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.
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Getting funding is a tuff and has a long wait period. I’ve heard this is how investors like YCombinator, TechStars choose which startup to fund
http://gooogle.comyr.com/articles/index.php?funding
Comment by Kevin Neilson -
Pingback: Mark Cuban’s Rules for Startups « Sam Davidson
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I have been part of 2 start ups. The most successful start up was
lead by a guy that would LISTEN to us. No idea was stupid for him.
We learned on the fly, adjusted often and outworked the competition.
Guys were working monster hours. We believed in our service. The best
part was we all had an equity interest in the business. The better the
company did, the more money I made. We had a great team. This is the
only kind of atmosphere I will accept.
Comment by Kurt -
Disagree on not having an “exit strategy”. In a business, planning
for an early acquire to going IPO is considered clear strategies.
When you start a business you must have clear exit strategies, good
or bad; remember your strategies change along the line, but thats
what business is about.
Comment by Guna Govind -
Mark, you are (half) right about point #10
Imagine if Cuban (or any Yobaby target customer for that matter) received a relevant piece of merchandise that promoted Yobaby’s brand promise. Yobaby is an organic yogurt line made for babies and toddlers. A polo shirt? Maybe for a staff uniform at a trade show. But for a client facing promotion? I don’t blame Mark Cuban for his views on the value of promotional products and their ability to create excitement.
Let’s look at this closer. Would the results be different if the promotional gift was a light yellow and lavender receiving blanket, coupled with an organic cotton baby one-sie and baby toque, each tastefully decorated with a subtle screen print (not embroidered as this requires a rough pellon on the other side of the garment to hold the stitches – too rough for a baby/toddler). Such a promotion focuses on the brand’s color palette and, more importantly, the needs of its target customer – parents with messy babies! You can never have enough baby clothing. I imagine most parents would line up to receive such a gift of high perceived value.
The cost of such a bundle would be approx $25. Imagine if this promotion helped create a loyal customer for years (Yobaby graduates to Yokids which graduates to Stonyfield’s adult line of yogurt). What is the value of a lifelong customer? Certainly more than $25.
A branded polo shirt being sent to someone like Mark Cuban seems just silly to me. However, Cuban is also a parent (he has a toddler). Despite his billions, I am sure he would have a use for a tastefully designed baby gift package from the yogurt brand he uses to feed his child. Now there’s an emotional connection between the marketer and the customer.
If I was to re-write Cuban’s rule to startups, it would go something like this:
DON’T WASTE your money on swag that is ill-suited to your ultimate marketing objective. Think of promotional items like you would any other advertising medium (TV, outdoor, print, etc). If you were developing a TV ad campaign for Yobaby.com, you would not air the ads on the NASCAR channel. Oprah would be your better property. If you are going to spend money on promotional goods, be sure that the goods speak to your audience and will resonate with them in such a way that you build loyalty. If you have no intention of being strategic with the medium, NEVER EVER EVER buy swag!
Comment by Mark Graham -
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this is a stupidass post. what the hell does:
“2. If you have an exit strategy, its not an obsession.” mean? fuck you.
Comment by brent -
Sorry Mark but I think you are wrong about #10. “swag” can be a great way for new companies to get their name out and start building their brand if done right. “swag” can work in some markets and telling a new start-up to stay away from it is bad advice which could lead to a missed opportunity. But all in all good info on this blog!
Comment by OleBoy -
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Very good words of advice!
My philosophy has always been focus on the important things and the minor details will fall into place. I watch so many start-ups spend all their time planning for success but taking no action to ensure success! Do not misunderstand, a good amount of planning and forethought is important in any business decision, especially starting a company. However there has always been a huge difference between talking and doing.
The best advice I can offer anyone interested in starting a company is stay motivated and persevere. There will be good times and bad, the biggest deciding factor in this game we call life is determination. Stay on the grind and things are bound to happen!
