Tag: startups

Focus on the road, not the wall

Posted on by Ryan H Vaughn

Running a venture-backed startup before profitability is like flying a plane you can’t steer toward a thick, steel wall. The only option is to throttle up faster and faster, accelerating to take off with enough distance to clear the wall (reach profitability), or somehow find a way to move the wall backward before you hit it (raise follow-on financing).

There is precedent to this wacky situation, out of which has come best practice.

Professional NASCAR drivers are trained to focus solely on the road, because history has shown that if they allow themselves to look at the wall, they’re likely to hit it.

It’s so difficult when running a startup from a balance sheet to not fixate on that wall, but Jeff Gordon might tell you your life depends on it.

When to stop “crushing it”

Posted on by Ryan H Vaughn

I’ve been “crushing it” for almost as long as I’ve been running a startup.

That’s not to say that things have always been up-and-to-the-right. We’ve had more than our share of WFIO moments along the way. But to most anyone I spoke with, we have always been crushing. I made sure of it.

I have always kept the key metrics by which we actually were crushing it at the ready at all times, because you never know who you’ll talk to and you need to be on your game when opportunity knocks.

There’s tremendous value to this. I have literally been in an elevator with an investor of limitless resources, and needed to position my company in the best possible light in less than 30 seconds to pique his interest enough to take an actual meeting with me. If I didn’t have that highly packaged version of our story at the ready, I legitimately would not have closed that round of financing. I certainly don’t mean to diminish the importance of presentation, as it’s critical to startup success.

That said, it’s worth knowing when to turn it off, too. And doing so can counterintuitively be a path to success.

If you’re always “crushing it,” you risk sugarcoating real problems that need attention, and prevent the outside perspectives that may actually help solve those problems from having a clear way to engage. In “crushing it” you present the image of success, but you may unwittingly do so at the cost of real, actual success.

Startups are hard. Over time we’ve cycled through periods of legitimately crushing it, and periods where I didn’t think we would make it. That up and down ride is the nature of the game, and the secret is that EVERY startup hits highs and lows, even though most don’t talk about the lows.

That’s for good reason. Talking about the lows will never get you funded. But on the other hand, “crushing it” communicates that you don’t need any help.

And sometimes we all do.

The (not so) new leadership: Context > Control

Posted on by Ryan H Vaughn

Many leaders still see their job as directing the activity of the people working for them, setting up detailed systems designed to remove the variability from human behavior and achieve predictable outcomes.

This approach to management stems all the way back to 1911, when Frederick Winslow Taylor released his opus, Principles of Scientific Management. His techniques were responsible for dramatically increasing the output of industrial era factories by limiting the freedom of employees to make decisions, instead creating detailed scripts to drive very specific, management-prescribed, behaviors. By creating a system that forced every employee to conform to standards in every situation, Taylor ensured maximum compliance, which at that time equaled productivity.

But that was a different time, and those employees were doing repetitive tasks in a factory. Today’s workers are asked to navigate rapidly changing markets and produce results in all kinds of situations, so compliance, at best, comes with many caveats. But many managers still use those techniques today. You see the issue.

Today, the most successful companies adopt a context > control philosophy to management. At VNN, it looks something like this:

  • Leadership’s job is to create context
    • Establish long-term vision, short term milestones needed to move toward that vision, and set any hard guidelines outside of which employees may not go (the goal is to make these as broad as possible)
    • From there, avoid making decisions wherever possible
    • Instead, ensure that everyone within the organization has the appropriate context to make their own decisions. Ensure everyone is aligned to where the organization is going, and understands their role in achieving the vision.
    • Then align some more (HT Patrick Lencioni).
  • Individual employees’ job is to use good judgement
    • Each employee is empowered to make the best decision for every situation in which they find themselves, based on the context provided by leadership

This way, the people closest to the situation, the ones best equipped with the most information about the situation–namely the employees–are the ones making most of the decisions. Meanwhile, leadership spends most of their time answering questions, providing feedback, coaching, training and generally ensuring that the decision makers (employees) have the context needed to make decisions in the moment that are aligned with overall company priorities.

