Your Corporate DNA Evolves With Every Person That You Hire


Founders should work hard at engineering the best corporate DNA they can.

Most of the founders at our incubator Ben Franklin TechVentures have not interviewed, selected or onboarded new employees prior to launching their startups. Having incubated more than 150 companies in 30-plus years, we’ve seen hundreds of successes and failures in hiring. It’s an essential step towards success.

As you may remember from reading my last couple of posts, all startups have their own idiosyncrasies and don’t lend themselves to rigid rules. So, instead of another “how to hire your first employee” piece, I’ll instead offer some higher-level advice that might lead to better decision-making.

If you stood side-by-side with your great-great-great grandfather, an observer could probably see a resemblance. That’s because some of his genetic makeup has become a part of you. This is how it is inside a growing company. If you’re the founder, you hire the first person. Then you and that person hire the third person. In fact, you’re probably involved in hiring each new person through about employee number 30.

But as your company grows, you will become less involved in the hiring process. Employee number two might choose employee number 31. But because you hired employee number two, that person hopefully resembles you in important ways: temperament, communication style, etc. Meanwhile, that employee number 31 probably resembles number two, and so on throughout a company’s evolution. Even after the founder is retired, there is a genetic culture that creates the core DNA of the company.

Below are a few practices we’ve seen that help companies go through a more successful hiring process and build a great lineage.

1.  You should even codify it in a company culture document that changes as you grow. A great example is the 2009 Reed Hastings PowerPoint deck on Netflix culture.

2. Write professional job descriptions. If you’re not sure how to do this, use this Monster Jobs link to help. While informal networking and reliance on your relationships will expose you to good candidates, using formal search processes will identify excellent, unexpected candidates. It will also build discipline, helping your company hire people in the future when you’re no longer directly involved.

3. Don’t wait for a job opening to meet candidates. Keep a link on your website that talks about your company and how you’re always looking for candidates in broad fields (programming, for instance). Forcing yourself to take interviews — even when you haven’t decided if you’re going to hire — helps you learn what you’re looking for, keeps you current on who’s available, and will make you better educated when you do have a decision to make.

4. Don’t hire a manager when what you want is a doer. Over the years, many startups in our incubator have hired former senior corporate people, especially for sales positions, because the person has a strong set of contacts. “Former EVP of Marketing at IBM” sounds pretty impressive as your Chief Marketing Officer. But that probably means they spent their day managing 100 people and not actually engaging with customers. Within a month or two, they will have approached every one of their contacts…twice. Results will probably be mixed because your startup is not IBM. If you’re trying to ramp up your business from its first five customers to its next 50, this senior management person probably doesn’t have the skill set nor inclination to do what really needs to be done. They won’t be happy or good at banging away at email responses, running product demos or making phone calls. It’s OK to hire a less-pedigreed person if the job and culture is a better fit.

It’s hard to build a successful tech company. It’s virtually impossible to do so with an undisciplined and poorly thought through description of what you want your company culture to be. Think of your business as a living thing and realize that each person who gets hired may become a critical chromosome in your company DNA.

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Entrepreneurship is about people, not things.

Water carrier innovation

The HippoRoller: Invention is what happens to things…innovation happens to people.

The post that follows was originally posted in the June edition of Keystone Edge. It is the second in a continuing series about what we at Ben Franklin Technology Partners and I personally have learned from over 150 incubator/accelerator clients.

In the first installment of this series of lessons we’ve learned from 30 years of incubating innovation we ironically described how there aren’t any universal entrepreneurial lessons to be learned.  Instead of rote lessons that, if learned and memorized, will systematically lead entrepreneurs to success, we’ve instead accumulated a body of gut-informing experiences that we share with each new founder we meet.  These experiences aren’t ‘the answer’ but rather are gentle nudges that help each entrepreneur find their own solutions.  Promising founders can become successful entrepreneurs only if they are able to accurately translate that advice from us and others into their own uniquely personal situation.  This is why so many investors invest in the person rather than the product.  Not surprisingly, it’s the people and not the lessons that matter most. This emphasis on people is the core of the second lesson that entrepreneurship is about people not things.

