David Ledgerwood - Serious Startups

7 Stocking Stuffers for the Serial Entrepreneur

Maybe it’s the health of my two boys, maybe it’s the sparkly lights and inescapable sound of sleigh bells…maybe it’s the hot buttered rum (hiccup!). Whatever the cause, I’m feeling particularly generous this holiday season and am going to give you some entrepreneurial coaching for free. Stop worrying about what to buy your clients, employees, or investors. Here are seven fantastic items you, or the serial entrepreneurs and startups in your life, need now. As a serial founder, entrepreneurial coach, and an avowed tech junkie, each product below has been used, abused, and approved by moi.

The Lean Startup by Eric Ries. The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses is a MUST for any entrepreneur, and really any manager who wants to work more effectively in an innovative organizational culture. Full of practical advice and case studies, Eric Ries creates a blueprint for allocating resources as efficiently as possible, suggests actionable ways to avoid product failures, and science-based methods to thoughtfully evaluate whether to persevere or to pivot. There is truly no better guide to improve the odds of a startup’s success. Furthermore, you’re going to need the vocabulary in this book to converse with other ‘treps, so get it!
Google Apps. I have founded dozens of startup companies with only Google Apps as my IT infrastructure (literally). Google Apps for Work provides a variety of Google’s web productivity tools at a price point that is affordable for even the smallest budget. Since it your domain name, each application within the suite (Gmail, Google Calendar, Hangouts, Drive, Docs, Sites, etc.) is independently customizable to put your best collaborative (and branded) foot forward.
LastPass. I refer to the years before I started using LastPass as the Dark Ages. Just think of all the time I wasted trying to remember every single login and password (or, gasp, using the same password on every site)! LastPass Password Manager is a convenient program to help you keep all of your login information secure without having to memorize it. I create really long, esoteric passwords for all my accounts and use the Share feature to share them with my Virtual Assistant (see #5 below). Delegation with security is a critical feature of my productivity.
Freshbooks. If you want to make money (and you do), you have to bill your clients. Freshbooks does this easier and better than any other. There are a lot of online invoicing services out there, but none provide such ease of use on the important tactical tasks like invoicing and expense billing. I love the thing, especially on mobile. Sure it can create customized invoices and quotes, but the real genius of Freshbooks is in the extensibility. Don’t believe me? Here’s what Kathy Yakal at PCMag.com thinks, “Besides a host of add-ons, it integrates data with sites like Outright (Free, 3 stars). It incorporates time-tracking and support tickets, and it lets you upload documents to a shared area, something competitors don’t do. Basically, it does everything that everyone else does, and a lot more. Multiple subscription levels are available, ranging from free (three clients, unlimited invoices) to $39.95/month (unlimited clients and invoices).” You’ll want to pay for it just to get recurring invoices which saves a ton of time. Being able to see who owes you money, who has viewed your invoices, and quickly being able to mark who has paid is awesome. The graphs of your revenue are great, too.
A Virtual Assistant. Without Ellen, my Virtual Assistant (VA), I would be a hamster stuck endlessly running in my wheel. Sure I’d be working hard, but I wouldn’t be getting anywhere. Virtual assistants are particularly well-suited for startup CEOs and serial founders because they’re easily reachable and are paid only for time spent on task; talk about using resources efficiently! With virtual assistants there is no overhead: no office space, no benefits to cover, no sticky HR policies, and on. I interviewed seven different agencies and went with Worldwide101.com. Check ‘em out and decrease your workload as a gift to yourself! I’m not kidding — Ellen pays my bills, orders clothing for my kids, and schedules all of my meetings. It saves me TONS of time and doesn’t break the bank. Do it!
A sit/stand desk for better ergonomics. If you’ve paid any attention to health news over the last few years, you’ve by no doubt heard that sitting day in and day out at a desk is more detrimental to your health than smoking cigarettes. Fortunately, even if you need to be tethered to your computer for your business to be successful, there is something you can do. About two years ago I bought a sit/stand desk and have never looked back. It’s pricey but it’s amazing. I can crank the desk up and down and I have multiple monitors for making my work easy to see. I’m the envy of the office.
Voxer. Back in the day, I admired the direct connect capability of Nextel phones, but man was that beep annoying! Enter Voxer. Voxer is a push to talk (PTT) free app for your smartphone that improves team communication, regardless of whether your crew goes iPhone, Droid, or Galaxy. Voxer offers its trademark walkie talkie function, but also includes a text function, a group chat (perfect for telling multiple people you’re running late), and the ability to save those walkie talkie audio messages for later listening (on the Pro plan). Have a colleague who can’t help herself from dropping the eff bomb (mine is a consultant living way up in Maine)? No worries. You can opt to disable the speakerphone function so you only listen to audio messages like a phone call. The ability to do asynchronous voice communication has saved me so much time and effort. It’s perfect for remote teams.