– Chase
http://chasehosting
THE ONLY TRULY UNLIMITED WEB HOSTING PLAN
Comment by Chase -
I totally agree about the offices besides the failure of communication, it creates heirarchy with people who should be working together. Where I am managing we do have about 30 small enclosed spaces people can just get if they need some heads-down time coding and designing or they need a private meeting and we expect time spent there is exceptional rather than the rule.
I agree the open cubicle layout helps people communicate and stay high energy and I can think of two things on my list I practice as a manager:
a. Unless it\’s a quick phone call or something like that, no working at home for anyone ever.
b. No outsourcing I\’m even discovering companies are starting to undo that I\’m wondering when someone got a clue communicating in the same office is hard enough without doing it over 12 time zones in an office around the world.
I believe people work a lot better and get more satisfaction out of their jobs if we\’re all high energy and together in one place.
Comment by Mark Jones -
great list I bad at english but I read it thank you
Comment by WarChiLd -
To points #9 and #12 – keeping an organization flat = less managers = less politics which enables more team work, more ownership, less ambiguity among responsiblities, creates a win-win for all… – making the job fun is an absolute necessity, happy people are energetic, creative and productive.
Oh, and to point #6 – I love our coffee machine and yes, it does mean less trips out the door to the coffee shop!!
Comment by Lesa Buccella -
This was one of the best Biz BLOGS I have read. Hope no one minds but Im printing this one out and emailing it to my company….
Its nice to know im not the only one who thinks offices are nothing more then a \”EGO Egg shells\”.
Years ago a buddy of mine in the Navy told me the \”key\” to being a great leader is investing in the lives of your people…and the \”Lock\” that holds it all together..is being the umbrella that keeps the \”sh#t\” off their heads when something goes wrong.
Comment by Tory Schmeiser -
An expresso machine? Damn, that must be fast.
Comment by John K -
I generally agree with everything – keep it lean and mean. Focus where the importance is. Absolutely reward brilliance wherever you encounter it. Make sure everyone is having the best time.
Forget machinery it\’s not the business – your business should be interesting enough. Keep it interesting.
Help individuals to reach their best performance and they will become your best assets.
Support individuals to be doing the work they are meant to be doing. Visionary intent adds levels of motivation and performance that is priceless
Comment by Gary B. Strauss -
I can agree with most of this, except the office and espresso machine one.
For those doing heads down productive work, they need peace and quiet. Putting them in a noisy environment won\’t help them attain that. Where I\’ve had the chance I\’ve always opted for three models of space. 1) Open offices for those who come and go, interact with customers, and need to know what the others are doing on a day-to-day basis. 2) Shared offices for those mentoring new recruits, allowing them easy access to one or two senior developers. 3) Private offices for those who do a lot of heads down work — think programmers here. They can\’t be interrupted. You can put two of them in a reasonably large office, but an open office environment is simply disruptive.
I have no problem with an espresso machine if it allows folks to mildly interrupt their day. Some folks live on coffee. Some live by a regular cuppa but some want an espresso. Having an espresso machine is akin to bringing in food. It allows employees to grab nutrition (or brain chemicals in terms of caffeine) quickly and efficiently while detracting from work the least. Hence any machine that allows for that is always welcome. It\’s why I never charged for sodas. If folks have to hunt for change they\’ll go nuts and get distracted. Better to eat those costs which is amply compensated in improved productivity.
Also, to make a success you need a lot of breakout/meeting rooms with walls that you can write on. I found this invaluable to be able to get teams together to hash out problems. Also, testing labs I\’ve always put in an open environment where the teams can work with QA in sorting out problems in live environments. Those work best in a collegial environment as problems that arise are best resolved using brainstorming-like solutions.
Comment by Gene Mate -
These 12 are great; after a 30 year career in startups myself, i came up with a similar list of 100http://blogs.jobdig.com/wwds/2008/02/12/100-attributes-of-successful-entrepreneurs-now-an-e-book/
Comment by gl hoffman -
Linked back from sitestalker.blogspot.com.
