SCARCEST RESOURCES FOR AN ENTREPRENEUR : 4KTA
Date: Wednesday , August 01, 2012
Naveen Bisht is a serial entrepreneur and Board Member, Chair – Programs, The Indus Entrepreneur (TiE )and member of TiE Angels Steering Committee, based in Silicon Valley, California.
Once a great opportunity has been identified by the entrepreneur and he is well on his way pursuing this opportunity, one of the daily challenges is to identify, understand and optimize the key resources for its successful accomplishment. For those seeking to learn further on the topic of opportunity identification, there is an excellent framework called the Blue Ocean Strategy Framework by W. Chan Kim and Renée Mauborgne that defines the first fours levers used for opportunity identification - eliminate, reduce, create, and raise. You can get this book from any bookstore. For every entrepreneur, it is critical to analyze and then decide how and how much time, talent and resources to invest in any task, activity, project, or a customer prospect. My focus in this article is to outline, in my view, the scarcest resources for an entrepreneur. Here are my four key take away (4KTA) points on this topic based on my experiences.
1.Time - Assuming that you already have a world-class and brilliant technology and business team in your startup. This team is highly passionate and wants to ensure that company will succeed big time. With a smart team like this, it is apparent that not only they would come up with many clever ideas but they would want to implement all of them. These could be new features, new projects, new marketing tactics and on and on. And, it's really tempting to take these on. Each idea sounds like the next great idea since the slice of bread. However, regardless of how much venture capital you have raised and how many developers you have, it’s impractical to pursue too many ideas at the same time. It becomes critical for team to define clearly what they will spend time on and what they will choose not to pursue. For instance, if you add one extra feature than was planned that serves a narrow set of customers, you end up supporting it in future releases adding complexity to next version of development with all sorts of testing whether it be usability or regression testing or something else. You and your team need to be laser focused on core mission of your company and hence, your team’s time is one of the scarcest resources. You need to prioritize, allocate and spend it wisely. Keep your team focused on the items most relevant to the company’s success in the short and long term.
2.People - In high technology industry especially for doing a startup, as they say that skilled developers are one of the scarcest resources. In my view, the entire team consisting of developers, product manager and business managers are scarcest resources. All of them need to be highly skilled. In early stages, the core initial team forms the DNA of the company charting the course for company’s future and ultimately, the grand success. Be ultra-selective in bringing team members that are ultra-smart, highly passionate, high energy, full of positive attitude, open minded and very flexible. These members serve as attractors for bringing new members with the similar or even higher caliber on board. They need to solve problems rapidly or find alternative strategies or solutions. An entrepreneur needs to recognize these members in the team early on and treat them with respect, understand what drives them to excel, what motivates them and ensure that an environment is created that will keep them charged up and motivated.
3.Focus - I touched upon it briefly in the Time section above. A recent highly successful and timely example of this scarcest resource called Focus is the Instagram app. Instagram only focused on Apple’s iOS devices. They were truly excellent at what they did namely photos and did not do video. Also, they did not release their app on Android platform until recently around the same time as their acquisition by Facebook. The key question to ask yourself and your team is what your company wants to excel at. By working on multiple initiatives, will that distract you and your team’s focus from your core mission? Since entrepreneurs are overly optimistic class of species, we tend to believe that we can finish this new feature, new idea, and new concept off in one weekend or in few days. However, the reality is far from it. Not only it ends up taking your team’s time, resources, and laser focus from the core mission but it ends up coming back and haunting you later due to diversion it creates. Make sure that your team is laser focused on the core mission of the company.
4.Cash - You may have heard this saying. Always remember that for startups "Cash is King". It’s so true. Having cash and access to money is another scarcest resource for entrepreneurs. What good it is that you have developed the product and you run out of money. Around the same time, some external unanticipated market factors have created public and private investors to turn bearish and hence, no venture capitalist or investor wants to invest in your company. It's like in early 2001 after the dotcom crash; raising capital for a startup used to be compared to being in a nuclear winter. Treat each dollar in your company as the last dollar. Create a scalable business model. Make sure that you have a repeatable and scalable sales model first. Be aware that as entrepreneur CEO, you need to ensure that you understand when your cash may run out; what milestones need to be achieved before you can go back to new investors to raise the capital and have the right plan of execution in place to achieve those milestones. More importantly, if market seems hot and investment activity in startups is on rise, investors are calling you to make investment in your company, consider it seriously and take the capital despite still having enough cash in the bank from last financing to reach your next milestone. In summary, my four 4KTA points in identifying scarcest resources for an entrepreneur are Time, People, Focus and Cash.