How I Manage Projects for Killer Results

As an entrepreneur and a consultant, I’m pretty much always working on a set of critical deadlines for one of my businesses, or the business of one of my clients. I don’t treat them in the same way. In fact, I often treat my clients’ businesses better than I treat mine. That’s not the best admission, but it’s a classic indication of the proverbial “cobbler’s kids have no shoes.”

If I can put in extra effort to drive something home for a client I’m going to do that. The good part is that I’m pretty much always treating my business partners in my own startups like they are my clients, so it all comes out in the wash. At the same time I’d always advise my coaching and mentoring clients to apply the “oxygen mask principle” to themselves, which is to say act like you are on a crashing plane and put your own mask on first so you can help others.

Excessive preambles aside, there are some common principles that I institute in every project that have become my go-to practices. Having developed these patterns I’ve created a blueprint that works for me, operates efficiently, and gets good to better results.

Get out of email. There is no way you can manage a team with email. It’s nearly impossible to even manage a one-to-one project with two people. It doesn’t work. There are tons of reasons based on tons of research.
Repeat rule #1 until it gets annoying. Seriously, just stop. This is 2014 and there are lots of better ways.
Decide on one collaboration system and stick to it. I don’t care what this is. Use Basecamp, use Google Docs, use Podio, or use Asana (my personal favorite). Whatever you do, share the project with everyone and require your team to use it. No email about the project, ever. It all goes in the tool. Stay in the loop by staying in the tool. Fall out of the loop at your own peril. If you are merciless about this the team will fall in line and they will love you for it. Working on shitty projects sucks. No one wants that. Good management feels good to everyone involved. Tie it to getting paid if you have to. My teams know I bring them great projects and I pay them well and this is how I do it. No questions asked. We don’t even talk about it anymore. We literally just kick off projects without a discussion because I start an Asana project and then we start billing.
Did I mention email ruins project effectiveness? Go ahead and try. If you don’t believe me by this point you shouldn’t be reading this article. It’s going to take you a lot longer to do your work and you shouldn’t be screwing around on LinkedIn.
Run the project like you care. Communicate with each person with care and trust until trust has been damaged. If trust has been damaged try to repair it. If you can’t repair it, end the relationship. No harm, no foul. This is project-based interviewing. If you do what needs to be done you’ll get more work. If you don’t, you won’t. It’s pretty easy. Over time you’ll end up with a killer team that will do whatever you need done because they care about you and they trust you.
Document processes the first time and then outsource them. You don’t need your top people doing menial crap for high payment while getting increasingly bored. Every process should be boiled down to its basic components, turned into a workflow, and outsourced on Elance or Odesk. Build business machines and run them. Pay your contractors well for the little pieces they do. Care about them, too. They will love you and come back for more projects. It’s just like #5 yet not on your core team.
Email still sucks.

Resumes are dead. Interviews are largely ineffectual. Linked-In is good. Portfolios are useful.

But projects are the real future of hiring, especially knowledge working hiring. No matter how wonderful your references or how well you do on those too-clever-by-half Microsoft/Google brainteasers, serious firms will increasingly ask serious candidates to do serious work in order to get a serious job offer.

I dog on the HBR sometimes, too, but this article is spot on. It works. Do it. If you manage your project like I’m suggesting and you use your projects to build an awesome team through experience, you will see remarkably better results and you will bill more money or see more success from your startups. #winning

What My Kids Can Teach You About Business Perspective

I was running around the other morning trying to get my two boys (ages 2 and 5) ready for school and Carter, my 2-year old, was flipping out about nothing being able to “see” the video he and Will, my 5-year old, were watching on the iPad. I moved the iPad closer and went back to unwrapping cereal bars. He kept flipping out. I got frustrated and snapped at him. He got more upset. This was going nowhere.