Comment by presitge -
Great Article!!! and very true and hey Its about keeping employees motivated!!! but!!! I looov coffee, there for an expresso machine for me is a must! 😉
Michelle
from
http://www.FaceySpacey.com
Comment by Michelle -
\”Wait, wait, don\’t tell me.\” I imagine people don\’t often tell you you\’re wrong and if they do, you probably ignore them; but small startups have to advertise and \”swag\”, properly used can be a good way to do it. If I can get you to use my coffee mug- that you and your people see at work hourly- don\’t you think I\’m more likely to get the call for: an exterminator, someone to provide printer cartridges, or a restaurant to deliver lunch?
Comment by R Gambel -
Great idea about the offices. We\’re currently in two large offices, however I\’d love to move into one open concept area. By doing so, it would minimize the running between rooms, and constant IMs getting everyone up to speed. Plus, any issues are known by everyone and solved as a team in less than 5 minutes, rather than 24 hours of emails flying back and forth.
Comment by David Ciccarelli -
Point number 9 is right on the money. I worked for a startup who\’s President and CTO didn\’t know how to build a functional organization. They favored a top down, very deep org structure since they were from larger, established organizations and that\’s all they know. We had an IT group of 11 people comprised of a CTO, a VP of IT, two Directors(I was one of the directors), and 7 developers. Count them – four levels of IT staff with only eleven people!!! I could talk for days about the completely dysfunctional situation this created. Deep org structures don\’t add value, and are detrimental in a startup.
Another point needs to be added to the list regarding intra-organization communication in a startup. The President and CTO of this same organization largely refused to communicate information downward. What\’s worse, we found a large part of what little was communicated to be completely untrue. It was so bad they were referred to as the \’Secret Society\’. The VP and CTO also refused to listen to anything that was communicated upward. This scenario ultimately lead to a complete meltdown where half of the IT group threatened to quit and walk out(myself included). The moral of this story is: if you don\’t communicate openly and honestly with your people and listen to what they have to say, you will fail in whatever you are attempting to accomplish. This is critically important in a startup as every day is a fight for survival and every individual has to be pulling in the same direction. That isn\’t possible if no-one knows what\’s going on.
Comment by Brent -
No. 1 is definitly the most important. I can not tell you how many times I have watched businesses fail because they just do not love what it is they do.
Comment by Sell My House -
That\’s good information. I learned the hard way that cash is king on a start-up. You don\’t need all of the fancy stuff until you can afford to pay for it. As a previous start-up myself, I recommend every potential start-up take heed to this advice.
Keep your overhead low. Do not spend additional funds on marketing unless your current marketing is working. Try to test market everything. If it\’s not producing, cut the fat.
Comment by Phoenix Real Estate -
We were at TechCrunch40 and a notable reporter walked up and asked questions about us. We were ecstatic to speak with the gentleman. We read the blurp written about us and the tone was general. Someone suggested the blurp would have not been general but glowing if we had the right PR person.
Were not buying that! They maybe good for introducing you to their friends, but agreed, it\’s best to deal directly when you can with the bloggers and journalists! Thats why you go to industry events and galas in the first place!
Comment by Ryan Spahn -
Great article. And I\’m an old retireed fart! Much of these items will work in any company! I know because I tried some and they worked at Boeing. Just don\’t expect any rewards and stay below the horizon. One extra \”rule\” must be engraved in. You MUST have a measure of your product\’s quality! And track that measure religiously! Nothing worse than great ideas/services/products implemented poorly. Or getting poorer as time goes on because people are focused elsewhere. Go on and give it a try; start up your own company!!
Comment by George Rich -
I worked at a company that had only one office. I shared a bullpen with five other engineers, one of whom talked incessantly. So we all had to put on headphones or tell the guy to shut up all the time. Every time I got a phone call from outside, I\’d literally have to go outside because there was nowhere private to talk. The office belonged to the CEO, who thought that she was a better salesperson than the sales people, so she fired them all. She also thought we were supposed to ask permission to attend to personal business. The company lasted five months.
