What Makes an Entrepreneur (8/11) – Detail Orientation

Posted on Jan 26, 2010 | 102 comments


graph magnifying glassThis is part of my series on what makes an entrepreneur successful.  I originally posted it on VentureHacks, one of my favorite websites for entrepreneurs.  The full list is now posted there if you want a sneak preview.  I’ll try to add a few extra comments in my posts to keep it interesting.

I started the series talking about what I consider the most important attribute of an entrepreneur : Tenacity.  I then covered Street SmartsAbility to PivotResiliencyInspiration, Perspiration and Willingness to Take Risks.

8. Detail Orientation / Hands On – One of the easiest ways to rule out people who are pitching to me is when they don’t know the details of their business.  There are easy tell-tale signs.  I’ll start with an obvious one – I talk with the entrepreneur about competitors.  You can always tell during this discussion whether the entrepreneur has logged into their products, talked to their customers, read all the news stories and gotten all of the back channel info on the competition.  You can tell if they have a deep-seated competitive spirit.  Can’t go a mile deep on competition?  Buh-bye.

Let’s talk about your product or let’s look at your financial projections.  Can’t walk me through it on a granular basis?  Did someone else pull you’re financial model together while you did “your job?”  Not good enough.  The best entrepreneurs focus on details.  They can tell you the square foot costs of their property, they can tell you how much they spend on Amazon Web Services every month, they can tell you the 12 features that you’re working on for your next release.

One other big tell for me is the CEO’s grasp of the sales pipeline.  I can’t tell you how many CEO’s I’ve met with who can’t walk me through the details of their sales pipeline.  I want the names of the key buyers, the last time you met them, who the competition is and what are the criteria for a decision.  You think we’re just going to talk about your largest lead?  Sorry.  Let’s go through the whole pipeline, please.  I care about the details but I’m more interested in finding out whether you do.

Along with detail orientation I have a strong bias for “doers.”  When I ask for a quick demo and the CEO tells me that he’ll schedule a follow-on meeting with his sales rep because, “I’m not a demo guy.  The sales team doesn’t like me to give demos,” I usually think to myself, “a follow up meeting probably isn’t necessary.”  Similarly if you need your CFO to walk me through your financial model you’re probably not the right investment for me.  Ask any of the previous CFO’s when I was the CEO – they did the hard work but I edited the spreadsheets cell-by-cell.  In fact, I usually built the first 3 versions of the financial model (but then my ADD took over and I needed a great closer to make the model complete.  Luckily I had CFO extraordinaire, David Lapter, who’s now the CFO at KickApps.  One of his investors called him, “the best CFO in our entire portfolio.”)

I wrote a blog post about being hands on where I argued that startup founders need to be hands-on or in my words, “you can’t run a burger chain if you’ve never flipped burgers.”

I once had a startup team pitch me for an investment where the President of the company led the first call with me on his own.  I told him that “president” was a strange title for a startup.  He announced that they also had a CEO.  Interesting, “what are your different roles?” I asked.  He told me that the CEO set the strategy but that he, the President, traveled to all of the conferences evangelizing on behalf of the company.  Hmmm, “so who runs the company on a daily basis?” “Oh,” he responded, “we have a COO.”  The company had sub $1 million in revenue and was burning $850k / month.  It had a strategy-setting CEO, a limelight-seeking President and a COO who ran the company.

I gave one of the cheekiest responses I have given in my 2.5 years as a VC, “You don’t want to raise money from me.  The first thing I would do is fire you.  Then I’d fire the CEO. Then I’d cut the burn to a realistic level and build a company.”  (yes, I really said this)

They got their round done anyway from a big late-stage VC.  One of the large parts of the burn was PR, Marketing and attending conferences.  As I said, there are VCs who are fooled by all this but it doesn’t equal success.  12 months later the president and the CEO had moved on.  Bad VCs funded this madness in the first place and weren’t close enough to the company to see what was going on.  When the CEO of an early-stage startup tells me that they plan to hire a COO I’m usually not interested in the next meeting.

It’s different when you’re co-founders and one person gets the title COO. But even then I think it’s funny.  Anyone who’s ever presented to me with these titles hears the same questions: “OK, so who does tech report to?  Who does finance report to?  Who does sales report to?  You’re slitting that stuff?  Then what does COO mean?  Isn’t it a confusing title?”  My vote is that co-founders should pick one lead as the CEO and the other should have a functional role & title like Head of Sales & Marketing, CTO, VP marketing or whatever.  But that’s a digression.

