances, there are people that have the ability of thinking outside the box and trace parallels to examples of different industries, different times in history or complete different subjects. I like to refer to that skill as perspective and, arguably, is the hardest talent to find and nurture in startup

How to nurture perspective? : Knowledge is the natural ingredient to broaden people’s perspective. Some people acquire knowledge by reading books, others prefer to constantly talk or interact with more experienced people, other prefers to travel, etc. Regardless of the method you use, providing the right channels to acquire more knowledge will broaden the different perspectives from which your team can assess a particular situation.

Passion

Passion fuels all the other aspects of a startup. Being passionate about a problem, a product or a specific goal will make people go to the extra mile to accomplish a specific objective. Differently from talent, experience and perspective; passion is highly contagious and it quickly changes people’s attitude towards a specific circumstances.

How to nurture passion? : Passion nurtures itself. As a startup founder, make sure you are giving your most passionate people the right space to leverage their talents and to influence the rest of the team. Also make sure you are getting rid of all obstacles that can affect your team’s passions.

Work Ethic

You can’t build a successful software business working 8 hrs a day, it just doesn’t happen. Having a strong work ethic, making the right sacrifices and being a team player are essential ingredients to succeed as a software startup.

How to nurture work ethic? : Lead by example! Make sure your most hardworking people have the opportunity to mentor and influence the rest of the team. From time to time, I find it useful to run a few sprints and fight a few fires that test and train the work ethics of the team.

 
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Posted by on June 19, 2012 in entrepreneurship, startups

 

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Does Freemium Work for Enterprise Software?

A couple of weeks ago we made an important decision to offer our Moesion product free of charge for the first 3 servers. This decision represents the final transition to embrace a “Fremium” pricing model as part of the entire Moesion platform. The interesting thing is that we decided to make the switch when our levels of customer acquisition are at their highest level since we launched. We just passed 400 customers, with just a few months since we announced the product.

Looking at that, a lot of our advisors rightfully questioned the decision of moving from a sort-of-traditional enterprise software licensing structure to a freemium model in which customers can start using the product, full-featured, for free and then upgrade to a paying license.

For weeks, we’ve heard all the traditional arguments against the freemium model:

  • Customers should pay for the product…
  • What’s wrong with offering the software in a trial period?
  • Are customers going to take us seriously?
  • Are people going to try to gamble the system and take advantage of the free offer?
  • Are customers likely to upgrade after using the software for free?
  • How does this change our sales model?

The arguments above are not only valid but certainly expected. If you think about it, until now freemium models have, for the most part, been associated with consumer technologies in which user volume is sometimes more important than the revenue model. When it comes to enterprises, the old mindset of long sales cycles, proof-of-concepts[E1]  or trial periods, and armies of nicely dressed sales guys still prevails when it comes to enterprise software.

Despite the previous arguments, we are seeing some very inspiring examples of enterprise software companies relying on freemium models to attract large numbers of customers. ZenDesk, Box, and Atlassian are just some examples of companies that have challenged established vendors in the enterprise software space and reached massive levels of customer adoption by leveraging freemium as the center of their revenue model. These companies are capitalizing on a very unique time.

We are living in really exciting times in enterprise software. The emergence of mainstream computing models such as cloud infrastructures and virtualization, the increasing presence of alternative connected devices as well as the new wave of social communication methods are fomenting unprecedented levels of innovation in the space and are allowing small companies to challenge established vendors such as SAP, Oracle, IBM or Microsoft. In my opinion, these technical revolutions are also opening the door for flexible pricing and commercialization mechanisms to be adopted in the enterprise software world.

A freemium pricing model definitely offers a lot of interesting opportunities in the enterprise software space but there are some serious factors that need to be taken into consideration before adopting it.

Where Fremium Works

Having a large number of customers is always exciting and can definitely help position your company as a leader in a specific market. However, if that customer adoption comes at the price of real revenue you better have a very solid strategy about how to monetize your product. In the consumer world, there are some established mechanisms such as advertising that offer a clear path to monetization once you have an established user base. That equation is not as clear in the enterprise world in which, most of the time, you have to find a way to have some of your customers pay for your product regardless of your user adoption.