Do not act like an emperero. You need sales people. You need to give people space AND you need to encourage lively and creative discussion. Good employees will not spend their whole lives at work (if you hire cheap people who will, you\’ll pay for it when everybody gets laid off because your cheap labor created more problems than it solved). Hire good people, and give them enough runway to do great stuff. If the success of your business depends on people working 24 hours a day, your business will fail.
Needless to say, I disagree with many of these suggestions.
Comment by Paul -
Really interesting article. I am waiting for a refined version or next version of this article. 🙂
Regards
Jay Popat
http://soulwithbody.blogspot.com
PS:Keep sharing your insights.
Comment by Jay Popat -
The Golden Rule about Following Rules when Running a Business…
\”Following Rules are a sure way to FAIL.\”
(Not to say you won\’t fail efficiently.)
I worked for a start-up which had a ton of potential and watched it go under because the \”Boss\” spent all his time following rules, and making new ones, and practicing theories he read on blogs such as this one.
He worried too much about making his business succeed, and forgot to focus on doing business.
It\’s like blogging. If you focus too much on trying to get people to read your blog, and not on contributing to the community, you will see that all the advice out there helped you crash and burn.
When running a business, startup or not, you should focus on one thing. Delivering Value. Don\’t think about squeezing the buck, or put too much thought in how you run your business. Focus on what it takes to deliver the value you will thrive on, and everything else will create the \”business\” you are trying to build.
Comment by Dave -
I spent over $200,000 on my own Internet Marketing education, and it sunk me financially. With all of my expertise, I found that people were constantly wanting things for free, and I gave them what they wanted. Stupid! I still have trouble with hiring others, because I know the quality of my work speaks for itself. I previously hired a few copywriters, and all of their articles were horrible except for one individual. Your list is overall right on the money, and I appreciate you putting it in writing. I am also a student of Rich Schefren, and he would agree with almost all of your points. It is a nice reminder to stay on track with our core competencies and seek highly qualified, passionate business members with whom you can work as a cohesive team! Success breeds success. Thanks!
Comment by Adrienne DeVita -
Great Post!
The no office piece concerns me as well. I\’ve had a few employees get bent out of shape when they found out what other employees were making. I think having a shared conference room for privacy is a must.
Stauffer
Comment by Chris Stauffer -
1) Offices. As already pointed out in some comments, offices actually can really help with productivity. It isn\’t about privacy, it is about being able to concentrate. Multi-tasking and distractions kill productivity. If your startup is a software dev or consulting company, then you want to get the most out of those developers – offices can really help in that regard. Want open communication? Encourage the use of wikis and other collaborative tools that don\’t interrupt people while they are working, but capture good ideas and information. Not everybody who has a problem that they think has to be solved right now really needs help right now – they can usually wait until someone is able to help them, or better yet, they can figure out how to solve it themselves. Minimize distractions and randomization. Set a direction and let people go.
2) Gadgets/tools/etc. Most developers make at least $75K to $100K, some make 50-100% more than that. The actual cost for the company when benefits and other costs are factored in is again 50-100% more than what you pay for their salary. Does it really make sense to pay that much for their time and then to turn around and cheap out on their equipment and cubicle? Get them at least a 20\” to 24\” monitor (shown to increase productivity, only costs $50 to $200 more than a 19\” monitor, lasts for years), a computer more than capable of running the multiple concurrent tasks they are commonly engaged in, and a chair that is comfortable. Preferably stick them in an office (it can be shared with another person) where they can concentrate, they don\’t have to listen to impromptu hallway meetings and don\’t interrupt them unless you really really really have to. Don\’t cheap out on this stuff – otherwise you are being penny wise and dollar foolish.