The most important founder skill that cannot be taught is how to interpret the needs and wants of people in world. There are many who think that successful companies start with an invention.  This, in my experience, is simply not true.  New products start with an invention, but great companies start with innovation.  Most people don’t think about the distinction of such things as invention vs. innovation, but we do and it’s an enormous distinction.  We think of it this way: invention happens to products, but innovation happens to people.  The general rule for us at Ben Franklin is that we believe entrepreneurs are people who identify market opportunities and then seek to create products to solve those problems.  Inventors are not the best entrepreneurs because they tend to identify products…protein interactions for instance, or some magic algorithm…that demonstrate breakthrough science but then look for market opportunities where they can be applied. Usually, the market opportunities the founder  later identifies are virtually everywhere.  “This new product can help every consumer and every business everywhere,” is not likely to be an effective marketing and sales strategy.  We have learned that it is generally better to start with an innovation for a limited market (aka, a group of people with a problem) and then work backwards to invent products to execute on the needs of those people.

My kids must certainly be tired of hearing me advise, as I have many times, that in life there are only two things that you will ever work on.  You will only ever work on things or work on people.  Most of our founders arrive at our door with incredible technical talents.  They have studied and worked with electrons, molecules, algorithms and polymers.  They elaborate on professional and academic experiences in which they developed and invented and hacked their way to breakthrough technologies.  But all of these are things…things that can be examined and manipulated in environments controlled for all sorts of factors like temperature and moisture and vibration and load testing.

But things are not people.  People do not behave like things. You can set a chemical reaction into motion, generally control the environment and time and time again, get the same results. However, selling and hiring and negotiating and purchasing do not occur in a controlled environment.  And entrepreneurship is ALL about the uncontrolled environment of people.  Co-founders, key first employees, suppliers, investors, customers…all people.  Often in the case of customers and investors, you’re actually dealing with groups of collaborating people which adds another layer of complexity.

My ultimate point is to know your strengths and weaknesses before you launch a company.  Building a great tech company absolutely needs a great product and, therefore, needs a team that knows how to invent things. But to significantly increase your chances of entrepreneurial success, you or your co-founding team needs to know how to innovate for people.

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There Are No Lessons in Entrepreneurship

The post that follows was originally posted in the June edition of Keystone Edge. It is the first in a continuing series about what we at Ben Franklin Technology Partners and I personally have learned from over 150 incubator/accelerator clients.

79539b1f-c4e6-4baf-888f-432ecd96bbf7image10Lesson #1: There Are No Lessons.

Beginning a list of lessons that I’ve learned from incubating innovation with “There are no lessons” is a bit risky. If my playful approach doesn’t work, I’ll have a difficult job bringing you back for future posts. But I hope the deeper meaning embedded here sets the tone for the rest of the series.

Tech company founders have a very difficult job. They have a powerful vision of innovation in their mind. They use the art form of company formation to interpret their vision — in the way dancers interpret their visions of music. In launching a company, founders are attempting to describe the future of their industries to prospective customers, investors and employees.

Innovators with a vision are dissatisfied with the world as it currently exists. Like artists, entrepreneurs can’t launch their ventures by starting with someone else’s vision of the world. They aren’t beginning with a previously constructed paradigm of what a business can achieve. They have to work from a blank canvas, and they have to do it with insufficient capital, insufficient industry connections, an insufficient product line, no staff, no IP and no customers! Yet success can be achieved despite these tremendous obstacles.

Entrepreneurs do not get the credit they deserve when it comes to the level of sacrifice they make in exchange for uncertain returns. Like artists obsessed with their work, the sacrifices can be extremely personal. Marriages may suffer and dissolve. Sibling rivalries can evolve into destructive winner-take-all contests. And lifelong-friendships can be tested. But magnificent accomplishments can emerge from a dangerous and difficult entrepreneurial quest.

Those facing these extreme sacrifices want to know the lessons that Zuckerberg or Jobs can teach them, as if there is some secret talisman-like codebook to follow. I’ve had entrepreneurs actually describe their business plan to me in a deliberate imitation of the way that these or other big-name entrepreneurs built their businesses. In those moments in my office, I often suggest to the founder that entrepreneurial lessons are not meant to be followed — they are only meant to be understood.

