The discussions of the last three posts, while important to all organizations of any size, are probably most important for startups. The big guys can more easily survive a misstep in these areas.
A case in point: Microsoft has taken a decade to slowly drop in esteem amongst business as well as end users, and still has the ability to turn this around because they have both massive resources upon which to continue living upon, and because they are the entrenched, accepted platform for most business computing.
When every company is using your applications (Office) and your OS (Windows), it’s both easier to forget to listen to your customers (and vendors, and developers), but also to stay alive long enough to change course. Microsoft has forgotten, but no one is yet saying they’re a has-been company. Although with current competition from Apple, Linux and Google…and practically ceding the mobile market…well, we’ll see.
Apple is another case. They slowly lost market share and business over a decade, but survived, largely because Microsoft needed competition to differentiate them in the marketplace. Now, of course, Apple is bigger than Microsoft.
Alas, the startup has no such “too big to fail (slowly)” net. Unless you a) are the dominant player in a market, and b) have massive resources at your disposal, you cannot afford to lose sight of these three areas: Customer Intimacy, Simplicity, and the Cost of a Dollar.
An illustration of the especial need for customer intimacy: Startups usually don’t have the massive data that an entrenched company has built up over years. Likewise, each customer, by working with a startup, is expecting a certain level of treatment and input in how your product will function (Crossing the Chasm, anyone?). Creating a product your current customer wants and that future customers will buy can only be accomplished if you have an intimate relationship with your customers.
Building a product or service without input from those who will use it will fail. Most startups are unable to recover from a lack of customer intimacy.
Simplicity sounds like it should speak for itself, but it covers a vast area. I’ll give illustrations of design and culture. First, any product that tries to please everyone will please no one. Apple is a great example here of usually doing this right. The original iPod didn’t do everything a handheld computer could do. It was optimized to a specific purpose: playing digital music. Now think about the controls. This was a machine that was simplified to the point of abstraction, then brought back just enough to be intuitive for people who were used to more complex controls.
Everyone bought one. Or three.
Now apply this to tech sales and the design or implementation of your product. Can a non-techie consumer, VC, or CEO easily grasp what it does and how it’s used? There are too many items in any given day vying for our attention. If we can’t figure out your product and it’s use immediately, we’ll pass.
Simplicity in culture is equally important. How many people need to be involved in any decision? Can, say, three people, with one having the final call suffice? Or do you need input from the entire company, plus buy-in from dissenters, as well as sign-off from Roy, Larry, and Terri, who all hate each other? This is only one fairly extreme example, but startups need to move faster than the large companies. Without dexterity, you will be run over. The paralysis can also undermine morale, with employees feeling they are not empowered to make decisions on their own and do what they need to get your product out there.
Lastly, and related to simplicity, is the cost of a dollar. CEOs usually know how much expense was incurred to earn $1 back. But is this transparent to the engineers and the salesmen? Especially the sales managers, who need to know when not to chase a deal that will lose the company money. I’ve personally met people who unfortunately sold the shirt off their back for the pleasure of selling something…and unfortunately that fleeting pleasure was all the revenue they received.
I don’t think I need to point out why that’s HUGE for startups to keep in mind.
But it’s not only sales that should grasp the cost of a dollar. Understanding, even just roughly, how much is spent on the different divisions, materials, support, etc., will help everyone in the company keep perspective of what the cost or value is of their actions. In turn, they will generally perform actions that create the greatest value, because they need their company to succeed.
Good hunting.
