Venture Adventure

Recently, Roger Ehrenberg published his post mortem on his experiences with Monitor110.

Roger’s top-seven mistakes:

1. The lack of a single, “the buck stops here” leader until too late in the game
2. No separation between the technology organization and the product organization
3. Too much PR, too early
4. Too much money
5. Not close enough to the customer
6. Slow to adapt to market reality
7. Disagreement on strategy both within the Company and with the Board

There’s many things that can be discussed and learned by looking at the details of this list.  But when I look at it from a very high level, it all points to 2 major issues — A lack of planning and a lack of leadership.

“Battle is a highly fluid situation. You – You plan on your contingencies, and I have. You keep your initiative, and I will. But what you don’t do is share command. It’s never a good idea.” — Vic Deakins (John Travolta), Broken Arrow, 1996

And this, to me, is a symptom of the web 2.0 mentality of creating a business web-site based on a high concept pitch with no plan and no real leadership.  I guess when the VC is only investing a few hundred thousand dollars, it really doesn’t matter.

But real businesses have an idea of who their customers are, what the customer wants, what the customer is willing to pay, and how the business will make money.  And all of this is known before a single penny is spent.

And real leaders lead!

Edit 1: Fixed Typos

While commenting on the The Future of Storage blog post Does Anyone Care About Efficiency Of Storage?, I starting thinking about all of the different customers involved in a single sale. Since the impetus (and my company) surround storage, we’ll focus on this product and market.

The Setup

Generic product

A NAS (Network Attached Storage) Solution with 10 TB of storage.

Generic Customer

A small enterprise – 1500 employees, a corporate data center, corporate IT staff

The Customer List

IT Staff

The IT staff has specific technical requirements for the product, the management of the product, and the integration of the product into their production environment. Quite often, they have relationships with other storage vendors that have to be broken in order to make the sale.

CIO

The CIO has to ensure that the generic solution (NAS) as well as the specific solution (us as a vendor) meet with all the strategic goals of the company – long term, financial, number/size/type of vendors, etc.

COO

The COO has to ensure business continuity, and has to be convinced that installing and integrating a new storage system will not cause any interruptions to the corporation’s work.

CEO & Board of Directors

Depending on the storage vendor and the type of customer, 10TB NAS solutions can cross the border from discretionary and departmental budget spending to corporate capital asset purchases. In this case, the CEO & BoD have their own set of objectives and objections that have to be met.

End Users

The end users may often have different requirements from IT for storage. For most end users, storage is a commodity on with the same value as pens and paper. As long as it’s there, we can get our job done. If we run out, then the work quickly grinds to a halt and there are a lot of very unhappy end users. Also, like pens and paper, end users perceive storage to be infinitely cheap, and therefore in complete abundance. Rationing of storage is not appreciated nor tolerated very well.

While end users are almost never included in the purchase process, if the end user expectations are not met, negative brand associations may result. For example, if, during the transition of files from the old storage system to the new storage system results in lost or corrupt files, the end users are very quick to blame the new stuff, as the old stuff was perceived to “just work”.

It is important for a new storage player to ensure that they meet with all the customers and determine their expectations for the system. Failure to meet expectations, even with a “successful” engagement, will quickly drive the Customer Lifetime Value to Zero.

Chris Yeh (Adventures in Capitalism) today provides us with a long analysis of why Obama beat Clinton. Chris cites the usual differences:

• Superior fundraising
• Brilliant execution of 50 state plan
• Soaring eloquence
• post-racial

However, he maintains that there are 2 additional important differences

• Obama is principled while Clinton is positional
• Obama is transformational while Clinton is transactional

I agree with all of this. However, the real questions are “why is this important?”, and “how does this apply to entrepreneurship?” Chris answers the first question:

“It seems to me that when you see a cataclysmic event like the defeat of an overwhelming favorite with nearly every factor in her favor, it’s important to identify the true underlying factors.”

As to how does this apply to entrepreneurship – well, to paraphrase Chris, may times we, as entrepreneurs are defeated evening when we should win. And it’s important for us to analyze why, so that we can succeed (win) in the future.

Let’s take the key differences between the candidates and apply them to business and entrepreneurship:

• Superior fundraising – There have been many posts on raising more money than you think you need. By raising additional funds, it gives you latitude to deal with unpredicted – and often unpredictable – events. It also gives you latitude to correct your own mistakes.
• Brilliant execution of 50 state plan – In entrepreneurship, this is really developing and sticking to a long-term plan. And often sacrificing the short-term for the long-term. This is also the difference between building a burger (flipping your business) and building a business.
• Soaring eloquence – Translate this to speaking the language of your customers. This is really Sales 101. This is the motivation for getting an MBA – so that you understand the lexicon of your customers (both the end-users and the VCs).
• post-racial – Translate this to market timing. You have to have what the customers want when they want it.
• Obama is principled while Clinton is positional – According to Chris, principled = accommodating while positional = confrontational. In business, it always pays to (appear to) be accommodating. Confrontational attitudes must be used with caution and purpose.
• Obama is transformational while Clinton is transactional – This is another version of short-term vs. long-term. By being transformational, you’re projecting an image of building for the long-term. Transactional approaches project that short-term image, and your customers are left wondering if you’ll be around in the next week/month/year.

There are business and entrepreneurship lessons in national politics – and in most every other activity we encounter, and we should study and learn well from them.