Working for a startup

A few days ago I commented on a post by Nikos  Moraitakis about why people should, of all things, want to work for a (greek) startup.  Today,  I read a post by Mike Greenfield, titled “Why Developers Aren’t Interested In Your Startup” which kind of reinforced my point of view.

First, here  is what I wrote in my comment, mildly edited.

Nikos, I think we should make understood, as emphatically as possible, that startups are VERY risky endeavors. They are not for the light hearted. And you do not want to lure the wrong people in them, as they will most probably quit on the first few obstacles. But attracting the wrong people  is a very probable turn of events in a crisis as the one we are undergoing in our country: you WILL lure them just because they have nothing else to do.

So, if the picture is as bleak as I am drawing it, how startups can ever find the right people to work for them?
There is a simple guiding principle here: economic behavior is about motives and the motive of a startup job is a reward substantially big to balance the high risk undertaken.
Having said that, I do not imply a financial reward necessarily, although this would be a strong motivator.
Since, by definition, startups do not have enough cash to pay big salaries, any kind of financial reward must have a variable element that relates to startup performance. Stock options is the most common such reward. This is the reason I had tried to open the discussion about stock options earlier this year.
Apart from the financial rewards, there are two other equally strong rewards:

  • do the things that you really really really like and are passionate about, and
  • learn a prodigiously lot of stuff in a very short time.

The first is not obvious. It concerns people with special skills that want to put them into work. If, for instance, someone has made studies in a very specialized area, it is not likely that he can put these studies to work anywhere else than in a startup. So if he really loves his field, he will be willing to undertake the hardships and the possibly less remuneration just to able to work on the thing he loves.

The second has to do with the multifaceted role that each employee plays in a startup. Actually, to be completely honest, there is no role. Not an exactly defined, at least. Especially in the very beginning.
It is, more or less, a broad direction that one gets, than a job description. Which means that he has to have the motive and the guts to pave his own way.

Greenfield’s findings support the view that financial rewards are one of the main motivators, although they appear fourth in the post. The other three are:

  • Industry
  • Founders’ reputation
  • Investors’ reputation

I relate also ‘industry’ to what I refer as ‘specialization’ for obvious reasons, and i tend to agree with Greenfield on his guess that working for a startup that potentially has the power to do social good or change the world in some aspect is also a big factor.

But apart from my beliefs and guesses it would be interesting to hear from others what would attract them to a startup despite the fact that they could possibly get a higher salary in a more mature company. What can counterbalance the financial rewards?

In search of angels

Earlier today, I read and shared a post which recounted the recent seeding of the, so called, drachma startup (congrats on this) and expressed, in the form of a wish, the following thought:

We need a paypal mafia of sorts. There’s enough old money in Greece to put this together, but it’s mostly in shipping and trading businesses, so it’s not connected to the tech scene in meaningful ways. This connection must be made and nurtured. I don’t know how this problem will be solved, I am not the right person to solve it. But here it is, laid out for the more creative minds out there to ponder.

At first, the thought seemed right to me but, pondering on the subject a bit longer, I finally  came to a different conclusion. History  and experience elsewhere (not only Silicon Valley but even in our continent) teaches us that it is the entrepreneurs themselves that become angels and VCs. And not any kind of entrepreneurs but the ones that have, broadly speaking, worked in the same areas and the same fields as the those they later opt to fund.

I don’t think we will see money from shipping flowing in internet startup investments in Greece anytime soon. And if we do, the expectations will most probably be wrong and the management of the investments not appropriate.

There is nothing wrong with the shipping people. They are not morons of some sort that miss to see the ‘lucrative’ opportunities of the Greek startups. On the contrary. They are extremely cunning and capable businessman, used in dealing with bigger and harder issues.  But they happen to have have shaped their mindset, practices and goal setting in an entirely different sector. And this makes all the difference.

Tech startups and internet startups are not traditional investments that can easily fit to appraisal models and have clear cycles and signs of rise or fall. A startup is not a vessel. Its business model is, in most cases, unknown. Or, changing too often. It is unlikely that, if it doesn’t proceed according to plan, it can be sold as scrap. The money that a ship owner can put into startups is money wasted for him as there is no shortage of investment opportunities in his sector with more foreseeable returns.

In my career I have experienced something like this twice. Not from ship owners but from bankers. Once as a simple employee, in the beginning of my carier, and the other as the executive who was supposed to run the ‘investment’.
In both cases the investor was a banking institution and the investment an IT company.

If there is one thing I can immediately pin point as the reason of failure (as they both were failures) it is this: the banking people thought of these companies (:their investments)  as mature businesses and tried  to manage them accordingly. Actually, for a long time,  I thought the same way. It was only after a lot of effort and pain that I realized that my role was not to run the business (as per my job description) but to find the business I was assigned to run. Unfortunately, Steve Blank had not come up yet with the The Four Steps to the Epiphany and he did not save me valuable time.

If there ever is going to be a crowd of angel investors from Greece, for Greece and in Greece, it must arise from the Greek startups and their successes. Which means it is going to take some time. It will not appear before we see some substantial exits and some real wealth  transfered to founders’ pockets. Once we have them both, then there will be angels.

