A Sack of Seattle

The Rise of Agile Organizational Development

There’s lots of buzz in the startup community about agile software development; there are software programs, books and seminars on the topic, and even huge firms like IBM are now touting their "agile
development solutions". The general idea is to create a team and a software process that is flexible, quick and adaptive to feedback from the market. Put stuff out there, collect feedback on what works, kill what doesn’t, improve what does, rinse and repeat.

But there's a parallel trend occurring in the early stage technology market that hasn't been talked about much.  Programs like TechStars, Y-Combinator, and Founder’s Co-op have been pioneering what I like to
call agile organizational development.  These “initiator” organizations provide founding entrepreneurs with an incredibly compressed calendar of iterative feedback on all aspects of their company. The feedback comes from a broad network experienced entrepreneurs who serve as mentors in these programs, and it comes often, regularly, and relentlessly.

Mentors in these programs provide feedback on the startup’s team, 30second pitch, fund raising pitch, positioning, product, pricing – on just about every aspect of the organization. Some of the feedback is
contradictory - just like market feedback can be. The TechStars program even has a name for the confusion that results from conflicting advice: "mentor whiplash". But the net effect of all this
menot input is a set of organizations that adapt to market feedback much more nimbly than startup organizations of the past.  This feedback cycle and the entrepreneurs' response is what I’m calling agile
organizational development and my bet is that the companies that embrace it are much more likely to succeed than those that don't.

These programs are all relatively new, and there aren't any books or seminars on the topic yet – but I'm betting there will be.

This blog post has been published by xconomy

Friday's advice for wannabe MBA entrepreneur

A 25 year old MBA student called me from MIT. I'm always happy to help an alum.  She had already demoonstrated the ability to do a little bit of research and reach out to people and introduce herself.  I told her that's a good skill to have.  My career advice was :

• Meet with the constituents of the start-up scene in Seattle
• • Entrepreneurs
  • Press
  • Investors
  • Big companies
• Strive to start your own company before you're 30 -- doing it while your young gives you great exposure, great learning, and you're not encumbered by life's expenses yet.
• Consider working at a big company for 4 or 5 years -- learn an industry and learn a function. I've never done this before -- so it's a bit of do as I say not as I do. My career has been small company after small company. It's useful to have experience working at one of the big tech companies.  

You're not young forever. Take advantage of it. Now that I'm forty -- I'm learning that I have some perspective of time. Sometimes that's useful....sometime it's an impediment. I'd gladly be 25 again. :-) 

TechStars is in Seattle Nov. 4 -- Seattle angel investors should attend

TechStars is a mentorship-driven investment program in Boulder and Boston. They fund 20 new startups every year from over 600 that apply, and have been operating for 3 years now in Boulder and one year in Boston. TechStars is like a "boot camp" for those companies highlighted by some amazing mentors. Somehow they let me on that list and went to both Boulder and Boston this summer to help these companies, and had a blast doing so. TechStars companies have achieved some notable exists such as Intense Debate (to Automattic/Wordpress), Socialthing (to AOL), and Brightkite (to Limbo).  

Every year, the TechStars companies get together for a reunion in a different city. This year, I'm excited to tell you that it's happening here in Seattle! As part of the reunion, TechStars reserves a part of one afternoon to have some of their companies that are still raising money pitch investors. About 75% of the companies that come out of TechStars have been angel or ventured backed historically, so this is a great chance to see some interesting early stage companies and to check out what TechStars is all about. In addition to the company presentations, there is a panel on angel and venture investment trends that I'm on along with Brad Feld (co-founder of TechStars and Managing Director of The Foundry Group), Greg Gottesman (Madrona), Stephen Hall (Vulcan Capital), David Cohen (co-founder of TechStars and angel investor), and Chris Sheehan (runs CommonAngels in Boston). I'm really looking forward to it and if you're a Seattle area VC or angel investor that is interested in attending, please contact me and I'll get you an invitation.

Preparing for a board meeting

My biggest tip for a successful board meeting is preparation. I usually start the process for a board meeting 1 week in advance and write down the one or two questions that if we do nothing else that I want input on from my board members. Board meetings are for investors -- but in an early stage company they're more a way for management to attempt to step out of the day to day details and see the forest for the trees. I usually put the questions I want input on down on the first slide and then build my presentation around those questions. I like to include financial information, a quick cash flow break even (or out of cash forecast) analysis, and a list of items from the last board meeting. Moreover, I always try and sometimes succeed in getting the presentation out to board members two days in advance of the meeting. Try it -- it works for me.

What to do when the hockey stick doesn't happen on your timeline?

It's been almost 2 years since we sold Judy's Book for a loss.  Recently, I've been reflecting upon the experience with the benefit of hindsight and of time. 

In the past, I've already blogged here about mistakes I made at Judy's Book : the failure of aggressive customer acquisition, poor market selection, and too ambitious of scope in categories and geography. All these factors led to a local web site that lacked necessary critical mass.

As a reminder, there were two parts of Judy's Book --
i) as a company we were a local reviews social network for 24 months and then,
ii) we shifted directions and we were a local deals site for 12 months.

As I look back on the business decisions I led during that time, I see a company that was early in a market, executed pretty well, but didn't have the perseverance or patience it needed to succeed.

