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Managing Start-Ups:The Indispensable Founder Syndrome

Français : La Chauvinière-Riant, Charles de Gaulle, Chartres (Photo credit: Wikipedia)

'The graveyards are full of indispensable men (and women)'

                --attributed to General Charles de Gaulle (and others)

Coming from a French General who sent many people to their death in war, the quote is at best ironic and at its worst, gravely cynical (sorry for the pun). 

I have witnessed the syndrome many times in my life in every company I have worked in and in many of the start ups I have had the privilege of mentoring and investing in. It generally starts fairly benignly, with the founder unable to delegate authority to his professionals. This can often be cured with some strong lectures, usually starting with the words: 'Why did we hire these people if they aren't given the resources to be successful?' lectures. If not, stricter messages are initiated in an effort to get Superman or Superwoman to help their team and the company be successful. If that fails, replacing/promoting the founder is often the only solution left.

The board, mentors, peers and investors all share the responsibility for making sure founders do not believe they are indispensable. Too often, founders either bully or threaten their board members into letting the worst happen. It may be insecurity on the part of the founder, or true belief that no one besides them is capable of running the company.

Here are a few thoughts on communicating with indispensable founders:

1. Be specific--often, lectures on poor behavior are couched in generalities, not specific situations. This is common when a co-founder or employee has approached the board and complained about the founder's behavior. Rarely does an employee, for example, want their founder to know that he or she has a complaint. If the founder is not confronted with specific situations, ones that potentially did/could harm the company, then the founder can often dismiss complaints as isolated events that do not need addressing. Its best to try showing the founder a pattern of behavior that is detrimental to morale or success.
2. Be honest--too often, messages can be overly coated with honey by providing excuses for the founder to slip back into his or her bad behavior. Don't say: 'I know you are under a lot of stress and that resulting in....whatever', say 'Your stress is creating havoc within the company, let's look at how we can reduce the stress and havoc'.
3. Be supportive--no one wants to be a jerk all their lives(well, some never learn but most don't). Changing behavior takes time and patience. You might try bringing in a CEO coach to work with the founder on their key problem areas. The board, peers and investors also need to take an active role in making change happen.

If you would like additional information, see this excellent 2008 HBR article by Noam Wassermann on the Founder's Dilemma and how to deal with it. 

Here's his conclusion - it is so apt.

 

"Choosing between money and power allows entrepreneurs to come to grips with what success means to them. Founders who want to manage empires will not believe they are successes if they lose control, even if they end up rich. Conversely, founders who understand that their goal is to amass wealth will not view themselves as failures when they step down from the top job. Once they realize why they are turning entrepreneur, founders must, as the old Chinese proverb says, "decide on three things at the start: the rules of the game, the stakes, and the quitting time." "

Managing Start-Ups: Useful SAAS Software Metrics(what Investors are Looking for)

cliffs notes (Photo credit: Shreyans Bhansali)

So you are building a successful SAAS software company and are looking for new investments. Congratulations!

What are key metrics sophisticated investors are looking for to justify a growth capital investment? One of my companies has been exploring this with leading venture investors. Here's the Cliff Notes summary:

50% growth

50% Gross Margin

50% Services (a 1:1 attach rate)

That's not to say you cannot be funded under these metrics, but expect a direct correlation between how close you are to these metrics and the proffered valuation by the potential investors.

Managing Start-Ups:Fear Failure More Than Enjoying Success

Cover of Only the Paranoid Survive

Andy Grove had it right: 'Only the paranoid survive'. Building a successful start up means lying awake many nights thinking about what could go wrong, and how to prevent it. What can go wrong will go wrong in a young company. One bad hire who becomes an energy vampire for the rest of the employees, releasing a product too early that fails in the field, a poor decision on features and functionality can all create failures that can be hard to recover from.

So celebrate those successes--customer acquisition, a new release, hiring a key employee--with lots of gusto, them get back to worrying...

Supply Chain Strategy: Big Data or Big Bust?

Buzzword Bingo: Big Data = Collection of large and complex data sets (Photo credit: planeta)

Big Data frenzy is sweeping the supply chain world. Numerous article tout the 'importance' of big data in making optimal planning, execution and investment decisions. Well, maybe...

First, a few thoughts on how Big Data could be helpful. Using downstream data on consumer insights, for example, could provide valuable insights into emerging consumer demand and enhance forecasting. Consumer feedback on carriers and deliveries can be used to improve outbound execution. Finally, monitoring Twitter or Facebook feeds can catch consumer dissatisfaction with deliveries and provide a forum for addressing the issues.

But Big Data accumulation and usage may be problematic. First, Big Data has many owners beyond your company--shipper's own the purchase orders, but carriers and many other third parties own much of the in transit/delivery data. Big Data owners are increasingly charging for data access, or limiting access due to consumer privacy concerns. Finally, linking together various data sources to get a coherent view of deliveries processes is a complex and expensive process.

So when your boss, after having read a glowing article on using Big Data to solve logistics problems, shows up in your office and asks what you are doing to integrate Big Data into your execution processes, be sure you have at least done your homework on what data may be useful and where you can get it. 
Your supply chain software provider, who is probably already evaluating how to add Big Data to their applications is a good place to start. There are numerous articles I have read recently on the subject of using Big Data to improve supply chain decision making, but none worth noting here. Stay tuned...I continue to look.