The Journey of Entrepreneurship
a blog by Keith Cowing

Only Hire People Who Challenge You

June 10, 2011

Building a team is the most critical part of running a company (or any organization). There's a reason why the Yankees and the Patriots have so many rings: they have great teams from top to bottom. Do you think those organizations are easy to manage? Absolutely not. You should recruit team members who fit your culture, believe in your mission, and are fun to work with. But do not hire people because they make your life easy. Leadership is not about how many "followers" follow you, it's about how many leaders join you. Leaders are ambitious, opinionated, and won't let you off easy. They take a lot of energy to coordinate and aim in a single direction. They're also exactly who you need if you aspire to greatness. Building something valuable and sustainable isn't supposed to be easy. So don't take shortcuts, especially with your team.

(View Comments)

The 5 Ways to Make Money in the New World of Retail

April 14, 2011

Commerce is changing quickly, increasingly dominated by the Internet, social media, and mobile devices. JPMorgan Chase predicted at the beginning of 2011 that global e-commerce sales would reach $680B this year. Although online sales are still less than 10% of total retail revenue, online experiences and social media engagements are dominating consumers' decision-making processes. With this major shift in play, retailers need to clearly understand their market position and their value prop to consumers. Below are the 5 succinct ways that I see retailers building scalable, profitable businesses.

Be a distribution king (Amazon/Walmart).
This is an important category, but one that few can play in. If consumers can get the same product cheaper and faster from Amazon, there is little reason to buy from another site. Even in-store shoppers are scanning barcodes and price-checking in the isles now. Diapers.com (aka Quidsi, now owned by Amazon) is a great example of a distribution play that was successful. But they had a tremendous focus on operations and customer service. Few startups or even large retailers can compete on this field alone.

Provide a product or brand that people lust for (Apple/LVMH).
There is a reason why the iPad 2 sold out (besides the fact that Apple purposely produced too few to create exclusivity). People drool when they see it. If you have a product or a brand that people absolutely love, they'll go out of their way to buy your products or shop at your store. You do not have to ship faster and cheaper if nobody can beat your product or brand recognition.

Provide a great customer experience (Zappos).
Zappos fought on very competitive turf (online shoe sales), but was wildly successful based on customer service. To Zappos (and Tony Hsieh), customer service was not just a bullet point on a website. It was the true lifeblood of the company. Just like Diapers.com, Zappos was swallowed up by Amazon (there seems to be a pattern). But the point was well-proven: customer experience matters and retailers should think about it deeply. The best retailers are always thinking about creative ways to improve customer experiences and empower their workers. Sometimes you have to give a little in the short-run to make major gains over time.

Innovate on business models (Guilt/Groupon).
Flash sales and group buying sites are showing that business model innovations can be profitable as well. Many of these are creative, well-executed revivals of old ideas. But the growth can be phenomenal. The key here is to have a great idea, move fast, and swiftly build up market share. Being Groupon is a good thing. Being Groupon clone #57 might not be. While Groupon is not exactly a retailer, I have included it here because it is a key example of how tying online and offline behaviors can produce success. That is a prime area for growth in coming years.

Provide raw convenience (Starbucks/Duane Reade).
Starbucks fits into a few other categories as well (product and customer experience), but my point is that they are on almost every street corner. It is always convenient to find Starbucks coffee. Many retailers focus on convenience alone (corner stores, shops in tourist locations, fast food restaurants, etc.). As they say, location, location, location. Having a sunglass shop in the right spot can turn a good business into a great business. But to truly scale you need to mix in product loyalty or customer service as well.

There are many aspects to retail, which is why it is a fascinating industry. Yet I believe that these 5 points can form the basis of all successful and scalable retail operations. As the world continues to change and customer engagement evolves, there will be increasing divides between the distribution kings and the retailers that focus on product and customer experience.  Especially when it comes to e-commerce, you can either ship it faster and cheaper, sell a product that nobody else has, or provide a great customer experience that keeps people coming back.

[Disclosure - My company, Seamless Receipts, serves retailers that focus on products and customer experience]



(View Comments)

Startup Cultures Start with People, not Policies

February 22, 2011

Building a strong culture is a key priority for entrepreneurs. Nothing is more important when it comes to recruiting and building a team. Your team determines your success and the way your team interacts will be largely affected by the culture you build at the beginning.