Doing this admittedly requires humility on behalf of the leadership, as they need to embrace the fact that they cannot keep up with the pace of business on their own, and empower their team to help them make critical decisions (and then support them when they decide things different than you would). But I’ve found that if you empower your team, and expect them to step up, they do.

When they do, the rewards are many. In addition to better serving customers (by ensuring the person they’re talking to is empowered to help them without checking with their boss), this approach has proven to lead to a more engaged and productive employee base, and a greater level of innovation throughout the organization.

I remember the moment when I realized we had implemented this effectively at VNN: I had given feedback to an employee that I didn’t think a project he was passionate about would work, but I also let him know that, as always, my opinion was context and it was his decision, within the parameters we had constructed. He decided to go forward with it, busted his ass on the project around his core responsibilities, and it’s now one of our most successful business lines. I had to eat some humble pie on that one, but there’s no question that VNN would be less successful if I had dictated that particular decision.

What was a radical philosophy as recently as a few years ago, what I’ll call “context > control,” is quickly becoming mainstream. It’s not there yet, but organizations like The Ready, Whole Foods and Google are all leading the way, and VNN is working every day to do the same.

Many leaders still want to control every aspect of their organization. But the companies that let go of that control, democratizing decision making and embracing the full capabilities of their employees, will outpace those who centralize decision making and look to control results.

They already are.

In a future post I’ll detail exactly how we went about implementing this approach at VNN, and the structures we use today to ensure everyone has the appropriate context to UGJ (Use Good Judgement, which we stole from Netflix like any good artist).

It’s also worth noting that the above is nowhere near the leading edge of management. Recognizing the futility of pretending to control the future, some companies have gone so far as to eliminate the annual budget entirely. We still have a budget, but I must say this is very intriguing.

Do Less, Better

Posted on by Ryan H Vaughn

Inspiration sparks the best ideas, creative process crystalizes them, and perspiration makes them come to life. Three parts of the value creation chain.

We startup founders are excellent at the perspiration part. We push and push, optimizing for a constant state of busyness, checking off more boxes than we did yesterday. Eliminating more gaps in our schedules in favor of “GSD” (getting shit done).

In doing so, we feel productive. We’ve been conditioned to “do more, faster“. And that’s not wrong, but the question is at what cost?

Inspiration and creativity require one thing: Space. The very thing that our quest for productivity would have us eliminate. We’ve been sold a line that we must hustle ad infinitum, and bought it wholesale with little awareness of the implications.

Nothing happens without perspiration. It is the core characteristic of successful founders, and foundational. But successful founders get that part, and then go too far.

With the way we glorify the hustle as founders and leaders, is it really a surprise that true inspiration and creativity have become so rare? Why everyone is just the “AirBnb for pet crates” or the “Uber for luggage”?

The case for the startup psychologist

Posted on by Ryan H Vaughn

Cofounders are effectively married, so why do we not invest in couples therapy for startups? It works.

There is no more fundamentally important relationship inside a company than between its cofounders, and no area in which things can get more royally screwed. By extension, that applies with only a very slight reduction to the founding team and/or leadership team, the group of people with varying functional areas who through their relationships guide the direction and success of the company.

Market, strategy, culture, all of these things are important. But none of them can overcome bad relationships within the leadership of a company.

So why do we, as founders and investors, not invest in nurturing and securing those relationships? And in the rare cases where we do consciously, why do we expect success from people without any professional expertise?

We rely on board members, usually business leaders all, and the founding team itself to fix these matters. This is like handing a drill to Mike from Accounting and asking him to fix your cavity. He’s not trained in dentistry, so you don’t hand him a drill.

A board and founding team are not doctors in psychology (much less do they possess the required dispassion to do the job with objectivity), so why in the world do we so unquestioningly trust them with managing the psychological dynamics of the leadership team, the single largest lever in our organizations?

I’m piling on here, as it is definitely encouraging to see groups like Freestyle Capital investing in the mental health of their founders. This is critically important and they are pushing the envelope, far, to do even that, but it’s about more than the mental well-being of the individual. We need to go farther, and invest in the mental well-being of the leadership team (if not the organization).