There is always more work to do in a startup than there are people in the company or hours in the day to do it. Everyone has heard horror stories about endless twelve hour days, all nighters and death marches. Some startups fail not because the idea is bad, but because they just can’t seem to focus effectively on turning the idea into a profitable business. This is the second post in a series entitled Startup Musings that discusses managerial challenges unique to the startup executive. This post covers a few handy tips on how to make the most of the few resources you’ve got.

Choose What NOT To Do
When you’re small, and looking to get noticed in a much larger crowd, it is far better to do one thing exceptionally well, than to do a lot of things mediocrely. In a startup, this simple rule of thumb applies to the highest level of strategy all the way down to the lowest level of day-to-day activities. In a word, FOCUS! Given that there is always more to do than you possibly can, the most important organizational skill of the startup executive is the ability to look an idea square in the eye and say, “We don’t need to do that, because it won’t impact revenue, save money, or make us more competitive.” You’ll be surprised how quickly this little acid test will shorten your to-do list.

Sounds Like a Volunteer!
Getting focused is hard, but staying focused throughout the organization is even more difficult. Bringing a good idea to fruition is something like 5% strategy and 95% execution. In a big organization, that might be more like 5% strategy, 45% execution and 50% waste, but you can’t afford that in a startup. Keeping the organization focused on your short list is crucial to success. Unfortunately, many startup executives fall back on micro-management when they see their staff straying from the important goals. But, I think the better solution is to show your staff how to choose what NOT to do for themselves.

The first step is to make sure everyone knows how their individual goals tie to the big picture through regular company meetings and the like. But, I will guaranteed that before these goals are achieved, you and yours will be be assailed by a multitude of new ideas for new projects and recurring ideas for projects you have already passed on as things NOT to do. Often these competing non-goals show up in subtle little complaints like these: “I don’t know why we don’t do X and get rid of this headache?” and “Yeah, the right way to do this would be Y, but we’re always taking shortcuts, so it never gets done right.” I’ve found that the best way to stay focused on the priorities at hand, while maintaining the flexibility to jump on a valuable new idea is to reply “Great, sounds like a volunteer! Still think we should do it?” If you complain, you volunteer. Works like a charm.

Size Matters….Keep It Small
Startups are big, risky financial bets. The best way to manage this risk is to break it up into lots of little bets that allow you to reap immediate results, and quickly adapt to opportunities and threats. Flexibiliy is key. You should aways be focused on goals that will yield immediate value, however you measure it: revenue, users, network partners, etc. And, you should break projects up into smaller and smaller increments, so that you don’t commit all your resources to monolithic endeavors with long time-lines and uncertain results. Stay nimble, be opportunistic and evolve through continuous learning and improvement.

Be Different. Be Creative. Get Leverage.
It’s not enough to have a great product, there are far too many great products and people have far too little time to try them all. You’ve got to get noticed, you’ve got to be remembered and you’ve got to be something worth talking about, Seth Godin’s so-called purple cow. Unfortunately, you’re always outnumbered by the competition in a startup, so you can’t compete on muscle. You’ve got to work smarter, not harder. While your left brain is focused on squeezing the highest possible ROI out of 90% of your limited resources, your right brain should take some creative risks with the remaining 10%. If you don’t buy the ticket, you can’t win the lottery. You never know what will work and what won’t, so its good to experiment and place a few bets that have potentially huge payoffs throughout the business.

For example, at Xignite we sell market data via Web services. Nine out of ten readers probably read right over that last sentence and didn’t get it. Don’t be upset if you were one of them. Web services are not well known to anyone but software developers and their benefits are NOT easy to describe. It requires education and trial to really get the value proposition. Once customers get it, they really get it, but we need them to pay attention first. We considered the usual approach to this problem, whitepapers, webinars, flash presentations, etc., but it all seem so….frankly boring…for anything but the most interested prospects who are probably registering anyway. So, we’ve decided to place one of our bets on in-house video capabilities. Our competitors Web presence is rather old school, so we are going all out to stand out. Not just a demo video…we’re converting the core of our website communications to video, and we’re doing it in-house…on a shoestring.

Resourcefulness is Golden
I have in mind a future post in this series on hiring tips for startup executives, but I couldn’t complete this list without at least touching on this topic. In a startup, everything is fuzzy. Rarely is there an established process to reinforce focus and ensure productivity. Constant hand-holding can be an excruciating drain on resources. There is nothing more comforting than people who can get $#!t done. And, I don’t mean simply completing well defined assignments on time. I mean given the basic business problem with no idea what the ultimate solution is and no idea where the resources are going to come from, they take the initiative, stay focused, get creative and deliver unexpected value to the organization. They find solutions, not problems. There are lots of qualities you can look for when hiring for a startup, but for me, good old resourcefulness is always at the top of my list.

