So, this is the third (and final??) follow-up post to my earlier post. In that earlier post, I offered three questions that any business leader should ponder over the holiday break. The purpose of these three questions was to help get you to create the right high-level vision for your business. As a reminder, the three questions were:
- What kind of business do you want to build?
- What kind of brand to you want to have?
- What kind of company do you want to run?
In my first two follow-up posts, I offered some more tips on crafting the answers to the first two questions: about your BUSINESS and your BRAND (if you haven’t read either of those posts, you can by clicking on BUSINESS or BRAND above). I recommend you read them before you read this post -- this one may not make as much sense if read alone.
As you can imagine, this post will focus on the third question:
What kind of COMPANY do you want to run?
The first two questions are, admittedly, fairly obvious. Many people do ask themselves these questions (although, I would argue they don’t do a very good job answering them and an even worse job executing toward those answers). However, there are very few entrepreneurs and early-stage business leaders (or late-stage leaders for that matter) or ask themselves this third question. Too many entrepreneurs/leaders are consumed with their products (the “great products will always win” syndrome) OR themselves (the “no one can do it as well as I can” syndrome). These entrepreneurs often think about their business...and a lot of times, they think about their brand...but they rarely think about their company.
I (along with Jim Collins from BUILT TO LAST) would argue that companies started with clear visions about the type of Company they want to be when they grow up are MUCH MORE LIKELY to build long-term, sustainable businesses. Founders who consider this third question upon the conception of their business build better companies. These founders think about their culture. They think about the type of people they want to recruit and they think about how they will train them. They consider what life will be for those working at the Company. They understand that they can’t do it all by themselves and they place a great deal of value on the people that will help to build their business.
I’ve recently done some thinking on this subject because I wondered why more early-stage leaders don’t think about their Company. I thought of several reasons, but one reason I kept coming back to was the idea that early-stage investors (and the proliferation of early-stage investors) are partly at fault here. I’m reminded of something a very successful , early-stage biotechnology CEO once said to me. This particular CEO has run several successful VC-backed, private and public companies and has sat on dozens of boards. He once said to me, “VC’s don’t know shit about running a company.” That always stuck with me. It wasn’t that he was saying that VCs are dumb business people or that they didn’t understand how to analyze an opportunity. He meant they don’t know how to run a business on a day-to-day basis. How to create an atmosphere that leads to a successful organization. They don’t understand the concept of execution. This has got me thinking -- most times, I think investors are concerned with the wrong things when they look at a business opportunity. They tend to focus on:
- The products/services: I’m not saying that a good product isn’t important -- it is. But the RONCO ROTISSERIE OVEN, arguably NOT the most elegant or ingenious product, has grossed $1.2B. There have been plenty of AMAZING products that have died well before $1.2B.
- Macro-economic factors: Seriously?!?! A factor? Maybe. A significant determinant of start-up success? Hardly. Macro-economic analysis is mostly a distraction. People who chase opportunities based on macro-economic trends usually find themselves in a very crowded pool.
- The resumes of the founders: Again, a good team is important, but what defines “good”? Investors spend too much time with the resumes of the founders. They back people with “relevant experience” (you can read how I feel about the traditional definition of “experience” HERE). Do they investigate how the founders get along? How they work together? Their thoughts on building out their organization -- from a major engineering hire to the office manager (often one of the most influential people in an organization)? I haven’t written a line of code in my life (unless you count the Russian spy game I wrote in BASIC as a high-school junior), but I guarantee that I could build a better software business than 90% of the 15-year+ Microsoft veterans. I guarantee it.
In short, investors focus too much on the Business (Question #1). They focus some on Brand (Question #2). They focus way too little on the Company (Question #3). And when those with the money focus on the Business, is it such a surprise that entrepreneurs do as well?
If I were an investor, I wouldn’t invest in a business whose founders didn’t convince me that they had a clear vision for the Company they were going to build.
With all of that said, here are some tips for shaping a good answer to this question about your Company:
#1: Think about this question from an employee’s perspective
Just like with the last two questions, I am going to ask you to use your imagination a bit here. I want you to put yourself several years out to a time when your company has a good base of employees. Imagine that you have a new employee interviewing for a job. During a side conversation, after the formal interview, imagine that this prospective employee asks one of your current employees, “What is is like to work here?” How do you want your current employee to answer? What do you want your him/her to say?
#2: Think beyond the senior level
When entrepreneurs, early-stage leaders and investors think of the “team,” they tend to think only about their senior-level executives. The CEO, President, CTO, etc. Yes, these people are important -- but certainly not the only important elements. Eventually, these people won’t even be the most influential members of the organization. I just read a fun story about John Chambers at Cisco (I forget where I read it, so I can’t reference it) who was upset to learn that his internal company blog wasn’t the most popular blog in the company. The most popular internal blog at Cisco was written by a mid-level engineer -- someone John Chambers didn’t even know!
The point is, when you think about the Company you are going to build, think far beyond just the senior executives in the ivory tower. Think about the type of people you want to inhabit every level and function of your eventual organization. Think about that Office Manager -- what is he/she like? How will he/she fit in the organization? Think about it. It sounds silly, but it’s very important.
#3: Look to the horizon
Just like the other two questions, it is important to maintain a long-term vision to answer this Question. You may have 100 employees now or you may have none. It doesn’t matter. Look out onto the horizon and imagine a time when you’ve built a bigger company (how big depends on your answer to Question #1). Imagine what it will feel like to over see that organization and really think about what it will feel like to walk into the office every day.
Here’s a relevant story from my own experience. I recently spoke to a former employee of mine who said something interesting to me. At the time of our conversation, he was venting a bit about his current job. He has a good position, with a very successful national brand. He’s making a lot more than he did when he worked for me while working far less hours. The job has great benefits, blah, blah. But he was still venting about the job. He wasn’t really happy there. When I asked him what he thought the problem was, he said, “I’m not sure. I just feel like we had a lot more fun [when he worked for me]. But it’s weird -- I worked harder with you than I had ever worked before or have since...but it just seemed like more fun.” To me, this was a very interesting comment and one I was very pleased to hear. While I certainly don’t take credit for his feeling (I give a great deal of credit to my entire team for creating this atmosphere), but I will say that this comment is almost exactly the type of thing I would want one of my employees to say to a prospective hire. However, now that I’ve had time to think about it, I am going to solidify it more for my future businesses. Here is how I would answer Question #3:
I would like to build a company where employees are happy to work hard. In fact, I want my employees to actually have fun while working harder than they ever had before. I want them to not only be aware of the goals we are trying to achieve, but feel as if they have a significant impact on our achievement of those goals.
So, if a prospective employee asks, “What’s it like to work here?” I want one of my current employees to say something like: “Well, be ready to bust your ass. We work hard here. But at the same time, I’ve never looked forward to coming into work. I look forward to coming to work here.”
Think about this third question. Write down your answer and leave it on your desk. If the next morning, you are still happy with it, post it on your wall with your answer to the first two Questions.
Now you’re ready to start building. The fun is just beginning...
Nice work.
DS