The word “lesson” tends to imply something that can be learned by rote repetition; like “1 + 1 = 2” or “In a right triangle, the square of the longest side is equal to the sum of the squares of the other two sides.” There are no such lessons in entrepreneurship. Instead of lessons, what you have are more like “gut-informing” experiences. No two situations or ventures are ever, ever the same.

Two firms may have similar product configurations, but different target markets. Or two companies might be targeting the same problem in the marketplace, but with a different sales model. Resources available to two otherwise similar startups can be wildly different, leading to two very different results.

No two companies are the same because company founders are people. How can two companies ever be similar enough to form textbook-like lessons when no two people are the same?

No hard-and-fast lessons can be provided to entrepreneurs because we cannot control the intrinsic and extrinsic phenomena that affect human actions. Experiences across ventures can be somewhat similar, but because startup ventures are so intertwined with their founders and the constantly changing circumstances in which they work, two pieces of venture-art may look similar at a cursory glance but will always be different in their hearts. This first lesson is very important to understanding the second lesson, which we’ll consider in the next edition of Keystone Edge.

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Pitching Big or Pitching Small?

Kramden pitching

Ralph Kramden, pitching his “Krammar’s Delicious Mystery Appetizer”….and pitching it big.

Ralph Kramden was always pitching BIG.

There must be a dozen episodes in which he dreams up a new way to make a financial killing. And when he pitches those ideas to his pal Norton, or as in the picture, to his boss Mr. Marshall, he’s pitching them big. He never seemed to struggle with the presentation issue that many founders face when putting their investment story together:  Should you pitch big or pitch small?

Many early founders show up in my office pitching big. That is, their presentation spends a disproportionate amount of time trying to convince me of all the markets in which their technology is going to dominate. They tell me about all the different people from all over the industrial universe that think their invention is so much better than solutions currently available.  These presentations usually include most or all of the following claims: “My brother introduced us to Dr. So-and-so and she was excited about including us in a grant she’s writing next year”;  “John Doe from the XYZ Corporation is ready to sign a licensing agreement as soon as our prototype is ready”;  “If only half of the conversations we’re having happen, we’ll have $80 million in revenue next year…and we’re being conservative.”  And, my favorite, “Co-founder Mary had a conversation with a VP from GiantCo and they asked us how much it would cost to buy our company before we even launch!”

These are probably all lies. Even if there is a kernel of truth in them, the founder who would utter these kinds of things out loud and dedicate space to them in a powerpoint may be suffering from what I’ll call here FIDOS…Founder’s Irrationally Delusional Optimism Syndrome.  It’s a dangerous condition for founders because it indicates a clinical inability to sift out legitimate opportunities from real opportunities.  Presentations of this type reveal that the founder is more dreamer than do-er.  They seem to believe that the only things that matters to most early stage investors are big, big promises when, in fact, it’s the little promises that matter most.

I’m not suggesting that you don’t tell me about the overall market opportunity.  I need to know and understand what you think your total addressable market is, but described in a bottom-up, rationally segmented manner.  And I want to understand how fast that market is growing.  But more important than that is what have you already done, specifically, to validate that market? Evidence of potential customer interactions, like those above, may be great, but I’m going to want to understand the steps that have been taken to this point to elicit those responses.  If all you have is “we’ve had one conversation” then it is way too early to include this kind of information in your powerpoint.  More important to me is to understand what you are going to do in the next 12 months to move those opportunities forward. How are you going to execute on the small stuff like…getting the prototype done, generating cash to keep the company alive, finding great team members, generating awareness and an early growing pipeline for your product.  Pitching small to me means demonstrating you have an eye for the boring details of daily execution over the upcoming short period of time. Pitching small means you have an appreciation and fear of the many pockets of risk that exist in your startup.  Investors need to believe there is a big opportunity out there, but I don’t think most of them are investing based on it. They’re investing based on you and your execution plan.

