Frameworks

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Let me set expectations. Some things about starting a company are very scientific, like the amount of money you raise. What’s not so scientific are the softer issues behind it: the vision for the company, the culture you want, the people you hire, and how you make it all work. I’m going to give you frameworks and principles, not answers.

Here’s how it all fits. Your value proposition is the starting point. Your vision and mission are what you’re aiming for. Your people and team are the basis on which you execute. And your culture is the underlying enabler that lets everybody flow in the same direction. That’s our agenda.

By the way, people ask: is it worth starting a company if you have a great group of people but don’t yet have the value prop nailed? Yes. I’m doing a spin-out of MIT right now based purely on the quality of the people, world-class experts in a discipline. We’ve done exactly that in open source and e-commerce, where the people already had the basis to form a team with a clarity of purpose worth starting a company around. So sometimes you start with a value proposition, and sometimes you start with a great team.

Now, a word about the lean methodology. There’s a lot of flip discussion about lean startups, and it pays basically zero attention to culture. I don’t think you should pay lip service to this. And “lip service” is actually my mnemonic (I’m a terrible learner; I remember everything through acronyms). For all the Listening and Learning you do, for all the Iterating and Pivoting, there is one thing that should stay consistent in your business, and that’s the culture.

Startup Secret: Iterate everything except your culture. No matter how many times you change your product definition, your business model, or your segment focus, underneath all that churn you want a foundation that feels solid. That’s your culture. It’s the one thing you should not be iterating. Recreating your culture halfway through building the business is really hard to do, and when people see that kind of chop (turnover in leadership, then changes in culture) it’s a signal that something’s wrong.

So the great companies do iterate quickly around their idea at the beginning, balancing what I always called listening and leading. If you ask customers what they want, they might know their present pain (say, a problem with data backup) but not the issue it’s going to become in years to come (archiving, managing all their forms of data, compliance, and twenty other things). Why? Because customers, in most instances, aren’t visionaries; otherwise they’d be off doing what you’re doing. So there’s a tremendously important balance: listen to the market need, then take a leadership position on what you believe the vision is, and along the way iterate, iterate, iterate. Cloud computing makes it easy to get an idea built into a product. The bad news is if you ship version one and expect it to sell, you’ll be disappointed. So use rapid iteration around not just the product, but the whole value proposition, and pivot to find market fit.

One student rightly pointed out the dichotomy: you’re supposed to have a road map with many milestones, yet also be flexible and willing to pivot, so the further out you go the fuzzier it gets. Exactly. That’s one of the dichotomies of being an entrepreneur: people expect you always to have an answer, and in reality all you have is a straw man. Set the road map out, treat it as a straw man, and be willing to pivot through iteration, learning and listening. But here’s the correlation I’ll leave you with: we very rarely back anybody who walks in with just an idea. We almost invariably look for a vision. And when we look back at our most successful companies (I’ve got one about to go public having walked in with essentially the same vision seven years earlier), the vision fundamentally has not changed, even though a thousand things changed around it. I even wrote a post: entrepreneurs don’t have to have all the answers. So relax around that, but have a vision.