The excitement and passion were high. Karen and Jose couldn’t stop talking. No matter how much time we had together, it was apparent that neither one thought there was enough time to cover everything.
Having just raised capital, they had a million ideas about how they might take their (rather immature) product to the next level. They wanted to discuss several hires they were about to make and talk a bit about how to set up their organization.
After 15 minutes had passed, I barely snuck in a question. “Can you back up? I think I missed something. What’s your vision”?
Karen paused. Jose quickly piped in, but he failed to answer the question. He simply spouted a few more ideas and it was obvious to everyone in the room that he missed the mark.
I asked a follow on. “Let me ask it this way, what is it that you’re ultimately trying to become? Describe your company five years from now. What does it look like? What have you accomplished?”
“Okay. Twelve months from now? How are you different from anyone else in your space?”
“Describe your product. Don’t tell me what it does. Tell me why it’s different.”
Finally, an answer. Unfortunately, it was all about the cool technology that had been developed and was unlike anything else in the market. A recipe for disaster.
After a few more questions, it became apparent that the founders of this company had no idea where they were going and how they were going to get there.
All too often I see product companies with nothing more than technology. No vision. No strategy. Nothing but an idea.
I advise first-time CEOs to be deliberate about creating a business by following these steps, each one of which builds upon the other.
1. Develop your core ideology.
What is your mission/purpose? What are your values? Be explicit, this is the foundation of your business and will seed the culture of your organization.
2. Develop your vision.
What is it that you want to become? Where are you going? Get crazy and define that “Big Hairy Audacious Goal”. This will inform your strategy and motivate your team.
3. Develop your strategy.
How is it that you intend to be different? What is your unique advantage? Competing on the basis of being better, or cheaper (obviously), will lead to commoditization. Be deliberate about creating a differentiated strategy.
4. Develop your structure.
How do you need to structure your organization in order to deliver on your strategy? Hiring people without an organizational strategy is a colossal failure waiting to happen.
I was shocked that Karen and Jose raised significant capital with so much ambiguity. While it’s not incredibly common any more (1999 has come and gone), there are plenty of entrepreneurs, intrepreneurs, and organizations that have gone straight from “an idea” to “a product” to trying to build a team. Doing so creates mass confusion and is a recipe for disaster.