5 tips on managing teams

June 4, 2010

Many founders struggle through product development, fundraising, sales, and team building and think they’ve got it made. But when it comes time to lead and manage the troops, they find themselves clueless. Here are a few tips to consider:

1. Leading and managing are different. Leading is about sharing your vision for the future, and getting your team motivated to make it happen. Managing is about making sure everyone is doing what they should, the way they should, on a day-to-day basis. Every company needs both. That said, some founders are great at both, while others find they are better at one than the other, and a partner or key lieutenant to fill in the gap.

2. This is not something you can outsource. As a founder, you MUST be involved in leading, managing, or both. One of my clients loves to sell but hates to manage. The minute she gets to the office, she closes her door and picks up the phone. She lands a lot of customers, but not without a lot of headaches. Her operations aren’t running as smoothly and efficiently as they should. Several top employees recently left for other jobs. And she’s even missing new business opportunities because she’s not on top of the details of what happens on the front lines. My advice to her: Find a great person to run operations, and manage employees. Add visionary leader to your role. Go to every staff meeting and fire up the troops, sharing your view on where the business is going.

3. Get the right talent in place. Marcus Buckingham wrote two books on management I recommend, both based on information gleaned from The Gallup Organization’s study of over 80,000 managers. In Now, Discover Your Strengths, Buckingham argues that people in business should put themselves in roles where they can take advantage of their natural talents. Instead of trying to fix their weaknesses, however, they should assign responsibilities to others who have the right stuff. Keep his advice in mind as you screen new hires and assign roles.

4. Give your people what they need to excel. In another book entitled First, Break All the Rules, Buckingham explains that employees reporting to great managers answer yes to the following questions:

  • Do I know what is expected of me at work?
  • Do I have the materials and equipment I need to do my work right?
  • At work, do I have the opportunity to do what I do best everyday?
  • In the last 7 days, have I received recognition or praise?
  • Does my supervisor seem to care about me as a person?
  • Is there someone at work who encourages my development?
  • At work, do my opinions seem to count?
  • Does the purpose of my company make me feel my job is important?
  • Are my co-workers committed to doing quality work?
  • Do I have a best friend at work?
  • In the last six months, has someone at work talked to me about my progress?
  • This last year, have I had the opportunity at work to learn and grow?

If your employees feel the same way, you’ll probably find they do better work, share positive views of the company, and stick around for the long haul.

5. Look in the mirror. In Good Boss, Bad Boss, and his blog post here, Stanford Professor Robert Sutton makes a compelling case for the way good managers think:

  • I have a flawed and incomplete understanding of what it feels like to work for me.
  • Having ambitious and well-defined goals is important, but it is useless to think about them much. My job is to focus on the small wins that enable my people to make a little progress every day.
  • One of the most important, and most difficult, parts of my job is to strike the delicate balance between being too assertive and not assertive enough.
  • My job is to serve as a human shield, to protect my people from external intrusions, distractions, and idiocy of every stripe — and to avoid imposing my own idiocy on them as well.
  • I strive to be confident enough to convince people that I am in charge, but humble enough to realize that I am often going to be wrong.
  • One of the best tests of my leadership — and my organization — is “what happens after people make a mistake?”

Got a tip on managing? Please share.


7 sales tips you won’t learn at business school

June 4, 2010

Top MBA programs go to great lengths to prepare students to be successful entrepreneurs. But for some reason, many don’t teach sales – one of the most important skills for founders. When you build a business, you sell constantly. You sell to bring on partners, customers, investors and employees. You sell when you talk to the press, go to trade shows – even when you chat with the person next to you on a plane or at a cocktail party.

So, what do you need to learn about selling? Here are a few basic tips, brought to you via the school of hard knocks:

1. Call on the right customer. No matter how good you are at selling, you’ll probably get nowhere pitching to a customer that’s a bad a match for what you are offering. Instead, do your homework. Network your way to ex-employees, investors, suppliers or other people who can give you the inside scoop. Learn about the company’s goals, the challenges they are grappling with, and the approaches they’ve tried in the past.

2. Understand the politics. At a small company, you may simply sell to the CEO or head of purchasing. But big companies can be tricky. Find out who the real decision maker is (Hint: That’s not always just about who is the “boss”). You may need to identify a “champion”, someone willing to bet on you, and shepherd you through the selling process. Also identify any haters—people who look at you and see more work, more headaches, or worse, a threat to their job. Think about how to get them on-board, or they may become an obstacle now, or later when it’s time for the customer to implement your solution.

3. Timing is everything. Learn about the customer’s planning cycle, so you approach them at the right time. Many big brands plan far in advance, so you don’t want to pitch them last season’s merchandise. Also, understand their tolerance for risk. Some companies want to see proven track records before they buy. If you are just starting out, better to find customers with a history of buying from innovative startups.

4. Define a “win”. Going into your sales call or meeting, know what you want out of it. A test order? A second meeting with the final decision maker? Other?

