Monday, October 25, 2010

The Jerk Employee

There seems to always be one employee that no one in the company can stand. They are usually rude and often condescending toward others and they seem to create problems and conflict with everything they do. But the entrepreneur keeps them around for some reason, regardless of how bad the complaints from the other employees get.

Why? Because the jerk is usually really good at something and the entrepreneur is willing to put up with the collateral damage for their behavior. But what does it do to the culture? How does it affect the other employees? Is it possible that the jerk is costing you more than any value they are bringing?

I have a lot of examples I could share, but I'll just give a couple of scenarios I've commonly seen.

SCENARIO 1 - The sales manager for a quickly growing outsourcing company rubs everybody in the company the wrong way. Nobody wants to work with the customers she sells because she always over promises, usually way beyond the capacity of the company and its employees to deliver. But she can bring in business like no one else, and the entrepreneur needs that productivity to help his company grow.

SCENARIO 2 - A product company does its own R&D in house. The lead engineer is a bit quirky, but a brilliant engineer with even a little bit of design capacity in him. But his bedside manner is sub-par and no one can stand to be around him. And if they are, he is always quick to remind them how smart he is and how the company would be nowhere without him.

So, have you ever experienced the jerk employee? How did you handle it? What would you recommend others do?

Monday, October 11, 2010

Ten Lessons Learned in Entrepreneurship

I spoke at the Entrepreneur Lecture Series course at BYU today. Here is what I spoke about:

  1. Be in a position of ownership - my first startup, a baseball umpiring business, taught me this when I tossed my first coach from a game and I took serious heat for the behavior of the other umpire.
  2. Know your customer - my second entrepreneurial venture bombed because I failed to do this. And I'm talking about getting into their head and knowing what they think, what their problems are, and so much more.
  3. Become an advocate for your customers - now that you know them, become a voice to which they can look for guidance, advice, and more
  4. Experience + Education - One or the other is good, but both is powerful and improves the chances for entrepreneurial success
  5. Know you numbers - without the clarity that comes from numbers, every business is missing out on strategic competitive advantages it could gain
  6. Know you partners - I learned this in my second startup failure when a prospective partner turned out to be someone much different that anyone suspected. Please refer to 4 Signs Your Business Partnership will Fail for more on this subject.
  7. Don't be afraid of the big boys - startups can do it faster, better, and usually cheaper. Never let a big competitor scare or intimidate you.
  8. Caution: Family Business - Please read 3 Rules Every Family Business Should Live By.
  9. Services are difficult to scale - time is a limited resource, and selling it has a finite capacity.
  10. Turn services into products - Read Built to Sell for more information.

Monday, October 4, 2010

Bootstrap for Slow Growth or Raise Equity to Accelerate

There is a lot of talk and content on the internet about "bootstrapping." I had an interesting experience with this just last week. A company is looking to roll-out an innovative business model in a very competitive online business space. One partner in the business wants to grow slowly, gaining customers slowly and using the revenue generated to fund future growth. Another partner wants to raise millions of dollars, throw it all into aggressive marketing plans, and accelerate growth exponentially.  I don't think either plan is fundamentally flawed, but I favor the slower growth plan, and here is why.

The partner in favor or raising millions of dollars and using them primarily in a marketing campaign is afraid of competition. He wants to blow the doors off of every potential competitor, mainly motivated by the fear that others will do what is commonly called "rip-off and design." His is a first-mover-advantage mentality. In some scenarios I think the fear is justified, but not in this one. You see, the business is so different from the traditional model that is it highly disruptive. And highly disruptive businesses are usually ignored by bigger competitors with deeper pockets because they initially discount the new-comer with rationalizations rather than consider them a serious threat.

This provides a great opportunity for the company to focus on retaining its equity and slowly gaining proof of concept and a loyal customer base. Is there a risk to this strategy? Of course there is. But the risk of giving away most of your company on marketing, in this situation, is far greater with significantly reduced opportunities for return.