Tag: Startups

Nailing your vision is only step 1

Nicole Glaros2 Comments

I’ve recently worked with 2 different companies who are struggling. In trying to help diagnose the issue, I talked to a handful of people (board, leadership team, employees, etc), and when asked “in your own words, tell me what the vision of the company is” – I heard surprisingly different answers. 

We all know how important vision is – in fact, we know it so well that we dismiss it. “Yeah yeah yeah, it’s table stakes, we did that already at last year’s offsite… don’t tell me about how important vision is.”

Yet vision itself is important only to the extent that:

  1. You have one (obviously)
  2. Others know specifically what it is (communicated); 
  3. It can’t be interpreted any other way (clarity), and 
  4. That people on the team are 100% bought into it, emotionally (alignment).

This is where I see a lot of companies go wrong – you need all 4. Ironclad.  Founders invest in the vision, but not in the other 3 steps, and eventually, things go sideways for them.  Let’s break it down.

You have a vision

I’m not going to spend a lot of time here because there have been entire books written about the subject. Just know that it’s not the same thing as your marketing tagline. It’s a rallying cry, it’s your ‘why’, it’s the reason your employees want to work for you and the reason you get up in the morning. Nietzsche famously said, “He who has a why to live can bear almost any how”. By the way, profits are not a good rallying cry.  Numbers, generally, are not. Also know that your vision is not your ‘how’, how specifically you’re going to accomplish your why. Your “how” is very necessary as well, and needs the following elements too, but that’s for another blog post.  

Now if you don’t have a vision yet, it’s okay, you’re exploring, discovering. Try not to succumb to the temptation to raise capital at this stage, it’s fundamentally misaligned with discovery (and that is yet again fodder for another blog post).

You’ve communicated it with others

Everyone, and I mean everyone, in the company should know what the vision of the company is. Nearly verbatim. The board, the leadership team, the new hires and interns. People should be able to state it, within a couple of word difference, upon demand. It should be easy to say and easy to memorize, and you should repeat it ALL THE TIME. An exercise once a year doesn’t cut it. Consider every offsite, every board meeting, every all hands – there is a lot of places to repeat your rallying cry to ensure it’s etched in stone.

This is very easy to test by the way, but it can’t be done in a way that gives people the chance to look up the answer, or if they get the wrong answer, they’re in trouble. If you’re in-person, get an advisor or friend of the company to walk around and ask people what the vision is. Have this person keep track of how many seem on point vs off track. It doesn’t need to be super scientific.  Or if you’re on Zoom, there’s a quiz feature that allows for short answers – the goal is to not give people enough time to go look it up, and done in a way that people don’t feel threatened.  Zoom is nice because you can see how off people are. Remember, deviations aren’t their fault, they are yours. Re-train.

Clarity: It can’t be interpreted any other way.

You would be shocked at how different interpretations can be, and when people think it means something different, then people aren’t working towards the same goal. It’s almost the same thing as not having a vision in the first place.  

Again, the test here is pretty easy, just ask!  At your next allhands, ask everyone to come up with various interpretations to the vision. Give an award for the craziest interpretation – make the object of the game to INVENT interpretations, so people don’t feel threatened. Then edit the vision statement as necessary to improve clarity.

Alignment: people are emotionally bought in

This one is the silent killer. Do people really buy in to your vision? How do you know? Just because they’re not debating or not pushing back, doesn’t mean they’re bought in. Whenever people aren’t debating, I’ve found it means one of three things:

  1. They agree. IMHO I find this case the least likely of the options, yet CEOs think it’s the most common. Beware.
  2. People disagree but they aren’t pushing back and helping you refine it because they don’t feel safe to disagree with the boss.  This causes much bigger issues in the company beyond vision.
  3. They disagree, they’ve told you so, they don’t think you’ve listened, or don’t care, they think you’re wrong and aren’t ‘disagreeing and committing’. They are going to do it their own way, your way be damned. Or they’re going to do it your way, but do it half-assed, so that mistakes abound.

