Don’t kill your startup. Build your team. Train your team. Then let them go.

Don’t kill your startup. Build your team. Train your team. Then let them go.

Whether you’re a male or female entrepreneur, starting a company feels a lot like giving birth. You went through the planning, the pain, the emotional roller coaster of fear, excitement and anxiety and, months later, you came out of it stronger than ever.

Fast forward a year or two past the launch. Your startup is a teenager, nearly ready to step into adulthood. It has full-time employees, a 1-800 number, maybe even a blog. There’s just one problem: You’re still cutting the crusts off your startup’s sandwiches. That is, you’re still fielding phone calls from clients, working hands-on with the product, probably even writing the blog yourself. You’re babying your startup by working in the business instead of on the business.

More than likely, it’s because you’re too afraid to let go. But if you keep treating your business like a baby, it will keep acting like one — in the form of infantile profits, sophomoric growth rates, underdeveloped vendor relationships, and an overall juvenility that will cripple your ability to accomplish long-term goals.

Fortunately, there’s a solution for this: Cut the cord … as in, the umbilical cord.

But how do you let go of the fear that’s tethering you to your business?
1. Create — and hand off — a systems manual.

The first step is to facilitate the evolution of your company from a clumsy, awkward, pimply-faced teen into a capable, debonnaire young adult. Create systems for each aspect of your business so that new employees can step in and quickly take over those roles. It’s easier than you’d think.

Walk through each process, from start to finish, and write down every step. The number of steps can range from four or five up to 100 or more for each aspect of the business. This should include everything you currently do, from direct client interaction to press releases and everything in between. Just make sure you document every last piece of the puzzle.

Congratulations, you’ve just created a systems manual. Now hand it to someone else and never answer the front office phone again … ever.
2. Hand-pick and personally train your leadership team.

OK, so “handing it to someone else” might be an oversimplification. Once you have your systems documented, the next crucial step is trusting others to undertake those responsibilities. Like a 20-something learns how to do laundry, pay bills, and survive away from mom and dad’s basement, your startup needs to learn how to run itself.

That means you have to let go of the day-to-day operations.

Letting go can cause emotional discomfort and logistical friction, but the end game is well worth it if you have the dedication and focus to continually improve on your systems. To do that, it will help if you train (and possibly hire new) individuals who will be taking over the most key functions of the business, e.g. marketing, client-care, development, etc. This will be your leadership team.
3. Give your leadership team the autonomy to develop their own systems.

Once you have a team in place, they can handle all of the subsequent hiring, training, and creation/implementation of new systems. Over time, they’ll need to bring even more high-quality people into the operation as your systems continue to evolve and expand. These new team members, like the original leadership team, will create and implement systems of their own.

Essentially, it’s an intelligent design/watch-maker scenario. Build a regular wristwatch, and you’ve got a nice timepiece on your wrist. Build a wristwatch that’s smart enough to build more wristwatches, though, and you’ve got a self-sustaining business.

Your leadership team will report directly to you with regular status updates, as well as information regarding important new matters. That should help curb your anxiety over letting go of the day-to-day operations.
4. Test your team by taking a short sabbatical. (Really.)

Once your startup is, to quote the movie Swingers, “all growns up,” you’ll find yourself with a lot more time on your hands. The true test of your systems comes when you can step completely away from the business for a month and come back to a more profitable, more successful company than when you left.

(Note: As a word of hard-earned advice, you might want to start with a week or a single day and then build up to a month-long hiatus.)
5. Congratulations — you can now run your business strategically.

Now you can finally afford to look at the big picture. You can come up with ideas for long-term growth, supplemental revenue streams, new partnerships, and other big-picture ideas that you never would have had time to think through had you still been writing your company’s blog.

You’ll be amazed at what new things you can accomplish when you let go (at least partially) of what you’ve already achieved and focus on what’s next.

by Council, Nick Friedman

Startup Advice - How Entrepeneurs Gain Credibility

Startup Advice: How Entrepeneurs Gain Credibility

While talking with young founders in Europe and the US over the last couple months, I have been asked the same question repeatedly -- how can an entrepreneur just starting out gain the necessary credibility to attract capital? It is an important question because, at its heart, a startup investment is an investment in the entrepreneur. And the earlier stage the investment, the more so this is true.

We all know the allure of the elusive "serial entrepreneur" -- the rare breed who has done it before (successfully) and will not fall victim to the same business pitfalls (he'll have to discover new ones). I have backed serial entrepreneurs before and will continue to back them. They have valuable startup knowledge to bring to bear on the company building process that we in the venture business clearly covet. But I have also backed first time entrepreneurs, sometimes just out of school. I did not back their extensive startup knowledge. I did not back their record of success. In many cases, I did not even back their domain expertise. In fact, some of the very best entrepreneurs with whom I have worked lacked any of the standard indicia of success that a venture investor might look for in a successful founder.

So how does an entrepreneur with little or no track record gain credibility? In my experience, they gain credibility in two ways -- they borrow it and they demonstrate it. Borrowed credibility runs on the same principle as guilt by association. If entrepreneurs surround themselves with people who have credibility, they gain credibility themselves. In the business world, reputations are paramount. As a result, when well-respected individuals vouch for an up-and-comer, it is meaningful. There are lots of ways someone can vouch for you as an entrepreneur. They can provide services to your company (awesome lawyers, accountants, recruiters, etc. are in great demand -- if they work with your company it means they were willing to bet on your success). They can lend their name to the company as an official advisor (ideally you will be able to clearly explain how they are working with your company other than merely lending you their name). They can invest in the company (if industry experts or startup/product/marketing gurus invest in your company, it is a huge vote of confidence in what you are doing). They can go on your board (business leaders have no more valuable resource than their time, so if they go on your board it is a huge recommendation of you and your company).