Funny side-note:  The company was recently nominated for a Crunchie Award.  Money can’t buy you ultimate success but it’s clear that money CAN buy you awards. Unfortunately.

Funny side-note 2: The title of the post was orginally published saying 7/11 when it is clearly the 8th post.  Obviously I updated it.  Thanks to Phillip @fillup for spotting.  How ironic on a post titled detail orientation.  Thanks for spotting, Phillip!  Originally it was the 7th post when I wrote the whole series back in November but I ended up editing before VentureHacks published. Still, pretty funny.

  • http://www.socaltech.com/ Ben Kuo

    Nads, There's a few folks in tech/VC working in/around China, happy to share with some more details.

  • http://www.ecoelectrons.com/ Rahul

    Learning the details of every role that reports to you is probably a good idea whether it is sales, marketing, finance or prod dev. Giving direction to them without knowing how they go about accomplishing the assigned taks/projects can make things pretty difficult! Jason Calacanis touched on this in one of his Twist episodes. He apparently learnt/performed 60-70% of every core function before handing it off to a team member. Im sure you did the same Mark!

  • http://bothsidesofthetable.com msuster

    I think it's OK to outsource some coding initially while you have a day job. But at some point if you really want to build a business you need to make a leap.

  • http://bothsidesofthetable.com msuster

    Very late. Most early stage companies just need a financial controller. A serious CFO is only needed when: 1) you have complex customer billing arrangements 2) you have international business 3) you need to do complex financing like debt or factoring 4) you're post $10 million in revenue and / or you're preparing for an IPO in the next 2 years.

    That said, sometimes businesses combine a CFO with more of an operations role, which works well for some companies.

  • Shane

    I have a question from a young, first-timer's perspective with regard to titles. As first-timers, we are trying to figure out how to handle our “official business card titles.” We want to portray our confidence in our skills, but we also are very concerned about the arrogance of putting CEO on a business card when we are so fresh. One option we have discussed is not having titles at all. What are your thoughts?

  • http://bothsidesofthetable.com msuster

    re: doing it all – I agree you need your hands in all pies but worth reading Roy's comments above. There is a danger as you grow of not devolving power / responsibilities. I'm covering that in a future email.

    re: raising $8 million. Yes, beware rocket fuel until you've figured out your business. Money can be a great distraction, strangely enough.

  • http://bothsidesofthetable.com msuster

    A team is important, don't get me wrong. I just think the economics are much better for a founder if they start it themselves and then get a team including co-founders with big economics.

  • http://bothsidesofthetable.com msuster

    Thanks, Mark. I appreciate it. And I like having you around because I need some people to be willing to call BS when they disagree. I enjoy that ;-)

  • http://bothsidesofthetable.com msuster

    Great input. I think you're spot on about discussing your detail orientation with the team and asking them to help you stay honest. And finding the happy medium is critical. If you're too in the weeds then it is demotivating for your team members.

    If I come across people in LA with China connections I'll put you in touch. I know a few in NorCal worth meeting. I'll also be out there in May myself at a conference. Feel free to email me at msuster at gmail dot you know what.

  • http://subject2.com Nick Johnson

    I just found this blog as well thanks to Maren and her great video tutorial on Youtube

  • http://bothsidesofthetable.com msuster

    In my first company I didn't and I suffered from it. I think I talk about this in the “flipping burgers” post that you can find under the tab “startup advice.” Eventually I did but too late. In my second company I did.

  • http://bothsidesofthetable.com msuster

    Yes, everyone has strengths & weaknesses. The key is knowing yours and surrounding yourself with people who plug those holes.

  • http://bothsidesofthetable.com msuster

    thanks for spotting! fixed.

  • http://sharelomer.blogspot.com SharelOmer

    Thank you! these are great tips, see they way a vc think make you understand hwo a good company should be built.

    I love how you take your/others disadvantages and with a good team around making then an advantage, ADD often let break barriers and not live in comfort zone, but you need the great team/ecosystem/closers/reality people/action=results people around you to make you and them complete :)

    When building a company, what are the key rolls that should be “saved” when building a team, for example if there is a 2 man operation, one for biz and CTO, what are the most important key rolls to take up ahead: VP RnD, VP products, Biz Dev.. ?

  • http://lmframework.com/blog/about David Semeria

    Sure, no doubt (it's my plan)

  • http://giffconstable.com giffc

    great comment Roy. I agree that it's a fine line and important balance. It's an interesting transition for an entrepreneur as a company starts getting bigger, helped by being surrounded by people you really can count on.

