Monthly Archives: January 2010

Sweat the Small Stuff

Here is something business schools and venture capitalists don’t tell you: in start-ups, little things compound to make an enormous difference.  The little things add up just like compound interest adds up – they are vital to the exponential growth of any company.

Sometimes the success of a company can be attributed to doing one thing really well.  But often, success is due to executing on many little things.    

Here are some small things that can make a big difference:

Signage
Billboards, company schwag, and advertisements can all boost your company morale.
 
For all of Rapleaf's success, one of the most motivating things for our team has been the big Rapleaf sign on our building.  It is real, tangible, and present … and that is important for a company that generally deals with bits and bytes.  When friends of our employees walk by the building, they sometimes text Rapleafers and let them know they saw the sign.  That’s real motivation.

Rapleafsign

Negotiating legal fees in term sheets

One of the little things in a term sheet that is really important is legal fees paid to the investor’s counsel.  Not only will negotiating the legal fees save your company a lot of money and hassle, it will also significantly increase the speed that the deal is done.

The entrepreneur who, when raising money, only focuses on valuation and ignores minor line items like the legal fees is doomed to a life where the little things are bound to take over.


Testing, testing, testing

All companies can benefit from controlled testing of their ideas to see what has this most impact. Consumer Internet companies, for example, can test every email, web page, and message.  Detail-oriented people who continuously A/B test and fine tune their site stand a much higher chance of success than those who do not.

You wouldn’t think that successful entrepreneurs would spend all their time in the weeds rather than looking at the big picture, but they know that not just the devil resides in the details.

Michael Birch, founder of Bebo (which sold to AOL), is one such entrepreneur who sweats the small stuff.  Bebo was, of course, very innovative, but its success was due to the dogged pursuit of tuning, testing, and iterating.

Thinking about your employees
Performing even seemingly basic tasks on behalf of your employees can go a long way.

Many start-ups neglect to do the little things for their employees.  I'm always amazed when I meet someone who has been with a company three months and still doesn't have businesses cards.  Or stories of employees coming to the office on their first day and they don't have a chair, computer, or even a desk.

The reason employees are neglected in large corporations is because large corporations are really bureaucratic.  At small companies, the founders are often "big picture" people who not too focused on getting the little things done and they sometimes don’t hire the person who is in charge of all the little things.   All start-ups should get a really competent office manager as one of their first 10 employees … the investment will pay off in spades.

Also, remember and celebrate your employees’ birthdays and other milestones, and be sure to honor their achievements around the office.

Subtle recruiting goes a long way
When you are in recruiting mode (as most start-ups are always in), signify that recruiting is a priority by putting a brief message in all your email signatures, on the back of your business cards, and in your daily communications. Doing things this small step may lead to your next crucial hire.

(And on a side note, Rapleaf is looking for amazing software engineers and salespeople — new MacBook Air or an all-expense paid vacation to Hawaii if we hire your referral. See more at www.rapleaf.com/careers)

Dialing for dollars
Sales is often about being meticulous and doing the small things. We've all been in organizations were the plodding salesperson beats the brilliant presenter. Did you send the proposal on time?  Did you make just two more calls per day than the other guy? Did you go through all your tasks and calls?  Did you log all the contact information? These seemingly small tasks can help your company close that next critical deal.

Getting your email delivered to an inbox
It is amazing how many new consumer Internet companies forget to focus on email deliverability and ensuring their emails do not get caught in spam filters.  Joe Greenstein, CEO of Flixster, likes to say that Flixster is an “email deliverability company with a focus on movies.”

Retargeting
Retargeting is one of the most powerful things a company can do to re-engage its customers and look big. Retargeting allows you to show ads to people who visited your web site wherever they are on the Internet.  So once someone comes to your site, they’ll see your ads everywhere (like on Yahoo Finance, Huffington Post, Fox Sports, and more) until they delete their cookies. Once you try it, you’ll never want to be without it.
I’m an investor in Retargeter.com which is the retargeting network with the biggest reach because they sit on top on the three largest ad networks (Doubleclick, Right Media, and Fox). 


Appease the customers

Customer service can be a differentiating factor that helps you get new customers and returning customers. One way to bolster your service is by automating your customer service systems. There are a bunch of free and inexpensive tools available to help do this.  And no matter what, answer all incoming support emails within 48 hours.

While many start-ups fail because they don’t come up with or execute on the huge compelling idea, more often start-up failure is rooted in not mastering the small stuff.