When it comes to borrowed credibility, there is perhaps no more important act than the initial introduction you are given to an investor. If you have no track record and you cold call an investor, you have huge reputational obstacles to overcome. This is particularly true because many investors will assume that you were either unable to find someone to make the introduction or too naive to realize the importance of an introduction. Either way, your likely success as an entrepreneur will be sharply discounted. On the other hand, if you are introduced to an investor by someone he or she trusts and respects, you are well on your way to a trusted relationship yourself.

The other way first time entrepreneurs gain credibility is to earn it. I don't mean this in some sort of hazing way. There isn't a clear path to earning credibility. You don't produce a particular amount of diligence. You don't deliver a particular number of industry reports. You don't call or email to followup a particular number of times. What you need to do is be really smart and well informed about the business you are pursuing.

The best way to earn credibility with investors is to have good answers to the questions you are asked. At August we want to invest in people who know more about their business than we do. We want to be excited about what you're doing and get more excited as you thoughtfully answer questions about your business. That doesn't mean that you need to have all the answers. You don't. You just need to be thoughtful when you don't and explain 1) how you intend to get the answer, 2) what you predict the answer to be, based upon what you do know, and 3) how you expect to gain the answer over time. Domain experts are best positioned to answer questions about a domain specific business. But being a domain expert does not require direct experience in a particular business. It may be sufficient to borrow the knowledge of those who have worked in the industry. In fact, oftentimes the most interesting ideas come from people who are not mired in traditional ways of thinking about an industry but know everything there is to know about how things are done today.

Credibility also comes from doing what you say you are going to do. Sometimes that means following up on a question from a meeting (If you say you'll get back to an investor with an answer and you do so promptly, you'll gain credibility; if you don't, you are done). Sometimes that means hitting numbers you say you will, or closing on a customer you expect you will. I once gave a term sheet to an entrepreneur because he delivered on a number of assertions he'd made about his business at a meeting three months earlier. There's nothing better than an entrepreneur who delivers the goods.

If one of these techniques for garnering credibility is good, all of them together are great. Get introduced to an investor by someone he or she trusts. Build an advisory board and board of directors of industry experts and admired professionals. Do your homework -- know everything there is to know about the market you are pursuing. Welcome questions about your business -- answer them well when you know the answer and admit when you don't. And always do what you say you are going to do -- whether that is delivering promised followup materials or hitting your numbers. In combination, these techniques can give any entrepreneur, no matter how young and/or inexperienced, the credibility necessary to attract great investors.

The Naked Entrepreneur: Does Your Startup Have the Ability to Succeed?

The Naked Entrepreneur: Does Your Startup Have the Ability to Succeed?
by Guest Contributor

David Cohen of TechStars

David Cohen didn’t found TechStars with the intention of being a social entrepreneur, but it’s hard to deny the social change his company has initiated by growing and mentoring countless startups in the United States. TechStars, one of the premier startup accelerators worldwide, leverages connections with VC firms and angel investors to provide members with seed funding and mentorship from some of the most successful entrepreneurs in the world. Ryerson professor and DMZ mentor Sean Wise interviewed Cohen for The Naked Entrepreneur on his advice for budding entrepreneurs.

Learn from the best
Cohen’s first few startup attempts taught him the value of having an experienced mentor. During the dot-com era of the mid to late 90’s, he founded his first company called Pinpoint, a mobile communication system used for ambulance dispatch systems. Within a couple years, the company valuation was upwards of $50 million. They started speaking with investors and soon got acquired. Five to six years later, the CEO of the acquiring company admitted they had “left half the money on the table,” and could have gotten twice the value of the offer they accepted. This may have been prevented if he had a mentor.

“What is a mentor worth?” Cohen asks. “A five minute phone call could be worth millions of dollars.”

When you are given advice, take it
Cohen also talks about the importance of “closing the loop,” which means actually taking the advice your mentors hand down. Learning is essential, especially among founders. The Startup Genome Report, a 67 page analysis on data collected from 650+ web startups, says “startups that have helpful mentors, track metrics effectively, and learn from startup thought leaders raise seven times more money and have 3.5 times better user growth.”

Work with the right people
“You want to surround yourself with contradicting ideas, people who think differently,” says Cohen. “[What differentiates successful startups] is founders who hired people better than them, enabled them to do their job, chose the right investor, and the right people.”

Robert R. Ackerman, Jr., founder and managing director of VC firm Allegis Capital, believes building the right startup culture is fundamental to success.

“If you’re building that culture in the early days, it’s essential that every new employee that comes in can fit into it,” says Ackerman. “That means the CEO is interviewing every new hire up until a certain threshold.”

Know when to quit
Success stories like Cohen’s are great motivations for aspiring entrepreneurs, but not all ideas are destined for success, which Cohen has experienced first-hand. Knowing when to quit is half the battle, and Cohen says mentors at TechStars never tell an entrepreneur that it is time to quit. According to the Harvard Business School, 30 to 40 per cent of startups end up liquidating their assets, and investors lose most or all of their money. The instability of entrepreneurship can be daunting, and the rewards that are impossible to monetize play a big part in the decision to quit.

“You have to ask yourself, ‘Am I waking up everyday excited about what I’m doing?’” Cohen says. “There will always be bad days, days you don’t want to get out of bed, but if that is happening on a consistent basis, it’s time [to take a hard look at the company].”

Love what you do
After selling his first company, Cohen was on track for an early retirement. While relaxing on a beach at age 30 may seem like a dream to some, Cohen wasn’t done quite yet.

“Staying on a beach is cool, but [entrepreneurship] is what I love to do. It’s stimulating. It’s creative,” he says.

“Entrepreneurship isn’t a conscious decision. It’s just what you do.”