Valuing an MBA in a startup

February 3, 2010 by Nick Barker

Over the last week there’s been alot of talk questioning the value of having an MBA in a startup – Giff Constable, Rob Chogo, Jon Steinberg, and Charlie O’Donnell (All stateside and non of whom I know). I’ve an MBA in entrepreneurship, 20 years tech business development experience and now a startup. In my experience an MBA does not teach anything you don’t  already know or can work out for yourself. However it does say something about you as a person. Unfortunately this counts for squat in a startup.   As in sales and in a startup you are only as good as your last months or quarters sales.

“Reach for the sky!”

Why do an MBA?

From my experience meeting other MBA’s Jon Steinberg summarizes  really well why people undertake the MBA:

  1. Value in building a network
  2. Credential – certain employers require an MBA for certain jobs
  3. Need a break from work
  4. Career change

For me it was about adversity, learning and change. Adversity has been shown to be the number one  driving force for successful entrepreneurs. I don’t have a first degree and dropped out of  college. I’d been stuck on an educational ledge ever since. Some of my close family and friends strongly advised me against doing the MBA, particularly in entrepreneurship. Yet it was one of the best years of my life. I loved every MBA minute!

Experience v’s an MBA

During my tech career I’ve built significant profitable customer bases three times from scratch. It been an amazing experience with great highs and the occasional low.  In my last employment I grew a remote managed services business unit  into a highly profitable multimillion dollar Global business winning customers like Richard Branson’s V2 Records. Building customer bases from nothing is not easy. I’ve found building a company even harder.

There is much an MBA does not teach you. It does not show you the many practical skills needed in business. In particular skills like sales, marketing a small business, attracting resources – the list goes on..  There are  so many skills needed  to run a startup.  Given the choice real small business experience wins hands down over an MBA in a startup. However sometimes we forget that an MBA is an academic qualification. I’ve found that my MBA  has brought value to our startup.

We like difficult challenging times

Some of us perversely put ourselves into difficult and challenging positions where the odds are not good. It’s often not a comfortable place to be. However we keep going back there! The MBA is deliberately tough. It was challenging for me not having the educational experience and understanding from a first degree. The first semester was the hardest. Its like a bootcamp. They give you too much work. It was an especially hard as my mother was diagnosed and died of cancer during the first semester – all part of life and doing an MBA!

Does an MBA bring value to a startup?

After so many years at the practical coal face of business development the MBA has definitely helped me see things differently. I now look at decisions more objectively. It has brought a greater understanding of internal business structures and holistic competitive markets. Was it worth the $10,000’s of dollars it cost? Plus all the living costs and lost savings -  probably not. Would I make that decision again to do it – defiantly!

An old serial entrepreneur friend of my said that ‘a startup is an MBA of life.’ And he is so right. Nothing can prepare you for a startup. It is unlike anything I have ever done. It messes with your mind and body. We all know you didn’t need an MBA to start as business. So why do it? For me is it’s about exciting new adventures where you push yourself to the limit and learn new tricks. This could be doing an MBA, starting a new challenging job or having a startup. Keep learning and pushing your own boundaries. Life is boring otherwise. And why have a boring life! You only have one of them ;)

Yeah I know I’ve got an MBA, so I’m bound to be a bit bias. However on balance I highly recommend an MBA for those that have something to prove and love challenges. If your heading to startup ville and not moving up the career ladder in the same company an MBA will probably set you back. It will cost you lots of money and if your doing it to change career will put you back years. But these are  good things. They keep you fresh and hungry. It’s the learning and personal growth that really matters.

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Startups: Obsessing about your competition

January 29, 2010 by Nick Barker

Competition is a good thing. It’s shows there’s a market and “it keeps you on your toes”. However its very easy to become completely obsessed with your competition. An obsession, particularly one which dominates your thinking, is never a good thing. It ends up wasting time, energy and is very frustrating. The thing really to focus energy on is understanding and adapting to your target customer needs.

Its so easy for startups to become completely obsessed with many aspects of the their competition:

  1. Price - Since the Web everyone can see each others published pricing. There’s pressure to be cheaper than your competitors because customers can so easily compare  suppliers. Remember customers don’t just buy on price.
  2. Features – The Web has also made it simple to compare suppliers features. You can become obsessed with needing every feature your competitor has. It’s so easy to forget the customer when focusing on competitors. Understand which features customers really value.
  3. Size – How many customers do they have, what is their market share, what are their revenues, etc. Becoming obsessed with competitor size is very destructive. It leads to land grab at any cost.  Remember the saying “volumes are vanity and profit is sanity.”
  4. Buzz – Being obsessed with your competition means your always waiting and watching for every piece of press on them. Great press coverage is important  but its the customers perceptions that really counts. Lots of press noise does not necessary mean lots of happy customers.
  5. Location – Over and over I hear people obsessing about location. They constantly compare the benefits of being is a different location. Usually one they’re not in. Don’t get me wrong location is important but getting hung-up over it is no help. Customers are everywhere. Focus on them.