But sitting down and writing a culture doc or inventing fun policies is not what truly sets the tone, it's the people who come to your office every day. I have worked in corporate cultures that are radically different (a semiconductor company in Silicon Valley, an investment bank in New York, a government contractor, and a software startup). I can tell you first hand about the unique quirks of each. What really matters is finding the culture that strongly supports your business and works for you personally (i.e. you like coming to work in the morning). Proactively creating and maintaining a culture is incredibly important and it starts and ends with people. Here are a few thoughts.

The first group sets the tone.
Even with large companies that have been around for decades, I still think that the first dozen employees largely set the tone for the entire corporate culture. Once a train is on the tracks it is very hard to stop its momentum (either good or bad), so you have to think about culture right from the beginning.

No bad apples.
When you bring on new team members, their experience and skills are clearly important (and a pre-requisite). I would argue that cultural fit is even more important. It only takes one bad apple to throw off the vibe of an entire team. You will have enough hurdles to cross when you are an entrepreneur. So do not make your life more difficult by hiring (or keeping) people who ruin the positive momentum everybody else works hard to build.

Diversity is good.
Finding people that fit your culture is key, but make sure you also look for a variety of skill sets and personalities. If everybody is an aggressive Type A business person that wants to make the decisions, that might not work so well. Find the yin and yang (or Jobs and Wozniak) for your business. Have detail-oriented people and creative people, aggressive people and patient people. Put together an ensemble. Inserting a few natural checks and balances into your team will make a huge difference down the road.

Be true to yourself.
Most businesses will end up representing their founders in certain ways (think about Apple, Google, or Blackstone). If you give your company a personality that strongly models what you really believe in, good things will happen. There is a reason why Warren Buffett works out of Omaha and sets a tone at Berkshire Hathaway that is ridiculously different than the investment banks on Wall Street. That is the culture, personality, and type of decision-making that works for him. He ignored Wall Street, set his own culture, and became one of the most successful investors of all time. If he had pretended that he was a hard-nosed Wall Street trader and worked in a typical hedge fund environment, he would have been miserable and never reached the same level of success. Be true to yourself.

Make it fun.
Running a startup is like fighting a war. Every day you go to battle. Those battles can be healthy, fun (especially in retrospect), and make you stronger. But you have to be in the trenches with people you enjoy working with. If you enjoy the journey, the entire process will be rewarding. To enjoy the journey, bring on team members who make it fun.

(View Comments)

Tech Startups: Never Outsource Your Technology

December 27, 2010

When you are building a company, there are a number of things you should outsource at the beginning (HR, legal, IT, etc). But you should never outsource a key business function. If you are a recruiting firm, don't outsource your recruiters. If you are a chef, don't hire somebody to design your menu. If you are a tech startup, don't outsource your technology.

So many people have a cool idea and think that a powerpoint and a few dollars spent on elance or odesk will bring them success. If you are starting a blog, then go ahead and have somebody else build it. But the technology is only for distribution - you're not outsourcing the writing. If the key value in your company is a technology product - you need a founding member who can make that technology a reality. There is a reason why every large, successful technology company built its core platform in-house (Google, Apple, Intel, Salesforce, Microsoft, etc.).

Outsourcing works best when you have extremely clear requirements, routine development tasks, and a product that is not likely to change. Startups are the opposite. You are constantly iterating and fine-tuning your product based on customer feedback (if not, you should re-evaluate). This can’t be accomplished by tossing requirements over a wall and hoping for something great. Engineering talent is drastically underrated. Using a freelancer to build a cheap product is a nice shortcut. It might make sense to create a quick prototype/mockup to show to potential customers. But when you really launch your business, it’s your staff that determines the future value of your company.

In my mind, there are two successful outcomes for a startup. The first is an early exit, where you get acquired for your technology and your team members. The second is the creation of an independent, profitable business (that either gets acquired or goes public). An early exit means that you have a great product and great technologists. Without both, there’s no deal. So you can’t get an early exit without a great tech team. For the second situation (which is what you’re aiming for), you have to fill a distinct market need and do it better than your competition. Without great technologists, the best you can do is prove the market need and then try to raise money while competitors gear up. But venture capitalists will look to your tech team as one of the key factors in their decision process. Persuading talented technologists to join your venture is a major aspect of running a business. If you can’t do that now, raising money will change things less than you think. Engineers flock to companies that have engineering in their DNA. If your company doesn’t have technology as one of its true roots and founding principles, you’ll find a difficult road ahead.

By the time you raise money, you want to have the machine ready. You should have the basic platform built, the key team members in place, and your sales process ready to roll. Then all you need is fuel and you’re off to the races. If you’re asking for money to find and hire technology talent, you’re behind in a very difficult race.

(View Comments)

<< Newer Posts Older Posts >>