I was honored to be one of the panelists at the 2013 Dallas Digital Summit on December 10 and 11, speaking on the panel, “Startup Summit: Ramping to Success.”
I have taken my notes from that panel and turned them into a timely 2014 tip sheet for startups, especially in North Texas, so you can benefit, even if you didn’t make it to the panel.
What are three tips you would give to any new entrepreneur on how to build for scale?
1) Establish and built your company culture early. It will attract the right people and help you to keep them, which is critical in the early stages for growth.
2) Pay for flexibility. Early on, take every opportunity to pay for flexibility rather than trying to save money with less flexible options. When given a choice, opt for the more flexible solution, even when more expensive in the short term. You’ll need the flexibility and it liberates your strategy, so you can change and grow as needed and don’t end up making decisions based on early investments that you now regret.
3) Create an owner’s manual/Wiki for your business as quickly and as early as possible so that you can delegate processes and jobs as early as possible. This will help you to grow your company while maintaining quality control. It will also encourage you to delegate with less fear and hesitation, which can be big issues for entrepreneurs.
Recruiting the right people and especially the right sales and marketing people is one of the biggest challenges to any startup. How can you do it right? How can you avoid the bad apples? Ask around and look at your industry.
Experienced hires early in your startup’s life can have a big impact, but always hire for passion over experience. And avoid mercenaries at all costs. I’ve had experience hiring people who were supposed to be industry leaders but were really more concerned about their own egos and reputation than they were about the growth or success of the company. This is a huge danger and a huge risk for early stage hires.
Avoid the corporate types who haven’t had to survive and grow on a very limited budget and avoid the mercenaries who want to strip the company bare and get on to their next gig.
Why is Dallas-Fort Worth a great city to start and grow a business?
1) In DFW, you have proximity to great, hands-on venture capitalists who’ve been there, done it, and are willing to dig in and figure a business out from the inside. And really, in North Texas, you’re competing with a few hundred startups for attention and investment, rather than a few tens of thousands, as you would be in Austin or Silicon Valley. And all investors, including VC firms, have a strong preference for investing close to home. These things give your startup a big advantage.
2) Growing angel networks. Face it: There’s a lot of money in Dallas but it hasn’t historically been organized into angel networks that could benefit startups. That’s changing and now there are organized, ambitious angel groups emerging from the shadows and growing. Look to the Dallas Angel Network (DAN) and the North Texas Angel Network (NTAN) for exciting funding opportunities for your startup, as well as advice and feedback opportunities from successful entrepreneurs and investors, right in your own back yard.
3) Dallas has fantastic access to corporate headquarters and industry connections and expertise for your B2B or B2B2C startup. It is second only to New York City in terms of corporate headquarters, overall. In terms of Fortune 500’s, Dallas is Number 3 on the list of cities with the most Fortune 500 headquarters, led by Number 1, NYC, and Number 2, Houston – which is a short drive away.
Access to these critical early strategic partners, buyers and strategic investors and acquirers in your own neighborhood is tremendously important to the success of a B2B startup.
Just take a look at this list of a few of the very largest companies with a major presence in DFW.
4) If, instead of a B2B, you’re building a strictly B2C company, you’re also in luck! The Dallas market is a huge consumer market that is diverse and easy to access. This is the fourth largest metropolitan area in the US and one of the wealthiest areas of the world. If you can’t sell your consumer product here, you need to consider whether you’ve got the right product!
5) The cost of living in DFW is highly competitive. When comparing salaries to cost-of-living, DFW comes in fifth in the USA for affordability, according to Forbes and famed demographer, Joel Kotkin.
6) Finally, the people are just Texas-friendly in Dallas. For simple lifestyle pleasures, North Texas is hard to beat. With easy access to stunning outdoor recreation, access to one of the easiest and best connected airports in the nation, Love Field, and fantastic barbeque and mild enough weather to enjoy it outdoors most of the year, North Texas is a great place not only for your startup, but also for your co-founders and families!
1) The first rule of startup success is to outsource everything that is not core to your business! Repeat that mantra to yourself while pacing your office. Write it on your white board.
Make a list of everything that isn’t core, but that you’re still doing, and figure out how to outsource it. Examples of things that we used to do ourselves but have outsourced with all of my new businesses: Use QuickBooks Online, use every cloud-based service you can find, use cloud-based monitoring and quality-checking services, use cloud-based backup and shared storage and outsourced security monitoring and management.
None of that means that you don’t have to have control of your infrastructure or not be responsible for your services. Note that several of the items I mention are specifically monitoring and control services. I use dedicated monitoring services to keep an eye on my cloud services and notify me by SMS within seconds if something stops working correctly. Seriously, I love it.
2) Create a personal relationship with your banker. Just in the past year, I’ve gotten a personal call on my cell phone from the president of the bank where one of my companies keeps our checking account. I’d forgotten to move money between accounts to make payroll and was about to bounce a bunch of checks. Ouch! Embarrassing, but eventually, everybody does something like that. And having a discreet call from your banker, who can fix the problem in 30 seconds, is the best kind of embarrassing phone call you can get. Don’t wait until you need a relationship with your banker. Make one now.
3) Engage informal advisors and formal advisors as soon as you can, and also engage industry advisors and product advisors. Some of your product advisors should be users and potential users of your product. Do this as early as you can. Good advice, and someone to bounce ideas off, can make or break a startup. Done correctly, this is cheap for the benefits it can provide.
4) Find an attorney who specializes in early stage and growth stage companies – and who moves fast. The need for speed is critical, above all else when doing legal work for a startup. Hire your full-service corporate attorney later. Hire the guy who says, “Oh, you’ve got an investor who wants to sign a term sheet with you tomorrow morning, before he flies to Aspen for the holidays? Sure, I can get that done. I’ll just stay up and get you the docs in the morning. No problem.” Yes, these attorneys do exist, because there are business and transactional attorneys who love startups and live for the thrill of the deal and enjoy the flexibility, independence and absence of litigation duties that servicing startups typically involves. Find one for your startup.
That’s all I’ve got. Keep innovating and have a great 2014!