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Mentoring makes the big time: Dilbert!

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Not sure that telepathic mentoring actually works! As the saying goes, “If you see something, say something.” But make sure your criticism is constructive and focuses on actions and plans, not on people.

And, of course, mentors should always schedule times to meet with their mentees so no excuse for excuses like “I’ve been too busy lately.”

How do you decide: data or gut instinct?

Screen Shot 2019-10-19 at 9.58.21 AMAs I’ve written before, I consider startups to be decision machines, ones that founders must learn to live with, and if they are too thrive, to conquer. And while I have several posts about decisions, I haven’t tackled the argument of relying on data versa gut instinct. Google considers itself a decision machine, as illustrated by how they decided that the variation of blue would grace their home page. As I recall the color choice of their chief designer was overridden by the one presented by data, as Google AB tested dozens of variation and went with the one dictated by data. The designer left Google soon after.

But as the founder of a startup you don’t have the luxury of a money machine like Google to indulge in AB testing of every decision. Startups need to be fast, flexible, and focused – the three characteristics not generally possessed by legacy companies and making up the wholly trinity of startup’s competitive advantage.

The article in The Wall Street JournalFeel the Force’: Gut Instinct, Not Data, Is the Thing by John Stoll is worthwhile reading, as it reveals how the mega-movers in the tech world, including Jeff Bezos and Masayoshi Son make their decisions. According to the article ” Research shows that most business leaders trust intuition over analytics.”

KPMG LLP’s recent global CEO survey shows just 35% of executives highly trust their organization’s data. Two-thirds of CEOs ignored insights provided by data analysis or computer models in the past three years because it contradicted their intuition.

Brad Fisher, KPMG’s U.S. leader of data and analytics, said companies beefing up their analytics units must also find ways to sharpen executives’ instincts.

“You should collect as many data points as you can,” he said. “But don’t throw out your intuition.”

But there is a downside to data, as an over-reliance can “numb the intellect and dull decision-making skills. The reality for both founders and venture capitalists is that both must make decisions with just a sliver of the data generally mandated for a decision in established corporations. That accounts for the definition of “venture” in venture capital:  a risky or daring journey or undertaking: pioneering ventures into little-known waters. a business enterprise involving considerable risk.

What I encourage founders to look for are signals, data points that point you to a sound decision. If your job candidate is brusque and rude with your administrative assistant that sharp data point should alert you to an egotistical performer who you don’t want on your team regardless of their alma mater, GPA, or shiny resume. Of course, finding signals that actually lead to effective decision making is not easy and can tend to be impossible by those brought up in the data-driven culture of large tech companies.

Mr. Bezos acknowledges the need for a reliable gut. “If you can make a decision with analysis, you should do so,” he said during a speech I attended last year. “But it turns out in life that your most important decisions are always made with instinct and intuition, taste, heart.”

As venerable professor of entrepreneurship at Harvard Business School, William Sahlman once told me, “Startups are a succession of small experiments.” Despite the fact that many successful people from Mr. Son to Bill Belichick, Coach of The New England Patriots rely on their instincts at the end of the day, the rest of their day may be devoted to gathering and evaluating data.

Startups by their nature have little or no data to help make many of their decisions, from the name of their venture to what market they should target. But there are two types of data, that derived from secondary sources, like Glassdoor, and data derived from primary sources, like interviewing a job candidate.

When there is good secondary data available to help you make a decision, such as salary data on a site like Glassdoor you should go ahead and use it. But data and instinct isn’t either/or, it’s both. Data can either reinforce your gut instinct or cause you to revisit it. The web enables reams of secondary data and founders should make good use of it when appropriate. Just be wary of “paralysis by analysis.” Any  decision can be better than none in many cases.

Founders must hone their instincts through practice. And when data and instinct aren’t sufficient it is time to call on your mentors or advisors, who should have their own instincts honed by many years of practice. When you are trying to convince others – be they investors or customers – you are going to have to lead with your data. As legendary management consultant W. Edwards Deming said, “In God we trust. All others bring data.”

Questions to ask a prospective co-founder

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I’ve written three posts about co-founders: Starting with a co-founder,  Why cofounding a startup is like marriage!  and How to find a technical co-founder, but I was glad to be informed about a very useful article by my MIT Sandbox fellow: 34 Questions to Ask a Potential Co-Founder  on the Founder Institute site, as co-founders is both a common and complex issue. The list of questions was put together by , Jessica Alter (co-founder of FounderDating and Entrepreneur In Residence at Social Capital LP).

The list is broken into four categories: Personalities and Incentives, Personal Priorities,Working Styles and Culture, and Roles and Responsibilities. These are great questions and I strongly recommend you use them as a reference.

The key concept in choosing a cofounder is alignment. If you are you and your prospective co-founder are not aligned with respect to values and goals for the venture then the answers to the rest of the question don’t really matter.