I remember looking for a hockey stick moment and when it didn't happen on MY timeline, emotions kicked in. I got down on myself, the company and the opportunity.  Emotionally, I became depressed and that led to greater impatience. The daily emotion toll of unmet expectations clouded my business judgment and prevented me from appropriately evaluating the situation  -- it undermined my assessment of the value of assets we had created.  You know when you feel like shit, everything tends to look like shit and reinforce the feeling.

What I should have done

• Personally:
  I should have taken a minimum 2 week vacation. Yep -- totally counter-intuitive. But I should have gotten out of the storm to gain perspective.
• Business wise :
  I should have downsized the local reviews site and let it grow organically with at most two developers rather than trying to convert the entire thing into a local deals site. 
  I should have gone back to the original documents and revisited the initial theses of starting the company. I likely would have been re-focused on the social network and viral acquisition strategies that had us excited about the opportunity in the first place.

A business that changes directions is fine -- but comes at a great cost of TIME to a founding team and to investors.

Remember that perseverance is critical to success. Success rarely happens in a straight line and the emotional toll on entrepreneurs is HUGE. Don't underestimate this. Exercise a lot. Take a break and then come back and kick some ass.

The parallels between a start up and a new born baby

I got his update from one of the CEOs we're invested in. I thought I'd share it with all of you. e

It is always funny to me that in the startup world we have a tendency to measure our success and our failure by the minute.  It's a bit like being a parent of a newborn when every smile, coo, and dirty diaper are analyzed, studied, read into and the news of each is distributed to any friend or family member who will pretend to care.  I recall sitting next to my perfectly healthy daughter's crib for hours listening to ensure she was still breathing and then turning around and blogging about it ("Stayed alive through the night!  Success!").  Now that she's twelve all I have to do is log into Facebook to find out what she's up and and to make sure she's still breathing (there's a bit more to this whole parenting thing, but you get the analogy).  

I fully understand that success will be measured by what this company becomes three to five years from now, but that won't stop me from acting the paranoid parent for now and assessing and analyzing everything our little company does in these early stages.  And it is in that spirit that it drives me crazy that we appear to be about a month behind plan.  That "plan" was by no means scientific but it is a benchmark that we have and will continue to hold ourselves up against.  So we will fight like hell to get that month back, but a month behind is where we are at this point.

The benefit of no

Entrepreneurs here the word "no" more often than not. The entire experience of entrepreneur is figuring out why people say no, and getting them to say yes. That includes customers, investors, and employees.  When people say no to you, it's an opportunity to gain understanding as to what exactly they're saying no to. Take the time to try to figure out what they're saying no to -- is it the problem isn't a problem, is it the problem you're solving isn't a priority, is it that you're charging too much, is it that your service is too new, is it that they don't like you ....and so on. Listening to what the customer is saying no to is the first step in getting to yes...and it's the power of no. :-)

Is it an ah-hah moment or a duh moment?

I was talking with Tom Staples of Cooler Planet about a recent realization he's had about our SEO and SEM strategy. Tom made the declaration at a recent meeting that he wants to focus on "Solar Energy" as one of the main key words for the company. It is among the highest volume keywords in our niche.  If you started a company in the solar space 2 years ago (and we did) you'd think that "Solar Energy" would be an obvious keyword to focus on ....and it was. But there was something in the process of the past 2 years that made Tom reiterate the need for renewed focus on the keyword "Solar Energy" for SEO and SEM.  In that moment, I wondered if we had both an ah-hah and a duh moment. Well, it was both. But, better to focus on the positive ah-hah moment and really operationalize the focus on the Solar Energy keyword.  Throughput a company's life, you constantly remind yourself of some of the things you knew at the beginning. That is good. This is just one very concrete example.If you're in business online, focusing on high volume (perhaps lower conversion) obvious keywords is a  good place to start....and to return to. Duh.

The entrepreneurs dilemma: on the right path or delusional?

All entrepreneurs face the moment(s) when they must assess the feedback from customers, the market, investors, employees and people in general as to whether their idea is worthy of becoming a profitable self-sustaining business or weather it's just a futile fools errand.  This question comes up more frequently in the early stages of a business as entrepreneurs go through the difficult time of getting a company off the ground. My only comment to entrepreneurs in this dilemma is the advice that the martial arts instructor gave to us regarding our young son's desire to earn a black belt:
"Every kid is capable of earning a black belt. It's usually the parents who get tired and stop encouraging the goal of obtaining a black belt."   It sounded better when he said it-- my point is that at these dilemma points, perseverance is more frequently than not the answer. 

If you're going to break the model, don't just break it a little

Chris and I have been talking about some of our portfolio companies. We came up with this insight (i.e. the title of the post) today in one of our meetings -- and I thought I'd share it with you.  A number of the companies are innovating on standard business models. Inevitably as they innovate, they also retain part of an existing business to be more evolutionary for customers, investors, and employees.  Our thought today is that we should be encouraging our companies to consider when breaking with a traditional way of doing business -- not to break away in a small manner but to make a full push to innovate. Think about all the cell phone innovations that existed before the i-phone was introduced. You probably can't even recall them -- I can't -- but trust me there were lots of innovations. But it wasn't until Apple broke enough of the model to truly stand out. Another way of saying this : if you're going to make a mess, don't make a small one.