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Building A Company

The Engine

‘Building a company is like building an engine. When you first draw the architecture, it looks especially clean, beautiful, and pretty. However, translating that into practice takes a lot of effort. That’s why startup founders and other key people, work 80-100 hours a week. It’s a heroic effort to keep it together. Eventually you want to construct a very high performance machine which nobody has to worry about every hour, every minute of the day.’
 
Therefore, ‘build a company that idiots could run, because eventually they will’ (Warren Buffett). The leaders job is to maximize the output of the organization (Andy Grove). Furthermore, you want to focus on that output or progress (not input), and by doing so avoid ‘measuring motion vs. progress’.

Allocating Resources

Allocating resources can be a top-down process (take resources and people and put them together), or bottom up (people decide what to do with their time). People who work with you, generally, should be coming up with their own initiatives. Your goal over time is to use less ‘red ink’ every day. A way of measuring how well you are doing (communicating, talking about what’s important and what’s not etc.) is how much ‘red ink’ you are pulling out in a day.

The leaders job is also to ensure consistent ‘voice’. Ideally, your company communication should feel like it was written by one person (website, PR, packaging, recruiting pages etc.) . However, that’s extremely difficult to achieve. At first you’re tempted to do everything yourself, which is okay for a founder to do. However, over time you do not want to be doing all of the communicating, editing and more. Therefore, it’s important to train people to recognize differences in voice (and how to use that voice). You will never get it 100% right, but you want to get as close as you can to 100%.

Delegating

You shouldn’t be doing most of the work. The problem with delegating is that you are still responsible for everything, because the CEO or founders have no excuses. They are always responsible for every single thing, especially if things go wrong.

How do you delegate and abdicate… it’s a pretty tricky challenge!

Metrics & Details

You want to measure outputs, not inputs.

You should dictate this rule to yourself (measure outputs, not inputs). You should also draft the dashboard yourself to tie this all together. One important concept is ‘pairing indicators’. Paring indicators are when you don’t measure or optimize only one thing (at the expense of something that is important). Pairing indicators force the team to innovate. Therefore, you always want to create the opposite and measure both. Also, you also want to look for the anomalies, because you don’t want to only look for the expected behavior. Also try to clarify with metrics what users of the product really want. However, you won’t discover that without looking through anomalous data.

If you get all the details right, you don’t need to worry about how to build a billion dollar business, revenue, or users.

Unicorns

Building a billion dollar business, revenue, or users, is a byproduct of what you do everyday to get the details excellent. Therefore, the organization as a whole must do everything exactly the right way. ‘Steve Jobs famously insisted upon an immaculate circuit board on the Mac’.

If every person on the team executes to the same level of performance, you will have a team that is performing at the highest possible level. At the highest performance level, the team will play at their best. When the founder is running around like a TaskRabbit for people, it will help take things off their plate (distractions), and allow them to be high performance machines. If you take enough things away from people which distracts them, and give them the tools to be successful, all of a sudden your organization produces a lot more.

Metrics (4:00)

Rory O’Driscoll

What kind of metrics you’ll need as you accelerate.

NOTE: video starts & stops at pre-assigned times

Product Development (7:00)

Ariel Tseitlin

Begin thinking about product enhancements… and what’s most important to the business.

NOTE: video starts & stops at pre-assigned times

Processes

Just like in the produce/service experimentation phase, process experimentation can also be beneficial. Process experiments can help you improve and enhance the most critical processes.

Experiment Herder Template (pdf)

ACTIVITY

Process Experimentation

In every startup, the processes created can become a significant source of competitive advantage.

A startup without effective and efficient processes will have a harder time in replicating their success (scaling). Developing and experimenting with processes is an essential competence which needs to be developed.

Start with a learning goal (improving a specific process), based on a hypotheses, actionable metrics, and how data will be collected (validation). Then design your process experiment (using the experimenter herder).

Herder Template (pdf)

 Do Process Herder Now!

Course Curator: Dr. Gerard L. Danford

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