  • http://www.socaltech.com/ Ben Kuo

    Nads, There's a few folks in tech/VC working in/around China, happy to share with some more details.

  • http://twitter.com/rahul2084 Rahul

    Learning the details of every role that reports to you is probably a good idea whether it is sales, marketing, finance or prod dev. Giving direction to them without knowing how they go about accomplishing the assigned taks/projects can make things pretty difficult! Jason Calacanis touched on this in one of his Twist episodes. He apparently learnt/performed 60-70% of every core function before handing it off to a team member. Im sure you did the same Mark!

  • http://bothsidesofthetable.com msuster

    I think it's OK to outsource some coding initially while you have a day job. But at some point if you really want to build a business you need to make a leap.

  • http://bothsidesofthetable.com msuster

    Very late. Most early stage companies just need a financial controller. A serious CFO is only needed when: 1) you have complex customer billing arrangements 2) you have international business 3) you need to do complex financing like debt or factoring 4) you're post $10 million in revenue and / or you're preparing for an IPO in the next 2 years.

    That said, sometimes businesses combine a CFO with more of an operations role, which works well for some companies.

  • Shane

    I have a question from a young, first-timer's perspective with regard to titles. As first-timers, we are trying to figure out how to handle our “official business card titles.” We want to portray our confidence in our skills, but we also are very concerned about the arrogance of putting CEO on a business card when we are so fresh. One option we have discussed is not having titles at all. What are your thoughts?

  • http://bothsidesofthetable.com msuster

    re: doing it all – I agree you need your hands in all pies but worth reading Roy's comments above. There is a danger as you grow of not devolving power / responsibilities. I'm covering that in a future email.

    re: raising $8 million. Yes, beware rocket fuel until you've figured out your business. Money can be a great distraction, strangely enough.

  • http://bothsidesofthetable.com msuster

    A team is important, don't get me wrong. I just think the economics are much better for a founder if they start it themselves and then get a team including co-founders with big economics.

  • http://bothsidesofthetable.com msuster

    Thanks, Mark. I appreciate it. And I like having you around because I need some people to be willing to call BS when they disagree. I enjoy that ;-)

  • http://bothsidesofthetable.com msuster

    Great input. I think you're spot on about discussing your detail orientation with the team and asking them to help you stay honest. And finding the happy medium is critical. If you're too in the weeds then it is demotivating for your team members.

    If I come across people in LA with China connections I'll put you in touch. I know a few in NorCal worth meeting. I'll also be out there in May myself at a conference. Feel free to email me at msuster at gmail dot you know what.

  • http://subject2.com Nick Johnson

    I just found this blog as well thanks to Maren and her great video tutorial on Youtube

  • http://bothsidesofthetable.com msuster

    In my first company I didn't and I suffered from it. I think I talk about this in the “flipping burgers” post that you can find under the tab “startup advice.” Eventually I did but too late. In my second company I did.

  • http://bothsidesofthetable.com msuster

    Yes, everyone has strengths & weaknesses. The key is knowing yours and surrounding yourself with people who plug those holes.

  • http://bothsidesofthetable.com msuster

    thanks for spotting! fixed.

  • http://lmframework.com/blog/about David Semeria

    Sure, no doubt (it's my plan)

  • http://twitter.com/mikenarodovich Nads

    ben, thank you, can't DM you @socaltech so let's connect on email, mikenarodovich at gmail

  • npatrick

    I couldn't imagine outsourcing code development…however I've been doing code as a side product of my engineering job the last 6ish years. I've been looking (not very hard) for a cofounder for the last 6 months since I started my business, but in the meantime have become the CEO, CFO, CTO, coder, telemarketer, salesman, yada yada yada with no outside help. If you think you could outsource this type of work, I don't think you should be surprised if the end product isn't really what you want. I think that as a software service business that you really need to understand every single part of your code, let alone the business model.

  • Pingback: Building A Business To Work Without You: The Pre-Start Up Paradigm! | Leadership Development Program()

  • http://twitter.com/mikenarodovich Nads

    ben, thank you, can't DM you @socaltech so let's connect on email, mikenarodovich at gmail

  • npatrick

    I couldn't imagine outsourcing code development…however I've been doing code as a side product of my engineering job the last 6ish years. I've been looking (not very hard) for a cofounder for the last 6 months since I started my business, but in the meantime have become the CEO, CFO, CTO, coder, telemarketer, salesman, yada yada yada with no outside help. If you think you could outsource this type of work, I don't think you should be surprised if the end product isn't really what you want. I think that as a software service business that you really need to understand every single part of your code, let alone the business model.

