My buddy Jason had a GREAT post about rules for startups. Read it, love it learn it.
Of course, anyone who has started a company has their own rules and guidelines, so I thought i would add to the meme with my own. My "rules" below aren't just for those founding the companies, but for those who are considering going to work for them as well.
1. Don't start a company unless its an obsession and something you love.
2. If you have an exit strategy, its not an obsession.
3. Hire people who you think will love working there.
4. Sales Cures All. Know how your company will make money and how you will actually make sales.
5. Know your core competencies and focus on being great at them. Pay up for people in your core competencies. Get the best. Outside the core competencies, hire people that fit your culture but are cheap
6. An expresso machine ? Are you kidding me ? Shoot yourself before you spend money on an expresso machine. Coffee is for closers. Sodas are free. Lunch is a chance to get out of the office and talk. There are 24 hours in a day, and if people like their jobs, they will find ways to use as much of it as possible to do their jobs.
7. No offices. Open offices keeps everyone in tune with what is going on and keeps the energy up. If an employee is about privacy, show them how to use the lock on the john. There is nothing private in a start up. This is also a good way to keep from hiring execs who can not operate successfully in a startup. My biggest fear was always hiring someone who wanted to build an empire. If the person demands to fly first class or to bring over their secretary, run away. If an exec wont go on salescalls, run away. They are empire builders and will pollute your company.
8. As far as technology, go with what you know. That is always the cheapest way. If you know Apple, use it. If you know Vista... ask yourself why, then use it. Its a startup, there are just a few employees. Let people use what they know.
9. Keep the organization flat. If you have managers reporting to managers in a startup, you will fail. Once you get beyond startup, if you have managers reporting to managers, you will create politics.
10. NEVER EVER EVER buy swag. A sure sign of failure for a startup is when someone sends me logo polo shirts. If your people are at shows and in public, its ok to buy for your own folks, but if you really think someone is going to wear your Yobaby.com polo you sent them in public, you are mistaken and have no idea how to spend your money
11. NEVER EVER EVER hire a PR firm. A PR firm will call or email people in the publications, shows and websites you already watch, listen to and read. Those people publish their emails. Whenever you consume any information related to your field, get the email of the person publishing it and send them an email introducing yourself and the company. Their job is to find new stuff. They will welcome hearing from the founder instead of some PR flack. Once you establish communications with that person, make yourself available to answer their questions about the industry and be a source for them. If you are smart, they will use you.
12. Make the job fun for employees. Keep a pulse on the stress levels and accomplishments of your people and reward them. My first company, MicroSolutions, when we had a record sales month, or someone did something special, I would walk around handing out 100 dollar bills to salespeople. At Broadcast.com and MicroSolutions, we had a company shot. Kamikaze. We would take people to a bar every now and then and buy one or 10 for everyone. At MicroSolutions, more often than not we had vendors cover the tab. Vendors always love a good party :0
These are all off the top of my head. But they have worked for me so far.
A Couple of My Rules for Startups
Reader Comments
(Page 2)22. You're wrong about PR firms. Especially if you need to reach a lot of people to succeed. If your company needs 5 customers to be profitable, skip PR. If ou need to sell b2b products, especially to mid-sized companies and up you need PR. Good PR people (or firms) are friends with the journalists, analysts and so on you need to talk to. Secondly, if you are a founder of a startup you don't have time to have all of the important journalists on speed dial all the time. If you are really new, use PR for launching. If you have lots of products targeting different verticals, try PR. Once thing I agree on, don't hire a $15K/month PR firm if you are a startup. Find a contractor. They'll be more cost-effective and deliver excellent results if you choose wisely. ANy mid-level or senior PR person is probably up for taking you on for a few hours per week. If you choose someone that deals with other clients similar to yours....they will be paying the big bucks to the PR for digging up the opportunities, and you'll just tag along for the ride.
23. Number 6.. ehh... a lot of coders like coffee, WHILE CODING. Yeah, it's important to take a break, have fun and go out to lunch, but why not get a coffee machine for the work time?
As for no offices. Uhm. That seems really silly. There are times when working together is great, and times when a creative spark cannot be interrupted, and one needs a private space to cultivate it.
Posted at 3:23AM on Mar 10th 2008 by Sven
24. Mark- had yahoo waited around awhile longer broadcast.com wouldve popped like the rest. What other startup experience do you have?
MC:Plenty, at least 5 that have turned out well. What have you done ?
