Techs and MBAs: the startup dilemma

New York is no Silicon Valley.  And while it may be a much better place to live (which is why I am never going to live anywhere else), it has a lot of learning to do about what it takes for a technical company to be formed, funded, and grown.

The challenges

  • Business guys — in Silicon Valley, it is often difficult to get a company to focuson the financial, pragmatic aspects of the business.  New York seems to ooze business pragmatism.  Unfortunately, it is often coupled with technical cluelessness which manifests itself in unrealistic expectations of technology, outsourcing debacles, and a complete disconnect to the motivations of West Coast tech companies who look for technology to acquire.
  • Tech guys — social, fun, traction, freemium, ad-driven, etc.  These are the buzzwords that technical people toss around often not understanding that“social” and “fun” is THEIR concept of social and fun, that society represented by their friends is not indicative of society as a whole (even in this country).  Often “freemium” and “traction” are used as excuses for completely neglecting even the thought of a revenue model for the business.

Given these challenges, here’s my take…

  • Respect. Business Guys: The technical people working at your company are not just “IT guys.”  Forget the way it worked at Morgan Stanley or your big consumer brands company.  These people are different.  And they are as significant to making the company a success as you and your Wharton buddies.  Tech Guys: The converse is true.  Without sales and customers your company is worthless, no matter how good the technology.  If you don’t have someone minding the business side of things, your idea, pinned to the unlikely hope of becoming “viral” will shrivel on the vine.  Tech may be great, but money is what you should be focused on.
  • Compromise.  If you are a business type, find a technical CO-FOUNDER.  Not a hired contractor that’s doing other things, not an outsourcing company that claims they can throw a prototype together so you can demo.  A real CO-FOUNDER whom you know well, invite to dinner, spend countless hours with in front of a whiteboard.  A real co-founder with whom you share equity EQUALLY.  This person needs to be someone you like, someone you can trust, and someone you admire.  The same is true for the technologists — you need a business CO-FOUNDER.  Not a hired sales rep.  Someone who is marketing focused and is not ashamed to cold call on the first few customers and hear “NO” over and over again.
  • Advice.  The problem is that most business guys wouldn’t know how to recognize a good technologist if they met him (well, he looks geeky, dresses poorly, and talks in jargon I don’t understand, he must be good).  And most technical people wouldn’t know a good business guys (he dresses well, seems sanguine enough, and isn’t embarrassed to start conversations).  These are not the criteria.  You first coder is not your CTO and you first sales guy is not a VP of Sales.  Both groups can use some outside advice, outside advice you should heed.

A good investor can help, but you have to show your willingness to accept help from the first presentation you give them.

One of the most valuable things VCs bring to your company (besides money) is helping you fill the gaps in you company’s team.  They should be very interested in balancing the tech and business aspects of the company.  You should ask them, after admitting your shortcomings, whether they have people they can interest in filling a particular role at a company.  If they are good, they will give you a name.  If they don’t, or throw around names that make no sense (“Yeah, I know Steve Ballmer from my Stanford days…” — actual quote I heard), think twice about accepting their investment.  You will be doing recruiting yourself and, I can tell you from personal experience, that task sucks more than any other task out there.  Not hiring engineers or sales guys — that’s doable, but recruiting VPs.  It is VERY HARD to do.

Bottom line:  Understand that no single person is a complete team and there is a lot you can learn from your business’ need for that “other half.”  And be prepared to pay for it.

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