Tom Peruzzi's thoughts on digital, innovation, IT and operations

Stakeholder Management of any sort of investor

Posted in startup failures by opstakes on September 19, 2015

my dear Startups, Enterpreneurs, founders, managers

There may be 10.000 of (operational) reasons why not to communictate wins and fails or any other obligation to the investors, backers, angels, … BUT confidence and trust is a value worth being protected. You may find a situation where you may need more money. You may need a business connection of one of your angels, you may like to let your backers spread a good word about your company and product …

It’s all about trust: as long as you are known as a trustworthy partner you will have a lot more freedom to act and react. Communication does not automatically mean collaboration, one way on a regular basis about all the major steps, achievments is already a good step forward. But imagine the following:

  • you get investors on board
  • you get backers on board
  • your product is massively delayed
  • you don’t communicate the delays

At some point people start connecting, bad customers with other bad customers, frustrated investors with frustrated customers and a spiral of anti-trust is happening especially in the phase where you need support from your stakeholders. That is the main critical point: You just get support if there is some level of trust. At some point money isn’t any longer the glue and you should never reach that point, at no time.

So to give you some short idea about what’s enough for the different groups:

investors, angels

  • Milestones, state of milestones of main business activities
  • Achievments, fails
  • Financial situation, burn rate, months left to operate (conservative calculation)
  • next steps
  • Need for support

Investors want you to do a good job, to increase their money invested. They cannot help if you use vanity metrics or too opportunistic reports. A fail sometime does not automatically mean to be out of game. A non communicated fail leading to severe problems may end your career much quicker. And you always see twice 😉

Backers:

  • Delivery dates
  • Functional changes
  • any fail in time and function
  • supporting material

Backers want to be part of the product, the better they are integrated the more they spread the word. Sounds simple, isn’t it. As for investors the same for backers: you always see twice 😉

Good experience, good habit – no team and plan – omg

Posted in general, startup failures by opstakes on December 4, 2014

Imagine you’re sitting in a room with plenty of serial C*O enterpreneurs with tons of national and international experience and after 2 hours you have to recognize that they simple don’t move forward. With each of them in a 1:1 session you could get all the arguments how and why to build the product this and that way around and how lean and bootstrapping should work and the experience of the past. All of them combined end in a “do not move forward” scenario. They are not overpaid, overfunded, ill of success. They simple don’t move forward, working hard and long but no true move.

I wondered what the reason could be?

Is it the wrong idea to follow? Simply not, the idea is genius, partly solved but still worth a try, it is ambitious but applicable and seems to be need on the market.

Is it the pressure of funding? Simply not, they got good angel money which should last for a couple of months and allow them to prove market and product fit and get first traction for the next round.

Is it missing focus? No, they are totally focussed on solving the problem, setting up structures and making the damn thing work.

Is it missing knowhow? Of course they will need to get more people in in order to handle all the edge cases if the MVP succeeded and no, currently they have the right talent on board in order to learn, iterate and if necessary pivot.

Maybe it’s the CEO? One may argue that it’s always the CEO being responsible for all gonna happen and partly you are right, because one key element is still missing:

They all built a plan – but simply said on their own. It is not the team, the startup’s effort to go forward, it is each individual’s effort to go forward. They are all so experienced that they simply forgot to build the leading team before. The compelling vision is there, the right people might be there, the team is missing and a joint action plan.

What happened next? 2 friendly advisors went in, discussed with them the great mission, stepped down to the next 30 days, created an approach and agreed on the action plan for the next 30 days. They pushed them hard to overcome the burden of the individual’s past successes and act as a startup team – a joint team, not a collection of exciting individuals.

Will it work? I simply don’t know, time will show whether one push was enough and whether they can solve the problem with the reduced amount of time and money.

What have I learned from that?

  • Exciting people with tons of experience are sometimes necessary to push forward and to get next financing round
  • Exciting people know how it works, thus start working immediately
  • Exciting people still have to become a team before acting as a group of individuals, a startup is always a joint effort
  • The CEO is the driver for the team creation. It’s not only picking up the right people. Leadership is much more!
  • If one brick in the wall (the team) is missing, the best bricks will not help you on the short or long run.
  • Exciting people must not be exciting leaders.
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