3) While sales is important, sales people are a dime a dozen. A software and/or hardware engineer that understands your problem domain and knows how to create solutions/services for that domain, with quality and is productive, is not near as easy to find. Ditto for QA people, network people, etc. Don\’t short change these people who create your product or perform your service or you may find yourself with a lot of sales people and nothing of value to sell.
4) Don\’t be a control freak. You don\’t have to know what every person is doing every minute of the day. Many people can telecommute. If you think they are going to goof off when out of sight then you either have the wrong people or you yourself are the wrong person to be in charge. Give people that enjoy what they do the tools, time and isolation to do their job and let them do it. If they don\’t do it then get someone else, but don\’t micro-manage and treat employees like adults. If they don\’t act like adults then hire those that will.
Comment by LCB -
I love this stuff!!! Great advice!
But I am going to cry myself to sleep tonight. I want to start a PR/Direct Marketing agency.
Time to show positive ROI!!!
Comment by Trent Sunahara -
Open offices suck if you are a software developer. I can\’t wait to get out.
Comment by G -
Thanks for the good advice. I agree no. 1 and 2 really are really important. But it is so frightening to not have a way out in case things go south.
Comment by Nancy N. -
You might also want to invest in a spell-checker. Poor spelling – even for derided coffee based drinks – is always bad.
Comment by Adam -
bravo, you make some excellent points.
Comment by joe lackner -
Thanks Mark for the advice. I like the initial point you made about not even starting it if it is not your obsession and something you love. Organization and persistence are products of that initial belief.
Im currently a business partner in a start up music label in Los Angeles and working on new website projects for the company. Organization and persistence are key, and sticking with your core competencies can make your company expand in the right direction. Personally, hard work does not always do the job, you must keep challenging daily the efficiency of your work and constantly improve.
Comment by Mario Mendoza, Jr. -
\”Locate yourself in the South, or at least middle America! With technology and travel you do not have to be in big cities anymore. You save a ton of money on everything including offices, equipment and people.\”
Good luck recruiting talent in the middle of imbredland.
Comment by Ryan -
I have been involved with start up companies and ones that are really projecting forward. What I can say is that yes all of these are key and you did a great job covering insightful bases that larger diluted companies forget. However my number one, from experience as one and hiring one is your employees. You can find people if you take the time to get someone who will love what they do. It is completely worth going through 200 resumes in order to get the right person under you to give you drive in the right direction. I actually found that going through colleges has worked out well because you find students that are ready to get and start (*want) to work.
PR firms – thank you – I got a kick out of that one!
Comment by lynne -
thanks mark. loved the post. and it\’s just so inspiring every time i read it.
Comment by viv -
BTW- it is called espresso not eXpresso. 🙂
Comment by CeliacChick -
Mark-
Great points. I\’m successful at my current career and now looking for funding for a retail boutique that is related to my field. The boutique is more of a labor of love thing for me, that\’s why I believe in it. Some of the things you\’ve mentioned have reinforced beliefs I have regarding the business.
Good read.
Comment by Mark G. -
I agree with most but #8 is absolutely wrong.
The technology used can be very relevant to what you do and your costs.
Talented people can switch between technologies very fast.
Professional experience is critical, experience with specific technologies is not.
Most important, can be critical to have all employees use same technologies in different parts of the product and not to have a wild mixture just because employee A was used to X and employee B was used to Y.
Note also that employees should be able to wade through each other\’s stuff relatively easily.
Comment by mc -
These all ring really true to me – especially point 1.
Comment by Eamon -
I particularly love no 9! 2 is just a lovely buttress to the omnipresent 1 and 5 is a summary of one my most life changing books \”Good to great by Jim Collins\”
Comment by qleyo -
Mark, having worked for a start up for 6 years now (I\’m employee #3)it is inspirational to see how you have taken these rules and made them work for you. We have followed these same rules and are at the point for a successful acquistion. How do we get in front of the right people who understand our potential. It seems you always read stories about these great companies who were bought out, but you never hear how the two entities met.
