Startup Related Items
Are start-ups getting carried away with crazy perks? Maybe not, responds one VC, who offers a nuts and bolts rationale for this obsession with morale.
The internet is full of tales of startups going to extreme lengths to get company culture right and keep morale high. From paying employees to vacation to moving the company to Morocco, we’re not talking about simple office foosball tables here. Have you ever stopped and wondered why?
Working from sunny locales and eating fab food on the company’s dime certainly makes for happier workers (and in the latter case longer hours at the office), but start-ups are bound by the same fundamental rules of economics as larger firms (eventually anyway) and it’s hard to understand sometimes how the boost in productivity from these extreme perks could possibly make financial sense for young firms. Is this simply keeping up with the Joneses Silicon Valley edition?
Christina Cacioppo, formerly of VC firm Union Square Ventures, has another idea. On her blog recently she floated the possibility that high morale is more important for start-ups hoping to retain and motivate talent because the financial payout of their work is less clear. She writes:
Might employee morale matter more at startups than at public companies? Here’s one argument in favor: compensation tends toward a mix of cash and equity in startups and public (tech) companies. Cash has a known value. In a public company, equity has a knownish value: there’s that day’s market price, which might be different tomorrow but probably not be drastically so. At a startup, no one really knows what their equity is worth. VC valuations only happen every 12-36 months, and they’re wonky. (Though company performance loosely enters into VC valuations, a high valuation doesn’t foreshadow a lucrative exit.)
When employees of both startups and public companies evaluate the value of their equity, they could consider what they can see: their day-to-day sentiment, fellow employees’ experiences, how the management team sees to be performing, whether the company’s strategic direction feels right. These judgements are mostly subjective. Public-market feedback provides a check on employees’ feelings; if the company’s stock is performing well, you might think more highly of the management team’s performance, and the value of your equity, than you otherwise would. (You might also be more down on a seemingly-strong team leading a poorly-performing public company too.) Private companies don’t have this outside check, and so the employee-perception datapoints could matter more.
Of course, lavish perks don’t necessarily translate into improved employee morale if the employees get the distinct impression that management is recklessly burning through cash to the detriment of the business.
But the impulse to create a rosey picture of the company’s prospects and the benefits of working there to keep employees with unsure financial compensation tied to the firm seems like a sensible explanation for the drive towards lux benefits and an obsession with culture.
What do you think, are extreme perks a sign of froth and recklessness or a sensible way to deal with talent in the competitive and uncertain work of start-ups?
Remember same-day delivery services that failed spectacularly in the dot-com crash? They're baaaack. But they say this time is different.
Same-day delivery services (think Webvan and Kozmo) crashed and burned in 2001. But a new crop of start-ups claims this time is different.
Why It Might Work
Today's GPS-enabled smartphones can track couriers and goods much more efficiently. More important, fleets of vehicles and professional drivers are no longer required. Start-ups such as Deliv and Postmates crowdsource that work to a pool of vetted part-time drivers.
"That's the disruption," says Daphne Carmeli, CEO of Deliv, which is running a pilot in San Francisco and Chicago in which retailers foot the delivery bill. Postmates, in San Francisco, Seattle, and New York City, charges consumers $6.99 and up for within-the-hour delivery.
Why It Could Flop... Again
The competition is stiff: Amazon, Walmart, eBay, and Google all either are in the game already or will be soon. To survive, start-ups must deliver reliably (no easy task) at a price consumers will accept--$5 to $10, says Kris Bjorson, a retail expert at consulting firm Jones Lang LaSalle.
Face it, sometimes you're going to mess up. Here's how to do wrong things the right way.
Winston Churchill famously said success is defined by the ability "to go from failure to failure without loss of enthusiasm."
The world's most most interesting entrepreneurs certainly lived that reality.
"If we're not making mistakes, we're probably not growing," said Bo Menkiti, founder and CEO of The Menkiti Group and CEO and founding partner of the city's fastest growing residential real estate brokerage.
"As an entrepreneur you're going to make a mistake," agreed Joel Holland, founder and CEO of Video Blocks, a subscription-based stock footage firm. "You can either let it crush you or motivate you."
Recently, Menkiti, Holland, and Naomi Whittel, the CEO and founder of natural supplements company, Reserveage Organics, revealed their best mistakes to Inc. during an event held in Washington D.C., sponsored by Capital One.
How do you separate the good mistakes--like, say, intentionally misspelling a word in a headline to garner attention--from the bad ones? And if you're going to make mistakes, what kind should you make?