The Ralph Kramden character in the Honeymooners was a bus driver. Daily, his roads were well mapped out for him.  The details of getting to the next stop were mostly figured out for him and so his FIDOS condition was pretty understandable.  As a founder, however, you’ll need to make dozens of decisions each day and each little decision has some level of impact on your ability to reach the big destination.  In your investment pitch, you need to have a vision and be able to articulate it quickly.  But early potential investors know that the road to achieving your dream will encounter countless forks, none of which are marked with signs pointing the way to that dream.  Your “pitching small” presentation needs to prove to me not that you already have all the answers, but that you are a great navigator, capable of drawing your own map to get to each stop on the way.

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If a PowerPoint Sucks…It’s The Messenger, not the Medium


Good example of a bad powerpoint slide…but if you MUST use something like it, at least reveal it in pieces, over the course of multiple slides instead of all at once.

Many have wished for and striven for the death of the powerpoint presentation.  I have always disagreed with this point of view.  There is no doubt that most power point decks are terrible and yes, should be killed.  However, it isn’t “Power Point” that is the problem, it’s the author!  Power Point is a fine canvas to use to tell the story of your venture.  Just do it right and it will not be painful.

Lots of founders have asked me over the years to create a template for an effective investor power point.  And, having yet again sat through one of the worst I’ve ever seen last week, I decided it was time to finally do it.  However…do not just rush off to the attached template!  Take a quick look at some of my recommendations below first…and then rush off to the attached template. I even stuck the link to the template AT THE BOTTOM of the page so you have to at least skim through the recommendations first!

1) Most investors have a relatively broad level of technology and industry knowledge, but their depth in any given technology or any given industry will not be as deep as yours.  If they can’t keep up with your presentation because it provides too much technology detail, or too much acronym-laden jargon, that is YOUR fault not theirs. Your goal is to present your BUSINESS PLAN, not your technology.

2) Put yourself in the seat of the viewer/listener.  This is not a lecture where you are trying prove how smart you are or educate your audience about how some novel technology works.  You are trying to convince investors that you have a plan to generate sales and profits by selling things of value to a given group of customers.  Tell a story…don’t give a lecture.

3) There is a difference between a “presentation” and a “performance”.  Many demo days and pitches to audiences should NOT follow the format I’ve suggested.  Basically, if you are going to be 1) on a stage and 2) literally have a spotlight on you, you need an image-rich group of slides with almost no text at all.  These are more “performance” than “presentation”.  Think, TED talk type…don’t use the attached for that.  If instead, you have more of a “meeting” oriented session with a smaller group of attendees, the attached “presentation” format should be a fair guide.

4) Use 2 minutes per slide as your guide.  I don’t mean “about 2 minutes” per slide. I mean absolutely NOT more than 2 minutes per slide. Under any circumstance. This means if you have an investor meeting in which you’re given “about 20 minutes”…10-15 slides is your max, with some slides obviously less than 2 minutes.

5) My opinion is that the emphasis of every investor presentation should be oriented more  on customer segments than on your  product.  Businesses exist to deliver value to customers, not to simply develop technology.  I know, I know.  The truth is that you very well may have developed your technology with only vague thought as to the market to target.  If that’s true, then lie to me.  Tell me you first understood a market need and THEN developed the technology to address it.

6) When you’ve prepared your slides, rehearse them numerous times.  The most important thing is to use the slide as a queue, not a crutch.  Do not read content…do not worry about saying the exact words that are on the screen. Your discussion should be more or less summarizing what the very few words on the screen also say.

7) Some slides work well if they are revealed one piece at a time.  For example, if you have a slide with a graphic that summarizes your sales pipeline, and you have, say, 5 major elements of that graphic, break the single slide into 5 with each slide in the series adding another section of the graphic until slide 5, when all the pieces are visible.  This way, the viewer/listener can view and listen at the same pace you’re talking!  If you dump a complex graphic on the screen all at once (see the picture!), the viewer in us tries to take it all in while the listener in us is getting only information on on the first piece. This may add to the number of slides in your deck…but some of them will go much faster since you’re showing pieces of the whole.

8) When you’re done…look at each slide individually.  If you are sitting in the back of a darkened room with no to only-moderate knowledge of the subject and a hundred other things in your day to think about, is the slide comprehensible.  Be honest! We’ve ALL sat through terrible power points.  Remember what made them terrible and work to avoid the reasons why they were terrible. I mean it…look at each slide on its own!

