Your First Customer

I’ve been thinking about what it takes to get your first customer. If you are in a startup and you don’t have a customer, this (hopefully) keeps you up at night. So I’ve been thinking about this and writing about it and Googling and I found this article at www.onstartups.com. Even if you aren’t in the software business, I think there are some really useful tips — you should read it.

I’m going to try to add a post every day this week about getting your first customer. I’m interested in hearing how you’ve done it (or if you haven’t done it, what your challenges are) so I can add to my list of suggestions.

My Wife Hates Entrepreneurs

In the About Us page on this site, I mention that until recently I’ve been hesitant to call myself an entrepreneur. I used to think it was pretentious to call myself an entrepreneur and in some instances, I still feel that way. For example, if someone asks me what I do, I would never say, “I’m an entrepreneur” but I would proudly say, “I’m the CEO at Franchise Foundry.” And I’m even more suspicious of people who say that they are serial entrepreneurs even though by some standards, I probably qualify as one. By many standards, I probably qualify as pretentious, but let’s save that for another post. Or maybe my friends and family can just write about that in the comments.

Well tonight I was talking to my wife and she said, “I hate entrepreneurs.” It caught me off guard since I have just recently become more comfortable calling myself an entrepreneur and she knows it. I nervously pushed back a little and said something about how entrepreneurs were going to save the world from financial disaster. Does that sound pretentious? No? Good.

Regardless, after talking for a while, I think I have a better understanding of why I have been hesitant to call myself an entrepreneur and why my wife claims to hate them. It’s because so many scam artists call themselves entrepreneurs. If you are building a business you are a lot more likely to say, “I just started a crappy business” than you are to say, “I’m an entrepreneur.” If, on the other hand, you have formed an LLC to manage the funds your ChatToText MLM business is generating there’s a good chance you’ll call yourself an entrepreneur.

Here are a few things that give the rest of us a bad name:

1. A focus on the short term. Nothing will kill a business faster than an “entrepreneur” who isn’t in it for the long haul. Maybe you will sell your business in three years but you can’t count on it. If you are building for an exit you will make mistakes. Build a strong business. Build a business you would want to buy and then you won’t be disappointed if nobody else does.
2. Overestimating your importance to the business. The best entrepreneurs build businesses that don’t require them to be involved in the long run (even if they stay involved). If you are irreplaceable, your business is weak. There are a couple of cases where the entrepreneur becomes the brand. This may or may not be a good business strategy. Just know this: these are people my wife hates.
3. Forgetting to create value. A real entrepreneur creates value. Most people who call themselves entrepreneurs destroy it. If you take money from investors, provide them with a return. If you aren’t cash flowing, be careful about your expenses. Pay your employees before you pay yourself.

Maybe if we all got together and started acting like real entrepreneurs, my wife wouldn’t hate us.

Failure is not an option. It’s a requirement.

I just found this video on WorkHappy.net and I really liked it:

I like the way everyone in the video talks about failure. I think that every crappy company must fail in order to succeed. The fact is that if you are in a startup, there is about a 99.999% chance that what you are doing now isn’t what you will be doing in a year. In fact, for your sake, I hope it isn’t. That’s not to say that I think your entire business will fail, but some aspect of it will fail and you will, you should emerge from that knowing a lot more about how to become a good company than you knew before you failed.

Fail fast but not often. Understand that you will have to reinvent yourselves a couple of times before you get it right. If you have this mindset, you’ll be a lot more careful about spending your money. Trust me that you are going to fail and make that happen as fast as possible and with as little cash out the door as possible so that you can get on to making your crappy company a good one.

Building Your Team

One of the best examples of great advice in “Good to Great” that is almost impossible to follow in a “Crappy to Good” business is the advice to get the right people on the bus and the wrong people off the bus. Don’t get me wrong, this is great advice but a startup entrepreneur is dealing with an intractable problem.

The nice thing about a startup is that it is attractive to a certain type of person. I’m not talking about VC backed startups with enough cash to hire former Yahoo! executives, I’m talking about the rest of us. The person who is attracted to your typical cash-starved startup is someone with a lot of energy and a low cost of living. These are people who care more about the company’s vision than they care about a fat paycheck. I love these people.

The problem is that what they have in heart, they often lack in experience and very few startup entrepreneurs have the time to coach employees. Since you probably can’t attract the talent that you need, you need to get the most out of the talent that you have. Here are 5 tips:

1. Hire slow, fire fast. Alan Hall gave me this advice when I was at Sharp Analytics and it’s good advice. Don’t hire someone until you absolutely have to and once you know that someone isn’t going to work out, fire quickly. It’s in everyone’s best interest.
2. Never underestimate the importance of cultural fit. If your gut tells you that the candidate isn’t going to fit, don’t convince yourself to hire them anyway. A good way to avoid this is to make sure your team meets and interviews every candidate. You’d be surprised at what you will learn from other members of the team. I once had an office manager whose gut was never wrong. I made sure she met every candidate and I would turn down qualified people based on her
3. Ask people to do things they are good at. This sounds ridiculously obvious, but I don’t think it is practiced regularly. I remember an employee who wasn’t good at project management but I kept assigning him project management responsibilities. There wasn’t a shortage of work, so it was easy enough to shift some responsibilities so that this employee didn’t have to do project management and could focus on what he was good at.
4. Build a rapport with your team. I believe that people who respect each other perform better. I can’t prove it but I’d love to see you prove me wrong. Building a rapport with your team means that you have to work at least as hard as everybody else and you need to be accessible. As important as those lunch meetings are, I highly recommend eating with your team on a regular basis.
5. Be brutally honest. You can’t afford to do this if you decided to skip the rapport building but if you can’t be brutally honest then you won’t get the most out of your team. And don’t confuse being brutally honest with being mean. Being mean will not get you loyalty. Being kind and honest will. I highly recommend reading “Crucial Conversations” if you have any problems in this department.

There’s no question that team building in a startup is critical to the success of your business. You’ll pay a high price for team building mistakes and you’ll get a great return on the right team.

Crappy to Good

This blog has been years in the making. I think the idea first hit me when I was reading Good to Great by Jim Collins for the first time. My friend, Chuck Sharp, and I had been slaving away trying to get our company Sharp Analytics off the ground. Chuck and I were reading “Good to Great” hoping that it would provide us with some much-needed insights into our strategy. I loved the book but I was pretty disappointed when I came across this sentence:

Pitney Bowes had grown to over 30,000 employees and revenues in excess of $4 billion, compared to the sorry remnants of Addressograph, which had less than $100 million and only 670 employees. (Good to Great, Jim Collins, 70)

So here we were trying to figure out how to cross the $1 million per year in revenue threshold, reading a book that describes $100 million in annual revenue as “sorry remnants.” We probably would have killed for those remnants.

I remember walking straight into Chuck’s office and pointing out that as much as I liked Collins’ Good to Great we needed the prequel, Crappy to Good. And that’s where this idea started. I started looking for resources for startups and found very little. While you can apply the concepts in Good to Great to a crappy business, it just isn’t the same as if the book had actually been written for an entrepreneur who is dying to figure out how to make his or her crappy business a good one.

I’d like Crappy to Good to become a blog that engages startup entrepreneurs in a discussion about what it takes to turn our crappy businesses into good businesses. Because seriously, if we are going to describe $100 million in revenue as merely “good” then I’m the proud owner of a really great crappy business. Help me make it a good one by joining in the conversation.