In that sense, you must do a very detailed analysis of the characteristics of your product and market to make sure it is a good candidate for a freemium pricing model. Based on my experience, I can list a few factors that need to be present in order to have a chance of success with a freemium pricing strategy:

  1. Great product quality: This one is very simple, if you want customers to pay for your product after using it for free, your product should offer an impeccable experience that justifies the upgrade.
  2. Large market: The only reason for embracing a freemium model is to have a large number of customers using your product. In that sense, the market has to be big enough to give you access to tens of thousands of customers and/or millions of users.
  3. Scalability and monetization unit: Number of users, servers, devices, api calls, storage capacity, etc are some of the metrics you can use to model your pricing structure. In any case, you have to have one or various units to scale your product from a free base.
  4. A broad spectrum to upgrade the product: When going freemium, you have to assume that a significant percentage of your users are just not going to upgrade from the free version in the current version of the product. Even if your target market is large in terms of the number of potential customers, you have to make sure is also broad enough that will allow you expand onto new areas with new products or features that will keep expanding your user base and number of paying customers,
  5. Simple to install and use: In addition to providing a great experience, your product needs to be simple to install and deploy within an enterprise environment.
  6. Simple pricing structure: If you expect customers to give you money after using your product for free you have to provide a pricing structure simple enough that won’t impose major challenging from the budgeting perspective.

In addition to the aforementioned points, there are other elements that could make your enterprise technology an ideal candidate for a freemium pricing structure. Intrinsic virality or the ability to building a strong user community around the product are probably some of the hardest aspects to accomplish but if you get there your product will be in a position to experience high and consistent levels of growth.

The Advantages of Freemium

If the conditions are created, a freemium pricing model can offer very tangible advantages over traditional pricing structures. Here are some of the ones that come to mind:

  1. Large customer base: Having a large number of happy customers can be one of your biggest assets, which will open the door for all sorts of interesting opportunities.
  2. Different sales cycle: Freemium can improve your sales cycle by only dealing with customers which are already using your product vs. having to start with a traditional enterprise sales cycle.
  3. Bring freedom to IT: I know it sounds cheesy, but I can’t avoid feeling satisfaction knowing that offering your product for free empowers IT users to make their own decisions and try to use the best products for the job without having to play IT politics at the very beginning of the technology acquisition process.

Regardless of the clear advantages and undeniable hype around freemium pricing, there are still some serious considerations in order to determine whether it will be successful in the enterprise. We are extremely happy with our decision and already seeing some positive results but I will encourage you to do some serious analysis before adopting a freemium pricing model if you are selling to enterprises. In the end, once you make the commitment to offer your product for free you might not be able to rollback without damaging your brand.

What do you think? Does freemium work in the enterprise?

 
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Posted by on April 17, 2012 in entrepreneurship

 

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Some Thoughts on Employer Employee Relationships

People are a key element of the success or failure of a software startup. Great people can build great things while ordinary people couldn’t differentiate a great thing from an average one. This is why aspects such as the hiring practices, culture, values and, ultimately, the employer-employee relationship should be the most precious relics of any startup.

Despite many challenges, I believe that we have done a great job at Tellago Studios and Tellago when comes to hiring and attracting talent. Up to this point, we can’t say we have had any hard time finding great engineers and we’ve managed to organically grow a very unique culture that contributes to the general happiness of our team. However, we also have learned a lot of lessons in terms of employer-employee dynamics that I think are worth writing about.

Value Loyalty

In 1885, Louis Pasteur used his knowledge of inoculation to save the life of a nine-year-old boy named Joseph Meister, who had been bitten by a rabid dog. When the Nazis captured Paris fifty-five years later (in 1940), Meister, working as the gatekeeper of the Pasteur Institute, was ordered by a Nazi officer to open Pasteur’s crypt. Rather than do so, he killed himself.

For Employees

Startups present a unique opportunity to build a loyal relationship with the founders and with the company in general. Being loyal is not only important because it helps you navigate through the tough times together but because it builds up dreams, relationships and principles that last an entire lifetime. If you feel that you are working on a startup that is not worth your loyalty then you should probably look for a different job. At the same time, you should expect loyalty from the founders as well.

For Founders

Like any other great gift in life, loyalty needs to be earned. As a founder, you should be extremely loyal to your employees. You should care about their career paths and work intensely to provide an environment on which they can put their talents to work for the best of the company. Without that level of loyalty, it is almost impossible to build any type of culture or environment that will inspire people to work for your company.

