How to Be a CEO: The Sales Leader or the Chess Master

There are many types of successful entrepreneurs that build and lead great companies. Most that I have seen have elements of what I refer to as the “Chessmaster” and those of a “Sales Leader.” Some amount of each skill set is required, but it is interesting to observe which is the dominant or “go to” skill set for an entrepreneur.

After more than 15 years in the venture business and over 40 venture investments, I have found that I prefer – and work more effectively with – entrepreneurs and CEOs where the Chessmaster is the more dominant skill set.

It’s a bit of a caricature, but the Chessmaster is someone who is data-driven, constantly trying to understand the landscape, formulate strategy, run experiments and learn quickly. The Sales Leader has a big vision, has high confidence that he (or she) is right, and is highly successful in getting others to see the world their way.

Most media represent entrepreneurs as the Grand Salesman. A fellow venture investor recently stated on a panel that the qualities she looked for the most in an entrepreneur were passion and storytelling. Steve Jobs, the subject of so much Silicon Valley hagiography, was an unbelievable Salesman and got much of the world to share his worldview – but this isn’t the only route to success.

I’ve been re-reading the Lean Start Up by Eric Ries. In my opinion, the entire book describes the Chessmaster approach to launching a new product- whether a start up or as part of a bigger company. The successful companies I’ve seen and been a part of have a dedication to learning quickly and cultures where people are trained to “speak with data.” Figuring out which metrics are truly meaningful for the business, building the instrumentation to understand them, and making data driven decisions to improve product market fit and business performance are actions of a great Chessmaster.

This post was provoked by a recent blog post, “The Post Mortem,” by Return Path CEO Matt Blumberg. His main argument is that successful endeavors need post-mortems as much as failures because companies often misattribute the reasons for their success and find it hard to sustain or replicate those successes.

Success has a hundred fathers – and that is just within the company. As Matt points out, some of those claimed reasons for success come from external dynamics, market phenomena or the failures of competition. And it can be damaging –or even fatal – for companies to have the wrong interpretation of successful history. The clear thinking and intellectual honesty of this argument is one of the reasons why I enjoy working with Matt and many of the other Costanoa portfolio CEOs.

It is the relationships with great entrepreneurs that make my role in the start up ecosystem so rewarding.

I appreciate: entrepreneurs who call when they have an issue and don’t quite have a solution but just want someone else thinking about it as well; CEOs who value questions about a product or its strategic context instigating an appropriate discussion rather than getting defensive because it assumes the team hasn’t done its job well; long, informal conversations that meander through various perspectives of the business and how to align all of its elements into a coherent strategy and execution plan; debating challenges that can go unresolved because all the information isn’t there, but a concerted effort is being made to address them; executives and team members who will say what they think and add a perspective to the comments of the CEO in a board meeting, but respectfully sign up to execute a plan agreed by the team. These are the signs of a high function company- and the kind that I love to work with.

Matt brought this kind of data-driven honesty and transparency to a whole new level last week by having his 360 degree review conducted with the Return Path management team and board together in one room. He applied the core lesson to himself – you can’t improve performance if you don’t have the data – and then he committed to getting the data about his own performance.

It takes a special kind of entrepreneur to lead like that. I’ve noticed several common traits: a sense of humility, knowing what they know but also what they don’t, comfort with uncertainty, and a data-driven orientation. These are the people that make my job great.

Greg Sands is the founder and managing partner of Costanoa Venture Capital, an early stage investor incloud-based services leveraging data and analytics to solve real problems for businesses and consumers. Follow him on Twitter @gsands and read his blog posts at http://costanoavc.wordpress.com/.

Stop Testing And Start Something

blog-writing When we started the “When You Work At A Nonprofit” Tumblr blog, an interesting thing happened. A prominent nonprofit publication asked us to write a post about it, on the topic of “how to create a blog that fills a community need.” They wanted us to discuss the process behind getting a blog started: how we chose a platform, how we determined the voice and content, tips for keeping an updated content schedule, and all those other “bloggity things” (their words).

We couldn’t help but shake our heads.

Their request summed up the epidemic of overthinking things that, in our opinion, plagues the nonprofit sector. As an industry, nonprofits tend to overthink things — it’s a huge problem that stems from a deep aversion to risk and fear of failure. As a result, we try to help nonprofits overcome their fear of risk, and not overthink things.

We’re big advocates of just trying something and seeing where it goes. Our blog is a good example of that approach.

