Just Managing: The Old Rules That Rule the New Economy.
Sandy DiNubilo has served as an HR domo for a slew of startups,
and she's learned a basic lesson that most founders should take
to heart: "There will be no basketballs thrown at other people's
You'd think that any hotshot smart enough to launch a successful
Web startup would understand that bouncing hard objects off your
co-worker's noggin just isn't good business. But no. DiNubilo, a
Silicon Valley veteran who has served as a temporary HR chief for
a roster of hot startups, says that gross violations of trust, respect,
and etiquette are more the rule than the exception among Amazon.com
This column, however, is not about etiquette, but a more important
notion underscored by DiNubilo's experience: that managerial fundamentals
- or a lack thereof - are tripping up many of the most promising
startups. It's alluring to think that change-the-world technology,
coupled with a cultural rush to capitalize on it, are creating a
new form of business. Alluring, but unhealthy.
At a time when easy money and fast growth are covering a multitude
of sins among Web starts, old rules rule the new economy. I'll gladly
concede new rules of business, such as the power of increasing returns
or the deconstruction (and reconstruction) of intermediation. Yet
most startups still get tripped up by failing to cover such basics
as matching the right finance to the business model, hiring and
managing the right people, and learning how to learn and adapt.
Above all, here are several enduring principles that cut to the
heart of success for any company:
"All the new thinking is about loss," begins "Meditation
at Lagunitas," a poem by Robert Hass. It continues: "In this
regard it resembles the old thinking."
And indeed, the walloping that unprofitable Net stocks have taken
in the past months is a sign that positive cash flow does count
for something, that the glut of VC money today is funding technology
and markets, but caring little for individual and robust companies.
Most money-draining Web startups frantically look to screwball critical
numbers as the key metric for future success.
Yet the Rube Goldberg model of buzz leading to eyeballs leading
to venture money leading to a quick IPO and associated riches just
doesn't play in the long term. Those companies that understand how
to eventually generate sufficient cash flow to fund their own growth
are those that will survive.
If brilliant business plans guaranteed prosperous companies, then
the analysts and sci-fi writers would be cashing in options today.
But between the idea and the IPO rests the execution, which is all.
As more money flows into the startup phase, it's clear that access
to smart people matters more than ever. It's the keiretsu of talent
that the KP veterans can assemble around a deal that makes it different
than your neighborhood venture capitalist.
I'm not talking about ethereal strategists, however. Competence
at managing people translates into simple operating principles.
For example, those who have done a corporate apprenticeship, or
have even have been through another startup or two, understand the
key distinction between employees and friends, and respect those
boundaries. In other words, they don't expect their co-workers to
laugh off a whimsical shot at them with a basketball; nor do they
expect friends to work all-nighters for a year without a clear articulation
of what's in it for them.
The character of a corporation matters. Not brand or identity
here, but the fundamental issues about your company's core values.
In all the scrambling to launch a Web site, too many companies are
forgetting to think about who they are. What are their strengths
and weaknesses? How well are they equipped to deliver on the promise
they make? When technology is ubiquitous, then companies are competing
on that which technology cannot achieve - in other words, they are
differentiating themselves by how well they serve customers, which
is based on how well they understand who they are.
What is your company's mission? If you truly think it's going
to change the world, then, well, great. If you're simply intent
on capitalizing on a temporary market slice that will garner you
a quick IPO, get ready for Andy Warhol's reputed "fifteen minutes
of fame" redux: when the bubble bursts, everyone will have enjoyed
their fifteen minutes of wealth. And what remains will be those
companies that have a clear mission, and who use it to simplify
the most complex issues. See: Amazon.
On the Web, more remains the same than one would think. Yet because
companies ramp up and down so quickly, they appear to be operating
under quantum physics, when in fact they are just revved-up Newtonians.
Blame it on the major change: a fundamentally different business
metabolism. Even with this new speed, companies still need to be
fundamentally sound. It's just that on top of building great companies,
company builders must also build in the ability to adapt quickly
and completely. Until the founders learn to become as proficient
at the process of the business as they are with the product itself,
they will find enduring success to be beyond their reach.
Read or print the Intro
and Chapter 1.
Read the book reviews at Inc
Read the publisher's press
this book from Amazon.com.
the companies that Tom discusses in the book
Hear a recent lecture by Tom on the Startup Garden
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and industry resources for your startup. Simply send me an email
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Managing – articles that Tom wrote for The Industry Standard and some
written for Inc., Fortune Small Business, Harvard Management Update, and other
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books and web sites about starting your own business.