I’ve written before that startup leaders should ignore the advice to write a long, formal business plan. Important eventually, probably, but certainly not at first.
That’s why I was glad to see two folks with much more experience than me with startups write an article on just this topic and discuss what’s more important in Harvard Business Review.
Cheryl Dorsey, CEO of Echoing Green, and her colleague, Rich Leimsider, write:
“Would you take a look at my business plan?”
Some member of our staff at Echoing Green, an angel investor and grantmaker in social enterprise, hears this request every week. And we are often happy to review these start-up plans — which include the typical elements such as a product description, competitive analysis, estimate of market size, and projected financials. But we are interested in much more than these traditional plans. We use other criteria to find new people and ideas that can create large-scale social change.
In short, the business plan is overrated.
They go on to explain what is most important.
Remember all the hoopla about Beyonce lip synching the national anthem at the Presidential Inauguration? I think it dominated the media for close to a week and made her look bad.
But the whole reason it became such big, gossipy news isn’t because Beyonce didn’t sing live. It’s because she allowed it to become a surprise instead of making a preemptive announcement.
She should have quietly released a statement with something like: “I’m deeply honored to be asked to sing the national anthem at the inauguration. Unfortunately, the weather conditions and the outdoor setup make it very hard to sing this song in top-quality. Out of respect for the President and the inauguration, I do not want to take any risks of something going wrong and will be singing a pre-recorded version.”
With hundreds of people sitting around her, did she not think this would come out? Instead it became a mini-scandal when she could have mitigated the shock factor amongst the press and social media who loves to keep breathing air into stuff like this.
This is all to say: surprises are very bad.
While starting my organization, I was reminded of this very early from a board member. He loathed the saying, “Don’t ask for permission now, ask for forgiveness later.” That’s a good way to burn bridges and lose trust amongst people whose trust you need over the long-term.
In the startup environment, I think this advice is especially important when things are very, very unpredictable. Startup leaders have a lot of ambition and personal pride which can often get in the way of admitting setbacks. But when it comes to your closest partners (board members, mentors, and colleagues) it is essential for a few reasons:
1) Bad news is likely to come out anyway
2) If you don’t share, no one can help
3) When it does come out, others close to you will wonder what else you’re not sharing and trust you less
4) You’ll be a better leader by not shouldering all the heavy stuff on your own
The answer: over-communicate. You’ll build trust, create a stronger team, and demonstrate your strong leadership skills.
The range of activities of a startup founder is amazing, tiring, high pressure, inspiring, and likely life-changing. In a given week (and possibly in just a day), you will write, market, pitch, deal with vendors, recruit interns, try to recruit board members, manage the team, deal with budgets, and more.
You might have experience with some of those things, but if you’re a young founder, many things will be new and you need support.
Here are three unique ways to be a better startup founder:
1) Wait Tables
Someone once told me, “All revolutionaries wait tables.” Meaning, everyone pays their dues. But it’s also an ideal training ground for a founder — you are pitching hundreds of times per shift, have to talk to people, be liked, and balance a ton of things at once (no pun intended). I would argue nothing is more important to starting an organization than people skills. Being a waiter is all people skills.
And it’s a low risk environment to try new things. When I was a waiter, I had a goal of making every table laugh once. People are more likely to donate (or tip better) if they like you. But if my joke flopped, it was not a big deal.
Bonus: you’ll probably need the money anyway and you’ll get lots of free food.
2) Be a Shadow
Who are leaders you admire? Ask if you can be their shadow for a day or half day each month. They’ll be flattered and you’ll learn a ton.
Bonus: you will meet a bunch of people.
3) Start a blog on anything
Being able to write quickly, publicly, and powerfully is so important for a founder. A blog is a great way to practice. Topic doesn’t matter. It’s all about style. Hat tip to Seth Godin for the idea.
Bonus: you’ll increase your personal brand (i.e. more Twitter followers) and learn a blogging platform.