Comment by Scott Schultz -
When dealing with software companies, #6 and #12 go hand-in-hand, in my experience. Happy developers are caffeinated developers. Plus, like another commenter said, if you can take 5 minutes to grab a cappuccino or espresso in the kitchen instead of having to walk or drive to Starbucks, the developers save time and keep their train of thought going.
Comment by birq -
there are some suggestions that I would ad regarding employees in any organization or startups.
1. Incentives- all employees should be given incentives for doing better and more efficient work. This could include offering suggestions that may prove beneficial to the company.
Employees should be encouraged either through monetary compensation or other rewards to be the best in their department or specialty.
2. Bonuses- This should recognize employees that stand out from their peers. This would be an indirect way of increasing their income.
3. Positive Affirmations or at a boys- people like to be appreciated. Recognize an employee that stood out in all areas. Sometimes called employee of the month in some companies.
Comment by Thomas Zimmerman -
I think it\’s funny that some people question or disagree with Mark\’s advice on starting up a business. If I were to start a business, I would want the advice from someone as successful as Mark. Everything he\’s involved with turns to gold.
You just can\’t argue with the billions in his bankroll. Naysayers, pay attention…you\’re the one who\’s been found wanting.
Comment by Shane Hill -
Great advise. I have seen some many start-up fail because of not following some of these.
Thanks
Jason Berkes
Comment by Jason Berkes -
Solid Mark. Thanks.
Comment by Dan -
@Mark: Otherwise great blog, but I\’ve got to call you out on the espresso comment. I distinctly remember you visiting WebTV in late 1997 and admiring the office\’s commercial-grade espresso machine, getting a demo from WebTV co founder Phil Goldman, along with Richard Brewer-Hay (now eBay Corp. Blogger). Mark got a demo and said the machine was a great idea and he wanted to get one for AudioNet.
Mark, Were you just being gracious then, or are have you changed your tune since? What is the straight story?
Comment by Aaron Burcell -
For #7, I understand not wanting a CEO who insists on flying first class and wont go on sales calls…but what\’s the issue with him/her bringing their secretary/assistat with them?
Comment by mike -
GREAT POST! I am printing this and putting it on my desk as I am doing a start up now (don\’t worry I won\’t e-mail asking for money 🙂 most of these points I\’ve already come up with but it\’s good to see them from someone else. I agree 100% with the offices, I work in an \”open\” environment now and love it, work is much better and you get to know more people this way, plus communication about projects are much easier. Heck out CEO sits in the middle of the office floor with no office walls and less of desk than most of the other employees. Thanks again.
Comment by Michael Englisch -
exit strategy
if you dont have one the vc\’s are going to a ignore you or take the company out from under you:-)
The otehr comenter is right about separate offices and geting and keeping into the flow state.
Comment by Maurice -
And one of those obsessions better be CUSTOMERS:
Who are the customers?
How are you making customers\’ lives better?
How will customers know you?
How will customers like you?
How will customers trust you?
How will customers buy from you?
How will customers evangelize/refer more customers to you?
How will customers buy from you AGAIN?
BringBuyers.com
Local Business Will Prevail.
Comment by Small Business Internet Marketing -
Great programmers need offices.
Comment by Ben -
coffee is for closers
I wasn\’t going to comment until I read this line. Mitch & Murry may have been a successful real estate office, but the working environment left a lot to be desired.
Comment by coffee is for closers -
Great comments, Mark.
I recently started a small business in a small town and while your rules don\’t apply 100% to my situation at the moment, they are good rules to keep me on track as I grow my business.
Thanks.
Comment by YourPCDoctor -
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.
Comment by Berislav Lopac -
Mark, didn\’t we have our own Espresso / coffee machine at Broadcast? I seem to remember getting one about 3 times a day.
Regarding #12: Foosball is a must.
Comment by Josh -
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
Comment by PJAM3 -
I don\’t think I can give up my espresso machine. Sorry 😡
Comment by Chad Ledford -
#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.