This one is much harder to test becaues people won’t readily admit to it, and once you’re far down the road on issue 2 or 3, it’s hard to repair. The best way to avoid this fate is to start early, ask often, remember people’s concerns so that when you’re wrong and they’re right, YOU say so and not them, and ask people to disagree and commit. A good tactic for this is the Fist of Five, where everyone, simultaneously, votes with their fingers a score between 1-5, where 1 is “hell no, this is a freaking mistake”, 3 is “maybe, I need more info”, and 5 is “hell yeah, let’s do this”. 

Without communication, clarity, or alignment, your vision is merely hallucination (thanks to Gino Wickman for that little nugget). People always seem to focus on the vision, that’s where they put their greatest attention. But remember you aren’t done once the vision is decided. It then needs to be communicated effectively, without room for interpretation, and people need to be bought in. From there, THEN you focus on how to execute the vision. Otherwise the time you spent on vision is wasted and it will have little to do with outcome of the company.

If the company is struggling generally and you’re having a hard time putting your finger on why, run through the above exercises to rule out murky vision and alignment as the reason why.

Now go thee and conquer!

Bigger isn’t always better, better is better

Nicole Glaros3 Comments

There is a long-running belief that things grow or die. In startups and in business, growth tends to mean more topline revenue.

But growth doesn’t have to mean more topline revenue. Growth can also mean improvement, better; better product, better systems, better processes. Here’s the thing (I always have a thing), better almost always leads to bigger, naturally.

The challenge with focusing exclusively on topline revenue when you want to grow is that problems nearly always scale faster than solutions.  When you throw dollars into marketing and sales, without a healthy, underlying business, the top line will grow, giving you false positive feedback, which leads to you to keep spending. However, problems are being created, and are scaling faster than the revenue, and eventually those challenges will consume the company leading to its ultimate demise. For instance, you can’t see that the CAC to LTV ratio no longer works – or maybe it never worked and you figured that by spending more in different niches, it would eventually work. Or maybe you don’t even know what the unit economics actually are, and you’re scaling a business that fundamentally doesn’t work. Or you can’t see that there’s disagreement on the direction of the company at the leadership team level. Or you can’t see that while growth is happening, customer returns/dissatisfaction and churn are happening at a faster rate than before. Or your team spends more time firefighting than driving results, creating incredible inefficiencies and destroying the bottom line (not to mention the employee turnover).

But if you focus on better, the company’s topline revenue often will grow naturally without any additional sales and marketing effort, and often with the same, dare I even say lower, costs – making the business itself healthier in all dimensions.

For instance, a focus on a ‘better user experience’ will ultimately result in:

  • Fewer customer support calls
  • Fewer bugs
  • Happier customers
  • Fewer refunds
  • Higher lifetime value, more renewals
  • Lower churn
  • Higher referral rates, increased virality coefficient or network effects
  • Happier employees
  • All of these items equal less cost, or more revenue, or both.

The better approach indeed takes more time to flow through your company compared to the let’s just throw more marketing/sales dollars at it approach – but it absolutely leads to a healthier, more successful company. And when it’s healthier, it will ultimately lead to bigger top-line revenue.

Now, I’m not saying you shouldn’t spend more on marketing/sales when you want to grow, but I am saying that you should take a hard, long, honest look at the business before you do so. 

Before you decide to scale the business:

Understand the unit economics and the levers of the business first. What are your unit economics? $1 spent in sales/marketing = how much in revenue? If you don’t yet know your unit economics or the levers that drive the business, you are not ready for growth. You absolutely need to know these metrics before stepping on the gas, otherwise, you’re just burning cash and praying for a miracle. Not sure how to go about this? Check out the book Levers by my dear friend Amos Schwartzfarb for a crash course.

Look for areas in the business to improve.  Here are common ones:

  • Product market fit – are you really in the best market for your offering?
  • Removing bugs (everyone’s least favorite – but reduces customer support costs and improves customer satisfaction)
  • Improving UX, steps, clicks, intuitive workflows, etc
  • Become obsessed with reducing the number of customer support calls because customers just get it, and it just works.
  • Become obsessed with how much customers love your product. What features can you remove (not add), or what niche can you focus on, to improve the love.
  • Removing steps in any process you have internally – this will reduce employee time spent on ‘tasks’
  • Removing policies – policy is never a good substitute for holding people accountable for good judgment, and it slows everyone down.
  • Identify redundancies in the business and remove them.
  • Look for gaps in the business “it’s not my job” and fill them.
  • Push reversible and inconsequential decisions down in the business as low as you can get them 
  • Improve alignment – is everyone incentivized similarly, or by the right things? Make it so.
  • Simplify – what areas can you simplify? Org structure, processes, policies, product.

