I visit a lot of startups, the video here is of Posterous, a company that is doing it right. Usually you can tell immediately whether a startup is really run well (which Posterous is). You’ll have your own ability to “smell” real startups when you go on the Startup Crawl in SF on November 20. Start the video to listen to Posterous’s founders and then compare them to your favorite startup. Can you see the difference?
Here’s some things that startups that aren’t run well do:
1. Have plush offices in the most expensive part of town. Come on, who are you fooling? You are burning someone else’s money and you aren’t spending it like it’s your own.
2. You can’t tell me what you do in a single Tweet. See that super complicated Toyota Prius in my driveway? It gets better mileage than your car. If you can’t explain why your product is better, the way I just did with the Toyota Prius, in a short space or time on the phone you won’t make it.
3. If I look around and don’t see programmers. I can smell programmers. A good company is full of them. Posterous, for instance, has ONLY programmers. FriendFeed had something like 13 programmers and one other person. Great ratio.
4. You hire a PR firm. Now this one is dangerous, but the best companies have let their customers do the talking for them. At Rackspace, for instance, they worked to stay out of the public eye and worked on building the best service organization web hosting had ever seen. The best companies, when small, have just gotten good at telling their stories. I still remember when Stewart Butterfield showed me Flickr. He didn’t have any PR flacks with him. Now, maybe a PR company was helping them behind the scenes or to take care of leads and all the other stuff that goes with building a company but it wasn’t the first interaction I had with the company. Nothing like having a CEO or CTO just show you the product and explain why it’s better. 4b: you don’t have a blog and a Twitter account. Even worse if you have a PR firm and you don’t have both of those things.
5. They spend money on the wrong things. I’ve been in more than one startup that had bad chairs and small screens for their engineers but they had an expensive coffee machine. Let me make this clear: you have 18 months to build your business. You have figured out how to get some programmers to work with you. Make them as absolutely productive as they can be. Buy them a decent chair and get them at least two large screen high res monitors with fast computers. Remember SOASTA? Every engineer had a 30-inch monitor both at home and at work along with a MacPro (you can see one of those monitors in the interview I did with them). That was a HUGE recruiting tool and I think it was key in helping them keep their best people and, hey, I hear they are doing well.
6. (This should be #1) They don’t fire fast enough. I’ll be honest, at Podtech me and another guy were pulling the company in different directions. John should have fired one of us. He didn’t. The story got muddled. The rest is history. (In those situations it doesn’t really matter who is right, either, you gotta pick one direction and go with it, startups don’t have enough resources to try out two directions). I’ve seen lots of other startups be slow to fire people who weren’t pulling their weight. Always bad because the best people get pissed and/or leave. Again, you need to have everyone pulling with all their weight in one direction. If that isn’t happening the startup probably isn’t firing people fast enough.
7. You picked the wrong infrastructure. I’ll let you read into that what you want because I’m biased here (I’m a Rackspace Web Hosting employee), but ask great startups and you’ll hear some common themes here.
8. You let VCs control your management team and strategy too early. There’s lots of advice out on the Internet about this one, so I’ll leave it for you to figure out. But your early decisions will have big leverage on your company later. Hire the wrong management team and your company won’t make it to the B-round. I’m not experienced enough to give good advice here, but I’ve seen what happens up front. I remember meeting one CEO of one company that was just, well, let’s say clueless. How did he get hired? The VCs put him in.
9. You have a too cool name and logo. Oh, OK, this isn’t a worst thing, but companies spend too much time worrying about them (it’s a sign that you have too much money before you even have a company and customers, which is a bad sign). That said, I just interviewed a company named rrripple. Now if you end up with a name like that maybe you should spend at least 20 more minutes thinking through your name! (Sorry Rrripple).
10. You say yes too often, particularly in engineering decisions. Look at Posterous (the video embedded on this blog). They have a blog publishing tool. But are their comments threaded? No. Will they be eventually? Yes! Why didn’t they do them threaded up front? Because they set priorities on other things that mattered more. That’s actually a good sign for a startup: if you have only four engineers you can’t do everything. If there’s one thing I like about Evan Williams, founder of Blogger and Twitter, is that he doesn’t try to do it all. In fact he prides himself on NOT doing things. It takes great leadership to say “no, Scoble, you can’t have more than 500 members on a list.”
11. Startups pick old technology because it’s familiar. You’re a startup, you should be picking the best of breed for everything you do. If you are using Microsoft Office “just because” then you are making a mistake. Have you considered Jive, SocialText, Zoho, Google Docs and Spreadsheets and Wave before making your choices? Have you really looked at ways to make your small company more productive? Or you just going with the same stuff your dad’s company used?
12. You don’t change direction fast enough. Every startup should be looking at its direction every month or so. Are things going according to plan? If not, fix them. But sometimes you just made bad assumptions about what the market would want from you. That’s OK! But don’t take a year to change directions, change quickly and you’ll have a chance to save the company.
What other mistakes do you see startups make?
Aside, if you work for a startup, I’d love to know the tools you are using for a list I’m keeping that I call “weapons for entrepreneurs.” I would love to know what tools/companies you’re using to outrun everyone.