Tag: John Morris

“A validation is a third party endorsement” – John Morris

The concept of validation is fundamental to the startup and it makes all the difference in how you track progress and how you create value early.

The strategic planner says to form the strategy, generate milestones and then relentlessly pursue the milestones.  This is true but it’s not enough.  Milestones are a measure of what you accomplish but not everything you accomplish adds value to your startup.  A great example is the formation of your company.  You have to do it but nothing about having an LLC or a C-Corp in itself will cause a customer to buy your product or an investor to invest.

It may be months before you generate any tangible evidence of value – that is, generate cash!  So how do you create value in lieu of cash?  By getting others to respond to your efforts – a third party endorsement.  This is the definition of a validation.  Examples of validations include:

  • Paying customers!!!!!! – early traction is fine but it’s better if you get paid
  • A stellar team – good people have plenty of opportunity.  All the better if they close to join you
  • First class advisors and mentors – these people bring their contact list and their influence
  • Key partnerships –  companies that add value for upside in your success
  • Investment capital!!!!

All of these are evidence that others are willing to bet on your vision and have put their skin in the game.

Checking off milestones is fine but they don’t mean anything unless they lead to validations.  Measure these and highlight them in your company pitch.

 

Blogging Gazelle is published daily by Shawn Carson

“Chaos happens at 15 and 45” – John Morris

As your startup grows, transitions will be necessary.  Two early milestones will occur when you have around 15 employees and then again around 45 employees.

At 15, the CEO has reached her capacity to keep a handle on everything and everyone.  At that point, division of responsibility has to occur and the level of trust has to go up.

45 employees brings about the introduction of middle management.  Management Processes take over as the CEO’s primary tool rather than central control of the decisions.

In each transition stage, be prepared to turn over control and decision making to your team.

“An army is good when you have training and structure; and command and control. But I’m still a geurilla at heart.” – John Morris

A company of one can be agile and react quickly.  It’s exhilarating.  If you grow, it does’t last.  Employees need to be managed.  Boards need to be managed.  Management requires structure and discipline.

It’s said a startup needs three CEO’s – The million dollar man, the ten million dollar man, and the one that grows the company past ten million.  Sometimes that’s the same person but usually, it’s not.  Each step requires transition that can be painful, especially when the founder/CEO is not the one for the job.

Know yourself and know when it’s time to find the next leader.

“It’s extremely unlikely that we will starve” – John Morris

A friend tells the story of his decision to start a company.  As most people do when they have a major decision to make, he consulted a trusted advisor.  In this case it was his wife.  They listed all the reasons for and against and they discussed all the risks.  At the end they came to the realization that if it all blew up, they could always do something else.  They were not going to starve.

Risk, especially entrepreneurial risk, is relative.