Thanks for reading through those tips first! Feel free to email or comment if you have a question or challenge to anything above or anything in the template!

Template for an Investor Preso

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Every Business is an “L” Business

Ain't talking 'bout love.

Ain’t talking ’bout love.

Ah, the “L” word.

No, not “love”. The other “L” word.

You know the one…the one that puts startup founders into an internal rage.  The one that signals to the founder that the person using the word finds their business less than exciting. When someone refers to the founder’s business as an “L” business, it usually means that someone thinks it will be a slow-growing, part-time, hammock-lying, uninteresting venture with no hope of any sort of financial exit.  The word should be only discreetly uttered aloud in reference to a business, so please read the following silently to yourself:  Luh….luh…Lifestyle!

Oh, the defamation! The slander! The shame of it!!

This post is to help those of you who’ve been labeled with the “lifestyle business” tag and felt dissed and offended, recover from the trauma.  Hopefully, by talking about the issue of  “lifestyle businesses” I can help those who’ve been accused of such a suggestion to understand the origins of the phrase, accept that it may be true and move on with the knowledge that every business reflects the founders lifestyle.

TechonomicMan’s First Observation: Is it actually true?  Usually, the “lifestyle business” tag gets used by professional investors…VC’s and angels…who do not believe your business plan warrants significant equity investment.  There are lots of reasons why investors won’t make equity investments in companies and the founder who exhibits a history or a plan that comes off as complacent and light on the drive needed to produce returns an equity investor needs, may get the “L” tag.  Examples of businesses that may get the “L” tag due to the founder include the majority of tenured professors and medical doctors who launch new ventures.  These are VERY difficult, lucrative and, in most cases, irrational professions to walk away from to launch a tech startup.  Successful consultants in their field are another example of founders who, without just the right set of other circumstances, often get accused of lifestyleness.  Guess why? Because it is so often true! These founders are often trying to fit the launch of the company into their professional lifestyle!! We appreciate that you give up your evenings and weekends and vacation days to work on your venture…but that makes it a hobby. And professional equity investors need to know that everything else professionally is zeroed-out and the business you’re asking us to back is the 24/7 obsession it needs to be.

Complacency is the other “lifestyle” give away.  “Well, we had trouble solving a technical issue on the product and my technical guy had to spend time fixing some things with a prior consulting gig he had and so I had to call someone who hasn’t gotten back to me for 2 weeks…etc., etc., etc.” is a sign that fixing the technical bottleneck was not the most important thing in your life.  And complacency can be seen a mile away by experienced investors.

So before getting indignant about being accused of appearing to be a lifestyle business, understand that while you may be the exception to the investor’s experience with lifestyle businesses…you’d indeed be the exception.

TechonomicMan’s Second Observation:  Some great companies are lifestyle businesses. Ok. so you suspect the equity investor has tagged you with the “L” business word.  Have you stopped to think about what is so tragic about that?  One of Ben Franklin Techonology Partners most successful companies was a lifestyle business…currently with about 4,000 employees, almost entirely owned by the “lifestyle” business founder.  Oh, woe is him!  If you exhibit the kinds of issues that a typical “lifestyle” founder exhibits, and equity investors decline your pitch, you absolutely, positively can still build a hugely successful business.  As big as you want.  Think Yuengling Beer…still family owned, not parsed out in preferences to a bunch of venture capitalists… and after >150 years, the 3rd biggest beer maker in the US.  Without that outside equity, I will concede, you’re gonna need a few more pinches of luck along the way.  But with a little luck, you could have both a nice business and a lifestyle of answering to yourself instead of an exit-driven group of investors.

TechonomicMan’s Third Observation:  It turns out that every business is a lifestyle business. This is my overall point with regard to the Lifestyle Business moniker.  Know who you are as a person before you decide who to be as a business.  (I’d like you to read that last sentence again for emphasis, because I think it is a good one.)  If you plan to attack a market segment dominated by one or more of the planet’s Fortune 5000 companies, you’d better be 1) able to commit 24/7 to the company and 2) capable of delivering Fortune 5000 success.  Do not lie to yourself or to others. Do not rationalize that you’ll be the exception…you need too much luck for that.  Be in the right place in life before you try to start a growth-oriented startup.  Your business is going to DOMINATE major time-chunks of your life and your lifestyle will not be the same afterward.  Add some employees who have families that depend on the success of you and your business and, well, you’ve got yourself a life-consuming obligation and therefore, a lifestyle business with 2 employees…or 4,000.

