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Shockingly Honest CEO Memos–Microsoft, Nokia

Engadget calls freshly minted Nokia CEO Steven Elop’s internal letter to the troops “one of the most exciting and interesting CEO memos we’ve ever seen.” Selected quotes:

We have more than one explosion – we have multiple points of scorching heat that are fuelling a blazing fire around us.

Apple disrupted the market by redefining the smartphone and attracting developers to a closed, but very powerful ecosystem.

They changed the game, and today, Apple owns the high-end range.

The first iPhone shipped in 2007, and we still don’t have a product that is close to their experience.

Android came in at the high-end, they are now winning the mid-range, and quickly they are going downstream to phones under €100. Google has become a gravitational force, drawing much of the industry’s innovation to its core.

But there’s still the low-end of the market … except.. oh, gotta love this choice quote:

At the lower-end price range, Chinese OEMs are cranking out a device much faster than, as one Nokia employee said only partially in jest, “the time that it takes us to polish a PowerPoint presentation.”

Hm, perhaps the Chinese don’t have PowerPoint? Smile (Hey, there’s a reason why I suggested the US Should Donate PowerPoint to the Taliban)

So yes, it’s a brutally honest memo from a new CEO – but not sure it holds the “most exciting ever” title.

Here’s another gem from Elop’s former boss: a CEO who is not a hired gun, but Founder, large shareholder, industry icon, Bigger then God.  Yet he can’ get his troops aligned, and as a user is frustrated at the crap his Monster of a company is turning out.  Yes, I am talking about (then) Microsoft CEO Bill Gates.

Excerpts from his 2003 internal letter:

—- Original Message —-

From: Bill Gates
Sent: Wednesday, January 15, 2003 10:05 AM
To: Jim Allchin
Cc: Chris Jones (WINDOWS); Bharat Shah (NT); Joe Peterson; Will Poole; Brian Valentine; Anoop Gupta (RESEARCH)
Subject: Windows Usability Systematic degradation flame

I am quite disappointed at how Windows Usability has been going backwards and the program management groups don’t drive usability issues…

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Damn, I Want to be a Developer … in Boulder, Colorado

Too bad I am not.  Which is why I don’t qualify for this all expenses paid trip to Boulder:

And the pitch:

Boulder Needs More Kickass Developers

Want a FREE trip to beautiful Boulder, Colorado? The Boulder tech scene is growing like crazy. Twenty of our top tech startups (you can see a few in the sidebar) have banded together to fly in one hundred top software developers, programmers and engineers from across the country, all expenses paid. You can apply to be one of the hundred.

So here we go, getting our daily dose of layoff news, while Boulder startups are in shortage of talent.  Good developers are still worth gold … somewhere. (They mine gold in Coloradosmile_wink)

Developers.  Not Management, Marketing, Sales – not the MBA’s.  And that’s the clue to understanding a lot of the differences between the startup world we have today and during the late 90’s bubble.

Back then startups got VC-funded and part of the deal was bringing in “pro” management teams: the MBA-types and former corporate Executives who flooded the Valley in the hope of IPO-riches.  Founders found themselves in VP / Director positions, or got pushed out, if not, they were left wondering how their little baby got to hundreds of employees so fast and just what all these new managers were doing with their company.  Then the bubble burst, and the imported Exec’s rushed back to the safety of the corporate world leaving the wreckage behind.

Today most Web 2.0 startups are run by the original Founder, often a developer him/herself. This is now the age of the technologist, not the business manager. The roles are reversed.  These CEO’s, Founders, team members won’t jump ship – the ship is theirs, and there’s nowhere to run back anyway.  One more reason to be optimistic about their survival.

In the meantime, here’s a preview of what it’s like to work in Colorado, also home of TechStars and Defrag (use discount code zoli1 to get $300 off @Defrag)

(Originally posted @ CloudAve.  To stay up-to-date on SaaS, Cloud Computing and Business, grab the CloudAve Feed here)

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No, the Sky is Not Falling in Startup-land

Lot’s of noise today, RIP Good TimesIT’S OVER! POP GOES THE BUBBLE, Sorry, Startups: Party’s Over etc.   I think the panic is overdone.

Sure, a lot of startups will fall – and some of them would have done so without a recession anyway. Times are officially tough, but the truly strong businesses will survive, and some of the Web 2.0 whiz-kid baby-CEOs  will come out of this as battle-hardened Entrepreneurs.

Talk about Executives… some can wreck the business on their own, they don’t need a crisis: see Entellium wrecked by fraud.

Finally some startups think they can keep on re-architecting forever – see NetBooks, ViewPath (the latter just came out with a new product though.)  Good luck to them… wonder if their market runs away…

These are some of the thoughts I’m discussing on CloudAve today – read more here.  Even better, grab the feed here.

Update:  Want to get off the “Sky is falling” treadmill? Need inspiration?  Find it here.

Even better, get really inspired at Defrag.  Use discount code zoli1 to get $300 off.

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Startups: Executive Hiring Challenges or Beware of the Suits

In a recent post about Atlassian’s quest to hire a VP of Marketing, I hinted at a bigger subject: the dilemma almost all successful and fast-growing startups face at some point.  When they reach 150-300 employees, should they still hire “startup talent”, or is it time for them to bring in some grey hair, and the corporate experience that comes with it?