The kind that inspire you
When Whittel went to sell her first company, she thought she'd done everything right. She hired a business broker, courted suitors, and settled on a family company with an 80-year business history. She developed a relationship with the company's head, even visiting him at home before closing the deal.
The only problem, she said, was that the buyer turned out to be "a very sophisticated con artist." After he'd gained her trust, he convinced her at the last minute to restructure the deal. The change left her holding stock that was essentially worthless.
Whittel went to court over the matter, but in the meantime, she said her husband convinced her to "frame the stock certificate" as inspiration.
When she launched Reserveage Organics, she used her bad experience as motivation to grow big fast and keep control. The result? She reached $70 million in sales in her second year and was named Ernst & Young's Entrepreneur of the Year in Florida.
The kind that reveal new opportunities
Holland was always an entrepreneur, dating back to when he collected and sold used golf balls as a kid. But he said an early mistake he made in trying to launch a business offering "life advice to teenagers" led to a realization.
Holland did a great job of rounding up celebrities and respected people for videos in which they'd offer inspiration and advice. The problem was that the resulting videos he produced were kind of "boring," he said, and lacking quick edits or fun graphics. "It was like Charlie Rose for teenagers," Holland admitted.
That realization led Holland to discover how few options there were for people who wanted to make videos with stock footage and better production. Eventually, he founded Video Blocks, distributors of 1,000,000 clips of royalty free stock video and audio every month (and one of Inc.'s 30-under-30 young entrepreneurs this year).
The ones other people make
This one is easy, but also easily overlooked. Why not gain the benefit of other people's missteps without actually having to go through the painful experiences yourself?
At the start of his businesses, Menkiti said he experienced six months of missteps, which he attributed in retrospect to having recruited some of the wrong people. Even as he corrected his strategy and focused on building a team that was committed to his vision, he recognized it might make more sense to learn more consciously from other peoples' efforts.
Now he seeks out "people a little bit ahead of me, and I learn from their their mistakes," Menkiti said, in part by constantly reaching out to new mentors.
"Most entrepreneurs are extremely curious and probably really lonely," and thus willing to share their time and expertise, he said. "Call them!"
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Are you a member of the texting generation who's more than a little awkward on the phone? VC Mark Suster has tips for you.
No one uses the phone anymore, the New York Times declared a couple of years ago and millions of young people shrugged.
Texting? Sure. Chatting online? Of course, but for a certain generation of young business people currently entering the world of work, actually dialling a number is mostly for moms and telemarketers.
But however much the phone may have fallen out of favor for personal use, professionally, the fact remains that every now and again you’re actually going to have to put headset to ear and chances are, with so little practice, you might be a bit rusty at this simple but essential skill.
So how can you make your telephone calls less awkward and more efficient? VC Mark Suster recently offered some tips on his blog that are worth reading in full for every digital native with a slight phone phobia. He’s not talking about anything specialized like interviews or sales call, "I’m talking about simple and quick calls to your business peers, VCs or other players in your ecosystem," he writes. Doing this well is trickier than it appears for many people, he continues, but you can up your chances of getting your business done smoothly and quickly by following this advice:
Prepare! Write your set of bullet points on paper before the call. Write out the reason you’re calling, your key points and “the ask” in advance and your time allotment so you can always refer back and make sure you’re tracking to your plan.
Start informally with banter: Two things to watch for: 1) if you’re trying banter to build rapport but not "feeling it" then quickly shift to business. Some people just aren’t "chit chatters" and prefer to get on with things. I find that kinda boring, but I know some people are just wired that way. 2) some callers take this banter too far It starts to border on disrespectful of the person’s time or wasteful of your 15 minutes. Don’t be that person. How long you go for is really a judgment call because there’s no right answer.
Let them know why you’re calling: When you’re ready to pivot the conversation your next line should be some derivative of, "listen, the reason I’m calling is … blah, blah, blah" 25 percent of people or less actually do this. They just talk and I’m not really sure why they called. If you’re calling for a reason, the sooner the recipient knows the sooner they can help.
Don’t hang yourself: One of the other big mistakes callers make is going “off to the races” talking about their business without getting any feedback from the recipient of the call. This is bad enough in person but I promise you if you do it over the phone the recipient will start to tune out. If you listen closely you’ll probably even hear the tapping of a keyboard. You can talk for a bit but then seek feedback and make sure the other person is “with you.” When I used to do a lot of recruiting we used to call it “hanging yourself” because people who talk for long periods of time without seeking feedback are generally not self-aware or good at human interaction.
Check out the complete post for several more phone tips and further details on how Suster likes callers to behave.
Do you have telephone anxiety?
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