Posted at 4:23AM on Mar 10th 2008 by Misanthropy Today
26. I think you are way off on hiring PR firms Mark. I have had tremendous success working with PR firms in most of my startups. I got great advice from a PR guy when I started Rust.net" "Someday Ameritech is going to enter the ISP business. Do you think you can out advertise Ameritech?" He was right. With help from a local PR firm we managed to be listed in every review of ISP's written at a time when the Internet was a hot topic. The phone rang off the hook.
I have used PR VERY successfully at RustNet, Gartner, Webroot, and Fortinet. But go ahead and give this advice to everyone else, it adds to my competitive edge!
Posted at 6:16AM on Mar 10th 2008 by sign in china
27. having just finished my degree in business management its neat to see some of the routes that you prefer regarding your business ventures. i think 12 has got to be one of the best suggestions for a company that truly desires to be special.. like southwest airlines has always said (no offense to the aac) its the people that make the difference. oh, and because i had no other hope of reaching you mark.. please sign gerald green or help me understand why people are letting him go.. is it an attitude problem? his 40 odd inch vertical? or is it that he would fit in so well after ju-ho was allowed to officially retire with kvh. (still remember watching him drop 21 on his 'new team' in the third quarter a few years back)
Posted at 6:36AM on Mar 10th 2008 by Aaron Holloway
28. #1 Having a passion for your start-up is essential when the all-nighters and time away from family kick in. It has been essential in our early development, everyone loves and believes in what we are doing, that makes the long hours easier to manage.
#4 also crucial. Most online start-ups are becoming; built it and let Google or Microsoft figure out how to monetize it. I want to know from day one how my rent and mortgage is getting paid. The money doesn't have to be coming in today, but there needs to be a plan if my time is an investment.
Great article Mark
Posted at 9:11AM on Mar 10th 2008 by Greg Rollett
29. Meetings - cut them to only 3!! From a software/web development perspective - meet with clients to discuss initial scope of the project and what is wanted and expected THEN get to work. I hate getting started on something just to waste my time going to meetings about the progress of the progress of the progress of something. Unless it is some crucial change that will affect the entire outcome of the project there should be 3 meetings for a project - 1. the initial meeting; 2. a meeting after the layout/design is done to see make sure everyone is on the same page; 3. then a meeting once everything is done - any other meetings are just a waste of my time and keeping me from completing a project and working on other projects - just IMHO though!! :-)
Posted at 10:09AM on Mar 10th 2008 by James
30. Hold on there tiger. Obsession vs Exit Strategy... I love your list of rules, and couldn't agree with them more... But in technology related start ups, even if it is an obsession, you better not be blind to the exit strategy. Rules change. Laws change. Technology changes. Sometimes the addition of those changes may make it hard to keep the obsession, so having at least a vague idea of an exit strategy is a good thing. Besides, if no one else wants a piece of what you're doing, or if there is no concept of a bigger fish coming along to swallow you, you might not be doing anything legendary.
31. The fact that you call it an expresso machine shows why you don't think its important to have.
Free access to concentrated forms of caffeine in a high quality format like shots of good espresso then made into drinks is a worthy investment. Its an addiction that people can consume in the office as opposed to smoking outside and it helps people work faster.
Posted at 10:24AM on Mar 10th 2008 by Christian Burns
32. This is impressive. All of them make sense. I think #11 is the most important, though. It applies to so much more than starting up a company. Connections seem to work in funny ways and a large e-mail address book can never hurt. I'll definitely remember this...thanks for the advice on more than just founding a company.
Posted at 10:43AM on Mar 10th 2008 by Brian
33. Mr Cuban's comment about espresso is very interesting and a clear indication of the relative value all of us place on activities that we don't necessarily find important. I am sure that he did not feel the same way regarding the work environment of the Mavericks and the "luxury" improvements he creatively initiated there. Other NBA owners consider them as unimportant as an espresso machine. The comfort one provides to her/his workers is very difficult to quantify in the short run.
It reminds of a doctor that gave advice to my wife about what not to do during pregancy. When I asked why not swimming, he said that he never liked it himself. Another doctor advised against tennis because (you guessed it) she did not enjoy the game.
Incidentally, I use an espresso machine at home for over a decade now that I got from WalMart for $40, and it still goes very strong. It's not a matter of costs; it's a matter of relative personal preferences reflected in one's leadership style and decisions.
34. This is a great list and anytime you can give Calacanis a hard time, I love it.
I think the most important one has to be #11: PR. If you cannot "sell" your own product, how passionate are you really about it.
I think what Mark is trying to convey here is become your own 8-cylinder, viral PR machine.