We didn’t create a strategy for it. There was no evaluation of tools. There was no discussion about voice. There’s no content schedule that we agree on. It’s very “Lean Startup” — we just decided to do it one day, and we did it in about an hour. We tweeted it out and it took off from there. Here’s how other organizations can do the same:

1. USE TECHNOLOGY TO RUN A SMALL TEST

Instead of investing hours of time or waiting months to “get things set up,” use new technologies to allow you to get set up quickly and with very little cost. There are tons of consumer technologies that are easy to set up, and you shouldn’t have to pay more than $20/month for just about anything you want to do. Even at that price, the benefits of a small investment of $240 per year far outweigh the cost.

How we did it: We created the blog using the blogging platform Tumblr (free), and used a theme that was pre-installed on Tumblr (free). We found and uploaded gifs (free), and posted them with some catchy, snarky text. We added a Google Analytics tracking code (free) so that we could see if anyone actually came to the site. We had our programmer add a small Facebook Like/Share plugin (cost: $125). We added a signup form using Mailchimp (free), which let people sign up for a weekly “best of” email. We tweeted it out using Tweetdeck (free), but you could just tweet using Twitter as well (free).

Total time spent: 3 hours

Total cost: $125

2. MAKE IT MEASURABLE

Build in mechanisms for tracking, so you can see the progress and success of your test. Google Analytics, an email sign-up form, social sharing: all of these are important tracking elements. Even if it’s not tied to donations, there’s tremendous value in building your list, increasing social following, and getting people into your organization’s ecosystem.

How we did it: We started a Google Analytics account under our master account, specifically for “When You Work At A Nonprofit”, then added it to the blog. We also embedded a Mailchimp signup form, so people can sign up to get the top posts emailed to them each week.

3. JUST START, THEN USE RESULTS TO MAKE YOUR CASE

Most people are quick to stop you before you get started, but hesitant to get in the way if you’re moving. Especially if you can show data. Once you just try something with your test, and you have data from your measurement tools, you can make the case that your test is worthwhile.

How we did it: On the first day of “When You Work At A Nonprofit,” we got 115 views. Second day: 3,000 views. Third day: 96,000 views. Fourth day: 115,000 views. Since we added the newsletter sign-up, over 5,000 people have signed up. I doubt management or the Board would argue with results like that.

4. IF IT DOESN’T WORK, THAT’S OK TOO

A test is just that — a test. Sometimes it will work, sometimes it won’t. That’s actually the goal here: it’s called “failing fast.” Try a test to see if it will work before spending real time and money. It is always better to fail quickly after a 30-day test using free or low-cost tools, than to invest months and significant expense.

The important part is to decide what’s failing. To some organizations, 100 signups is success; to others, that’s not worth the time it takes to maintain the test. Failure is determined by whether the cost of your time is worth the benefit afforded by the test. Use your best judgment to determine what’s failing and what’s a thumbs up.

How we did it: For another project we started, Lean Impact, we originally planned a telesummit: a one-day online summit featuring thought leaders in the Lean for Social Good space. We were testing whether people were interested enough in the topic to pay $20 for an educational experience.

We secured six speakers (free), set up a page on Lean Impact (free), created a graphic to advertise the site on the Lean Impact homepage (cost: 1 hour designer time), used Eventbrite to sell tickets (free), and planned to use Google Hangouts On Air to host the online event (free).

Total cost: $125 of designer time

Only four people bought tickets. As a result, we reached out to potential participants to ask why they didn’t buy tickets, and we learned that people needed in-person interaction with Lean Impact first before paying for something online. We quickly cancelled the telesummit and instead planned three in-person events in New York, DC and San Francisco. Each event had over 500 attendees.

Even though no one bought tickets originally, the test was a success. We failed fast. Instead of contracting with a venue, signing catering contracts, using a complex event ticketing service, and paying speakers, we spent $125 and had our answer in 60 days.

5. DON’T STOP TESTING

If your test takes off, that’s the ultimate thumbs-up. But the success of a test is not the end goal. If test Number 1 works, take the next step towards a test Number 2. For example, if X number of people from the test opt in to a newsletter, will they then open a newsletter targeted directly at them? If X people participate in a Facebook contest, will they then donate if a landing page has messaging specifically targeted towards contest participants? Think about each step as a test.

When everything is a test, you’re able to get things up and running faster. You can see results more quickly. You’re less invested in the results, positive or negative. You know when to call off the test and move on to something else. And you can try new and better things.

A version of this post originally appeared on Medium.