So I stopped and thought about it. I walked over to his chair and ducked down so my head was right next to his and I looked at the iPad. There it was — a terrible glare from the sun beam streaming in from our back window — right across the iPad screen. When I looked at it I couldn’t see the video at all. *Head slap* I moved his chair five inches to the left and he calmed down.

Isn’t so much of leadership and teamwork just like this?

It took me all of 20 seconds to calm down, reorient myself to his perspective, see and acknowledge that he was right, and fix the problem. From his perspective he physically could not see the screen, and that’s exactly what he told me. When I didn’t try to understand from his perspective he got upset. When I took the time to not just listen, but to experience the world from his perspective, it all made sense and we were back in sync.

True effectiveness requires the leader to stand in the shoes of the team.

This morning when we walked out to get in the car for school I saw a huge spider web covered with water droplets that I wanted to show the boys. I pointed it out and Will couldn’t see it. I lowered my head to his level and looked and sure enough the spider web was lost to my view against the light of the sky. I lifted him up two steps and he saw it against the darker background of the trees in our neighbor’s yard. We all enjoyed the view and went on our way, having an instructive discussion about how spiders might be scary, but they eat the “bad bugs.” I would have missed all of that if not for taking his perspective and learning from it.

When Getting Fired is The Best Thing Ever

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David Meerman Scott recalls, “I jumped into my own thing 14 years ago after being fired from a corporate job for having too many radical ideas. Today, I deliver speeches, write books, and serve on advisory boards for startups.” It doesn’t take a deep thinker to realize that sure does sound like a better gig.

Listen to our full interview with David Meerman Scott (part 1 and part 2).

The tried and true playbook doesn’t work.

David goes about his career by “trying to not do what everyone else does.” He thinks by business people fail themselves by focusing on what everyone else does while it’s been his experience time and time again that “the tried and true playbook doesn’t work.” Instead, he advises founders to “go agile, do things differently. Focus on what’s interesting to your buyers, not what’s interesting to your venture capitalists.”

“Focus on your buyers” is a very similar message to what John Lee Dumas told us about “listening to your audience.”

David notes how many VCs might have built up their money 20 years ago and since they were successful in that way they think the business playbook hasn’t changed. David knows from his own experience that simply isn’t the case and he challenges founders to be nimble and get out there and not use the old playbook.

I focused on what worked, not what someone wanted me to do.

David tells us, “I kept getting fired from the corporate world. I would focus on what worked and not what someone told me to do. In the early days of the Internet [1995] I was trying to shift budget spending from print and direct mail to online marketing.”

“[My boss and I] had a difference of opinion and in that organization they valued the boss’ opinion more than the people who were actually doing the work. I like organizations where bosses listen to people who have tested their opinions and know what they are talking about.”

“I thought for sure I’d be a corporate guy for another 10-20 years. Getting fired was the best gift I was ever given in my professional life. I did think in the back of my mind that I could go out on my own.”

David tells us his wife and one of his trusted colleagues made the difference for him and encouraged him to get out there as a professional speaker. We’ve heard similar messages about using mentors to push you forward. “They supported me to live on my own wits and that made it a little bit easier.”

I hustled business from my parents’ friends.

Going back to the earlier days in his life, David recalls cutting grass, raking leaves and shoveling snow for neighbors.

“I hustled business from my parents’ friends; I negotiated prices. What that taught me is that I could live by my wits.”

It’s a great lesson for founders. Many of us can think back and realize we always were entrepreneurs with lemonade stands, mowing grass, or “hustling” business like David recalls.

It might be terrifying to leave that corporate gig, but if you do the right planning, build your content footprint, and keep plugging away at telling your story, you’re very likely to be able to make it.

The Not-That-Hard Guide to Naming Your Startup

You can read any number of articles about this subject. I’ve seen many a startup labor over this topic. Yes, it’s important. No, you shouldn’t let it hobble your progress and make it a miserable, emotion-laden battle with your cofounders. Here’s my short process to take the drama out of naming your startup.