4) Watch the TV show Shark Tank
Observing others pitch their company — and get absolutely grilled with questions — is one of the best ways to improve your own pitch. Sure, these are for-profit companies, but the mechanics are the same as a nonprofit — you need to present the problem, the opportunity, your solution, progress, and make a compelling case for investor support.
One pitch, in particular, stood out. Two guys were starting “Netflix for ties.” They went through the opportunity, their business model, and their numbers. But one potential investor (known as “sharks”) did not invest because they never shared their personal story or passion for the product. They were caught up in the details and forget the most important part of the startup phase — themselves.
#1 and #3 worked for me. Wish I had done #2. What else could be on the list?
If you know someone starting a new organization or are starting one yourself, it’s safe to assume money is very tight. When I was starting my organization, there were some really important opportunities that I couldn’t take advantage of because other necessities came first (minimal salaries when possible, website, etc.).
But if you want to help a startup founder beyond just cash donations (or you’re a startup founder and others are asking what they can give you), here are five ideas:
1) Pay for conference attendance
When you’ve gotten paid $500 in three months, it can be hard to stomach $500 for a two day conference. But they are extremely efficient for networking and getting your name out there. Hundreds and thousands of people in your target audience are in one place for days.
2) Airline gift certificate
In my earlier start-up years, I would not take important trips across the country because I couldn’t afford them. I missed really important opportunities as a result (meetings, conferences, etc.). If I had a gift certificate for a flight, I’d have no choice — and that’s a good thing at times.
3) A fundraising coach
Fundraising is really, really hard. An experienced fundraiser to help shape strategy, early proposals, etc. is one of the best ways to increase success until a startup can hire a development director and the founder gets more experience. Having a coach that you can rely on for 3-5 hours/month for a couple months to read proposals and strategize before pitching a prospect, is invaluable.
Paying for someone on behalf of a startup, donating your time if you know fundraising, or calling in a favor from a friend who knows development, is one of the best ways to support a founder. In some cases, it could be make or break.
4) Lunch for three
If you can help a founder network and make connections in her field, take her out to lunch each month with you and someone they should know better. In other words, give the gift of your network. If you’re a founder, this is one of the best ways to engage a board member, advisor, or just someone really passionate about your work.
5) Amazon gift card
All leaders are readers, but startup leaders are broke. Help them keep learning.
All of these expenses are really important, but can be neglected because they are not absolutely essential. The train can keep running without them — just not as well. Some people want to help a startup in ways beyond cash and sometimes it’s good, as a founder, to be “forced” to take advantage of certain opportunities. With these gifts, you give a brave founder a better chance to survive and thrive.
What else would you recommend?
You have a great idea. You have the passion. But your landlord expects rent every month, you’re in a long-term relationship with Sallie Mae, and you’d like to eat when you’re hungry.
So how do you decide when to make the leap — to quit your job or dropout out of school, dip into your savings and/or increase your debt, and say: “I’m f—ing doing this. I’m starting an organization.”?
An article in Harvard Business Review has a more technical answer to this question and how it effects you personally (finances, reputation, etc.). I have a more strategic type of an answer.
In no particular order, here are my thoughts:
1. Crawl First
I already said how do you know “when to make the leap.” That’s actually misleading. I think it’s actually a mistake to make a leap. Before Aaron, Patrick, Matt and I decided to officially launch our organization, ServeNext, we tested the idea. We had conversations with leaders in our field (national service) and made a short video to explain what we wanted to do. The response was overwhelmingly positive. At the same time, we were still students during this phase. Without risking paychecks, we could gauge the value of our idea from leaders who we’d eventually need backing us.
2. Clear Need
There are too many nonprofits (both new and old). There is a fatigue among funders to support new social change ventures. Consider the recession and the risk averse nature of philanthropy, and startup funding is brutally hard to secure. With all of these factors, it cannot be overstated how important it is to powerfully explain the need your new organization would address and why it’s not getting addressed with existing organizations.