Make Everybody Better

Los Angeles Lakers guard Rod Hundley once roomed with Elgin Baylor, one of the greatest scorers in the history of the NBA. One night in New York, Baylor set a team record, scoring seventy-one points in a single game.

As they got into a cab to ride back to their hotel, Hundley put an arm around his teammate: “What a night we had, buddy!” he trumpeted. “Seventy-three points between us!”

For Employees

Software startup environments provide a unique opportunity to work with people that share your same vision, passions and, if the founders of the company are doing a decent job, even talent around certain technologies. Given the craziness of software startups, you are very likely to spend more time with your colleagues than with your friends and family. Every day, put forth your best effort to contribute to making your colleagues better and, in the same manner, take the time to learn from them.

For Founders

Building an environment that stimulates constant learning and improving is something that should be part of the core DNA of a startup. Most of the time, it comes easier if the founders share a passion and practice for learning and exploring new things.

At Tellago and Tellago Studios, Elizabeth and I, working together with the team, have managed to build a culture in which it is almost impossible to not learn new technologies on a weekly basis. Even if you try to not learn on purpose you will get bombarded with so many discussions, debates, and challenges that you will find it very hard to accomplish your mission. We complement that by hiring people that share our passion for learning and mastering new things.

Avoid Job Hopers

For Employees

If you are the type of person always looking for a bigger payday and incapable of committing to a company, then you shouldn’t work for a startup regardless of how much you like the company. You, most likely, belong in bigger and more structured corporations that can offer clear financial benefits without dealing with the challenges of a startup environment.

If you are decently talented, you can always find another company that pays more for your services. What you are going to have a hard time finding, are companies that offer you the pride and thrill that you experience when you are building something bigger than yourself.

For Founders

As a general practice, I tend to not read too much into a resume. In my experience, most resumes, and even your profile in a professional network like LinkedIn, is not an accurate representation of your skillsets. When I scan through a resume I look for aspects that help me understand the talent and character of the candidate. One of the aspects I pay attention to is the number of jobs a candidate has had in recent years. Generally (there are exceptions) I could be a little predisposed to not hire “job hopers”.

As a founder, I would recommend avoiding hiring “job hopers” unless you have a good reason to do so. Definitely avoid building an entire team of “job hopers” just because they bring some talent to the team.

Work With People You Admire

Christian Bale was delighted to play the villain opposite Samuel L. Jackson in Shaft. “It was a real honor,” he later remarked, “to be called ‘motherf—er’ by Sam Jackson!”

For Employees

If you are planning to join for a startup, make sure you believe in the founders as much as you believe in the vision of the company. Startup environments will bring long hours, tight deadlines and other challenges into your life.  Make sure that, at least, you take that journey with people you admire and believe in.  If you don’t feel admiration or respect for the talent, passion or vision of the founders of your company, then you are better off going somewhere else.

For Founders

Starting a company goes beyond having a decent idea and the resources to execute on it. Ultimately, companies reflect the talent, passion and character of the founders and the team. Make sure that, at every step of the way, you honor, protect and work very hard to improve that image. Make sure you surround yourself with people you respect and admire and that believe in you but, at the same token, do everything you can to improve every day as a founder and grow those beliefs onto dreams and passions.

Remember that your most talented employees will always care more about passion, talent and vision than about control. Great companies, big or small, get to be bigger than any individual and that applies for the founders as well. If, at any point, you feel you don’t have the talent, strength or passion to take your company to the next level either avoid taking that step or step aside and let other people lead the way.

Be a Fighter

When J.K. Rowling wrote the first Harry Potter book in 1995, it was rejected by twelve different publishers. Even Bloomsbury, the small publishing house that finally purchased Rowling’s manuscript, told the author to “get a day job.”

At the time when Rowling was writing the original Harry Potter book, her life was a self-described mess. She was going through a divorce and living in a tiny flat with her daughter. Rowling was surviving on government subsidies, and her mother had just passed away from multiple sclerosis. J.K. turned these negatives into a positive by devoting most of her free time to the Harry Potter series. She also drew from her bad personal experiences when writing. The result is a brand name currently worth nearly $15 billion.