Biggest advice: don’t get emotional. Remember that Amazon used to be a jungle and Verizon isn’t even a real thing. And while we’re at it, what the hell is a Lyft or an Uber? You can make this work.

Let your domain name drive the search. Use Domainr and go on a search for a domain name that you like. You likely aren’t going to find a .com that’s available anymore, so I recommend most new companies use either .co or .io at this point. They are growing in popularity and tend to be available. You’ll be surprised what decent ones you can come up with quickly if you think about it. The Domainr app is on my phone and it let’s me search any time I have an idea.

Keep it short. I personally prefer short domain names. They are easier to communicate and easier to type and remember.

Check your social handles. Once you find one check the social handles in this order: Twitter, LinkedIn, Facebook, Pinterest, Instagram. You’re looking for something you can register without having to change it across all the networks so people can find you easily on their network of choice.

Make it easy to communicate verbally (by phone). You might have a really good business name in your head (you think) but before you jump on it try communicating it by phone. If you have to spell it ten times that’s annoying and people will spell it wrong and you’ll lose business. I think this step is the most important one.

Make it relevant to the benefit you will provide your clients or customers. Don’t get too cute. No one cares about your vision for the company being communicated in an obscure acronym. Again, this isn’t about your feelings. Pick something functional that will close more business more quickly.

Did I miss anything you think is crucial?

Serial Entrepreneurs: Short Term Failure Doesn’t Matter in the Context of Forever

Since 1996 I’ve been a contributor to several teen leadership development organizations, my favorite of which are the Rotary Youth Leadership Awards (RYLA). I’ve designed and run RYLA programs for more than 2,000 teens in New Jersey and Tennessee.

I credit most of my early managerial skills to these programs. I had to figure out how to build and scale real teams, none of whom got paid a dime, and all of whom were rabidly passionate about what we were doing, namely, changing the lives of teens who came from some of the richest and poorest zip codes in the country (together in the same room).

Credit: RYLA Maui. What’s cool about this, and really any other RYLA photo is it could be from any of our programs across the world. All of the pictures are the same awesomeness.

Having been immersed in experiential learning programs for some 17 years now, there’s one major lesson I’ve gathered. It happens to be an important lesson for serial entrepreneurs as well.

As soon as you decide your timeline is forever then there’s really no way you can screw up that badly.

At RYLA that meant the other organizers and I looking at each other and committing to be in it indefinitely. As soon as we decided we were going to do these programs for the rest of our lives then making incremental changes each year, even if they seemed major, allowed us to test and review, debrief and change again.

Over time we iterated the program and it got better. Sometimes we came full circle. We got excellent by testing out things that might be not excellent. Some of them were amazing. Some of them were abject disasters. Looking back it had lean startup all over it, except the distance between iterations was a year.

The key was always asking, “How can we do it better?” We even had t-shirts printed with this acronym: HCWDIB?

Imagine then the amazing position of a serial entrepreneur who right now commits to lean startup principles AND at the same time commits to being an entrepreneur forever. If no startup is your first, middle or final AND you iterate quickly using all the amazing technology tools available today, how can you possibly go wrong? You will make it. To do so you will have to keep these points in mind:

Don’t bet too much on any one iteration.
Take a break when you need it (maybe make some consulting money or *gasp* get a job).
Take care of yourself. Work out, eat right, do walking meetings.
Nurture your network above all else. It’s the only thing you take with you between iterations.
Learn, learn, learn. Read, read, read.
Keep notes about each effort and laugh at how crappy you were last year.

That’s what’s worked for me through several disgusting failures and several more break-even hobby-like projects. I have not “exited” nor have I “made it.” I don’t care because I’m in it forever and I will at some point.

Why You Don’t Want Employees On Payroll

Dear W-2 employee,

It’s not you; it’s me. I’ve been hurt before by people like you and I’m just not ready to do it again. I’m sorry, but not really. I’ve moved on, and I’m keeping the business.

Best regards,

Ledge

We must buy commitment!

When I did my first full time startup in 2007 I was obsessed with company culture. To my mind, and aided by partners who shared this view, in order to foster loyalty and commitment we simply had to put all of our hires on payroll. We were absolutely convinced that what we were building was too damn important to work with, gasp, contractors.

