Comments on: Three Ways (Times Three) for Entrepreneurs to Blow It http://www.xconomy.com/boston/2008/08/11/three-ways-times-three-for-entrepreneurs-to-blow-it/ Business + Technology in the Exponential Economy Sat, 21 Nov 2009 22:30:41 -0600 http://wordpress.org/?v=2.8.6 hourly 1 By: Wayne Boulais http://www.xconomy.com/boston/2008/08/11/three-ways-times-three-for-entrepreneurs-to-blow-it/comment-page-1/#comment-26828 Wayne Boulais Mon, 25 Aug 2008 13:20:01 +0000 http://www.xconomy.com/?p=4257#comment-26828 James Good summary of the key traps in building companies - I have seen all of them in some form or another. The toughest decision is the timing of a "scaling" CEO, ususally people make the right choice about skills. The trick is creating/finding the right leadership structure at the early stage that lets the company develop properly and earn the right to hire the next CEO. The salesforce scaling too quickly is a big problem when direct sales are required. I think many CEOs, boards and investors have seen problems over the last business cycle so this error may happen less often. Another thing that has changed is the move to lower cost sales models that enables companies to experiment, measure and innovate to find the right sales model - this should also help minimize the scale too fast error. James

Good summary of the key traps in building companies – I have seen all of them in some form or another.

The toughest decision is the timing of a “scaling” CEO, ususally people make the right choice about skills. The trick is creating/finding the right leadership structure at the early stage that lets the company develop properly and earn the right to hire the next CEO.

The salesforce scaling too quickly is a big problem when direct sales are required. I think many CEOs, boards and investors have seen problems over the last business cycle so this error may happen less often. Another thing that has changed is the move to lower cost sales models that enables companies to experiment, measure and innovate to find the right sales model – this should also help minimize the scale too fast error.

]]> By: Aynsley http://www.xconomy.com/boston/2008/08/11/three-ways-times-three-for-entrepreneurs-to-blow-it/comment-page-1/#comment-26615 Aynsley Fri, 22 Aug 2008 15:19:36 +0000 http://www.xconomy.com/?p=4257#comment-26615 James - I just wanted to say thank you for being so pragmatic and honest when it comes to VCs and the wonderful world of entrepreneurship. Advice on the subject is a dime a dozen but it's rare that much of it can be applied to early stage startups. My partner and I began our first venture in February at www.parkingspots.com and thanks to your insight we have already been tweaking and building smarter then we would have had we not had access to information sources like yourself. thank you. James – I just wanted to say thank you for being so pragmatic and honest when it comes to VCs and the wonderful world of entrepreneurship. Advice on the subject is a dime a dozen but it’s rare that much of it can be applied to early stage startups. My partner and I began our first venture in February at http://www.parkingspots.com and thanks to your insight we have already been tweaking and building smarter then we would have had we not had access to information sources like yourself. thank you.

]]> By: Daniel Weinreb http://www.xconomy.com/boston/2008/08/11/three-ways-times-three-for-entrepreneurs-to-blow-it/comment-page-1/#comment-25824 Daniel Weinreb Tue, 12 Aug 2008 13:16:44 +0000 http://www.xconomy.com/?p=4257#comment-25824 James, I would guess that new CEO's start hiring all those VP's because they're used to being in big companies and haven't adjusted to the very different realities of a startup. About shipping with bugs, it depends. Usually I would rather ship with no bugs and fewer features, than more features but unreliability. Then customers won't walk away. And you get customer feedback early. The problem of having too much money sounds paradoxical at first, but I've watched a lot of startups and the ones with too much money never succeed. It's amazing, but there are good reasons for it, as Roger Ehrenberg points out. My own startups never had this problem. We had the right amount of money, and the more I learn, the more I realize that was a blessing. James,

I would guess that new CEO’s start hiring all those VP’s because they’re used to being in big companies and haven’t adjusted to the very different realities of a startup.