Tom
Posted at 11:08AM on Mar 10th 2008 by Tom Altman
35. Love your Blog and agree with many of your points in dealing with a startup. One thing I will say can help is PR. Now, that is not because we do PR for our marketing clients. The key is to find a firm tha does more than just PR as part of a package. We specialize in helping businesses figure out who they are at their core and then positioning that and the messaging to their target market using Marketing, Coaching, and PR. When you just use PR it is anyone's guess if the message is going to work right. Especially if it is not refletive of who you are as a business and why you are doing what you do in the first place.
If you decide to go the media PR route alone here is our guide for working with standard media.
http://www.trueyoumarketing.com/secrets-of-success-from-those-working-with-standard-media.htm
Have fun and keep writing those posts.
Posted at 11:47AM on Mar 10th 2008 by Mark Ferguson
36. #1 & #2, together with being true to a certain extent, only calls for people to start-up new ventures, who has nothing to lose.
I personally have a six digit salary (despite at the lower end of the aforementioned spectrum) on a reputable Fortune 500 company. I have ideas that I am toying with on my own time. One day may come and I may decide to launch my idea in some form of a company, hoping to make money some day. According to Mr Maverick's post, I should not even consider doing this. Because, since I have a lifestyle that I am not willing to give up to a certain level. I for instance like a roof over my head and food in my fridge along with few other absolute essentials like clothing and healthcare. Hence I need an exit strategy. If the things do not turn out what I expect them to be, I need to get a job and somehow restore my way of life.
If only the hopeless people, who has nothing to lose, start up new companies, most probably we would end up with likes of pets.com in my opinion.
Today, staring up a new company, calls for people with a solid head on their shoulders. And people of this type, will naturally have an exit plan if things do not turn out. We all have been thru the dot-bust, which is still fresh in our memories. Mr. Cuban, who made a quick fortune out of the snazzy broadcast.com name, can not represent facts of today.
Posted at 12:48PM on Mar 10th 2008 by Mel
37. I don't think I can give up my espresso machine. Sorry :x
Posted at 1:49PM on Mar 10th 2008 by Chad Ledford
38. I agree with a lot of what's said but the reality is...startups are no better than big corporations who outsource everything for cheaper labor. You do need passion and you have to live it every second of every day.. You also need the talent.. But after the first 10 employees, how many more lemmings are going to find that are really the best of the best?
I worked for a dot com bust years ago and in all honesty, I would never work for a startup again. It was just not worth it. 100 hour work weeks for a cheap salary and stock options that never amounted to being real. I was a young kid then...stupid really...but that is what it is... You work 100 hour weeks, you create great things, then you get patted on the back when the company either goes out of business or sells to the highest bidder.
At least a lot of people who worked for Microsoft and Google could say they became millionaires off of all their hard work. Most people who worked just as hard and were just as smart but worked for other companies couldn't say the same thing.
What could the employees of broadcast.com say? That they were rich on paper for a day, but other than that..they got no real ROI for their hard work.. OR I guess they could say they made Mark Cuban and the founders rich...
The reality is... Startups really need to find lemmings who are stupid enough to work for free(working 100 hour weeks when being paid a 40 hour salary is essentially working 60 hours for free) and probably won't ever see any real ROI. Startups are never about the best and the brightest after the first 5-10 people. It's always about cheap labor who get screwed over in one way or another.
So Mark, did your employees at Broadcast.com really become rich like the google and microsoft millionaires, or did it just make you and the founders rich?
From MC: Over 300 employees, who got the same Yahoo exchange as I did became paper millionaires. Thats out of 330 employees. I made it clear to each and everyone what steps I was taking to protect the value of my stock. Some listened, some didnt.
When I sold my first company, MicroSolutions, we sold it for 6mm dollars, in 1990. Of that we took 1mm dollars and split it equally among all employees based on a formula of number of months they worked at the company. We didnt have to do this, we wanted to
40. Hm, it seems that the best approach to offices is to turn the traditional model upside-down: put the people who do the actual work to nice, private offices stuffed with everything they need to do their job; and put the managers in a crowded open space area when they can communicate and exchange information instantly.
Posted at 3:55PM on Mar 10th 2008 by Berislav Lopac
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21. Dont agree with "Sales Cures All. Know how your company will make money and how you will actually make sales."
I would focus on "how can I get a 10,000 users in $10,000".
Rather than "How can I get $1 of revenue per user"
The above applies atleast till you have the critical mass of users.
Posted at 2:10AM on Mar 10th 2008 by Niraj J