I’ve seen this movie too many times, and it’s not a particularly good one. In the 90′s startup Founders rarely had the chance to make the decision themselves: they typically were heavily VC funded, and the VC-dominated Board’s standard formula was to bring in “4-star generals”: ex-corporate VPs, SVPs, who would likely have  the experience to take the business to “the next level”.  Or not.  I’ve seen too many of these  fail, in fact I personally experienced the pain of two businesses: aggressive growth, 300 or so employees, hiring top-notch (per their pedigree) Executives and mid-management, and a year later the Founders were wondering just where their ROI was… big $ spent, nothing got done.   With more of the corporate-types on board, politicking began, and soon the early employees, really more members than employees, who defined the very fabric of the company started to leave.

During the post-bubble, nuclear 2000-2002 when the job market was essentially dead, this trend only got worse. The surviving startups still had loads of VC money, and their Boards  felt survival depended on smart hiring.  In came the Executive Recruiters, who often did not even understand the business, they just ticked off items on their shopping list.  Experience, experience, experience: you had to have been there, done it – in the exact same position, title, and preferably five times.

The only problem with this hiring mentality was that it completely ignored human nature. If you’ve “done it all”, there’s little challenge left in the new job.  And challenge you need: that’s what makes you strive to become an over-achiever, which is what a startup needs.  The “been there, done that” types often have a sense of entitlement, having descended on the startup world, they expect smooth sailing till the IPO, than retirement.  Smooth sailing is not what you need in a startup: you need fighters.  Don’t hire somebody who steps down into the role for the equity; ideally don’t even hire someone making a lateral move.  You need hungry, driven fighters, who while have the skills and experience, will truly step up to the new job.  You need someone who does not want a job, but a passion, a lifestyle.

Another problem with hiring former corporate hotshots is that they  often turn out to be quite incapable of performing without their previous support infrastructure and staff.  They are leaders, not doers – a startup needs both in one person.

I remember interviewing for a VP position at a well-funded startup: the rounds with the CEO and his co-founders went well,  not only did we “click”l on a personal level, but my enterprise software background was a perfect match and  we had intense business conversations right from the first moment. Then I met the freshly minted VP of Sales, who just got hired from Siebel (which was a good brand back than).   Mr. Sales was a corporate BS-er who had absolutely no clue about the business. He avoided answering any specific questions on market positioning, differentiation,  giving me the “our product is best” generic BS, and any initiatives we discussed started with “I’m about to hire a manager for this”.  In minutes I knew that not only it was the end of my application there, but worse, the company was in big trouble, too.  I felt bad for the founding team: they were so proud of their latest hire (“big fish from Siebel, so he must be good, so we’re on track with sales…) – but as an applicant I was in no position to open their eyes.  Lo and behold, a good year later the company was out of business: they got picked up in a garage-sale.

But enough of the negative examples:  let’s look at the success stories.  Back to Atlassian, where this story started: when Mike Cannon-Brookes and Scott Farquhar started their business in 2001, drawing $10k against their credit cards,  they had no clue just how successful a business they would build – yet 7 years later they are now running a $30 million fast growing international business, and are celebrated as Entrepreneurs of the Year.   Back then they certainly would not have been hired for *this job* by a recruiter firm.  And perhaps the best testament comes from Google: I read one of the Founders say that their current recruiting filters are so excruciatingly tough hat he himself could not get hired by Google today. ( I can’t locate the quote – would appreciate any reader help).

Perhaps the invasion of the suites is inevitable in any business – I don’t know if it happens at having 1000 employees… 5000.. or more, but it should certainly not happen at the 1-300 level, when a (former) startup is about to implement some management structure and processes for the first time.   Experience, some track record of course never hurts, but I think startups and “recent graduates” of startup-life owe it to themselves to hire someone with exceptional skills, drive, who would have major challenges and for whom the current job is a clear step up.  That’s the growth engine you give up when you bring in the suits, and IMHO, you should put it off as long as possible.

Disclaimer: I’ve been a Management Consultant, Startup Executive (President, VP), but not Founder of a successful startup… so what do I know?  I know I have CEO readers, also VC Board Members, so please come in here and comment below.

Update:  With perfect timing this old post showed up in my reader again.  Xobni’s Gabor Cselle talks about the three waves of startup hires:

    1. First-wave people want to create success from nothing.
    2. Second-wave people want to make something popular more successful.
    3. Third-wave people want to join a successful environment and preserve the status quo.

I was surprised to find my own comment on Gabor’s old post, essentially summarizing the above long rambling in one sentence:

Startups typically get into trouble when the Founders realize they need 2nd-wavers, work with “pro” recruiters and end up with a bunch of “big name” expensive 3rd-waivers.

Update (9/1/08): Since I started this post with Atlassian’s quest to hire a VP of Marketing, it’s only appropriate to follow up on it.   Atlassian President Jeffrey Walker reports:

All but one of our best candidates came from referrals

None from recruiters.   Even though many are smarter than this.   Takeway: network, network, network.

Related posts:

Update: This quick rant by Bob Warfield is worth reading:  Startups Need Starters