Last year, I met with a very smart college senior who wanted to start a leadership development program for low income high school students. Yes, very important and likely there needs to be more of this. But she couldn’t explain why a new organization was needed; why existing groups were falling short (if, in fact, they were); how she would do it differently; etc. I did NOT need to hear every detail of how her organization would work or expect her to know exactly, but I did need to understand why other groups were falling short in order to judge if her organization is needed.
Details of a new organization can come later, but first being able to explain the need is critical.
3. Partners and Advisers
The startup process is fun but rough — long days, progress can be slow, getting ignored by the world, and no money. A partner makes a huge difference and I think it can be difference between success and failure. The most surprising part of the startup phase for me was the loneliness and I even had a couple partners. Going at it solo sounds brutal. If you don’t already, I recommend finding a true partner who, with you, will do whatever it takes to bring an idea to life.
And beyond a co-founder, find some advisers. For me, that was a combination of former professors and leaders in our field. They did more than they realized. Beyond the great advice, they were people who understood what we were trying to do and offered emotional support and encouragement.
4. “Credibility” Investors
Unfortunately, being a young founder is not generally an advantage. Yes, adults love to talk about your energy and spirit and do-whatever-it-takes attitude. But you need a lot more than that to raise money and build trust with other leaders and partners.
You’ll ultimately need financial investors (donors), but you’ll also need a handful of leaders to be your “credibility investors” — folks in your field who can be third party validation for you and your idea. They can help you get meetings, raise money, and generally get taken more seriously.
For my organization, this was the single biggest reason we got off the ground. Because of them, we raised about $100k and got national press less than a year after launching. Without these folks, we don’t get far.
5. Thrive in Ambiguity
I’m often asked about the startup process “how did you know what to do?” The answer is that I didn’t. We had to figure it out. That’s both scary and exciting. If that uncertainty doesn’t give you a rush, then maybe you’re not ready or you don’t have the right idea or need a partner. But if the unknown gives you energy and you have an idea you’re craving to spend more time working on, then you’ve got the most important ingredients to start moving.
Any others key factors you’d add to my list before really “going for it” and starting a new organization?
PS — worried about failing? Don’t — it’s a big benefit to your future. Read my post: Benefits of a Failed Start-Up.
I’m not a huge fan of PowerPoint. If I’m giving a presentation, maybe a few pictures. But clicking through every 30 seconds doesn’t help me and it hinders some of my flow (maybe I need to just practice more).
And with meetings, I’d rather have a few handouts than a big stapled stack of papers that likely won’t get looked at and often don’t have the level of detail to stand alone after I leave. I know my subject well and prefer a more authentic conversation regardless if I’m sitting with one person or standing in front of many.
However, at times they are necessary and useful. And I think the Heath brothers (authors of Made to Stick and Switch — must reads) suggest the best way to format them:
Before your audience will value the information you’re giving, they’ve got to want it.
Most presenters take that desire for granted. Great presentations are mysteries, not encyclopedia entries. An online video called “The Girl Effect” starts by recounting a list of global problems: AIDS. Hunger. Poverty. War. Then it asks, “What if there was an unexpected solution to this mess? Would you even know it if you saw it? The solution isn’t the Internet. It’s not science. It’s not government.” Curious? See, it works. (Go to girleffect.org for the answer.)
Curiosity must come before content. Imagine if the TV show Lost had begun with an announcement: “They’re all dead people, and the island is Purgatory. Over the next four seasons, we’ll unpack how they got there. At the end, we’ll take questions.” We’ve all had the experience of being in the audience as a presenter clicks to a slide with eight bullet points. As he starts discussing the first one, we read all eight. Now we’re bored. He’s lost us. But what if there had been eight questions instead? We’d want to stay tuned for the answers.
They also reference Guy Kawasaki’s blog post explaining his 10/20/30 rule for PP — also worth the read.
Two short thoughts today.
I’ve written about the many stale and uninspiring resources about starting a nonprofit — laundry lists of admin tasks instead of a focus on building something. They seem to fill the first few pages of search results, which is why this a problem. The start up tech scene offers much fresher and helpful ideas to new entrepreneurs.