For the past couple of years I’ve been active in an up-and-coming CMO-only professional group called The CMO Club. It’s simply one of the best marketing executive groups I’ve encountered, so I thought I would pass along the tip. It was started by Pete Krainik, a former CMO himself of M&M Mars, Avaya, and DoubleClick, with the intent of keeping it CMO-centric, vendor free and focused on high-value peer-to-peer sharing.

CMO Opinions on The CMO Club

Pete treks around the country hosting local CMO-only dinners with great conversations and guest speakers. There is a social networking site with increasingly good content and the dinner schedule, but the real action is interpersonal at the dinners and bi-annual leadership summits.

The next CMO Leadership Summit is coming up in San Francisco on November 13th and 14th and yours truly will be orchestrating a breakout session focused on the unique challenges of the Startup CMO (had to be a plug right?) The summit is an investment at $995, but for nearby CMOs there are upcoming dinners right before in Orange County 10/19, San Diego 10/20, and Bay Area 10/21, so you can decide for yourself if it is for you (dinners are a more modest investment…about $100).

Here is the session description….anyone following my Startup Musings series will find the angle familiar. Hope to see you there!

So You’re a Startup CMO, Now What?
Whether by choice or by chance, CMOs find themselves in startups for many reasons: to follow a dream, to strike it rich, career change or simply as the victim of economic circumstances. Whether you are coming into it from a fortune 500 company or right out of B-School the creative, managerial and leadership challenges are unique and if you’ve never done it before, there are lot’s of ways to fail. This session will tackle trials and tribulation of the startup CMO and provide a open forum to share experiences from the trenches, lessons learned and secrets of success. Topics covered will include gaining leverage through creativity, getting stuff done on a shoestring, building something from nothing, managing rapid growth, budgeting when cash is king, overcoming a technical handicap, making yourself essential, developing relationships with the board, how to choose the right startup, and managing career transitions.

Lots of Smiling CMOs at the last CMO Summit in NYC May 2009

The aspiration of most technology startups is to grow from virtually nothing to a billion dollar company. But, if you examine the typical billion dollar company you find something that looks very much like a factory. People are divided up into divisions, departments and job descriptions. And, crossing these boundaries are well defined processes and support systems that sew up the pieces into a business value chain that drives revenue. Lot’s of round pegs and round holes for them to fit into that in the best companies provide a vehicle for talented individuals to drive superior organizational performance and a safety net for weaker performers to ensure that things keep humming along no matter what. In other words: NOT a startup.

Getting from here to there is like growing a fully functioning human being with a brain, a heart, lungs, legs, arms, and fingers from a single, blank zygote. In nature, this miracle is accomplished through stem cells. Which according to Wikipedia are “characterized by the ability to renew themselves…differentiating into a diverse range of specialized cell types.” I think I would be hard pressed to come up with a better analogy of what it takes to be a successful startup executive. I say this for two reasons. First, it is the job of executive management to build the organization, processes, and jobs that will be the billion dollar company. Second, until you achieve the revenue growth that will allow you to pay for all these offices, people, and systems—-you must do it yourself.

One hat is not enough for successful startup executives. Startup executives must demonstrate breadth across functions and depth within roles. In it’s simplest form, breadth across functions means understanding the basics of the functions adjacent to yours, so that you can work with other managers to define the organization, processes and systems that will enable the business to scale. In the extreme, you may find yourself managing multiple areas, simply because there is more work to be done than there are people to do it. Depth within roles means being able to actually do the work, not just manage it. I like to call this the McDonald’s requirement. If the employee doesn’t show up, the manager works the counter..or the fryer …or the drive-thru…or whatever it takes to keep the doors open. And, you won’t always have the luxury of hiring highly paid, senior staff. So, you must be an effective mentor to grow them from more junior staff. I always look for these characteristics when hiring executives. In addition to the primary functional skills, I assign extra credit for multi-functional, general management and entrepreneurial experience.

Note:
As this post implies, when you work at a startup you often find your attention pulled back and forth between the highest levels of company vision and business strategy to the lowest levels of operational detail and execution. On occasion, I’ve even found that the mental gymnastics can actually give you a headache. So, in deference to this fundamental challenge of startup management, I am kicking off two new series of posts with distinctively different flavors.
Startup Business Musings which will focus on the principles that help shape a successful startup business and successful startup executives…of which this is the first. And, SaaS Marketing Tips where I’ll attempt to expand upon the SaaS Success Top Ten Do’s and Don’ts by exploring concrete, actionable ideas and examples (first post tomorrow).