For Employees

Being part of a startup entails way more than building new products and working on small teams. Startups also bring with them uncertainty, instability, growing pains and other challenges that will test your beliefs in the company and founders. Particularly if you are going after a big opportunity, most of the time it is not sufficient to execute flawlessly, sometimes you have to fight very hard to accomplish your goals.

For Founders

As part of your hiring practices, make sure you can clearly identify “the fighters” within your team. When facing difficult times, you need the right combination of talent and fighting passion to pull through them. Additionally, as a founder, you owe it to your employees to fight to accomplish the vision and preserve culture and principles of your company every step of the way.

Wear Multiple Hats

For Employees

During the initial phases of a company, you will be asked to perform multiple functions some of which won’t be aligned with your expectations. While this should be an exception rather than the rule, be aware than versatility and flexibility are sometimes as important as mastery in the early stages of a company.

For Founders

Plain and simple, hire technology and business generalists into your team. Let’s be clear,  being a generalist doesn’t mean that you are haven’t mastered any particular skill. Instead, it means that you have the skillset of playing different roles effectively in order to make your team better. Additionally, as a founder, be aware that many times you are going to sacrifice working on some of the areas that you truly love in order to perform other necessary functions.

Master Something

The virtuoso violinist Niccolo Paganini often played using fewer than four strings. “One evening a rich gentleman begged… Paganini and [a guitarist named] Lea, together with a cellist named Zeffrini, to serenade his lady-love… Before beginning to play Paganini quietly tied an open penknife to his right arm. Then they commenced. Soon the E string snapped. ‘That is owing to the damp air,’ said the violinist, and kept on playing on the other three strings.

“A few moments later the ‘A’ broke… but he went on playing. Finally the ‘D’ snapped, and the love-sick swain began to be fearful for the success of his serenade. For what could Paganini do with only one string on his violin. But Paganini simply smiled and went on with the music with the same facility and strength of tone that he had previously used on all four cords.”

For Employees

As part of your professional career in the software industry, take the time to master a particular skill. Whether it is a programming language, a specific technology or a general technology segment, try to become one of the best in that specific area.  Even if you don’t get to utilize that specific skill your entire career, the abilities you acquired when mastering a specific subject will take your learning skills to a completely different level and, most likely, will help you to master many other skills. Contrary to popular belief, becoming one of the best in the world in a particular technology subject is not as hard as it sounds.

For Founders

During the interview processes at Tellago and Tellago Studios, I always try to find out whether the candidate has either mastered a particular skill or has the ability to do so. Whether big or small, the ability of mastering a specific skillset is a testament of intelligence, will, hard work and having the capacity to improve. As a founder, I am sure you can use all those skills on differ

 
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Posted by on August 15, 2011 in entrepreneurship, startups

 

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A good reason why we are not in a technology bubble: Competition

There is a lot of debate in the venture capital circles around whether we are seeing the first signs of another internet or technology bubble. When the last internet bubble burst I was in high school and not even living in the United States but I clearly remember starting computer science school reading the horror stories of companies going out of business and the entire world complaining about the lack of sustainability of Internet startups. Ten years after, we are, yet again, experiencing an explosion in technology markets that are bringing back dark memories from the last collapse.

Certainly, the excitement in areas like cloud computing, mobility or green computing are pushing valuations to levels that, sometimes, are not a true reflection of the real value of a company. You even have companies like Pandora being able to pull a $1B IPO without even being profitable. On the other side, we have many indicators that contradict the hypothesis that we are entering a technology bubble. Arguably, the clearest of those indicators is the fact that the hottest technology companies like Apple or Google are trading below average levels.

I’ve spent a lot of time watching the market and thinking about this topic and I firmly believe that we are NOT experiencing a technology bubble. I will go as far as to say that there are some very specific conditions that will prevent the technology market from experiencing another massive collapse. If you do some research online, you will find a lot of macroeconomic reasons that will sustain this argument and I certainly don’t plan to expand on those aspects in this post. Instead, I would like to focus on a basic and almost trivial argument that, in my opinion, will prevent another technology bubble: Competition.

My thesis here is very simple, I believe that the fierce competition we are experiencing in the technology market will guarantee that only great companies will prevail at the end of this cycle. If you look at any of the hot internet trends these days like location, social or recommendations, you will find a small number of companies raising the level of innovation at an unprecedented pace which, at the same time, is raising the level of maturity of the current market. This almost contradicts the characteristics of a technology bubble.