I was reading an article yesterday that summed up perfectly this difference and also captured what I’ve been trying to say about going for it. The key quote comes from Fred Wilson, a leading VC, who was speaking to college students. The professor said:
He repeated a comment that we drew out from last year’s conversation, which I particularly like: “Start-ups should be hunch-driven early on and data-driven as they scale.” What was interesting was discussing the profile of the entrepreneur that has good hunches—often they come from outside the domain, yet are obsessed with the opportunity to disrupt the new field with a fresh perspective.
A hunch (not data), new (not experienced), and diruptive (not incremental) — a great formula for philanthropy to embrace.
Ted Leonsis has a great blog post a few weeks back, “Common Traits I love in Founders as Entrepreneurs.” It’s a great list and one worth reading because Ted has no shortage of perspective on leadership. His experiences include building AOL, making documentaries, mentoring young people, owning sports teams, and investing in lots of start ups.
#6 stood out for me because it’s not always phrased this way: “Having a chip on your shoulder.” He goes on to say:
I love working with entrepreneurs who have a chip on their shoulder. They have a score to settle, are highly motivated and fiercely competitive. These founders are driven to win: they play hard and work hard and build a team of like-minded competitive players.
This tone or style is far more above the surface in business than in the nonprofit sector, but it’s definitely there. I think it’s a great characteristic to use when determining to launch a new venture.
I recently spent five days in Florida with my 92 year old grandmother. Each night we had our routine: movie, dinner, and of course home by 8pm. And at each dinner she had a habit which I think is a good lesson for anyone considering a start up.
We would sit down. She would immediately reach for the little box that holds the sugar packets. She would shuffle through them with purpose and urgency. Why was sugar priority #1? The first night I wondered too.
Turns out that when my mom visits, she likes Splenda. But my grandmother drinks her coffee black. So she never buys Splenda. And why spend a few bucks when you can get it for free? So each dinner was a chance to stock up. But my favorite part is that my mom just visited, meaning she won’t be back for at least six months. My grandmother is planning months in advance to avoid spending just a few bucks.
Having spent the last five years starting and building an organization — three of those in a terrible economy — I use my grandmother’s sugar search as a serious example of the financial mindset start up leaders should prepare to embrace (both personally and organizationally).
I don’t think this is necessarily right or fair or reasonable. But it is the potential reality. I’ve heard many other entrepreneurs say “prepare to go broke” if you launch a new venture. Hopefully that doesn’t happen. But every dollar counts and every way to save money should be done.
During the early years of my organization I joked with a friend also starting a new venture that we should go eat Costco samples for lunch. A few free lunches, free sugar, sleeping on couches when you travel, taking Bolt Bus instead of Amtrak, etc. add up to make a huge difference. It could mean another month you can afford a salary, launch a new program, or attend a critical conference. In other words, giving up some comfort and convenience to increase impact. Plus, this sends a good signal to others about your commitment and financial management abilities.
Here are some ways I’ve personally and organizationally saved money:
- Find donated office space or work from home. Use public places for team meetings and interns.
- Hotels are a last resort (no pun intended). In five years, I’ve traveled roughly 200 nights but spent less than 20 in a hotel. Use Facebook to find friends where you’re going.
- Turn limited resources into an “asset” for pro bono support and discounts. People want to help and if you explain you really want their help and would appreciate some of their time, most will say yes — lawyers, accountants, etc. And with vendors you have leverage: either they come down in price or you can’t afford them. They know this (if you tell them). You’re not being cheap — you have no choice. Use that as an advantage.
- Get a friend who works at a big company to make your color copies. Kinkos is a buck per page which is a ripoff. But you want to look good.
- Speaking of Kinkos, it always has pens and paper clips to take in their copy stations.
- I rarely ate out. 10 dinners at $20/each = an entire month of meals from the grocery store.
- No Starbucks. Cost of 5 large coffees ($10) = about 40 cups if you make it at home. Over the course of a year, that’ll save about $400. That’s 15 days of rent, a week’s pay, or the cost of a plane ticket to an important conference.
