From Tribal Mode into an Organisation

David Beisel writes:

In the early days of a startup, its always all hands on deck. There are a set of founders or founder(s) with an early team, and the roles of who does what and when is often decided by whoever has free bandwidth to address it. These individuals apply their skillsets to whatever needs to be taken care of today with little (if any) thought to process. Results are paramount. Accordingly, peoples roles become fluid and partially interchangeable. They get things done in small ad hoc groups or tribes that form and dissolve in lock step with the necessary tasks at hand. And thats a good thing in those very early days, its imperative that the organization is nimble and flexible to react to the marketplace as it commences in building both a product and a corresponding business model.

At some point, however, a startup team needs to evolve from building a small-team endeavor into building a company with a strong organizational structure. A number of events could serve as a catalyst for this transition: a round of institutional investment, the introduction of a new senior person on the team, or significant growth in the number of people within the company. But maturing from a tribal mode into a healthy functioning organization is often a very challenging process.


Paul Graham writes about the reasons why people do not do a startup.

1. Too young
2. Too inexperienced
3. Not determined enough
4. Not smart enough
5. Know nothing about business
6. No cofounder
7. No idea
8. No room for more startups
9. Family to support
10. Independently wealthy
11. Not ready for commitment
12. Need for structure
13. Fear of uncertainty
14. Don’t realize what you’re avoiding
15. Parents want you to be a doctor
16. A job is the default

Tim Draper Advice for Entrepreneurs

Via Paul Kedrosky:

What is your advice for a startup looking for venture capital funding?

A: Run your company. The money can help accelerate it but don’t wait for the funding to get started. The best companies get their first money from customers, not VCs. An investor can tell whether an entrepreneur is exploring a theoretical business idea or dedicated to the business. To an investor, make your company look like it is a train leaving the station.

Seed Investing

Fred Wilson writes why seed investing is less risky than later stage investing:

My basic point is in seed/early stage investing you ante a little, see your cards, decide if you want to invest more in your hand, see some more cards, etc, etc. You get to stage your risk capital as the investment shows itself to you over a number of years. You can manage all kinds of risk this way; management risk, valuation risk, technology risk; and market risk. Classic later stage investors want to be in the last venture round and in that scenario, you are putting all your chips on the table before you’ve really seen your cards.

Later stage investors can’t impact the development of the company. They have to accept the direction that has been put in place before they came in. We typically invest in pre-revenue companies. Usually they have the technology platform in place and in most cases, they have launched something with some success. But getting the business model and market entry strategy (the angle of attack) right is key.

Experimentation and Failure

Josh Kopelman writes:

The truth is that early stage ventures are all about experimentation and iteration. As soon as it’s written, every business plan is wrong. Good entrepreneurs recognize this, and tend to build agile teams that can quickly respond to early market information in order to identify a real business model and minimize risk.

A necessary side effect of all this experimentation is that most startups will ultimately fail. While the mythical “90% failure rate” has been disproven, I would venture to guess that for technology based startups the failure rate is still extremely high. That’s just the nature of the early stage venture world, and ideally it allows the entrepreneurs involved to apply their hard-earned lessons towards more productive ventures. Or, as Jeremy Liew aptly put it: “Companies die, founders and employees learn from the experience and move on, and hopefully start more companies. I for one would love to see the second acts from the teams that are newly freed up.”

Founders at Work Book

Paul Kedrosky writes:

I’m often asked what single book I’d recommend startup founders read. Until now, I didn’t have a good answer, but now I do: the recently-released “Founders at Work” is great. It is the best read for startup CEOs (now and future) I have come across in ages.

Mind you, the book is no strategy tome, nor a motivational text, nor even a guide to getting money out of adrift VCs. Instead it’s just painfully honest revelations, some good, some bad, and all in interview form, from the founders/creators of companies/products like Adobe, Apple, Flickr, Gmail, Hotmail, Paypal, Excite, and so on.

I could choose from myriad examples, but I’d rather you just read it. The “I quit” moments; the struggle to find what you’re really going to do after the thing that you started to do doesn’t work; the predictable battles with VCs (and the dish from some founders about a few famous VCs); and on and on, all of these are the reasons to buy the book.


Sramana Mitra writes:

The entrepreneur is the real soul of a venture.

We already have the VCs in India in droves. All I am suggesting now, is to layer in the Dave Chens with experience in different domains, around the Sramana Mitras who perhaps have the Niagran passion, the Himalayan ambition, but are simply not ready yet.

Get them ready in this round, and they will become Serial Entrepreneurs, doing venture after venture after venture.

Learning from Failure

Business 2.0 writes: “From Dogster to Google, Web companies are finding that mistakes can be shortcuts to success.”

Where old-economy giants once boasted of running “zero-defects” operations, today’s successful Internet businesses embrace defects as a way to get things right. Some management consultants even advise their clients to “get good” at screwing up.

“Failure is the enemy of efficiency, but it’s the best way to learn,” says Robert E. Gunther, a business consultant for Decision Strategies International in Conshohocken, Pa. Gunther encourages clients to make “deliberate mistakes” to learn faster.