Not all of our startups are successful. By no means.
After we'd been investing in and starting high tech companies for twelve years, I sat down and looked for a pattern in which of our companies were successful and which not. By then, we had 15 startups in total, and had coached hundreds more. Our sample size was small, but not entirely inadequate.
There is noise in the data; I think the difference between a success and an enormous, roaring success is about having the right product at the right time. Luck. Bluetail and Klarna both had the perfect product at the time.
Some of our failures are similarly due to *a lack of* timing and luck; for instance, Apple introduced the App store, which tackles the casual gaming market much more effectively than Telco Games business model.
But it turns out that, over all, it makes a difference if we spend significant time at the startup. Enough time so we're part of the gang and we're asked to do mundane things.
I've thought about why.
- We're by no means world experts, but we're decently competent at many things. They're not things a busy CEO would or should ask a board member about, but are the kinds of tasks which are given to a startup team member with relevant, fresh experience.
From this past month: Which CRM system is very cheap, good enough and easy to use (and I then set it up). How to work a trade show stand and follow up leads. What tricks and traps do you look for in an NDA. How to run a brainstorming session. Rudimentary company documentation structure. Rudimentary social marketing. Recruiting tips. None of these things, by themselves, is the *KEY TO SUCCESS*, but getting each of them done promptly and well does contribute to the success of the startup.
- Sales process. Since we join high tech startups, there is almost always more tech competence than sales and business competence when we join. We balance that out as best we can, and get sales going. There will be much more about that absolutely key process in another blog post.
- We build trust and cooperation in the team. Not only are we in the same boat as the rest of the team, with the same common shares and the same shareholders agreement, we're there, working reliably for the company's best. Many investors let very early stage startups alone too much, and the startup team can then start to feel as if they're being used, that the investor is freeloading. The resulting lack of trust hurts the startup.
- We keep up with what is going on by being there, and don't slow startups down. Startups move very quickly. In one of our current startups, our strategic situation, our main problem, and what we're discussing changed ENTIRELY over nine days. The board member who knew absolutely everything on Monday had no idea what was going by the Wednesday just over a week later.
One possible solution to that problem is scheduling very frequent board meetings. That would keep each board member updated. But how frequent would board meetings have to be?
Each board meeting takes the CEO maybe one and a half days to prepare. A startup CEO generally works as hard as s/he can, and that day and a half is taken directly from other important tasks, often sales.
Board meetings in "normal times" more than once a month are probably too costly in terms of CEO time. And yet, everything important can and does change in a week in the early stages.
We believe that by joining startups, not just investing money in them, we contribute to their success.