The Android Déjà vu

Since it’s inception, Apple meant to offer a combination of hardware and software to the consumer. Back in the ’70s this wasn’t really a novelty. Such was the paradigm of the Computer Industry in general. One needs only to think of IBM as a testimony to this claim.

And then, in the beginning of the ’80s, came an innovator: Microsoft.

Innovator in the sense that it pioneered the business of being a software company that sells primarily operating systems. Because, otherwise, neither OS it sold (the MS-DOS)  was really novel, not the company itself. As a matter of fact, Microsoft is a bit older than Apple. But Bill Gates and Co were the right time in the right place to close a deal (with IBM) that would change their fortunes as well as the whole computer industry.

The decoupling of the Operating System from the Hardware and the widespread copying of the IBM personal computer, led to the boom of the PC industry: hundreds of manufacturers produced cheap clones of the original IBM machine, eroding its dominant position and swallowing its market share. This unprecedented expansion was not matched by a relevant expansion of OS offerings though. Microsoft became the king of the game.

The situation remained practically unchanged for 25 years until, in the middle of the ’00s, Apple, aided by the success of its ipod and itunes, started gaining market share again. The one stop shop approach started showing strength again and this trend, as far as personal computers are concerned,  is still unfolding.

In 2007 enters the iPhone, a mobile phone with HW and SW from the same source: Apple. As with the original Apple computers, ipPhone made significant inroads in the Smartphone market. Soon it became its  driving force and certainly the fastest growing, most profitable and most discussed product.

Android, much like MS-DOS compared to Apple, comes later. Much like MS-DOS too,  it’s coming from a vendor (Google) that does not sell hardware. Much like MS-DOS it helps manufactures around the globe to produce better and cheaper smartphones. And much like MS-DOS (or Windows) suffers from bugs and instabilities and lacks in the user experience it offers compared to the iPhone operating system, the iOS.

But it doesn’t matter.

On it’s way to  becoming the main smartphone operating system  (if it’s not already there) it’s becoming better. And it challenges the wisdom of buying hardware and software from the same source afresh.

If we project these parallels into the future, we will expect to see a marginalization of the iPhone and its latter, much latter, shiny come-back with a vengeance.

But Steve Jobs is not around this time. And this makes things less predictable.

e-nnovation: My presentation on Social Shopping

It’s a little bit a thing of the past now, but since a blog is also a sort of a personal log, a diary, I want to have this recorded somewhere.

It’s Official: Apple Is Now Worth More Than Microsoft

Let’s see for how long…

A biz social media account should follow back?

I am not adamant on this but I think it is right: a business account in a social medium, should reciprocate friending/following etc wherever possible (in facebook pages it is impossible) as a courtesy to the people engaging with it.

For account of individuals I have strong contrary views though.

What do you think?

Consumers Trust Their Friends Less

…social networks themselves may be contributing to the decline in trust. Platforms such as Facebook and Twitter have allowed people to maintain larger circles of casual associates, which may be diluting the credibility of peer-to-peer networks. In short, the more acquaintances a person has, the harder it can be to trust him or her. Mr. Edelman believes the Facebook component has “absolutely” played a role in diluting trust levels.

I subscribe to this

Is Social Search a threat to SEO?

I think it is, and I tweeted so  yesterday.  And the reason is obvious. What is SEO about? Ultimately, it is about one thing: the ‘website’. It’s about making a website and its pages discoverable, ranked favorably in search results, described appropriately so that searchers hook on the description etc.

But ‘websites’ are not ‘in’. Check the diagrams  from Google trends for websites below.

Website traffic for 5 major IT companies
Website traffic for 5 major IT companies
Website traffic for the 2 major consumer goods companies
Website traffic for the 2 major consumer goods companies

While the overall number of people online is increasing, the visits to the web sites keep falling.

At the same time the volume of searches for these brands shows a completely different picture.

Search volume for the 2 major consumer goods companies
Search volume for the 2 major consumer goods companies
Search volume for 5 major IT companies
Search volume for 5 big IT companies

In the last 12 months CG companies see a volume increase or remain steady (amidst the crisis) while, for IT, a longer perspective reveals a mixed picture that has to do with what these companies are and technologies they offer:

  • oracle and ibm are gradually decreasing,
  • apple is increasing,
  • dell  increases too  although less quickly,
  • and hp seems to hold its ground or slightly decreasing.

But there is an equally important movement undergoing: people shift their reliance from search to peers for news,  recommendations and answers.

I don’t remember how many times and about how many things I  have asked my twitter friends’ advise. And it always comes. And most of the time  it’s good too. Not so  abundant as  search results, but who reads search results past the first page anyway?

Enter social seach. Google injects results in search from our social graphs (opt in). I don’t have to reason the usefulness of this.

What should we expect? What else than  these two inversely related trends accelerating?  Less reliance on search, more reliance on peer recommendations.

There are some interesting implications here: SEO consulting and search advertising have profited from our reliance on search. Search won’t go away anytime soon, especially with the social element in it. But what would be the need for SEO? And what would be the need for adword advertising, if the important factor in search results turns out to be our peers?

Is Google shooting its own foot?  So it seems. But I am sure they have figured it out already and they are thinking of alternatives.