Doing the small things is like compounding interest: little changes add up really fast. If these "little things" are not your forte, make sure you hire detail-oriented people and build a culture that encourages sweating the small issues because the minor details can be the difference between a good company and a great company.

Special thanks, as always, to Michael Hsu for his edits.

Outsourced thinking is today’s biggest problem

The biggest problem in the world is that too many people outsource too much of their thinking. Too many people are letting others decide what they like, what they feel, who they support, what their opinions are, and even who they are.

Benefits of outsourcing
Outsourcing is generally a good thing – you gain leverage from another’s expertise.

Most of us outsource milk production to dairy farmers and conveniently buy it at the grocery store.  We also outsource our piping problems to a plumber. We can outsource our knowledge too: most of us believe the world is round even though we haven’t proved it ourselves. And, of course, when we are around friends, we subsume their thoughts, tastes, and values as our own (sometimes called homophily).  This too is generally a positive trend since it allows us to gain knowledge and learn from their experiences quickly.

In fact, if we never outsourced ANY of our thinking, we would be paralyzed by the simplest decisions and would essentially become useless in society (or become the Unabomber). 

But it is easy – and intellectually irresponsible – to outsource too much of our thinking. These days, it seems like people can too easily adopt the opinions of the people in their lives: their professor, downstairs neighbor, pastor, boss, community, or favorite talk show host.

Dangers of largely outsourced thinking
The biggest problem with over-outsourced thinking is that we can become homogeneous, resistant to change, and lose our ability to think of new ideas. Instead of being independently-minded, we are in danger of becoming walking phonographs that repeat what we have heard. Given that so much of our economic and technological progress to date has been from our ability to think fresh for ourselves, outsourcing too much thinking can stifle continued advancement.

A light-hearted yet sad example of outsourced thinking: In September 2008, one comedian interviewed Obama supporters and asked them what they thought of “Obama’s Vice President pick, Sarah Palin.”  The response was overwhelmingly positive.

Outsourcing your decisions is very different than outsourcing your thinking.  We cannot decide everything.  We are in a representational democracy where we elect others to make decisions for us. But outsourcing who you are going to elect (or hire) to make these decisions can potentially be disastrous.

Not only can outsourced thinking stifle creativity, it can also impact your career. In business it can be a red flag during interviews with people who cannot display that they think for themselves.  When someone always thinks like the majority it generally means that they will have trouble going against the grain or coming up with anything revolutionary.  One of my favorite interview questions is “what is a belief that you have that most of your friends think is crazy.”  I’ve heard some really interesting responses but I have also heard some things that are utterly conventional.

How not to outsource your thinking
Here are some simple steps to start repossessing your own values and beliefs.

•    Seek out opposite opinions

One way to start developing your own values and thoughts is by talking with people who subscribe to different values. This will force you to identify what matters to you and speak your mind. For example, if everyone you know voted for McCain in 2008, you should seek out 1-2 people you respect who voted for Obama. You might still vote for McCain, but you can try to understand the other side and see why they differ from your beliefs. The same is true on contentious issues like abortion or drug legalization. And if you don’t respect anyone who holds a different view from you, you should spend a lot of time looking at yourself.

•    Guard against bubbles

People who play into bubbles generally have trouble thinking for themselves.

In 2006, it was obvious to everyone we were in a real estate bubble. During that year, I couldn’t find anyone who did NOT think we were in a bubble. When the crash came, it wasn’t really a shock to anyone (though few predicted how fast the bubble would burst).  However, almost all investors kept betting that real estate would continue to rise.  

Why? Because they outsourced their thinking to others.

People who kept investing money in real estate despite recognizing the bubble were riding an unsustainable wave of outsourced. If they had thought for themselves, they would have made fewer investing mistakes.

•    Strive to be wrong

To be true to yourself, you need to be wrong sometimes. You need to be ok with being wrong and you should be ok when others around you are wrong. That means going against the grain and speaking your mind, especially when it’s different from what those around you are thinking.

Striving to be wrong forces you to be a more creative thinker, someone who is not tied down by the status quo and how things are typically done. These are the people who, ask the “why’s” and ask the “why nots.”

Additionally, the process and conversations needed to understand why you are wrong is itself an exercise is un-outsourcing your thinking since it makes you explain your thoughts and values.

People who fear being wrong generally end up adopting group mentality and outsourcing their thinking because they are afraid to voice contrary opinions or to have their ideas shot down. In contrast, people who are ok with being wrong tend to have a freedom around creativity and less impeded by herd mentality.

Special thanks to Michael Hsu for his help and edits.