Thoughts on startups by investors that
fund them & entrepreneurs that run them

Investors Like Ideas, But Measure You On Execution

After the idea, it’s all about execution.  I often hear from investors that a great idea is necessary, but not sufficient. The most important thing is a proven team, meaning one who has built a startup before, and has experience with the execution process in this domain.

I’ve talked before about the best personality traits for a good entrepreneur, but I’ve never talked about the importance of process. Yes, even entrepreneurs need to follow a disciplined execution process if they want to maximize their probability for success.

Even though John Spence in Awesomely Simple, was talking about larger organizations, I think his concepts adapt equally well to a startup.  Here is my adaptation of the key steps to ensure a winning execution in any business:

  1. Create a vision and instill values.  The vision may be yours alone, but the communication has to include your team, potential investors, and customers. For most people the communication is the hard part – written, verbal, over and over again.
  1. Define a focused strategy.  Limit the focus to a few critical areas that will yield the highest possible return. If your strategy has more than ten elements, it’s not focused. Not everything can be a priority. Do not spend any time on unimportant goals.
  1. Get stakeholder commitment.  People who are not committed cannot be held accountable for delivering ambitious results. The guiding coalition must demonstrate 100 percent unity, or there will be a mutiny.  The worst case is a silent mutiny.
  1. Align the objectives of principals.  I have seen startups implode when principals were pitted against each other on mutually exclusive objectives, like adding more technology versus keeping costs down. Quantify time and cost goals early, get agreement from all, and measure results regularly to verify alignment.
  1. Every process needs a system.  Define and use well-thought-out systems, manual or automated, to ensure repeatable success of every key process. The most basic element of every startup system is a written, agreed, and measurable business plan.
  1. Manage priorities.  You must relentlessly communicate to all constituents the current priorities, and keep the total to a manageable number. One of the biggest mistakes I see in startups is a new and larger set of priorities every week, causing the team to lose momentum and lose commitment.
  1. Provide team support and training.   People are your most valuable asset, so start with the right ones, and make sure they have the tools and training to deliver the results you are asking for.  Don’t assume they know everything you know, or learn as fast as you do.
  1. Assign and orchestrate actions.  Leaders must make sure all team members are taking the right actions (and behaviors) on a daily basis to deliver long-term performance. Even after all the previous steps, great leaders can’t afford to be merely observers. Lead by action.
  1. Measure, adapt and innovate.  Things change in a startup, and things will go wrong.  You won’t notice if you don’t measure.  Measure four or five key drivers, not twenty or thirty things. Motivate everyone with an insatiable curiosity to make things one percent better every day (kaizen).
  1. Reward and punish.  What gets measured and rewarded gets done. Be exceedingly generous with praise, celebration, recognition, small rewards, and sometimes money. Set high standards for performance and use the three T’s (train, transfer, or terminate) to deal with people unable to effectively execute the plan.

I’m not suggesting that your task execution will be perfect if you precisely follow these steps. There are far too many pitfalls and risks in a startup to imply they can all be avoided. But if you adopt this blueprint, it’s much less likely that when things get tough, your investors will be thinking of an alternate meaning for the term “execution.”

 

 

All opinions expressed are those of the author,  and do not necessarily represent those of Gust.

Written by Martin Zwilling

user Martin Zwilling Founder and CEO,
Startup Professionals

Martin is a veteran startup mentor, executive, blogger, author, tech professional, and angel investor. He is the Founder and CEO of Startup Professionals, a company that provides products and services to startup founders and small business owners.

prev next

You might also be interested in

Measuring the Immeasurable: Evaluating Startups Qualitatively

At Hyde Park Angels, we evaluate startups based on quantifiable metrics related to traction, market size, and more.  But that’s not all we consider. In fact, sometimes the most important factors in determining whether we should invest are qualitative. While these can vary from deal to deal, there are a few that remain the same.

Understanding of the Pain

Read more >

Addressing the Dreaded Lifestyle Outcome

Three outcomes dominate exits of angel-funded companies:

Dead bugs – Startups that go out of business, returning less-than-invested capital to angels (usually zero).
Positive exits – Companies that liquidate with capital gains to investors, usually via a cash sale to a larger company.  While IPOs are possible, they are very rare for angel-funded companies.  The exits can range from simply return of

Read more >

Why Does Startup Pricing Vary by Location?

Entrepreneurs seem genuinely surprised to find that investors in Peoria or Little Rock are not willing to invest in startup companies at Silicon Valley prices.  After all, they just read in TechCrunch that investors funded a company similar to theirs at an $8 million pre-money valuation!

The valuation of startup companies shouldn’t be impacted by location, should they?  Guess again!  A

Read more >

How to Build a Unicorn From Scratch – and Walk Away with Nothing.

This is a grim fairy tale about a mythical company and its mythical founder. While I concocted this story, I did so by drawing upon my sixteen years of experience as a venture capitalist, plus the fourteen years I spent before that as an entrepreneur.  I’m going to use some pretty simple math and some pretty basic terms to create

Read more >

US Crowdfunding in 2014

Crowdfunding is the practice of raising money for a project or venture from a large number of people utilizing an Internet website or platform.  Funding from each individual can be quite small, $10 or less, although some projects have much higher minimums.  Projects include films, musical recordings, new companies, products, inventions, personal causes and many others.

Since the JOBS

Read more >

Comments

One thought on “Investors Like Ideas, But Measure You On Execution”