About shipping with bugs, it depends. Usually I would rather ship with no bugs and fewer features, than more features but unreliability. Then customers won’t walk away. And you get customer feedback early.

The problem of having too much money sounds paradoxical at first, but I’ve watched a lot of startups and the ones with too much money never succeed. It’s amazing, but there are good reasons for it, as Roger Ehrenberg points out. My own startups never had this problem. We had the right amount of money, and the more I learn, the more I realize that was a blessing.

]]> By: Janet Kraus http://www.xconomy.com/boston/2008/08/11/three-ways-times-three-for-entrepreneurs-to-blow-it/comment-page-1/#comment-25766 Janet Kraus Mon, 11 Aug 2008 19:13:32 +0000 http://www.xconomy.com/?p=4257#comment-25766 James, All of your points are dead on. . . but one of the ones I can totally resonate with is building the sales force too early. One of the things I used to hear in the my first venture after our first round of VC investment was that it was critical that we "get there first" . . and my question back was "get where first?" Make certain you have the business model and the sales model well understood before scaling. It is expensive both to build one up and worse yet, break it down if it is the wrong one. Trust me on this. James,

All of your points are dead on. . . but one of the ones I can totally resonate with is building the sales force too early.

One of the things I used to hear in the my first venture after our first round of VC investment was that it was critical that we “get there first” . . and my question back was “get where first?”

Make certain you have the business model and the sales model well understood before scaling. It is expensive both to build one up and worse yet, break it down if it is the wrong one. Trust me on this.

]]> By: James Geshwiler http://www.xconomy.com/boston/2008/08/11/three-ways-times-three-for-entrepreneurs-to-blow-it/comment-page-1/#comment-25756 James Geshwiler Mon, 11 Aug 2008 16:18:41 +0000 http://www.xconomy.com/?p=4257#comment-25756 Elias, thanks for the comments on the trackback. Well said about internal communications. As to whether this is bordering on schadenfreude, I should have been clearer at the beginning of this post: I share the blame too in many of these cases. Like Roger Ehrenger said in his post, I too had a gut feel in several ventures that a particular course of action was premature but withheld my view and deferred to the judgment of my more experienced--and often later stage colleagues who were investing more money. As the earlier stage investor, however, I probably knew the company better and what it could or could not execute on. So, perhaps to encourage early stage investors and to empower CEOs to push back more on investor pressure, I share these notions. As Roger notes, the buck has to stop with the CEO. The rest of us can be supportive of or undermine them to greater or lesser degrees. Elias, thanks for the comments on the trackback. Well said about internal communications. As to whether this is bordering on schadenfreude, I should have been clearer at the beginning of this post: I share the blame too in many of these cases. Like Roger Ehrenger said in his post, I too had a gut feel in several ventures that a particular course of action was premature but withheld my view and deferred to the judgment of my more experienced–and often later stage colleagues who were investing more money. As the earlier stage investor, however, I probably knew the company better and what it could or could not execute on. So, perhaps to encourage early stage investors and to empower CEOs to push back more on investor pressure, I share these notions. As Roger notes, the buck has to stop with the CEO. The rest of us can be supportive of or undermine them to greater or lesser degrees.

]]> By: Meanwhile… » Post Topic » Experience is what you get … http://www.xconomy.com/boston/2008/08/11/three-ways-times-three-for-entrepreneurs-to-blow-it/comment-page-1/#comment-25753 Meanwhile… » Post Topic » Experience is what you get … Mon, 11 Aug 2008 15:24:31 +0000 http://www.xconomy.com/?p=4257#comment-25753 [...] that vein, check out this pithy posting from James Geshwiler for Xconomy Boston listing some of the ways that companies can flame out. What may seem like an invitation to [...] [...] that vein, check out this pithy posting from James Geshwiler for Xconomy Boston listing some of the ways that companies can flame out. What may seem like an invitation to [...]

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