5. Go second. When you show up for your pitch, ask a few key questions, and listen carefully to the answers—including the way those answers are delivered (tone of voice and body language can help you read between the lines). Questions like: What would you like to do better, why, and what would happen if you got what you wanted (e.g. saving time, money, aggravation, etc.)? Also ask follow up questions, to show you are listening, and to get to the heart of the matters. Take notes, and run your synopsis by the customer to make sure you are on the same page.

6. Pitch against their problems. Don’t just roll out your boilerplate lines. Restate the problems your customer just mentioned, and explain both how you can address them, and what they’ll stand to gain by working with you.

7. Ask for the sale. No lesson in sales would be complete without a wink to Alec Baldwin’s line in Glengarry Glen Ross:  “A-B-C… Always be closing, always be closing”. Tell the customer what you’d like do next, and listen for a response.

To learn more, read Spin Selling by Neil Rackham. Got other tips or recommended reading? Please post suggestions.

4 tips on building an advisory board

June 4, 2010

This week, two UpStart coaching clients told me the same thing:  “It’s great having someone to help me think through tough issues.”  One is based in the middle of Manhattan; the other on a remote Pacific island. But they both effectively said “it’s lonely at the top.” Even the greatest athletes need coaches. The same is true for founders. That’s why I recommend that founders build advisory boards.

1. What an advisory board is, and isn’t. Don’t confuse advisors / a board of advisors with directors / a board of directors. As a CEO, the board of directors is your boss. Directors take a formal role in overseeing the business, often representing shareholders, approving budgets, and deciding who should act as CEO. In contrast, advisors work for the CEO. Advisors provide feedback, advice and introductions to investors, customers, and business partners – as needed.

2. Who to put on your advisory board. To establish an advisory board, start by picking three to five areas where you really need help. Maybe you want a person who has a “golden Rolodex” of industry contacts, another person who is great at sales, and/or a person with expertise in an area where you are weak, like finance or marketing. Then come up with a list of dream advisors in each group, and network your way to them. Make sure each advisor is the kind of person who will enjoy sharing her expertise and helping you build the business from the sidelines as a mentor or coach.

3. How to structure advisory board deals. Be specific about the role you want each advisor to play, and the amount of time and type of assistance you will want from then. I typically tell advisors I’ll need them to put in about one hour per week on average. In exchange for their help, I grant advisors equity options in the range of one percent of the company, vesting over three to four years. As always, run advisory board deals by your lawyer and accountant.

4. How to work with advisors. Advisors can function both as specialists and generalists. Give individual advisors specific requests for assistance (e.g. please see if you can help me get to the CEO of customer X). Then schedule a meeting or call at regular intervals (e.g. once per month or quarter), and use it as an opportunity to get feedback on general issues, like opportunities, threats, and major decisions. Keep in mind, you don’t have to follow their advice (but if you don’t, explain why).

Dany Levy interview: A business plan should evolve.

May 19, 2010

Dany Levy is the founder and Editorial Director of DailyCandy, a daily newsletter with insider advice about style, food, fashion, and fun. Dany started DailyCandy in 2000 with a simple vision: one thing in your inbox telling you what to do that day. In 2008, Comcast acquired DailyCandy for a reported $125 million. Today DailyCandy has over three million subscriptions. Prior to founding DailyCandy, Dany worked for New York Magazine and Lucky, and wrote for The New York Times, Martha Stewart, and Vanity Fair. Dany is a graduate of Brown University.

UpStart:  How did you make use of a business plan at DailyCandy?

Dany Levy: “A business plan should evolve depending on the stage of a business and on the audience it’s written for. I started DailyCandy myself, at my kitchen table, with no employees. At that point, my business plan was just for me. It was a two page document describing what DailyCandy was, to help me clarify and narrow down what the product should be. That plan helped me stay focused, but it also left room for flexibility. I just concentrated on writing great editorial, and spreading the word. A year later, I developed a more comprehensive business plan, as I began to sell advertising and court suitors. Still, I kept it short. I figured investors needed to “get it” after the first few minutes. As the business grew, and I took on institutional investors, I needed more detail, like financial projections and strategies for marketing and sales.”

UpStart:  Did developing a business plan provide any other benefits for you?

Dany Levy: “Yes. Most of all, it helped me learn. That was one of the greatest things about building a business – the steep learning curve. And the business plan made that learning explicit. I got a lot of help with my plan from my CEO, Pete Sheinbaum. At the time, I handled editorial, and he handled business matters. I remember learning to measure the cost of acquiring customers, and the value of those customers. I think at the time one customer was worth somewhere around $10.37. The next time I attended a DailyCandy event, I looked around the room and imagined a price tag on every girl’s head reading ‘$10.37’. Understanding the economics of the DailyCandy business gave me a much broader and deeper sense for what we were doing, and that ultimately paid off far beyond my wildest expectations.”