Leah Neaderthal is the Co-Founder and Chief Marketing Officer of Start Somewhere, which uses design and technology to help social good organizations look incredible online. Leah is the co-creator of the popular “When You Work At A Nonprofit” Tumblr blog, and she is the Co-Founder of Lean Impact, the community of people and organizations using Lean Startup principles for social good. Follow Leah at @leahtn.

The Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, the YEC recently launched #StartupLab, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses via live video chats, an expert content library and email lessons.

Eric Ries, Author Of The Lean Startup Offers Great Advice At SXSW [sxsw]

Eric Ries, the author of “The Lean Startup” and creator of the Lean Startup methodology gave a keynote discussion at SXSW on Sunday afternoon.

He offers an entrepreneur some great advice on testing product and preparing for launch. He also comments about the new movement that is becoming Lean Startup and how they are looking to grow the organization both nationally and internationally.

Check out the video below.

Check out even more of our awesome startup SXSW 2013 coverage here.

The Minimum Working Thing GUEST POST

WorkForPie, Lean Startup,MVP, Brad Montgomery,startup

WorkForPie co-founders Cliff McKinney & Brad Montgomery (left) (photo: nibletz llc)

By Brad Montgomery, co-founder WorkForPie

I’ve been pondering this post for a long time. Any student of startups is probably familiar with the phrase Minimum Viable Product. It’s really a simple idea, and I think it embodies an important philosophy for anyone starting a company. The idea is that your product (whatever it is; e.g. a service, a physical thing, or some software) should be as small as possible, but still be a working, viable product that customers will buy.

The concept is fairly easy to understand, and I don’t really think anyone misudnerstands the idea. However, the execution of that idea is incredibly difficult. Who knows why this is the case, but I’m going to postulate that the terminology is getting in the way.

Let’s get some definitions out of the way.

Minimum. The least or smallest amount possible.
Viable. Capable of working successfully.
Product. An article or substance that is created or refined for sale.

I don’t really think anyone has a problem with these terms individually, but put them together, and I think many people have wildly varying interpretations of their definitions. One reason, I think, is that people unknowingly emphasize the wrong words. Let’s break it down even further.

Minimum

This may be the most important word. Yet, I think it often gets the least amount of emphasis. Honestly, if I were to change the phrase (and I am!), I’d keep this word. It’s perfect. We want to do the smallest amount of work possible, but we need to strongly emphasize that.

This is hard to do. People like to make things more complex than they need to be.

Viable

Here’s where things start to get confusing. The problem is, that many entrepreneurs (especially first-timers–myself, included!) very rarely agree on what will work. It’s also very tempting to try to build a solution without fully understanding the problem.

I say it’s OK to not fully understand what you’re doing (that’s what startups are all about!), so it’s even more important to adjust your definiton of viable. And, you know what? It’s much smaller than you realize.

Product

This is where things really get confusing. When you say the word product, many people start thinking features! Seriously, go to a business guy, an engineer, or anyone that calls themselves an entrepreneur; sit down and brainstorm a new “product”. Start making a bulleted list of all the features that you’d like to see, and then tell me how many pages you have after an hour.

That’s the problem. People envision a product as a fully-featured, complete, does-it-all-with-bells-and-whistles… thing. As soon as you speak the word product, you’ve already started having feature-creep, and you’ve already forgotten that all-important adjective: minimum.

Build a Minimum Working Thing

I’ve complained long enough, so now I’m going to propose a solution. In the tech-startup world, I suggest that we ditch the phrase Minimum Viable Product, and adopt the phrase Minimum Working Thing.

Again, let’s break it down:

Minimum. Do the least amount of work possible. This is important! You know why, right? If you’re in a startup, you’re going to have to go back to the drawing board. You’re going to have to re-work some things. Build less up front in order to save yourself some time later on.
Working. Deploy something that works. Remember, you’re just as interested in failure as you are in success. Your first few iterations don’t have to launch your company into success. They have to teach you the direction in which you need to travel. If people can use it to do something, then it’s working. It doesn’t have to be successful.
Thing. Don’t build a product. Don’t build features. Just build a thing Yes, I’m being intentionally vague, because your thing may be very different from someone else’s thing. In fact, take that long list of features that you think your product needs, and circle the first item on the list. That’s your thing.

So there you have it. Ultimately, forget what you think you need to build. Instead, build something really small that works, and let your customers start using it. Then, pay close attention to what they do and how they use your minimum working thing. They’ll guide you the rest of the way.

About the author: Brad Montgomery is a developer and the co-founder of WorkForPie. Cliff McKinney, WorkForPie’s other cofounder penned these guest posts here and here.

WorkForPie is hosting a huge party at everywhereelse.co The Startup Conference