Our startup has got more competition than you can shake a stick at! However it is vital we have competition. They validate the market need and help to grow the overall market sector through a courus of marketing messages. Competitors give a startup a known quantity to position a product against with customers i.e. ‘it’s like…’ They also bring a measure to set yourself against.

However becoming obsessed with your competition is counter productive. Forgetting about them is not a good idea either. They may start addressing a customer need which takes away your customers. In reality it is unlikely  your competition which will kill your startup. There are lots of other challenges that will do that, especially not understanding adapting to your customer needs.

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What has LinkedIN done for you lately?

January 15, 2010 by Nick Barker

After much networking over the last two years I’ve now reached LinkedIN’s 500+ connections. I’ve followed up every new meeting with a personally edited LinkedIN connection email. Was it worth all the time and effort? It was. The time investment  has demonstrably helped our startup  more than once. It’s also re-connected me with many long-lost colleagues.

Many people have said to me that LinkedIN’s only good for recruitment. They’re right, it’s great for that. However its great for other things too. LinkedIN has help us find freelancers. We needed a web developer and designer last year for our Web site monitoring application startup Aware Monitoring. Without my LinkedIN connection to the lovely Mel Kirk, made after meeting her at the FOWA conference in 2007, we might never have found Luc Pestille. And Luc did a wonderful job for us :) Before choosing to work with Luc we looked at 11 other developer designers, many found via LinkedIN.

LinkedIN is excellent for helping to understand and profile people.  Whether they are business partners, suppliers, competitors or potential customers. The information brings great intelligence quickly and effectively. It’s now so easy to find out who’s the CTO or CEO of a company. A very useful tool to identity new contacts within potential customers. LinkedIN also helps maintain weak tie relationships and friendships when people change jobs. I’ve spoken, emailed and met-up with many old friends and colleagues since using LinkedIN.

LinkedIN have cleverly made it worth your while putting the effort into growing your network. More connections brings a greater visibility to 2nd/ 3rd degree contacts. Your loose tie network grows!  In theory I now have over 5million 3rd degree connections.The founder and former CEO Reid Hoffman has tapped really well into the ideas of ‘six degrees of separation‘, ‘network effects‘ and ‘business social networking‘. Hoffman and LinkedIN have done great job in making a  useful business social service!

UPDATE: Ian Brodie and Webex have carried out a poll on ‘How to Use LinkedIN to win new business: poll results’ - these interesting and useful results echo my personal findings.

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Life, death & startups..

January 7, 2010 by Nick Barker

How many times have you heard the saying life is Too short. Thing is, there is much truth in this. Jeffery Walker’s recent untimely death from cancer and seeing the movie The Curious Case of Benjamin Button got me really thinking about life and death. It’s also got me thinking where startups fit into life’s equation. Life’s challenge is we only have a short time to work out what we really want from it. In many ways having a startup or fulfilling your dreams brings  self understanding, personal growth and even enlightenment.


The final words in life (Blade Runner, 1982)

Entrepreneurial stories and the movies are a great reflections of life. The alter ego fictional Fight Club character Tyler Durden said “This is your life, and it’s ending one minute at a time.” Reflective life films and the death of someone you know creates self-reflective questions.  Are you happy living the life you live or would you rather being doing something else. Would rather have a different job? Or desire a startup company?

“First, you have to know, not fear, know that someday you are going to die. Until you know that, you have no sense of urgency. You think you have all the time in the world to do amazing things, but you may not live to see that particular someday.” Another Tyler Durden quote

In Steve Jobs wonderful speech after surviving cancer “Your time is limited, so don’t waste it living someone else’s life”. Steve went onto repeat Breaker Morant quote, which he’s lived by since the age of 17,  “Live every day as if it were your last and then some day you’ll be right.”