  • http://www.astramatch.com/blog pemo

    Mark as usual you make some good points & continue to educate me with your posts. However this series on What Makes a Good Entrepreneur has had me ticking each post with glee until I read this one. I gather a lot of the qualities that you talk about & acknowledge are your own strengths as is this one. However I must say that my mind naturally does not want to go with the detail. Having said that I have trained myself to do accounts, bookkeeping & financials for my own businesses over the years. My mind also isn't naturally strategic but I find it helpful to have teams/colleagues around me who can support me in my weaknesses whilst I try to beef them up. But surely the bottom line is that entrepreneurs are not perfect – they have different strengths & some weaknesses otherwise we are not talking human anymore. Steve Blank posted over at Venture Beat asking the question 'Do dysfunctional families breed entrepreneurs? http://entrepreneur.venturebeat.com/2009/09/23/… which certainly highlights the more human side of the driven & focused quality of some entrepreneurs including myself. Sorry I just needed to bring a little balance to all this entrepreneurial perfection. Keep up the great posts though, I am learning loads.

  • http://shanacarp.com/essays ShanaC

    Mark, would you mind addressing how to break through the fear that comes with learning new material because it can sometimes be very painful? Please?

    One of the hardest moments for me was learning to draw. My stuff sucked (sort of). And then it started to really burn so that you would want to look (it took six to nine months, give or take, where I ramped up to about 5-10 hours of practice most days). And while I can't do a perfect render, I can say if I wanted to I could sit there and practice because I know (most) of the techniques how to start looking. And I can draw in a way that brings out emotions and energy. I know a lot of it was the practice, yet some of it was being (especially initially) in an environment where it was assumed that you didn't know how to draw and that it was a learnable skill.

    I'm finding it extremely hard to replicate that process in order to learn to code on my own. (Javascript, small thing for my BA, I wish I was smart enough to make it bigger). It's not fear of trying something (I've just copied out of cookbooks before, and I made one really small toy program in another language designed for artists.) It's how do you replicate the comfort zone of only emphasizing the small ways you suck so that you are more confortable learning how to become detail oriented?

    Of your list, this is the one I don't think is totally inborn. Maybe someone gravitates to certain fields and is weak in others. Yes one can learn, which does require stretching to the limits. But there is bad pain and there is good pain. I'm one of those in favor of building up- just like I don't expect a inflexible person to become suddenly flexible after one yoga class, I don't expect every detail to be understood easily by a person in the initial stages of learning. And yes, I believe in preventing strains in both yoga classes and in people's heads.

  • http://shanacarp.com/essays ShanaC

    The best advice I got was from a Rabbi in Chicago – if it really isn't working out, you can always change. Perfection isn't worth it, striving is.

  • http://www.astramatch.com/blog pemo

    Mark as usual you make some good points & continue to educate me with your posts. However this series on What Makes a Good Entrepreneur has had me ticking each post with glee until I read this one. I gather a lot of the qualities that you talk about & acknowledge are your own strengths as is this one. However I must say that my mind naturally does not want to go with the detail. Having said that I have trained myself to do accounts, bookkeeping & financials for my own businesses over the years. My mind also isn't naturally strategic but I find it helpful to have teams/colleagues around me who can support me in my weaknesses whilst I try to beef them up. But surely the bottom line is that entrepreneurs are not perfect – they have different strengths & some weaknesses otherwise we are not talking human anymore. Steve Blank posted over at Venture Beat asking the question 'Do dysfunctional families breed entrepreneurs? http://entrepreneur.venturebeat.com/2009/09/23/… which certainly highlights the more human side of the driven & focused quality of some entrepreneurs including myself. Sorry I just needed to bring a little balance to all this entrepreneurial perfection. Keep up the great posts though, I am learning loads.

  • http://shanacarp.com/essays ShanaC

    Mark, would you mind addressing how to break through the fear that comes with learning new material because it can sometimes be very painful? Please?

    One of the hardest moments for me was learning to draw. My stuff sucked (sort of). And then it started to really burn so that you would want to look (it took six to nine months, give or take, where I ramped up to about 5-10 hours of practice most days). And while I can't do a perfect render, I can say if I wanted to I could sit there and practice because I know (most) of the techniques how to start looking. And I can draw in a way that brings out emotions and energy. I know a lot of it was the practice, yet some of it was being (especially initially) in an environment where it was assumed that you didn't know how to draw and that it was a learnable skill.