And, as I’ve written elsewhere, the best way to get to know someone is by doing something with them, something that can cause frustration, irritation, loss of patience, lack of grace, and other undesirable outcomes. Play a sport, like basketball; play a game, like chess; travel together to a conference or trade show. You will learn a lot about how your prospective co-founder acts and re-acts. You are looking for someone who has grace under pressure; can handle frustrating events calmly; is highly competitive; bends, but does not break the rules; and can solve problems – which is why traveling together is such a good test as traveling usually presents frustrating and irritating problems.

You can even kill two birds with one stone by asking some of these questions on your trip to  your conference or trade show.

One trait you need as a founder of a new venture is ability to observe and correlate observational data with other information. You will need to spend a lot of time observing the senior management team, employees, board members, partners – all stakeholders in the venture, as not all important information is as explicit as answering direct questions. There are many helpful articles about becoming a good observer on the web. You can start with How to Be a Good Observer on WikiHow.

 

 

The byproducts of team practice

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Perhaps you’ve read or heard about the fact that it takes 10,000 hours of practice to master something, like playing an instrument. This became a meme thanks to Malcolm Gladwell in his book Outliers  but there is research disputing this “fact” since. But there is no disputing the value of deliberate practice as a vital part of mastery.

What is interesting about this quote from Tom Brady about trust in the Boston Globe article Tom Brady has seen it all, but practice is still ‘very important for me’ by Jim McBride are the byproducts of practice: confidence, trust, good execution.

As rosters evolve, it’s important for Brady to evolve, as well. He needs to work to establish a rapport with all his available weapons — new and old.

“So, even though I maybe have done things, I still recognize that a lot of other players haven’t done those things,’’ he said. “So, my connection with them is very important. Even though I’ve been doing it, the two of us need to do it together.”

According to Brady, repetition is the key to success.

“You know, football is a very coordinated game,” he said. “Everybody needs to be thinking the same thing, reacting the same way, anticipating the same way, in order to be successful. That’s why us being out there as a unit is very important — practicing, executing in practice so you can build confidence, confidence builds trust, and trust leads us to good execution when you’re out on the field.’’

There are many ways you can practice with your team. One I’ve found powerful as a product manager is the post-launch “post-mortem.” Rather than simply heading for the nearest bar to celebrate when you ship V 1.0 of your product, consider scheduling a meeting shortly after launch to review what went right, what went wrong, and what was omitted that should have been included during the product development process. Properly conducted, this team exercise can build trust and improve execution for the next product in the development pipeline. But you have to be careful to avoid finger pointing or blaming; any discussion of what went wrong needs to be constructive and  focused on procedures and tasks, not on individuals. Finally, keep good written records of your post-mortem discussions, they make for great on-boarding material for new members of your product development team.

What other ways can your team practice together to build confidence, to build trust, trust that leads your team to good execution?

Why customer satisfaction is not enough

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For those of you who think your job is done when you have satisfied your customer, the 2019 Trusted Automotive Brand Study (TABS) from AMCI has news for you.  According to the Forbes article Tesla Motors Tumbles In Key Trust Measure by Jack R. Nerad, the TBS Study again affirmed that trust accounts for more than 50% of a consumer’s decision to repurchase or recommend an automotive brand or its dealers.

Satisfying people is just not enough. Based on the hypothesis that emotions beyond satisfaction are the real drivers of customer loyalty and brand enthusiasm, AMCI identified trust as a facet of the buyer-seller relationship worthy of study. And the study revealed that developing and maintaining customer trust is a very, very powerful thing.

Ian Beavis, AMCI Global’s chief strategy officer sees trust as being of a “higher order” than satisfaction, a metric that includes satisfaction but goes far beyond it. Because customer satisfaction has been scrutinized for decades now, most brands are fairly good at executing on it, but the AMCI strategist now believes satisfaction is a cost of entry.

One of the major factors in Tesla’s falling trust is due to their pricing changes. Tesla had thousands of customers put down deposits on the Model 3 based on Elon Musk’s promise of buying a Tesla for only $35,000. That price quickly turned into a myth, as the only models available were packed with extras, bumping the actual price up to the mid-fifty thousand dollar range. Misleading customers about price is a very efficient way to destroy trust!

Ian Beavis has a great analogy that helps one understand the difference between satisfaction and trust. Satisfaction is the absence of illness, but it doesn’t mean a person is fit or healthy,” he said. “Another analogy I’d use is you don’t get a serious relationship because you’re satisfied with dating someone. It takes love and trust to build longterm relationships.”

Your entire customer experience chain from pre-sale to sale to post-sale support and service contributes to building trust in a brand. Making a sale is necessary, but not sufficient to build a trusted brand.