Fast forward to the end of 2008 and we had eight really talented people on payroll. We were doing top line revenue of just over $40K/month. For the first time in the history of the company I was paying myself (less than the high school kid at the snack bar, but still). We were getting there, baby.

Anyone remember what happened then? It started with “Great” and ended (oh, did it end) with “Recession.” B2B training and development budgets, our life blood, all got cancelled the instant the clock changed to 12:00am on January 1, 2009. It was unreal. We went from $40K/month to $0. For six straight months.

What would you do?

I love this story. Not just because I took a six-figure haircut and burned my friends and family loans to the ground. More so, I love it because it taught me a hell of a lot about what it means to be an entrepreneur. It also makes me a damn good mentor for founders. You know that advice you are ignoring from that mentor with gray hair? Yeah, I was you.

So, ignore advice I did. I refused to believe that each successive month was not an ugly aberration. Certainly this can’t continue… for three years.

I ran out of money, laid off the entire staff, and closed the doors in June 2009, a month before my first son was born. In reality I was lucky. I got a consulting gig the following Monday and started making actual income that persisted through the recession. Many were not so lucky.

So what does this have to do with payroll?

Factors in the failure of this company were varied. We had significant marketing issues and were likely peddling a valuable solution to a problem no one wanted to try to solve when the chips were down. We would likely not have survived 2010 even if we got through 2009. However, we also had one significant operating flaw: too much payroll overhead.

I believe sincerely, and have accumulated proof, that our critical failure was to believe we could not create and deliver an exceptional experience with contract staff. We simply burned too much cash staffing our bench. What’s worse, when that fact was clear and I most definitely should have cut staff, I balked. I took care of people to the detriment of my company, my partners, and my family’s finances. I paid everyone else until the bitter end and left myself with a huge debt load. (I paid, and intend to keep paying, the company’s debt even though it was unsecured.)

Contractors can be blow your mind awesome.

I’m not saying it was really like this; I know everyone on staff was doing their best. But, it often felt like I was killing myself trying to sell enough work to pay everyone else. During the day everyone was in a desk waiting for a gig and during the evening and night I was alone at mine trying to eek out how the hell I was going to make it another week. I got to where I hated getting out of bed to go to work at my own company. That’s a sad place, the kind that makes CEO peer groups and therapists grateful.

Since that very expensive learning experience I have started somewhere around 10 additional companies. Every single one of them has been successful with an exclusively contract workforce. At first I did this begrudgingly. I just couldn’t afford payroll. I paid when the client paid. It didn’t take me long to realize what I had created by accident.

My contractors are bar none the most effective, efficient, and loyal people I’ve ever worked with. (I refuse to say they work for me, always with me.)

How was I so wrong about this? I think it was a fundamental misunderstanding about motivations, incentives, and the entrepreneurial spirit.

Let’s dive into the lesson.

I need you hungry. If you want the “security” of payroll we’re not a good fit. I need you to thrive on projects for which I will pay you well and not give you shit about your rate. I need you to starve if we don’t collectively kick ass, and I need you to love it. For that I’ll always pay you and do so before I pay me.
I need you to appreciate public feedback as compensation. I started hiring Odesk and Elance contractors shortly after the sites opened. I loved how I could get great talent for projects who worked for their 5 Stars because their top ratings got them more gigs. To me that’s a brilliant alignment of incentives.
I need you to own it. I’m a huge proponent of project-based interviewing. You get a gig. If you jive with me and you kick ass, you get another gig. It’s elegant and, again, incentives are aligned.
I need you to take my call first. This is why I don’t haggle on rates. I ask a contractor what he or she wants to make and I don’t argue with the answer. If it fits the project, I pay it. If not, I’ll tell the truth, allow for a lower bid at their option, or file their info for the next gig that’s a fit. In exchange, I want to be first. Every time. I don’t care about your other clients. I pay the best, I manage the best, and I bring the best gigs. If you want that then we’re a good fit. I care more about fielding the best team and winning than I do about anything else. My clients demand it and I’m your client, so I demand it.

This works for me.

I have a sick team that has joined me, project to project, in some cases for 12 years or more. None of them has ever asked me for a salary or benefits. None of them is hurting for money. We absolutely kick ass together and we bring the goods. More importantly, we work like an all-star team together. We support each other. We have a damn good culture even though we don’t share a shred of durable binding.
It’s awesome, and it’s why I’m done with payroll.

