Startup: An Insider's Guide to Launching and Running a Business (10 page)

Luckily, we had two revenue streams at this time, and we were able to focus our efforts on other areas (namely our data business) during this transition period.

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Hope for the Best but Plan for the Worst

This is a logical strategy. Plan out what the full range of possibilities are for your business, for your project, and for your new product offering. Understand the possible outcomes, from the best possible outcome to the expected average outcome to the complete-failure outcome (e.g., not selling any product and getting sued). This exercise should be part of any project plan.

But beware: you need to make sure that in mapping out the various scenarios, your subconscious mind does not grab a hold of the worst-case scenario and nudge it toward actually happening! The trick is to be aware of some of the most likely of the worst cases, but to move past them and push forward to the best-case outcomes.

Do
not
get derailed by thinking about every possible bad thing that can happen. If you find yourself going there, just stop. Train yourself to examine only the most likely of failure points, and do not go on any fantasy excursions to the
land of low-likelihood disaster scenarios. There is no point, and it will hurt more than it helps.

A great deal of our success or failure comes about because of the subtle expectations that lie just below our conscious thought. If you obsess over worst cases, you increase the likelihood of bad things happening. Do not doubt this for a second.

As for the detailed failure analysis work, have one of your subordinates do it (if you have any) and only ask for a summary of the most likely failure points.

Changing Plans Is Easier When You Change Early

Always keep in mind Seth Godin’s wisdom in
The Bootstrapper’s Bible
(Upstart, 1998):

Opportunities will try to cloud my focus, but I will not waver from my stated goal and plan—until I change it. And I know that plans were made to be changed.

Don’t resist starting over or drastically changing your approach if it is needed. If you are going to do so, however, make sure of the following:

• You carried out the best analysis you could before you got started.
  
• The prestart analysis used the best information available at the time, and you continued to get further information that materialized as the project (or business) moved forward.
  
• The further information that you gleaned from carrying out the project (or business) informed you that change (or a stop) was needed.
  

Avoid indecision and vacillation. If you cannot see a clear path that will take you at least a few steps forward in your business, then find someone who can help you to do so. Don’t fall into the trap where you tiptoe a few steps into something and then quit, and then tiptoe into something else and quit. This fail-early rule is not an excuse for weak decision-making. It is an exhortation to decide on the best available information, keep your antennae up and receiving
all available input, and be open to modification of your plans as you move forward. It is better to adjust early than to continue on a path that will not take you where you want to go.

Some businesspeople and educators are fond of the phrase, “Fail early, and often.” I cannot quite grasp this. I don’t like the “often” part. It indicates a pessimistic outlook by the entrepreneur on identifying real opportunities in the market, visualizing a viable path from idea to profit, and executing the plan. “Failing often” indicates a lighter commitment to the research and planning before investment of capital than I am comfortable with.

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Value and Preserve Your Agility

The tension between being quick on your feet and using military-style planning (deliberate and predictable, but slow) was clearly evident after we were acquired by a larger player in the same market. My small team was able to perform miracles in productivity, demonstrating that we could execute technical changes in hours while our larger parent company would often take months. It was a matter of some pride for my tribe of bandit programmers and creatives.

The truth of the matter was that we were able to do this because we were
good
and we were
motivated
to be agile, but also because we were
smaller
. Here comes another metaphor:

Running a business is like hiking with a backpack.

When the backpack has nothing but a canteen and an extra pair of socks in it, you can freely run up and down the mountain without breaking a sweat. When you add the cumulative effects of years of business rules, customer relationships, and technical dependencies to your project, it is like loading bricks and rocks into that backpack until it is overflowing. When it comes to hiking, you will find yourself struggling to simply get out of camp—let alone show off by running up the mountainside. So what to do?

For one thing, you can evaluate whether the extra weight is worth adding on each time an opportunity to put something extra in your backpack presents itself. This means that you evaluate with a critical eye every transaction that is
going to cause you a support demand. Everything that has to be tracked and accounted for as a business process is going to contribute to the weight. Every new business rule or routine added on to what your business already does needs scrutiny before you agree to it. Contracts, special arrangements for individual customers, pet projects, marketing processes, and many other things that your business will want to do fall into this category.

I suggest that you share the analogy of rocks in a backpack with your team. When you discuss new projects and responsibilities in this context, the consequences of new projects become more intuitive and context-rich. For engineers, saying, “Do we really need to add this rock to our backpack, guys?” helps them to view the project from more of a long-term perspective, where they may tend to be execution-biased (using short-term thinking) otherwise.

Keep in mind the tension between being able to change course on a dime and having to plan your moves like an aircraft carrier battle group—about 20 miles in advance. Weigh the benefit against the true long-term costs on each decision that you make, because they add up over time.

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Mistakes Are Inevitable

Most entrepreneurs are
seriously
afraid of making mistakes. They often think that making a business mistake will blemish not only their businesses, but also their personal identities. This is unnecessary, and time will show that everybody makes mistakes. You make mistakes, and so do I (and everybody knows it). It is tremendously taxing to try to build up and maintain the illusion that, as the leader, you have perfect judgment and knowledge—so don’t even try to do it.