How Is That Different From The Dotcom Days?

Well, if you think about it, despite the number of internet companies started during those days, there was not enough level of competition to increase the maturity level of the market. Interestingly enough, the few areas that did experience tough competition like search or ecommerce ended up producing companies like Google, Amazon and EBay which are some of the pillars of the modern internet.

What Competition Can Do…

Here is a quick anecdote of how the rivalry between two of the greatest masters of the Italian renaissance helped to influence a beautiful piece of art.

Italian Renaissance artists Michelangelo. Buonarroti, and Raphael Sanzio were unspoken rivals. The irascible Michelangelo, forced by Pope Julius II into painting his own private chapel, the Sistine as we know it, complained that he was not a painter, but a sculptor. This complaint fell on deaf ears as the pope had a war to fight and little time or patience for soothing the artistic temperament.

Raphael, on the other hand, blessed with a much more affable personality, never seemed to lack for funds or friends. Both artists were occupied simultaneously with the pope’s own private artistic visions in the Vatican.

Raphael’s work in the Vatican Stanze was open to the curious; while Michelangelo left strict orders that no visitors were to be allowed in the Sistine Chapel. Michelangelo, busy as a bee himself, consumed with a daunting task, apparently had little interest in Raphael’s work. But Raphael had an interest in his. Raphael paid a secret visit aided by the pope to view Michelangelo’s ceiling in progress.  So profoundly did it affect him that he returned to his work in the Stanza della Segnatura (the pope’s private library), where he proceeded to pay tribute to Michelangelo by incorporating a seated figure of Michelangelo in the foreground of his masterpiece fresco, The School of Athens.

Competitive Market For Investors

The level of competition we are currently experiencing in technology expands beyond companies and  touches the investors behind these companies. Even though it’s true that there are a lot of funding options available to companies these days, competition is putting investors under constant pressure to make sure they back and grow the right companies and is forcing founders to make sure they select the right investors. With a little bit of luck, such a competitive market will play a role on preventing investors from focusing heavily on irrelevant companies.

Forcing To Innovate Fast

Competition is forcing companies to innovate really fast. If you think about it, only great companies have the ability to continuously innovate at a fast pace and, at the same time, stay very competitive. The companies that are not able to do keep up with this level of innovation, will see their value proposition diminished and, therefore, will have little chances to influence a potential technology bubble.

Forcing To Pivot Fast

When you are operating in a highly competitive environment, your target market and users are likely to evolve relatively fast. In that fast changing market you will, inevitably, realize that some of the your product features or even complete ideas are not relevant anymore. At that time, is when great companies have the ability to pivot onto a different direction that allows them to stay competitive or to expand onto new market areas.

Pivoting a business is extremely hard and a large majority of companies simply don’t have the skillset or support to do it. The fierce competition between internet startups will force a lot of founders and investors to pivot their businesses multiple times which will cause a lot of those businesses to either fail or stagger which will leave little chances to influence a technology bubble.

Alternatives To IPO

Technology bubbles are mostly influenced by disproportional company valuations which is a phenomenon ultimately reflected when companies start trading their stocks publicly (IPO). In recent years, the level of competition and innovation in the internet space have, almost organically, created various alternatives to IPOs which allow founders and investors to stay involved in a company for longer times.

Acquisitions, secondary markets or secondary funds are some of the most obvious alternatives to traditional IPOs. This competitive market is obviously forcing a lot of the big technology vendors to expand onto new areas by acquiring new technologies, which, at the same token, influence their competitors to acquire similar technologies.

Secondary Funds like Russia’s Digital Sky Technologies (DST) are offering investors and founders the opportunity to obtain some liquidity without the pressures of going public. Finally, secondary marketplaces like SecondMarket offer shareholders the opportunity of trading some of their stock options while the company stays private.

There Will Be Exceptions

Like any other big macroeconomic phenomenon, we will see exceptions that make us believe we are in a technology bubble. Unreal valuations, companies going public without creating a sustainable business are going to be a normal element in the near future of the technology market. However, we should trust that the level of competition in today’s technology market will be one of the factors that will organically help to prevent another technology bubble.

 
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Posted by on August 2, 2011 in entrepreneurship, startups

 

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