Why You Should Take All Early Startup Revenue–Even When It’s Off Target

I dropped this tweet recently which got a lot of attention:

I honestly believe this goes hand in hand with the true discipline of the Customer Development Process. The idea here is really simple: don’t start a company around something you think is a good idea. Rather start it around something that someone else indicates he or she will pay you for. That’s the true essence of the MVP — it’s the least product someone will pay you for right now.

Where I’ve tripped myself up in this equation is around the standard logic that you have to go into business doing something you are passionate about. I’m just not sure about that. It makes for great online courses from authors and gurus, but I’ve done it and at least in my case it didn’t pay off. There are a few reasons for this.

Hello, visionary Chief Sales Officer.

As the startup founder you probably have the product vision and are the most adept at selling that vision. If you ever intend to make money you are going to have to sell a lot of what you know because you’re the one who really gets it. Therein lies the problem — if you are spending all your time selling, who exactly is spending all of his or her time on the doing, making, performing or whatever else it is that your company gets paid for?

You can’t do both at the same time. It’s very hard to strike the appropriate balance because when you land your first big client you don’t have the money to hire anyone else and you spend all your time delivering on that first sale. When you do that your pipeline dries up. Then your first client pays on Net 30 or Net 45. You deliver, you wait for cash, you get back into selling and you face a nasty cash gap.

The point is that you won’t really get to do what you are passionate about, at least not for awhile, because you have to sell what you are passionate about before you get to do it. Whenever you are doing it you don’t get to sell it (as much; there’s the art of the upsell that I will discuss at some other point).

You are not the customer!

Now, I don’t think you should hate what you are starting a business around, but you just aren’t the customer. You might be solving a problem or set of problems you had or have but that still doesn’t make you the customer. The customer is the person (hopefully many persons) who pays you money to solve her problem. It doesn’t matter if you think you’d pay you to solve your problem.

Make money to stay alive.

My opinion differs from many people at this point. I agree that hardcore focus is important in the early stages of a company. I also agree one should not get distracted “chasing” revenue. However, I disagree with the notion that one should not accept any revenue that in some manner validates some manual or grossly inefficient manifestation of the startup’s MVP. A lot of times that’s some kind of consulting that sort of, kind of, looks like what you intend to do later. I’m not saying hang out a big marketing banner about it, but if the opportunity presents itself to make some cash I think you should take it.

Mind you I’m not saying make that part of your business vision or even mission, but rather use that cash as a way to keep doing what you are doing for as long as possible so you can keep bootstrapping. If you are like 90% of businesses you will get no angel investment*. If you are like 97%+ you will get no VC investment*. That’s why I think you should take the money!

If you can rework your early business model around making early revenue then DO IT. Stay in business. Live to fight another day. As a friend and colleague from my first startup said while addressing the rest of the team (in our garage-office), “No margin, no mission.”

Agree or disagree?

* I’m estimating here and not using references. These numbers are based on conversations I’ve had with academics and investors, not based on research.

How to get your startup acquired

Why would someone want to buy my company?

There’s a new school of thought in startup financing based upon a book called Ultimate Exits by Dr. Tom McKaskill. You can download the Ultimate Exits e-book and it’s accompanying workbook for free from Dr. McKasKill’s website. (He’s also got a ton of really great e-books on Amazon.)

Eric Dobson summarizes the book’s key themes for us:

“[Entrepreneurs have] been taught our goal is to create shareholder value and [to the contrary] the book says in the short run you need to create acquirer value. The reality is if you create certain products that fill a known obvious niche for a big player you may get a speculative bump on your valuation that may far exceed anything you can drive in revenue.”

Filling an obvious niche is very much like listening to your customers to learn what they want to buy.

Eric thinks this viewpoint is full of great lessons for founders.

“If you are going to build something, build something with a need in mind. Understand who the acquirers are. Be able to names names. [For example, approach an investor and say,] ‘Here are three companies that need what I do and they would be interested in me because I’m going to do this [specific plan] and I plan to liquidate in 3-5 years.’ Just have a solid plan to [take that approach].”

Most importantly:

“You can always change your plan, but do it out of opportunity not out of duress.”

Listen to the full episode part 1 and part 2.