Even good, robust decision-making is bound to result in mistakes. Great leaders know that making decisions quickly, getting on with it, and making mistakes from time to time is OK. The upside of this is that you get out there and respond to your environment quickly with the knowledge that there are few things that cannot be fixed. The alternative to this is slower, more paced decision-making or, worse yet, delegating all the decision-making to others—with no guarantee whatsoever that taking the additional time will make the decisions any better.

In fact, making a mistake and then owning it afterward is a great way to share your humanity with your team and build loyalty from them. Do your best at all times to get everything right, but don’t paralyze yourself in the effort to nail everything on the first try every time.

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Customer Complaints: Treat Them Like Gold

You can assume that for every complaint you get there are many, many more customers out there that thought the same thing, but didn’t care enough to tell you about it. Consider every complaint to be the literal tip of the iceberg.

It is unfortunate if you screw up and someone is unhappy about it. But, you can (and should) strive to turn it around and make it a win for your customer and your business. If you have the chance to interact with a customer that feels wronged, find a way to fix the problem. Even if it costs you some money to do it. Don’t mess around—fix the problem. Apologize for the inconvenience.

On our social networking site we would give customers free extensions of their account time—a free month, six months, even a year sometimes. It was not an out-of-pocket expense, and people loved it.

I have this exact discussion several times a year with my employees, and it is worth repeating here. A team I am managing right now is an online web brand. We touch about 5 million individual customers every month. Recently the marketing team lead was agitated and upset because a customer went to our Facebook wall and commented negatively about how hard our site is to use: “This site is completely counterintuitive! I couldn’t find anything on the overview page! What are these guys thinking!” My team was upset because the user was venting, and incidentally had simply not noticed features that were right in front of him on the page.

I talked to the marketing folks as a group and reframed their understanding in the following way: “How many visitors does our site have in a month? A lot, right? If we lined them up shoulder to shoulder, how many miles would they reach?” (The marketing manager calculated at that time that they would reach 70 or 80 miles, shoulder to shoulder.) I asked them to imagine driving past
them at 50 miles an hour, trying to look at each and every face swishing by one at a time. After 30 or 40 minutes you would be absolutely numb trying to see that many faces. Imagine how big that group is! Out of
all
of those people, how many are going to reach out to us and give us feedback on our site? Looking at the sheer size of that group, how many would contact us to complain if something was wrong? You might say 1 percent, or 1/2 percent … and be way wrong; 1/2 percent would be thousands of people giving us feedback—(which clearly does not happen). Of all those faces, all those customers, it is less than one in a million who take the time to contact us to say anything personal about what we are doing. The fact that they take the time to say anything (positive or negative) makes them extremely special—and worth taking the time to respond to positively. It’s a miracle, don’t you see? Of all the things they could have been doing in that moment, they chose to interact with you. I get a warm feeling even now, thinking about all of our disgruntled web site complainers.

The team responded to the customer, and the customer apologized for complaining—and put a positive comment on our Facebook wall. And incidentally, the customer had a valid point on improving the site, so we also learned something about how we could make our site experience better.

Takeaway:
Customer feedback is often rare almost always valuable, and something that entrepreneurs often underestimate.

Note
Pause to consider before ever explicitly admitting a mistake to your customers—the noble gesture of admitting to a mistake could (in certain circumstances) find you in court with no ground to stand on if loss or damage were involved and the customer chose to use it against you.

Case Study: Adaptec

My company invested some serious cash in top-of-the-line computer gear when we were putting our data center together for Meridian. Unfortunately, the critical storage controller card for the primary database went bad right after we installed it. We were really upset, because it was supposed to be bullet proof (nothing really is bullet proof in IT, but we paid a lot to get close to perfect). We called up Adaptec, and they immediately, without questioning us, sent an overnight package with a new controller card. Not just a new card, but a
more expensive
card that was a big upgrade from the one that had failed. Wow. We went from pissed off and disappointed to fans of Adaptec. I am still happy with them, even though their product brought down part of my operations for what ended up being a little less than a couple of days.

When it comes down to it, I think that most disgruntled customers just want to be recognized as human beings and to feel that they are respected. It is not so much that they want to cause problems (although sometimes it is the case); they most often just want to be treated with respect. The inverse is also true. Always strive in every direct communication with your customers to show them your humanity. When I get on the phone with a customer, I do everything possible to establish rapport with them; this means giving them a warm greeting and self-introduction, listening more than talking, and speaking clearly and professionally. This short list is just common sense, but I have seen how bad situations can get when common sense is not used.

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The Dollar Exercise

One thing that I am known for in my circles is the
dollar exercise
. I always have whiteboards in all of my work environments—one of the first things I do in my offices is cover all available wall space with whiteboards because of the importance of multimodal dialog with the team when discussing complex things. (Pictures plus notes plus words plus hand-waving equals better communication.)