    I'm finding it extremely hard to replicate that process in order to learn to code on my own. (Javascript, small thing for my BA, I wish I was smart enough to make it bigger). It's not fear of trying something (I've just copied out of cookbooks before, and I made one really small toy program in another language designed for artists.) It's how do you replicate the comfort zone of only emphasizing the small ways you suck so that you are more confortable learning how to become detail oriented?

    Of your list, this is the one I don't think is totally inborn. Maybe someone gravitates to certain fields and is weak in others. Yes one can learn, which does require stretching to the limits. But there is bad pain and there is good pain. I'm one of those in favor of building up- just like I don't expect a inflexible person to become suddenly flexible after one yoga class, I don't expect every detail to be understood easily by a person in the initial stages of learning. And yes, I believe in preventing strains in both yoga classes and in people's heads.

  • http://shanacarp.com/essays ShanaC

    The best advice I got was from a Rabbi in Chicago – if it really isn't working out, you can always change. Perfection isn't worth it, striving is.

  • Keith B. Nowak

    I always get confused by the President and CEO roles as well. I don't understand the difference. Is there actually a difference (in the proper business sense) or is it just a 6 of one, half dozen of the other type thing? What I really don't understand is when someone is the President and CEO. Again, does that mean anything different than if he was just the President or just the CEO?

  • http://keithbnowak.com/ Keith B. Nowak

    I always get confused by the President and CEO roles as well. I don't understand the difference. Is there actually a difference (in the proper business sense) or is it just a 6 of one, half dozen of the other type thing? What I really don't understand is when someone is the President and CEO. Again, does that mean anything different than if he was just the President or just the CEO?

  • http://richineverysense.blogspot.com/ scheng1

    haha, the small company with CEO, President and COO is really good at generating big title. I bet the cleaning lady is the Office Manager then!

  • samsantana

    Work in a start-up. I helped plan and structure the company.
    the biggest problem I see when deciding what direction to go is that people start proving their points with their “wallets”. Comments like “Let's go with my lead, I've been making lots of money since before you were born.”. Even though it's not said with the utmost arrogance that it sounds, I think that these “successful” people don't realize the new era we're in.
    It's a fast, interactive, and un-personal era (I believe). Things like CRM with call centers and events are becoming more rare, expensive and useless. Apple realized that and software companies are make millions selling products for US$10 to US$ 50 rather than for U$300 on convectional stores.
    I would like a few tips on how to talk to these entrepreneurs so we can focused on what the world is like now…not what it used to be.

  • http://richineverysense.blogspot.com/ scheng1

    haha, the small company with CEO, President and COO is really good at generating big title. I bet the cleaning lady is the Office Manager then!

  • samsantana

    Work in a start-up. I helped plan and structure the company.
    the biggest problem I see when deciding what direction to go is that people start proving their points with their “wallets”. Comments like “Let's go with my lead, I've been making lots of money since before you were born.”. Even though it's not said with the utmost arrogance that it sounds, I think that these “successful” people don't realize the new era we're in.
    It's a fast, interactive, and un-personal era (I believe). Things like CRM with call centers and events are becoming more rare, expensive and useless. Apple realized that and software companies are make millions selling products for US$10 to US$ 50 rather than for U$300 on convectional stores.
    I would like a few tips on how to talk to these entrepreneurs so we can focused on what the world is like now…not what it used to be.

  • http://cromotion.net BerislavLopac

    Mark, speaking of titles: what is your opinion on non-standard titles which describe people's responsibilities a bit better, even if they might sound a bit funny? On one project (currently stalled), my co-founder and I have split the work in such a way that he was doing about 80% of the development, while I was doing the other 20%, and everything else; and we called ourselves (in presentations and other material) the Tech Guy and the Biz Guy. This way it was pretty clear who do you need to talk about which, and it worked most of the time.

  • http://cromotion.net BerislavLopac

    If someone joins later, what makes them a co-founder, or better, what differs them from other employees? I would guess one thing is enthusiasm, but what if it lacks? It is then just a hollow title? (E.g. OK I'll pay you salary, give you 2% of the stock, and call you a co-founder.)

  • http://abstract-factory.com/ BerislavLopac

    Mark, speaking of titles: what is your opinion on non-standard titles which describe people's responsibilities a bit better, even if they might sound a bit funny? On one project (currently stalled), my co-founder and I have split the work in such a way that he was doing about 80% of the development, while I was doing the other 20%, and everything else; and we called ourselves (in presentations and other material) the Tech Guy and the Biz Guy. This way it was pretty clear who do you need to talk about which, and it worked most of the time.