Tole's Take

Rules for Startups #5: CEOs should be like Tom Brady

Without a doubt, Tom Brady is the current golden boy of the NFL who is a winner on and off the field, having inherited the mantle from Joe Montana and Joe Namath. 

Tom also encapsulates and manages to put into words what it means to be a quarterback in the NFL (from the NYT):

He said that the best advice he received from Montana was to remember who you are in the huddle. “When you’re the quarterback you’re one of the guys, but you’re not really one of the guys because you’re kind of the coach on the field,” Brady said. “I’ve come to experience that and realize what Joe’s talking about. You can’t be a goofball and all of the sudden show up and expect those guys to perform great.”

While I'd never compare the rigors of professional sport (split-second decisions while 300 lb. behemoths bear down on you) to the daily life of a startup CEO, his underlying point still rings true.  Everybody has a role to play in your startup's success, and your role is to lead by example, provide direction, and always let your people know where you stand on the issues and priorities facing the company -- to go back to the football analogy, in your company's "huddle" you are one of the  guys, but you're not really one of the guys, so don't even try to pull it off.

Jack Welch has some wonderful podcasts on this and other management topics on the BusinessWeek site, which you can also subscribe to with iTunes.  Another recommended listen is the Manager Tools podcast.

Rules for Startups #4: walls = revenue

A startup that has no walls, has no revenue.  Why?  Because great engineers like open spaces (for impromptu conversations, group meetings and nerf football games) but great salespeople need big, soundproof walls (to constantly work the phones).  Since a startup nearly always spends months building the product before sales are even possible, a good question to gauge whether a startup is making money yet is, "Do you have walls in your office?"

At Krillion, we put up our first walls this week ... exciting times!

Rules for Startups #3: Grit & Determination

People will often tell you they want to do a startup.  90% of the time it's BS.  You want a quick and easy way to assess if they won't be roadkill in a year?

Ask them who their 2 best friends are.   

Meet the guys who will become your new best friends if you want success: Mr. Grit & Mr. Determination.

Rules for Startups #2: Recruit Constantly

Recruiting is commonly cited as part of a laundry list of corporate priorities, usually couched in such platitudes as "people are our #1 priority," "we put people first," etc.  And it's complete BS, not only as a hackneyed priority but also in its limited focus only on employee recruiting.

Which brings us to Rule #2 in our occasional series on Rules for Startups (not in any particular order; Rule #1 was about getting a great lawyer) -- you should always, always be recruiting.  And by recruiting I don't mean buying drinks for the disgruntled software engineer sitting at the end of the bar because you are months behind in your product rollout and you'll take any warm body who can code at this point.  No, I'm talking about recruiting in the larger sense of talking business (yours and theirs) with people you know and meet along the way, not solely for the purpose of getting them to join your team.  Some benefits of this approach:

• you improve your sales pitch to customers (how to translate what's in your head into customer-ese)
• you improve your sales pitch to investors
• you improve your sales pitch to potential recruits
• you are forced to answer the question "what exactly do you guys do?" (have pity on the first few people who ask you this, since they have no idea of the verbal assault & battery they are in for ...)
• you learn to listen to people's comments and not just ramble on with your vision
• you'll learn about someone else's business, which makes you a more interesting conversationalist and also improves your ability to grok new ideas (as Oliver Wendell Holmes said, "Man's mind, once stretched by a new idea, never regains its original dimensions")
• most importantly, you may actually impress and interest some folks along the way, any one of whom could turn out to be an advisor/investor/new hire, etc.

We have a stellar Advisory Board and a wonderful VC in Ann, and the common thread running through our relationships with all of them is the fact that we got to know each of them long before we started the company or we were referred to them by a close friend.  Good karma goes a long way, and it takes a long time to build the foundations of such relationships before they start to bear fruit, but in the end all the work you put in "recruiting" over the long months and years to get your startup off the ground is ultimately repaid in spades.

Rules for Startups #1: Get A Great Lawyer

We've seen a lot of big changes at Krillion since we founded the company 9 months ago.  And while I'm sure the experience is common across many early-stage startups, there are several key patterns that have emerged along the way, especially when it comes to what not to do.  As Paul Graham says, "way more startups hose themselves than get crushed by competitors," and he is right -- cut down on your number of self-inflicted wounds and you increase your chances of survival (even if only slightly).

So in this vein, here is the first of an occasional series on "Rules for Startups," in no particular order of priority.  Do I have all the answers?  Hell no.  But getting a startup off the ground is like playing a continual game of Russian roulette, so can I keep a few other entrepreneurs from pointing the gun in their own direction?  I certainly hope so ...

So Rule #1 is simple and others have touched on it (two examples are here and here), but nonetheless it is frequently overlooked in the rush to start building the company -- get yourself a great lawyer.  Not a good lawyer, not a lawyer who handled your friend's divorce, and likely not the cheapest lawyer since you truly get what you pay for in this area.  A great lawyer (ours is Steve Bochner of WSGR) will save your ass more times than you can count, and more often than not you won't even know it at the time.  How?  By gently & proactively pointing the gun in your hands (remember the Russian roulette theme) in a different direction from your natural instinct to point it at yourself. 

Having worked as an attorney for WSGR in the distant past, here are some code words the great lawyers employ to save their naive startup clients:

• "let's be more creative".  Translation: you are way off base but I am too polite to say no because you are the stubborn type (of course you are, you are an entrepreneur out to prove everyone wrong).  Example: "Perhaps there is a more creative way to write this term sheet provision (without giving away your firstborn to indentured servitude with the VCs)."
• "it's ultimately a business decision".  Translation: this is just a polite caveat; whatever I said right before this, that's what you should do.  Example: "I think there are other alternatives to signing a 5-year exclusive deal with this big customer that isn't going to pay you very much, but ultimately it's a business decision."
• "that's non-standard".  Translation: no way are you getting my legal signoff on that piece of crap.  Example: "A 10x liquidation preference in a VC term sheet?  That's non-standard in the Valley these days."   

Ultimately it boils down to one subtle, but very important, distinction between a good and great lawyer.  When you bring a new deal or business proposal to a good lawyer, they look for reasons to say "no."  A great lawyer looks for reasons to say "yes" -- they'll flag all the risks for you, but they try to enable the business as much as possible.  Do yourself a favor and find a great one!