30 West 3rd

Very Early Stage Technology Investing

Keeping Score in a Start-up

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Every early-stage company I encounter is under-capitalized and under-talented.  That’s not to say they don’t have great talent.  There’s just never enough talent or money to do the things that feel important.  Sorting out the important from the unimportant is Task One for the early-stage CEO, with the help of investors and board members.

7 Habits guru Steven Covey introduced a powerful and simple matrix for task management back in the early ’90s.  In the context of a sound business plan, with key milestones identified, it is a good method for sorting the important from the unimportant, the urgent from the not-so-urgent.  In today’s world things will fall off the to-do list for even the most organized and capable executive. 

For the start-up CEO it is more a struggle to see through the clutter to clarity.  I’m not one to hype self-help gurus, but I think everyone needs a paradigm for managing themselves and their time.  Covey’s book was right for me when I was a start-up founder.  I won’t endorse everything else that sprouts from that seed, but his book is filled with simple but useful concepts.

Now back to the quadrants.  You can find hundreds of blog posts and references to Covey’s quadrants, but you really only need to understand the axes: importance and urgency.  By building a matrix around these you have a paradigm for dividing tasks and activities – assuming you have a good grasp on what is important, of course – into either important/urgent (crises, pressing items), important/not urgent (planning, strategy development), unimportant/urgent (feeling busy), and unimportant/not urgent (golf, Vegas, etc.).

For the start-up CEO, sorting through urgent items is the real challenge.  Why?  Because all start-up CEOs crave time to plan, develop strategy, reflect on the business and seek advice/mentorship.  We called this “Quadrant II time” in my company.  We found that not only did we crave Quadrant II time as a management team, but our customers craved it as well. 

I rarely encounter a start-up CEO who is focused on leisure activities, so we know the only way to make Quadrant II time is by prioritizing urgent tasks and ignoring those that aren’t important.  It is liberating when this habit first gains traction in a small organization of any kind.  But it requires intense commitment and agreement on mission, key milestones and culture.  Building this sense of alignment is what leadership in the early-stage company is all about.

To illustrate, in the early-stage company, it is comfortable and easy to talk about marketing, partnerships, and topics that are at least one or two degrees of separation from an actual transaction.  Most early-stage companies, as they enter the market, overemphasize their branding needs and marketing requirements.  Filling a funnel with unqualified leads only creates work for the sales team, or whomever is plugging that hole at the outset.  Almost without exception all that matters in the first 12 months of market entry is building transaction momentum.  In some cases that may mean generating only four-six deals in the first 12 months.  Any start-up should be able to source, qualify, and close that number of deals without any significant outbound marketing effort.  If you lack that amount of resourcefulness and talent, you might have a bigger problem.

Consequently, you need to build a scoreboard that is prominent and unavoidable for everyone to see.  The scoreboard should first display the date that you are projected to need another capital infusion, or by which you must break even.  Next you should have sales goals/actuals at the appropriate periodicity for your business.  Below that I would have major milestones with dates that are qualitatively critical to raising the next round.  You don’t need to post a name next to these goals/milestones because they should be owned by the entire company.  Everyone should be selling, everyone should be contributing to product development, everyone must be pulling the organization forward. 

I also think that anyone who takes on a leadership position in an early-stage company should have an individual sales goal, even if it’s only one deal.  Start-ups thrive when they engage the outside world with all tentacles.  Everyone should be sourcing opportunities, even the introverted VP of engineering.

The scoreboard is a scary concept, but it is a grown-up concept.  It shows you are serious, that you have no secrets, and that the company thrives on transparency, unity of purpose and leadership.  It also eliminates by default any need to focus on the unimportant.

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Written by Mike Venerable

September 29, 2009 at 1:27 pm

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