Hope the extremes of this list aren’t necessary for long for any start up. But even if it’s overly cautious, you’ll just have more money saved to execute your organization’s mission. Or to buy sugar.
I started this blog, in part, because the resources I found for starting a nonprofit were out of touch with both the times and for Millennials.
Earlier this week I published a post 8 Things to do Before Launching Your Nonprofit. Today’s post is the opposite: 6 Things NOT to do. These are based on my experiences as well as countering some of the resources out there that miss the mark:
1) Write a formal business plan. Before I go any further, let me say this: you still need goals, metrics, etc, etc. But you don’t need a 30 page business plan or a 50 slide Power Point. It takes too much time, no one is going to read it, and it’s going to change too much in the early months. In five years of leading ServeNext, I’ve been asked for a formal business plan ONE time. Go with a 3-5 page plan with a shorter time horizon.
2) Related to #1, you don’t need to have every detail about your organization finalized. There’s a fine balance between knowing enough to move forward vs. getting so caught up in knowing everything you move no where. Entrepreneurs are problem-solvers. If you feel ready to go, then go. You’ll figure out what you need to.
Technology provides a good example. Facebook didn’t launch with events, photos, a newsfeed, apps, and more. It launched with a single picture and a basic bio. People liked it, venture capitalists invested, and Facebook added more features. Repeat. They didn’t know every feature before it launched. They tested, iterated, scrapped ideas that didn’t work, and improved ones that did. Same thing for nonprofits.
3) Apply for a bulk mailer license. I couldn’t believe that various nonprofit resource groups recommended this. Who are you bulk mailing as a startup anyway?
4) Your own 501(c)3 status. Start with a fiscal sponsor. This is the better route anyway because it saves you time of applying for your own c3 until you’re confident your idea is working and you have the resources to keep going.
5) Well-connected board. The first board at my organization consisted of a friend and family member. That got us going and then we added others later.
Another way to look at this list? Over thinking, over planning, and worrying about every detail. Launching a nonprofit is a balance of head and heart. Too much of either and things won’t go too far. But if you start moving, your idea will work — or it won’t. But either way that’s progress because you went for it.
I’m a big believer that you need to be working full-time on your start up if you want to make it happen. There’s too much to do and it’s too hard to inspire donor confidence if you’re part-time. “I’ll go full-time once I have the money” won’t work very often.
And while you won’t know if something is working, well, until it works, there are things you can do before going full-time to see if your idea holds water.
1) Double your workforce without additional cost by finding a partner who is equally passionate. Someone who can go to a meeting when you have an exam, who has other networks, who has additional time, and can push each other.
2) Go talk with a lot of people and see what questions you’re getting asked, get better at answering them, and get a sense for what research you need to do based on FAQ. Pay special attention to people in the field of your nonprofit. Are they excited, threatened (which is probably a good sign), helpful, willing to make intros, etc.
3) Research what’s out there and have a good explanation why your organization is needed. You don’t need all the answers of what you’ll do, but you’ll need a solid answer about the high level need and your protential solution and how that’s different/better then what already exists.
4) Identify potential customers (i.e. funders) and see what they think. If you’re looking to start a health related nonprofit, go talk to the Robert Wood Johnson Foundation or Kaiser Foundation, for example. These big players have a national perspective. They can probably give you a decent idea if your idea has a market or direct you to someone who can.
5) But don’t let one or two doubtful meetings with big players deter you if you’re seeing positive signs elsewhere.
6) Find third-party validation. Is there press or a research paper that supports the idea your proposing since you’re young and unproven. Or some leaders in your field who will tell their peers they are behind you. This was absolutely essential for my organization — we don’t get off the ground without this.
7) Gut checks — are your conversations and research getting you more excited? Can you see yourself spending 70-80 hours/week on this and going broke in the process while having no social life.
8) Repeat. Repeat. Repeat. Keep doing the things above. They build on each other and can create a virtuous cycle so you know if you’re on to something — or not.
Based on these eight factors, our founding team at ServeNext knew we were on to something. Game on.