I’ve found in life that when you’re doing  something new and challenging in an intense short space of time period, time  seem to slow down. Learning and keeping your experiences new and fresh is so important in life.  It brings a life full of rich and varied experiences. Paul Graham says that working in startups “seem like time slows down”. It’s because there is such an incredible amount to learn in a young company. Paul goes onto say in his great 2006 essay post The Hardest Lessons for Startups to Learn:

“..there’s nothing particularly grand about making money. That’s not what makes startups worth the trouble. What’s important about startups is the speed. By compressing the dull but necessary task of making a living into the smallest possible time, you show respect for life, and there is something grand about that.“

The character Benjamin Button said “When it comes to the end you have to let it all go.” Why wait until the end when it’s too late.. We can all choose what we do with our lives, no matter what our age is. “Every passing moment is a chance to turn it all around.” Look forward and don’t dwell in the past or you will just stay there lost. We can choose to hold onto negative emotions such as fear, doubt and anger or let them go and fulfill your dreams doing something you really enjoy.

I regard making money as a boring errand to be got out of the way as soon as possible. There is nothing grand or heroic about starting a startup per se.

The challenge in life is that  we only have a short time to work out what we really want from it. Some would call the discovery of a life’s purpose or understanding as enlightenment. Wikipedia defines ‘Enlightenment broadly as wisdom or understanding enabling clarity of perception‘, ‘full comprehension of a situation’ and ‘a state of freedom from suffering, desire and ignorance’. In many ways having challenging experiences and doing something you love brings deeper self understanding and personal enlightenment.

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Posted in Life, startup | 4 Comments »

Happy Christmas one & all

December 25, 2009 by Nick Barker

A very Happy Christmas to all my readers!!

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Awesome: Aware Monitoring 2nd on Google search

December 4, 2009 by Nick Barker

I’m pleased as punch – our startup Aware Monitoring ranks 2nd place on an organic Google ‘website monitoring’ UK search. That’s Awesome news!! Not sure how we did that but we have :)

Only one place to go :) Interestingly non of the sponsored result companies provide pricing on their website – they’re all a call us service and speak to the sales guy.

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Are the best startup founders young or old?

November 23, 2009 by Nick Barker

I recently heard a University lecturer say “entrepreneurship is a young mans game”. Investors do prefer younger founders.  The well-respected startup investor Yossi Vardi: “I generally invests in young entrepreneurs”. The average Y-combinator or Seedcamp winner tends to be in their 20’s.  However there is no best age to be an entrepreneur.  There are benefits and draw-backs to both young and older founders. Being  a successful entrepreneur is derived from the ability to  learn, having  an inner driver and maintaining the right attitude.

Our web app startup operates from a student/post grad startup incubator. I see alot of young startup entrepreneurs coming through. Most startup founders at the incubator are either young or middle-aged.  A recent US report showed that the average age of startup founders is 39! There are benefits and draw backs to both young and old founders:

  1. Energy – Youth brings an abundance of energy. Startups require alot of energy. You have to work hard, often and late. However startups are more of a marathon than a sprint. They  require long-term mental and physical stamina to succeed.
  2. Enthusiasm – The danger with enthusiasm is it does not always last  in the young and inexperienced. Startup projects can be dropped as enthusiasm wanes and reality kicks-in. It is important to be committed on a path whether young or older.
  3. Experience -  A younger entrepreneur is often eager to learn and has fresh ideas untainted by working as an employee. Whereas an older founder often has great industry knowledge. Research shows that companies are more likely to survive if the entrepreneur is older, and has previous business experience.
  4. Money – Older startup founders tend to have more capital to invest than younger entrepreneurs. However older founders outgoing’s tend to be much higher with kids, houses, etc..
  5. Risk – Younger entrepreneurs are often less risk averse than older founders because they haven’t got so much on the line i.e. outgoings and responsibilities.
  6. Time – Without responsibilities a young founder can focus just one  thing – working hard on the startup. Sequoia Venture’s Michael Moritz.:  “distractions like families and children…that get in the way of business” . They also have time to make mistakes that can be learnt from and then try again.
  7. Innocents – The young tend to be more naive on how hard startups can be. Whereas the older tend to be more worldly-wise.

VC’s prefer more youthful startup founders because they have  fresh ideas and can more easily be managed. The best founders are probably older serial entrepreneurs with both startup know-how and market experience.  However they can suffer from destructive excessive egos at times.

There is no best age to start a company. Age plays both ways. It can be a strength or a weakness in either age group. Attitude and an inner driver, with a sprinkling of luck, is more crucial than age. An entrepreneur is  made by building upon an individuals fundamental personal qualities, including determination, and not age.

