I’ve been around the block a few times as a technology leader. I’ve been fortunate to start a company, bootstrap it to profitability, skipping the VC rounds, taking it public on the NASDAQ exchange and then having a successful exit – this was over a 14 year span. I learned to manage, I learned the importance of leading by example. Since then, I’ve done another startup and performed three corporate turnarounds, all feeding my intense desire to learn how to build financially sound and insanely happy and productive companies. I thought I had heard and seen it all. Boy was I wrong.

This past year I have been working with 10 startup companies. Some through our accelerator here in Bend, Oregon, others through a recent Startup Weekend we held in Bend and the rest through my consulting practice. Not all startups are created equal. Some start with one person, others with more. Some start with a techie developing a killer mobile application, the other a mom with an idea on how to reduce her child’s asthma attacks and that’s it.

Working with these companies I’ve had the chance to see what has worked and where they’ve stumbled. I’ve been able to start understanding the Best Practices of a Startup Leader. The first thing you should note in my title is, I chose the word “Leader” over manager or founder. I strongly believe you lead people, and you manage things. Startups are about people, not the things. The things are artifacts of the production from the team. Production drops when people fail to lead.

If you’re thinking of founding a startup, or if you’re a founder of a startup, here are some of the Best Practices I’ve observed from the founders I’ve worked with:

1. They’re passionate.

They’re the Chief Customer Officer. They empathize and represent the customer. They’re subject matter experts in their field. They understand the customer’s persona and the problem they’re trying to solve better than anyone on the team. They know if they help their customer succeed, they will succeed.

2. They’ve got a good soul.

They’re grateful for people helping them in their startup. Not just the workers, but also the advisors and outsiders cheering for them. They choose to do the right thing over the easier path. They have integrity; they build trust and become trustworthy. They’re humble. They take responsibility for all setbacks and give credit for all the wins to others. They understand the power of two simple words, "Thank you."  They say it often.  People know they're appreciated because they're constantly reminded how much they're valued.

3. They’re a multitasker with a strong work ethic.

They’re often first to arrive and last to leave. They lead by example and are often task driven. They’ll jump across functional areas to lend a hand wherever they’re needed to kick the ball forward. They help people get unstuck. They’re not afraid of uncharted territory or learning a new skill.

4. They’re team builders.

They’re always looking for the talent and always recruiting and networking. People want to help them by volunteering, becoming advisers or working for equity. They understand it’s their duty to encourage and inspire others, because in turn it encourages and inspires within. They seek other positive, gung-ho team members.

5. They set great expectations.

They dream BIG and set huge expectations. They understand the power expectations has on the team. Saying we will have the MVP done by the end of the month, or we will have our first paying customer by Friday does work. They understand it’s not where you start that counts; it’s where you finish.

Obvisouly I could go into greater depth but I think you get the point.  Feel free to add to this list, as always, your comments are welcome below.

...Jim

My wife Debbie and I caught the premiere of NBC’s The Biggest Loser the other night. For those that follow the show, Jillian Michaels returns as the senior screamer on the show. I like watching the show because of its use of embedded product placements and am always curious what they’re going to do next.

This year, The Biggest Loser has a totally redesigned fitness center, with all of the equipment provided by Planet Fitness, a low cost, neighborhood gym model, available as a franchise. They appear to be out lifting 24 Hour Fitness, the previous equipment sponsor on the show.

As the premier was airing with Bob, Jillian and Dolvett beaming over the new gym equipment by Planet Fitness, I decided to visit http://www.planetfitness.com/ to see if anyone had purchased the rights for Central Oregon, where I live. I’ve been a gym goer since I was 14 and have thought about owning a neighborhood gym for the past 20 years. But that is another blog post, I digress.

When I attempted to go to Planet Fitness, their site crashed. The premier had over 1 million viewers; I suspect this was a spike the Planet Fitness IT team may have not expected. I'm sure the sales and marketing team were happy their product placement created demand, yet immediately went into shock when their web site crashed.  I want to suggest a better way. If Planet Fitness would have moved their website to Microsoft Windows Azure Cloud Platform, they could have easily adjusted the amount of computing resources around their original air dates on both east and west coast premiers. Once their website and member portal is converted to take advantage of Windows Azure elasticity, it’s really as easy as logging onto the Azure management portal and moving a slider up and down to allocate more or fewer server instances.  You have the advantage of extra computing resources when you need them without paying for a maximum build out of a datacenter only to be fully utilized when the Biggest Loser airs.