How to review a pitch

pitch.pngI’ve posted a lot about how to create a pitch but it occurred to me yesterday at a pitch review, that I’ve never provided any tips to those, like myself, who get tasked with reviewing pitches.

Know the audience and purpose

While the vast majority of decks we are asked to review are for the purpose of raising money, not all are aimed at investors. The second largest category I see are pitches for contests. While there may be investors in the audience, often the goal is to win or place, which is often accompanied by a cash prize in the low to mid five figures. Other audiences include trade show and conference attendees – I’ve given a number of presentations at conferences myself;  customer pitches; partner pitches; and company pitches. Often, as in demo days, the purpose of the pitch is to drive the audience to the presenter’s exhibit booth to make a personal connection to the company and see their product in action.

Understand the constraints

The major constraint for organized pitches like business plan contests is time. Usually each participant is allocated somewhere between 4 to 10 minutes. Sometimes, that’s it. Other times an equal amount of time is allocated for Q and A. And how strictly the time limit is enforced varies, but best practice is to assume enforcement is strict. Another constraint is asking for money! The MIT VMS Demo Day pitches can not explicitly ask for funding, presenters can only indicate that they are actively raising capital. At times there are also format constraints; some pitch contests don’t allow video or require all presentations to be in PowerPoint so they can be loaded onto a single laptop for ease of presenting a number of pitches, one after another.

First time run through

Even if the pitch is aimed investors it is a good idea to set a time limit. 15 to 20 minutes for a detailed presentation to interested investors is typical. But whatever the audience give the presenter the opportunity to run through the pitch without interruptions, but against the time clock. This will give the reviewers a chance to emulate the actual audience – aside from VCs, who often will interrupt founders so many times they may never get to finish their pitch! (And that’s actually good, as it shows they are engaged.)

Format

It can be less threatening for the founder and an easier start for the reviewers to address the format of the deck. There are dozens. if not hundreds, of posts about how to format a pitch, but even so as a reviewer you will see mistakes. The number one mistake is cramming multiple points into a single slide.  If I could give founders one piece of advice it’s the formula one idea = one slide.  You will often catch things like a “Confidential – Do Not Distribute” footer on what will be a public presentation –  that’s just a distraction. Judges also need to look for consistency of format, readability of text, sufficient white space, correct use of color and fonts, etc.  Reviewers can also leave format comments to last – up to them.

The story

While it can be tempting for reviewers to jump on slides that they feel are weak or even should be deleted, the first step in the substantive review is the story. Is it clear? Is it compelling? Is it concise? Does it make sense? Do the slides reinforce the story or are they redundant and/or distracting? Does the pitch make clear not only the problem and solution, but who the customer is? One common mistake founders make is to confuse institutions with customers.  Hospitals are not customers for medical devices. You can’t sell to a “hospital.” Who in the hospital makes the buying decision? Who actually cuts the check or issues the purchase order? Who will use the medical device? These  can be the same person, but in large organizations are most often three or more persons; sometimes committees decide on high ticket, high impact technology purchases.

Are assertions, like market size, backed up with evidence or citations? A pitch isn’t an academic paper but presenters need to back up assertions that they make. Make sure presenters don’t go down technical or other rabbit holes. No technical or business jargon!

If you have 45 minutes to review a pitch, spend the majority of the time, say 30 minutes on the story. The founder should be able to tell the story smoothly without notes and without slides. The slides should reinforce major points in story, not simply reiterate it. Getting the story right is necessary, but not sufficient.

The presenter

Reviewers can not be bashful about critiquing the presenter: their speech, their body language, their pacing – too fast and they will lose the audience, too slow and they will bore the audience. Presenters need to speak clearly and forcibly. If they are working with a fixed microphone they need to be aware of mic technique – don’t drift away from the mic but don’t get on top of it either, you may start popping “”p’s” for example. If no  mic they will have to speak loudly. Do presenters make good eye contact with the audience or are they looking at their notes? Their slides? Their shoes? Presenters should be enthusiastic and confident, but not overly “salesy”. People make snap judgments; they can decide in as little as 15 seconds whether they like someone or not, so make sure presenters get off to a good start – no fumbling with papers, no throat clearing, mic testing or other warm up tics. See my post It’s the singer AND the song.

Slide by slide

I find it most helpful to founders to go through each slide individually to make sure it does its job of helping to tell the story. Don’t be afraid to tell a presenter to cut slides; the other day we told the presenter to dump his entire fancy graphics-laden presentation in favor of a very simple 5-slide, text-driven presentation. His story was so simple, so engaging that all the fancy slides were nothing but a distraction. But most presenters will benefit by having slides to reinforce their speech. Don’t assume that the presenter has the slides in the correct order. I often find that presenters “bury the lede,” that is they don’t get to who the customer is and what the problem is until they’ve spent way too much time describing the marketplace. Reviewers need to be familiar with good slide design, if not they shouldn’t be reviewing! Make sure that the slides are in sync with the presenter’s speech and vice versa. Each element may be fine on its own but if they aren’t synced up correctly that’s a problem. Are slides in the correct order? Is every slide necessary? Less is often more.