Comment by Mel -
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.
Comment by Mark Ferguson -
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
Comment by Tom Altman -
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.
Comment by NOTIS -
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.
Comment by Brian -
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.
Comment by Christian Burns -
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.
Comment by Matt M -
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!! 🙂
Comment by James -
#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
Comment by Greg Rollett -
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)
Comment by Aaron Holloway -
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!
Comment by sign in china -
I\’ve been lucky enough to meet loads of very successful entrepreneurs. Whilst all were obsessed, often for different underlying reasons, plenty of them had exit strategies!
Comment by Ed French -
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 ?
Comment by Misanthropy Today -
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.
Comment by Sven -
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.
Comment by Jame -
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.
Comment by Niraj J -
Interesting. #1 is probably the MOST important yet will likely be the least-heeded observation here…
I semi agree about the offices – there are times when topics, be they financing or personnel or other, need to be discussed and would be inappropriate for others to hear. I think having numerous \”private\” rooms is useful if you aren\’t going to have dedicated offices.
I mostly disagree about the PR firms. While MANY are a waste of money, the industry should not be completely written off. My thoughts on this are on my blog here: http://www.stagetwoconsulting.com/good-marketing-aint-cheap-67/
Comment by Jeremy Toeman -
Thanks Mark, another great post for every startup to read. I\’ll add this to my bookmarks as well.
Comment by Shawn -
Great list. Funny, I am in the middle of interviewing PR freelancers — wasn\’t sure when/if to hire. Looks like that has been answered resoundingly. I will definitely share this with all those startups on campus.
Comment by Campus Entrepreneurship -
Thank you for advice.
I\’m forwarded this page to 2 friends.
Comment by PR -
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!
-Stiennon
Comment by Stiennon -
Some great wisdom in there. No offices, no swag, and a flat organization. A great way to get it going!
Comment by Ken Hanscom -
I am in full agreement with you on the offices.
Too many exec\’s get caught up in the mystique of staplers and wall decor instead of burning up phones and hitting bricks.
Good stuff here!
Comment by Paul -
#3 When it comes time to hire, what positions should you fill first? My first thought is to fill the positions that you don\’t like to do but Im not sure how to find people that would \”love to be there\” doing a job that I would not like to be doing myself.
Comment by Shawn from Realado.com -
There is NO REASON whatsoever for an office…cell phones, EVDO, come one people…ALL employees should be selling the product every second. You want privacy? Go sit in your car. An office is a ridiculously expensive proposition. Every employee should work from home…keep out the ridiculous costs, have everyone on sales calls always, and the company is five steps ahead of their competition every single time…
Comment by Doug -
I agree with Chris (#4) and heartily disagree with you on your point about no offices. It\’s my experience that managements that favor open offices are almost always untrusting of their employees, afraid that the employees will be goofing off or doing personal business on company time. If this proves to be so, then you hired the wrong people.
I\’m in the sales game. When you\’re on the phone trying to listen to what your prospect is telling you about their company politics, operating environment, buying process, decision making, etc., etc., taking notes of what they are saying while trying to concentrate on formulating your next question, the last thing you need is to be distracted by surrounding office noise (talking , laughing, ringing phones) and other antics.
You also don\’t want your prospect to hear extraneous office noises and other people on the phone, which can make your company sound like some sort of time-life call center boiler shop. Conversely, with salespeople working on the phone, other people in the office are also disturbed by the constant noise from one telephone conversation after another, all day long. Taken together, a noisy open environment is a distraction and WILL result in an overall loss of productivity.
Also, do you really want the engineers and office staff included in the negotiation discussions for each prospect? Hearing discussions on competing products, knowing how much you are selling the product for and what kind of discounts you are giving? Didn\’t think so.
The job where I was most successful, I had a small, windowless but private office. The positions where I was least successful were offices with low cubes and a lot of noise. I refuse to work in an open environment and in fact, walked away from one such opportunity a couple months back. Their loss……
Comment by Jojo -
Great advice. I\’m just forwarded this page to 5 people.