If your business is a B2C (Business to Consumer), and you’re approaching the tipping point, your IT staff should be moving your customer facing web properties into the cloud. IT staff are always resistant to change, especially outside their comfort zone.  This is when you need a team of skills-based consultants who have been there and done that, successfully.

Nimble Development - Windows Azure Experts

Bend, Oregon, based Nimble Development (www.NimbleDev.com) is a team you can trust. They have deployed websites, web applications, tablet applications and mobile applications on Windows Azure. In fact, they were one of the first Microsoft Gold Certified Partners for Windows Azure, working through very early and ever changing Azure SDKs (Software Developer Kits). Nimble Development is competent at Window’s Azure and also has friendships and strong ties to the Windows Azure development team.

Add the fact they’re an Agile development shop, skilled in short SCRUM sprints with results, they move quicker and bill less time. In a word, they’re Nimble. If you’re a growing B2C company, there is no reason you should be hosting your website in a traditional hosting environment that can’t add computing resources when you need them and shrink back down during non-peak periods. This is what Microsoft Azure was designed to do and Nimble Development is the team to help you. I know this sounds like a commercial, it isn’t. I hate to not offer real solutions to my web visitors. If any of you have worked with other teams to move your site to a true cloud platform, please use the comment field below to share your details.

As for Planet Fitness, congratulations on opening your 600th franchise. Now make sure your IT strategy will support it.

…Jim

Ten years ago, I couldn’t finish a dinner with my friends without someone asking me a computer related question. Even though,  I was a software guy, I was their go-to guy all things PC. The last two years it has turned to smart phone applications.  Now that I’m involved in startups and an accelerator, the dinner chatter often turns to startups.

Last night, all they wanted to talk about was Facebook’s acquisition of mobile photo sharing application, Instagram for a cool $1 billion dollars.  Was Instagram, which is still pre-revenue, worth $1 billion? Yes.  A company’s worth is measured by another company’s willingness to pay.  At this moment in time, Instagram and its team of 13, are worth $1 billion dollars. That shouldn’t be the main question.

To me, the true lesson here is about the founders. I wish I could say I know them, I do not. I’ve never had the privilege to meet Kevin Systrom and Mike Krieger. Based off what I’ve studied about their product, I can tell you that they are intensely driven by the user experience (UX). Instagram user interface is efficient and elegant.  For them, their Minimal Viable Product (MVP) had to have a WOW experience, which is why 25,000 people downloaded the application on their iPhone the very first day it was released in October 2010. Ninty days later, over 1 million people had it on their iPhone.  Today, it’s close to 30 million subscribers and with last week’s release for the Android market, that hockey stick is likely to continue.

So, what are the lessons we can learn from Instagram’s early success?

1. UX (User Experience) matters.  The lean startup and MVP principles don’t always mean your interface can (or should) suck. Also, you have to give credit to both founders for making sure the back-office was well designed and could scale. They clearly learned from Twitter and MySpace’s early failures. In order to have an awesome UX, the total user experience needs to be awesome. The fact they were able to pull this off, with their explosive growth, is impressive indeed.
2. Focus on what matters. Instagram is available only as a mobile application. Unlike Pinterest, you can’t view it on a website. This was another great decision because it allowed them to stay insanely focused on the user experience.  It also plays well for the type of photos they’re looking for. They want photos of people living life. Pinterest’s market is decidedly different. Just compare the photos on Instagram and Pinterest and you’ll see what I mean.
3. Keep it lean. According to CrunchBase, Instagram funding was $57.5 million from Benchmark Capital. A total staff of 13, they kept the group agile. Most companies with $50 million in funding would immediately grow to 100 to 200 people. This is impressive to me and something we can all learn from.

So even though I don’t know the Instagram team, I want to tip my hat to them.  Anything is possible, dream big!

…Jim

The work with our startups intensifies this week as we continue to work on Customer Development and The Lean User Experience. As our Founders move closer to defining their Minimal Viable Products (MVP), they have gone out in the market and interviewed potential customers of their products. As a result, some of our startups have made pivots in their business plan.