Finally, can the presenter take in feedback or are they defensive or filled with hubris so they ignore feedback? If the founder doesn’t take in and act on valuable feedback the reviewer’s time is wasted and most likely the presentation will be weak. During MIT VMS pitch scrubs where we do a two-pass  review, I’m often amazed by how much better the second version of the pitch is; founders exceed my expectations.

The recap

If time permits it can help the presenter to ask them what they learned from the review and reviewers may need to reiterate major points that the presenter didn’t seem to absorb.

Dealing with the group

Pitch scrubs almost are always done in groups, this can be both a problem and an advantage. I like to know the background of the other reviewers – for example, they may have domain expertise, such as in medical devices, which I lack. The other day I had no background on the other reviewers and there were several of us. In that situation my practice is to let others go first. Often there will be someone who is really good on story telling, another person an expert of graphic design, and yet another may have deep domain expertise.

Don’t be afraid to second someone else’s point. Getting the same or similar feedback will help the presenter to understand what they need to pay attention to. Be as brief and concise as possible to leave air time to others. Don’t interrupt other reviewers or the presenter. But don’t be bashful about asking to go back to slide “n” (it really helps reviewers if all slides are numbered. These numbers can be dropped from the final version).

Finally keep in mind, a pitch review is not a shooting gallery. Your job is not to shoot down the presenter’s slides, it is to provide valuable feedback and advice to enable the presenter to improve their pitch, to get the next meeting, to successfully raise capital or win a pitch contest. You are a coach and you want your player to improve so that they will win. Act accordingly.

Are you recruiting for the right attributes?

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If you are recruiting staff for simply domain knowledge and experience you can check their resume, their references, and their knowledge via interviewing. But is domain knowledge all you need to check for? From what I’ve seen over years of recruiting domain knowledge, whether it’s programming, marketing, sales or finance is necessary but not sufficient, especially in a startup.

Startups need to recruit for the team, not just the position. It’s small, well coordinated and highly focused teams that can win over large legacy companies with, as Bill Gates famously said of IBM, “Masses of asses.” Domain expertise is necessary, but not sufficient. What else is there you might ask?

My friend Art Bardige, lifetime math educator and founder of WhatIfMath, maintains that industry is hiring for what some would term “soft skills”: communications, collaboration, creativity, and problem-solving. As those of us who have spent our careers in education it is to our regret that neither K – 12 nor college education focuses on these skills and attributes.

Today’s New York Times articleEngineers Sprint Ahead, but Don’t Underestimate the Poets, by makes clear that these soft skills are rated highly by employers:

According to a 2018 survey by the National Association of Colleges and Employers, the three attributes of college graduates that employers considered most important were written communication, problem-solving and the ability to work in a team. Quantitative and technical skills both made the top 10, alongside other “soft” skills like initiative, verbal communication and leadership.

When you do your reference checking – especially those references you find through the company’s network, not via the job candidate – make sure you are asking how the candidate worked in teams, what was the quality of their written communications, and what types of problems were they faced with and how well did they do in solving them?

Back when I was a hiring manager I used to assess written communications by reviewing the candidate’s resume and their accompanying cover letter. The latter usually told me a lot about their written communications ability. But times have changed; both the resume and cover letter are probably better indicators of the quality of help the candidate got in writing these documents than in their own skills. Therefore you might want to give your candidates a written assignment as part of the interview process. Just don’t create the appearance that you are trying to get work done for free by doing so.

I did what I called “two-pass” interviewing. The first pass was a detailed run through of the candidate’s educational and job history, with many questions, including why they chose a particular college to attend and jobs to work at. These answers can provide valuable insights into how a candidate makes decisions and what they value. The second pass was based on Harvard’s case method: put the candidate in the job they are interviewing, say product manager. Then pose a typical problem a product manager would face, such as having to ship their product by the the date of an upcoming trade show. The gotcha was that the product was far from ready. How would they approach this problem? Cut features? Cut back on testing? Punt on delivery for the trade show? And most importantly, why did they make these decisions. This type of role playing can reveal a great deal about the candidate’s oral communications skills and problem solving ability. (It also can give them a taste of what working at the company would be like.)

For positions where I lacked domain expertise I would rely on the interviews by my staff, each of whom was also prepped to test domain expertise.

I’ve found that recruiting is all about fit – job and candidate fit, candidate and company culture fit. Checking for domain expertise is absolutely necessary, but don’t neglect those so-called soft skills which make for a successful team player. And great startups are all about great teams, not just great individuals.