Startup Step 3: Management & Strategy
by Shelby Dattilo
October 16, 2014
The risk of failure for startup enterprises is astronomically high, and IT startups are especially at risk of failure due to inefficient quality of marketing. In an insightful panel discussion at the 2014 World Knowledge Forum, Eric Jackson, CapLinked CEO and Co-founder, and Ken Miller, Gem COO, enlightened the audience with information on marketing and risk management for startups.
The discussion began with Mr. Jackson and Mr. Miller explaining that the most critical things startups need to be aware of are product features and customer happiness.
Mr. Miller noted that really good, developed features are best.
“[Developed features] are much more important than suffocating your customers with an endless amount of features that they don’t understand or need yet,” he said.
Both panelists agreed that at the time of launching, a product must be the minimal viable product (MVP) with the smallest set of features, adding that the startup should focus on developing those features more fully as opposed to attacking too many ideas at once.
The panelists noted that this will also aid in boosting the quality of products. If startups cut corners on quality control at their inception, they will invariably accumulate technical debt down the road, causing problems in software they must fix later.
“If you don’t build testing and quality assurance into everything you’re doing, your product will fail,” Mr. Jackson said.
Mr. Jackson pointed out that another pitfall of many startups is the assumption that they will gain a broader customer base if they start out as a free service and shift to charging for the same service later. He discussed how his own company, CapLinked, started out as a premium service but later moved to a subscription model to acquire business from more large scale enterprises.
“Free or premium isn’t always necessarily a good business model,” Mr. Jackson said, because it can be difficult to scale up later.
The panelists also focused a lot of attention on common perceptions about staffing in startups. In regards to making traditional hires versus hiring friends, Mr. Miller noted that startups involve a lot of time and hard work.
“Hire people who you trust and want to be around, because you will spend most of your time at your startup,” he said.
Mr. Miller also clarified that more staff does not equal more productivity. He stated that it is imperative to stay focused on building the minimal viable product (MVP) that customers want.
As he put it, “Stay lean, hire wise.”
In regards to staffing a sales team, Mr. Jackson stated that is is a myth that startups should hire experienced salesmen early on. Many startup founders may believe that experienced salesmen can help figure out how to position their product in the marketplace, but Mr. Jackson pointed out that this is not always the best route.
“There is no substitute for a founder getting right in there and talking to customers,” he said.
However, the importance of understanding the marketplace before attempting to enter it is key. Mr. Jackson described the unnecessary pressure put on startups to hit the global market too quickly. He related this to Korean entrepreneurs who may feel pressure to enter the United States markets they know less about.
“If you want to actually build a good company, focus on the market that you know,” he said.
Both panelists went on to discuss their personal stories in the startup world. Mr. Jackson discussed his job prior to joining PayPal at one of the former “Big Five” accounting firms, Arthur Andersen. He said that if he had not taken the risk in joining the PayPal startup when he did, his career may have been demolished alongside Arthur Andersen during the Enron scandal.
“You can fail at any aspect of life,” Mr. Jackson said, “…doing a startup is insanely risky, but risk is more complicated than that.”
Mr. Miller told of his entrepreneurial spirit as a child and how trial and error eventually propelled him into the autonomous life that startups could offer. He noted that he made many mistakes in his career, but that those mistakes were essential low points on the rollercoaster that is startup development.
“If you’re not making some mistakes then you're not pushing the boundaries enough, not trying hard enough,” he said.