I like to celebrate these pivots with our startups. We're six weeks into the process, we've saved monthes of development time by not building software no one will purchase. We're learning more and more about their market segment each and every day. One interesting observation is, with each pivot, the founders are becoming even more passionate about their business. I contribute this to the fact the nine founders are going through this together\, and they're gaining positive energy from the team. This is another benefit of an accelerator; you push through the challenges at a much faster pace.

The importance of WHY, before HOW and WHAT.

Simon Sinek, an adjunct staff member of the RAND Corporation, one of the most highly regarded think tanks in the world. He wrote a best seller, "Start with Why: How Great Leaders Inspire Everyone to Take Action". Yes, his principles focus on leaders and the importance of communicating "why". I could write about this topic for pages, but I want to stay on point for this post, so...

Sinek believes you should communicate to your customers: WHY your product/solution matters, than HOW it does it and finish with WHAT it does. We believe most companies do this in reverse. Starting with what features the product has, how it does it so well and finishing with why you should but it.

"Sell to people who believe what you believe." Says Sinek. "People don't buy what you do, they purchase why you do it."

He spoke at a TED talk back in September 2009, it has been viewed by over 4 million people on YouTube.

He does a nice job of explaining his point and connecting it with Geoffrey Moore's Crossing The Chasm principles that help you understand the importance of getting wide spread adoption of your product by the early and late majorities, which is where the "big" sales come from.

Here is his presentation at TED, enjoy!

...Jim

I recently sat down with one of the VentureBox startups I'm coaching, and we were reviewing their short term goals, over the next 30 days. They had a lot on their plate; it was time to groom the list. So I asked them a simple question:

Does it create Cash or Traction?

The moment of clarity helped force them into critical thinking. Entrepreneurs need to remain focused on moving the company forward every single day. Time is a scarce resource, use it wisely.

For each decision you face, ask if it will bring your company cash or traction. If the answer is no, then ask yourself why you're spending time on it? Is it really that important?

If you're overwhelmed with your to-do list, give it a try and let me know how it works for you.

...Jim

This Week In Startups - A Damn Good Show!

If you have missed the first couple hundred shows, like I have, don't sweat it. They're all online. I actually subscribe to their iTunes podcast, and have been catching up on them while I hike with my dog Morgan. The last couple weeks have been remarkable, however, if you truly want to have fun, listen to some of the old tapes from 2009 and it will confirm just how fast our tech industry changes.

This Week in... is a web television network covering a wide variety of topics from tech to entertainment. Produced out of our Culver City studios, the shows feature guest experts, founders, movie stars, comedians, technologists and CEO’s — all keeping you up to speed on what’s happening this week with a fast and funny style. Informative and entertaining, ThisWeekIn is the place for whatever your interests may be.

The company was founded by Jason Calacanis (co-founder of Weblogs, SVP AOL, CEO of Mahalo), actor Kevin Pollak and Mark Jeffrey and is based in Culver City, CA.

I've been listening and occasionally watching some of the Podcast and have found them informative, educational, insightful and entertaining. Jason Calacanis is an excellent host with an amazing memory. If you're an entrepreneur or angel investor, especially if you don't hang out at all the startup events, you'll want to catch this show each week.

I came across two videos I wanted to share with you this week.

The first video features three teenage girls, Lauren Hodge, Shree Bose and Naomi Shah, who swept the top prizes at last year’s Google Science Fair.  They were asked to present at the recent TEDx Women's conference and share not just their project, but their journey as  well.  The mentors that took these young women under their wings are my heroes.

Enjoy.

Each of our three winners had major obstacles they had to clear. They didn’t let their age become a barrier to their drive to find their answers. They have done a great service to other young scientist who will follow in their footsteps. If just one additional adult opens their lab when a 15 year old kid calls asking for help, the world will be a better place.

Next up is a concept video from Microsoft. They do a great job of showing you what could be. They dream big, I love it!  Enjoy as well.

I firmly believe we are the some of our experiences. As entrepreneurs we need to spend time thinking about our customers using our products and services in the future. We need to dream about the future and not be blocked by the limitations of today. Technology advances continue to accelerate, what used to take 20 years to get to market has been cut in half, or more.

…Jim