The Care And Feeding Of Co-Founders

The most successful startups are founded by persons whose skills are complementary and by working together they bridge the entire spectrum of skills necessary to exit the startup cradle alive and stand strong as a successful company.

In theory that can take the form of a visionary, a creative person, a product development person, an operations person, a marketing person, a tech person, and a finance person. That is a lot of potential co-founders, no? Continue reading


Smile Direct Club Bankruptcy

Smile Direct Club, founded in 2014 as a D2C company, was an ambitious effort to provide progressive tooth re-alignment to your smile at an attractive price. It had a good product, a healthy market, a good price, and satisfied customers; but, it failed and is now in bankruptcy.

SDC had more than 2,000,000 customers (its main competitor Invisalign (operated through dentists) just passed 15,000,000 customers, but it was founded in 1997 and came to market the next year) and sold progressive aligners (plastic trays that gently moved your teeth) and regular service thereafter with a lifetime guarantee.

It was less expensive than alternatives (Invisalign), was D2C, did not require a dentist visit, and customers loved the product and service; but, alas the numbers did not work.

They have $900,000,000 of bloody debt. Can that be possible?

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The $10MM Gross Revenue Reality Check

If you are a startup, I hope one day soon you get to $10,000,000 in gross revenue. If you do, I have some thoughts for you.

A caveat first — there are a great number of exceptions to what I am going to share with you, so do not fall prey to missing the difference of your situation or embracing every word I say, but there are reasons big and small as to why I hold these views.

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CEO Shoptalk – Celebrate The Winning Of Small Beginnings

In the beginning was the Word, and the Word was with God, and the Word was God. [John 1:1]

In the beginning of any startup company is the crucible that is the startup world which flows from The Idea and becomes the Vision, Mission, Strategy, Tactics, Objectives, Values, Culture.

Take a breath, a deep breath, exhale.

Then, there is the Pitch Deck, the Go-to-Market Strategy, the proforma, the Business Engine Canvas, the Dollar Weighted Org Charts, etc. etc. etc. There are Bylaws, Articles of Incorporation, and Shareholder Agreements.

This is all before you even begin to think about the prospect of raising money to breathe life into all of the above.

It is a bloody daunting task and I see lots of startup founders slowly drowning in the enormity of it.

Ernest Hemingway reference, The Sun Also Rises:

“How did you go  bankrupt?”

“Two ways. Gradually, then suddenly.”

Substitute the word “drown” for “bankrupt” and you get the picture.

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The Three Year Itch, The Second Scale

If you are a startup that has survived for three years, have a substantial gross revenue, are EBITDA positive, are GAAP earnings profitable, and have an attractive annual growth rate — CONGRATULATIONS.

You are a top 1-5% startup company and now you face the Three Year Itch or the Second Scale issue.

The problem is this —

 1. You are as busy as a one legged man in an ass kicking contest. Everybody is working their butt off. You can feel the effort in the air. Taste it. You are proud, but exhausted.

 2. Noting the above, you feel the need to add hands and person hours to the organization — maybe, just to relieve the perceived burden currently. Belay that thought.

In your exhaustion, you are struggling to figure out how. Perfectly normal, sorry.

 3. You want to grow — double in sales in the next 2-3 years [in my mind, you are in the $10MM range headed to $25MM in Year 3 of the New Plan (meaning Year 6 from founding)].

 4. You are clearly a powerful entrepreneur, but you have no idea how to handle the next three years — you had no idea how to form a company and take it to market, but you seem to have knocked it out of the park, so do not fret.

 5. You are going to do this thing. Why not do it under control? Continue reading


For Founders Only — The Thrill Of It All

In life we get paid in cash, ego enrichment, and self-esteem nourishment.

There are certain things that only a founder can experience or appreciate in the ego enrichment and self-esteem nourishment arena.

Here is a list:

 1. Only a founder gets the thrill of finalizing — owning — an idea that is either an aspirin (removes some of the pain of living) or a vitamin (improves the quality of life) — or both.

 2. Only a founder gets the final say on the name of the company. Jeff Bezos and his wife picked the name “Amazon.”

Same thing on the logo. You do this. You get the thrill.

One of my favorite logos. It comes from the corner of the Littlefield Building, an historic building at the corner of Sixth and Congress in Austin By God Texas, USA.

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Performance Appraisal And The PLAN

You’re a startup on your way. You are at that magic 50+ employee level at which you start to pay attention to things like Performance Appraisal. With that level of staffing, you will find out that when the tide goes out, some folks have been swimming naked — meaning not everybody is a super star.

Sure, you remember this — click on to see larger:

Business planning building blocks graphic

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Looping The Feedback

I am struck by how sometimes in startup world we miss the obvious.

Suppose you are a startup founder with a subscription element of some type to your future unicorn business. Being an analytical person, you check to see how many total subscribers/customers you have. About nine (or fifty) times a day.

You undoubtedly want to know, “Why did you subscribe to my website/product/genius?”

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