Mo Koyfman interview: Startup teams

May 19, 2010

Moshe “Mo” Koyfman is a principal at venture capital firm Spark Capital, where he leads investments in Web services such as www.aviary.com. Prior to joining Spark, Mo spent six years at IAC, most recently as Chief Operating Officer of Connected Ventures, parent of CollegeHumor.com, Vimeo.com and BustedTees.com. Mo is a graduate of The Wharton School and The College of Arts & Sciences at The University of Pennsylvania.

UpStart: What do you look for in a startup team?”

Mo Koyfman: “A great team is the first thing I look for in an investment opportunity. Successful businesses are built by extremely talented people and that’s where my investigation begins. I specifically like to see great co-founders, as there seems to be a unique chemistry that develops with the right mix of leadership at the helm. If technology is an integral part of the product, I also like to see at least one of the founders with a strong technical background. It’s certainly ideal if they’ve had prior success, but not a prerequisite. And it’s important that they’re still hungry, no matter how successful they’ve been previously. I also look for a balance between tenacity and passion on the one hand and a willingness to listen and learn on the other, as many mistakes will be made and the company will undoubtedly have to hear their users / customers and pivot over time.”

UpStart:  “What do you like to hear from a team when they present their business plan?”

Mo Koyfman: “First, I like a business plan to be clear, informative and brief. If your PowerPoint is more than 20 pages, you haven’t done a good enough job of crystallizing your plan. In the team section of the plan, I like to know how the team came up with the idea. I tend to prefer ideas hatched from real needs, as opposed to ideas developed in top-down brainstorm sessions. I also like to know how the team knows each other, to get a sense for their shared vision, and to understand how their skills are complementary. I also prefer when teams come with a built product rather than just a plan—particularly for Internet service companies, where it’s become easier and cheaper to build basic products right out of the gate. I like to see a team scrappy enough to have built a prototype themselves, with the least amount of money possible.”

Tommy Hilfiger interview: Team, team, team

May 19, 2010

Tommy Hilfiger is the founder of Tommy Hilfiger Corporation. An entrepreneur from his earliest days, Tommy skipped college to run a string of retail stores in upstate New York. He later turned down highly sought-after fashion design job offers to start a company of his own. In 1995, Tommy was named Menswear Designer of the Year by the Council of Fashion Designers of America. Three years later Parsons School of Design named him Designer of the Year. By 2004 Tommy Hilfiger Corporation had over 5,000 employees and revenue of more than $1.8 billion. Private investment company Apax Partners acquired the business in 2006.

UpStart: What does it take to be a great entrepreneur?”

Tommy Hilfiger: “I think skills and personality traits are more important than background. I never went to college or design school, but I had passion, drive, and resourcefulness in droves. When I launched Tommy Hilfiger Corporation, I wasn’t trained in the conventional rules of business, but that worked to my advantage. I experimented. I made bold moves. And I adapted as I learned. I credit much of my success to my drive to win and my fear of losing.”

UpStart:  “To what degree was your team responsible for your success?”

Tommy Hilfiger: “I’ve always been aware of my strengths and also my weaknesses. Because I acknowledge my weaknesses, I’ve been able to surround myself with people whose skills complement mine. Building great teams has been essential to my success.”

Liz Lange interview: Bootstrapping in practice

May 19, 2010

Liz Lange launched her eponymous line of fashionable maternity clothing in 1997. Within eight years, the company grew to over $10 million in revenues, secured partnerships with Target and Nike, and established a cult following said to include the likes of Cindy Crawford, Gwyneth Paltrow and Kate Winslet. In the process she changed the way women, retailers and the media think about maternity wear, despite the fact that industry experts told her it would never work. Liz Lange also bootstrapped her way to success. Here’s how she did it:

UpStart:  “How did you build a multi-million dollar brand with limited startup capital?”

Liz Lange: “I started with no money and eventually borrowed $50,000. Initially, I did everything myself. I waited on every customer. I packed the FedEx boxes. I was the fit model. I did my own PR by calling editors to write about my business. To avoid getting stuck with unsold inventory, I produced all my clothing to order. And before opening a retail store, I just had a small office where customers could see me by appointment.”

UpStart: “Did you find that there were advantages to bootstrapping the way you did?”

Liz Lange: “Starting with limited capital helped me become successful. In the end, let’s face it, most businesses are thrift businesses, even the supposedly glamorous ones. Starting with less taught me to operate the business efficiently, and those lessons stayed with me throughout good times and bad.

“I had to be very smart about what I did and didn’t spend on, and that led me to make smart decisions. I also had to focus on the bottom line from the very beginning, as opposed to startups that raise a lot of capital and tend to lose sight of the bottom line in favor of generating revenue.

“Since I had to do almost everything myself, I understood every aspect of my business and got direct feedback about the needs of my customers. Even after I could afford to delegate, I made it a point to interact with customers personally, even if only via e-mail, as I had learned the value of staying connected to them. Plus, doing everything myself ensured that everything was done well. Nobody has more passion about their work than a founder. It’s your baby, after all.”