So I’d start with the end game in mind. The business you build had better fit the lifestyle you expect to have. And vice versa.


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Being Small is Not a Strategy for Beating Your Competition

Always assume your competition is further ahead than you think.

Always assume your competition is further ahead than you think.

A meaningful percentage of my startup clients have no respect for their competition.  Too many first-time founders have bought the story that big existing companies in their space are too slow to be a competitive threat.  Or that “existing competitors aren’t as nimble as we’re able to be.”  Nimble? Oh, got it. Nimble. What? You think you can buy a pretty damn fast pair of sneakers with that $48.87 of available cash, do ‘ya?

Over the weekend, I read the following quote from a client (with specifics removed) which is what got me to thinking about this subject. The quote was in response to a challenge to how they’ll compete against entrenched players in their space.

“We had a conversation with one of our competitors and one of their managers. One of their biggest challenges is all the formal processes they have in place. This prevents them from innovating quick enough to keep up with their client’s [sic] needs. Every suggestion has to be planned out in detail and go through multiple committees before coding even begins. We feel this type of workflow for software development is outdated and can prevent company from keeping up with the wishes of their user base.”

This is hogwash, but I don’t include this quote to ridicule the client. This is fairly routine thinking among many first time founders.  There is an unwritten rule that many have come to believe about entrepreneurial ventures: small = fast and big = slow. This generally holds true in the animal kingdom, though not always.  One reason why this is a poor assumption to start with in the business kingdom is that “small” is roughly equivalent to “woefully lacking in resources”.  I’ve noticed that none of my clients ever say, “Well, our competitor is big, but slow. Since we are small and woefully lacking in resources, we’ll win in this industry”.

What this founder, a first-timer, does not understand is that any and all businesses that begin to have success beyond $1-2 million in sales, must put these types of bureaucratic processes in place. You, the founder, begin to run out of capacity to make EVERY decision that needs to be made.  So, if you’re smart, you start to delegate to another person.  That person has capacity constraints as well as the business grows and brings a 3rd person into key decision making.  But, person #3 makes a couple of poor decisions and now person #1 wants to review some of those decisions going forward.  And maybe a board of directors demands input on certain issues.  And R&D has grown so much that there is a whole team in place that starts to have creative differences and so a new “Feature Development Priorty” team is put in place.  Frankly, what most first-time founders don’t get is that the ability to construct an effective organizational decision making ability is often the reason for success.  And that is because speed (or, acceleration) is only part of the equation for winning.

The other part of the equation is Mass, as in Newton’s Second Law of Physics, in which Force = Mass x Acceleration.  I don’t know if I can take this metaphor a lot further but to suggest that being able to make decisions fast only matters if the number of decisions that are capable of being made is also large.  A startup with $48.87 in the bank can make a couple of decisions fast…eg, Wendy’s or McDonald’s Dollar menu for lunch today?  But those larger, slower competitors can make dozens of decisions, reasonably fast. And believe it or not, there are those larger and fast competitors that can make scores of decisions very fast.  Your ability to become a FORCE in your industry depends on both.

My point to all this… is this: Being small is not a strategy.

If the best answer you can come up with as to how you’ll compete against your competitors is the fast v. slow irrationalization, I immediately assume that you 1) do not have sufficient understanding of your competition and therefore 2) you do not have a sufficient strategy for how to use your speed to out-maneuver your competitors.  What I want is for my clients to say that their competitors are serious, more resource-rich and experienced warriors in the battle for jungle supremacy.  I want to hear about specific examples of ways in which their competitors are vulnerable in specific segments of the target markets and “we think customers will respond well if we do X”.  And, I want to hear that because the competitors already have the customers you want…you won’t be able to sleep until every last one of them is slain by your force.


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