Monitor the unit economics and key levers as you work on areas to improve, you should see movement! Maybe you started at a $1 marketing/sales spend = $3 revenue ($1:$3), and through your efforts it grew to $1:$4. Hell yeah! Be a little patient though, it can take 6-12 months to flow through the system.

Once you decide to increase sales and marketing spend, keep an eye on those levers and metrics – when you see the ratios start to head south, hold or reduce spending, and investigate. Don’t just keep throwing money at it.

The one exception to this is when your company is very early stage, and you have little to no revenue. But then your focus isn’t on ‘growth’, but rather finding out if you have product market fit (PMF). Don’t confuse the two. A doubling of your customer base or revenue doesn’t necessarily mean PMF. The best measure of PMF that I’ve seen is called the Sean Ellis test, whereby >40% of your customers would be ‘very disappointed’ if they couldn’t use the product anymore. Now, you need a customer base large enough to have statistical significance, and in most mathematical circles, that’s >30, however, I recognize if your customer base is large enterprises, that might be challenging.  But I digress.  If you’re still in PMF mode, do not, I repeat, do not focus on growth. Focus on PMF. Don’t focus on growth until you’re sure you have PMF.

However, there is a play that says “grow at all costs”, and on extraordinarily rare examples, this play works because you can have market effects. Grab as much of the market as possible, which will kill the competition, and then focus on quality later. But for this play to work, you have to be in a winner-take-most market, you have to be extraordinarily well funded, with low-to-reasonable valuations, and very understanding and aggressive investors who commonly invest in the next rounds even if the fundamentals of the business aren’t yet healthy, in a highly stable or growing market cycle. Given all of that is out of your control, you literally cede control of your future and company to fate. Your success lies in the hands of luck, not skill. If it were me, I’d want to stack the odds in my favor by building a healthy business before focusing on growth.

This year, as you’re working on your budgets and strategic plans, consider a focus on quality, a focus on better. Then enjoy bigger happen naturally, with lower costs and headaches, and more pride in what you’ve built.

Navigating Your Startup Board of Directors: The Meeting – Part 4 of 4

Nicole Glaros1 Comment

This is the final part in a series on getting the most out of your startup board of directors. If you haven’t already, please read Part 1: The Framework, Part 2: The People, and Part 3: The Board Package.

Special shoutout to my friend Ari Newman, Managing Partner at Massive who served as an editor, contributor, and sounding board for this series.

You’ve come so far, my friend!  You’ve got yourself in the right headspace about how your board is your not-so-secret weapon, you have the right people on your board, you’ve established a highly functional, productive, and trusting relationship with them, plus you’ve created a killer board package.  Now it’s time for… dum dum dummmmm, the meeting. In all honesty, once you’ve done the above things well, the meeting is the easy part.

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Navigating Your Startup Board of Directors: The Documents – Part 3 of 4

Nicole GlarosLeave a comment

This is part 3 of a series around navigating your startup’s board of directors. It focuses on the board package, what documents and sections to include and how to organize it. If you haven’t yet done so, please read Part 1 – The Framework and Part 2 – The People.

Special shoutout to my friend Ari Newman, Managing Partner at Massive who served as an editor, contributor, and sounding board for this series.

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The next billion dollar idea – Placebutt (pronounced Pla-see-butt)

Nicole Glaros1 Comment

It’s a diet pill.  It’s a placebo.

Here’s the marketing angle.

Your diet pill doesn’t work anyway, it has those nasty side effects and is expensive!  Start taking Placebutt today – research shows that if you believe something will work – it DOES work!  So pop a Placebutt every morning while BELIEVING that the pizza you ate or dinner last night didn’t just stick to your thighs.  BELIEVE Placebutt will help you to lose weight, and it will!  Without those nasty side effects or a dent in your budget, Placebutt is the placebo for everyone.  And IT WORKS – but you have to believe…

We’ll make billions.  Now I need a partner.  Who’s with me?