Comment by Sports Bettor -
I agree with all but #2, but not for the reasons that you would probably expect.
The typical rebuttal for this is that (most) VC\’s will demand an exit strategy. From their perspective, someone who has thought through the exit is someone who is savvy, credible, presumably realistic (unless is the strategy is \’uh – get bought by google…\’), and most importantly – a fit with the VC\’s primary motivations – to liquidate their own investment in a timely fashion.
That said, I\’ve heard your suggestion before, that a \’true\’ entrepreneur is one who is passionate about creating, growing and nurturing his startup, come what may.
The reality is somewhere between the two – not the extreme position you suggest – but for a different reason. Simply put, it comes straight from your answer to #5 – know your core competencies. The right person to create a company is not always the right person to grow a company, and that may not be the same person who is right to manage a business that is the more mature stages of its life cylcle. This self-awareness is, I believe, critical to a would-be entrepreneur – and knowing when to hand over the reigns, either via an exit or by bringing in a professional management team is a decision that must be well-thought through well in advance.
Comment by Alasdair Trotter -
Would you explain #5 in more detail? By \”your core competencies\” do you mean the company\’s or founder\’s? If the company is a tech company, do you mean pay up for software developers and pay cheap for sales people and service/support people?
Comment by Bill P -
Locate yourself in the South, or at least middle America! With technology and travel you do not have to be in big cities anymore. You save a ton of money on everything including offices, equipment and people.
Comment by Lucas -
Wait…that posted before I was through! (!). Anyway, as I was saying, if you stay cloe to the press you want to notice you, you\’re as good as in. PR firms just rack up billable hours and it\’s all BS. Also, don\’t for for quantity in press hits, quality only. Quality means publications everyone knows and reads. Who cares if you get the cover of some po-dunk pub. And never EVER pay for press. Need not say more on that one….
Comment by Tina C -
So true about PR agencies — use to be with one. A huge waste of money. Go without on! Startups should be calling on press – when you have press worthy news. In the downtime, create you top tier press list, touch base with them, send info (something you read, heard, etc.) they can use. BE BRIEF! DO NOT GIVE THEM MARKETING BS
Comment by Tina C -
I\’m going to disagree with you on two points.
* Offices: It sounds good on the surface to have no offices, but you might pay for it more in the long run. Interruptions when doing any type of programming can be killer time-wasters. You\’re in the zone, you\’re balancing dozens of pieces of complex information in your head to try and get some aspect of the system right, and somebody pokes you and asks you for some help with something and all of a sudden you\’re out of the zone and you\’ve got to spend 30 minutes mentally getting back to where you were before you were interrupted. Maybe you can go without offices if you have a solid \”don\’t interrupt people when they have their headphones on\” type of policy, but having no offices can waste a lot of time.
* Expresso Machine: Spending money needlessly is a bad thing, but spending a bit of money to be more productive is a good thing. If you can save even 10 minutes per employee per day by having them walk to a small kitchen for a quick cup of coffee they can take back to their desks instead of going down the street and waiting in line at Starbucks, the thing pays for itself rather quickly.
Much of the rest of the advice is understandable though.
Comment by Chris Papadopoulos -
I like the comments on expenses. Don\’t spend any money unless it is a current need. I can\’t stand some of the spending people do based on the speculation that there business is going to grow extremely fast and be successful in a week. Also new policies and rules kill more time. Don\’t create new policies without removing and old one or being absolutely sure that it will lead to more money.
Comment by Refrigerators -
Some of this might be a bit hard to swallow but it\’s tight!
I have worked for a few startups and the ones that stay great followed this philosophy. The tide really starts to turn after a buyout though. Larger companies struggle to maintain a culture like this. Especially the hierarchy and politics.
Comment by Steve -
So Shoemoney shouldn\’t be doing t-shirt friday?
Comment by michael webster -