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Thank you for reading & growing my blog

November 12, 2009 by Nick Barker

The total number of visitors to my Nickpoint blog has been on the rise again  for the last two months. previously the number of visitors have reached a plateau. Thank you to all my readers for following my blog writings. I must be bringing some value to the conversation.

Nickpoint Oct09 Blog Stats

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Startup short-term & long-term mind splitting

October 30, 2009 by Nick Barker

I’m fascinated with the 80/20 theory which originated from the economist Pareto. I particularly like idea that 20% of what you do today results in 80% of the future. Visa-vi 80% of what you do today only counts for 20% of the future. The challenge is finding that  elusive 20%  in the here and now. Its especially difficult in the fast moving tech sector compounded by having  too much short-term stuff to do in a startup.  However startups need to be both short-term reactive and maintain a long-term strategy to survive.  The problem is our brains find it hard to handle both thought processes simultaneously. The answer for startup founders is to learn to regularly split and switch their mind-sets or where possible divide the roles between founders.

NormanBates

The character Norman Bates (Psycho) going too far with split thinking

I didn’t agree with Eric Ries Gigaom’s post on ‘Myth: Entrepreneurship Will Make You Rich’. However Eric did highlight the dichotomy of startup founders dealing with short-term v’s long-term decisions simultaneously. The lifetime of startups is very short compared with larger companies. Startups don’t have the luxury of time. The startup needs to continually change to survive.  This results in continually switching between short and long-term planning or reacting.

I recently attended a panel discussion at The British Libary which included Doug Richards (of Dragon’s Den fame) & Nick  Wheeler founder of Charles Tyrwhitt, a specialist shirt manufacturer. Doug’s early tech startup days in LA he was extremely reactive to selling Sun Microsystem whatever the business opportunity presented at his feet.  This is a good strategy. It gets immediate prospect/customer feedback on what they do or don’t like and brings in much-needed immediate revenues to put food on the table. However short-term selling means your only react – jumping from one customer need to the next. This can lead to excessive diversification and no focus within startup.

Nick  Wheeler was determined to ‘stick to his knitting‘. Nick only wanted to sell shirts. He knew, obviously, that there would always be a need for men’s shirts. He knew in his own mind that he would be the ‘best’ shirt maker. This is a long-term strategy and vision. Again this is a good strategy. Its has the potential to bring growth, clear direction and commitment. However too much long-term strategising does not  pay the bills  and if the strategy is wrong i.e. the customers aren’t interested in the product the founders won’t know until it’s all too late. Nick did say ‘they nearly went bust‘ based on his long-term goal. But then I’m sure Doug Richard’s must have sailed close to bankruptcy with his short-term selling.

It’s a difficult balancing act managing short-term long-term goals like so many other peculiarities of running a startup.   It can hurt the brain to keep switching between the two thought processes required for short-term and long-term thinking. You have to learn to cope with the constant flipping between short and long-term thinking. It is vital skill but make sure it does not drive you mad ;)

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Entrepreneurs: Beating the employee out of you

October 14, 2009 by Nick Barker

Being a startup founder is poles apart from being an employee. During my 20 year employment career I’ve worked for small tech companies and large software manufacturers. I’ve now had a web app startup for the last two years. Like many I’ve been taught by successive employers how to behave as an employee. My attitude has had to change with our startup because uncertainty abounds and as founder’s we’re responsible for everything.

FightClub self beating

Edward Norton beating himself out of employment
in the movie FlightClub.

Last year I met Ben Way who started running companies at 15! Ben’s now the grand age of 29. I spoke to Ben about his startup life and he said ” I’ve always known it this way and don’t know it any differently.” Having a startup, particularly one where you are trying to build a product, requires a very different approach from being an employee. You have to change your outlook and the way you manage your time:

  1. Job security - There is none!  Remember what it was like when one of your past jobs was in jeopardy and uncertain abounded. That is what it is like everyday in a startup, get used to it.
  2. Salary – In a startup, particularly if you are building a product, there is no money posted into your bank account every month. Get used to living frugally.
  3. Structure – You don’t have the hierarchy of a company to rely on. You have to do everything. From setting strategic direction to putting out the trash (rubbish)
  4. Discipline – There is nobody telling you what to do. This sounds great, however it does mean you have to be totally self disciplined.
  5. Direction - Too much freedom can be a bad thing. You can become paralyzed by uncertainty. You must maintain a focus on where you are going.
  6. Massive Overload - There is too much to do in a startup. Much more than any other job I’ve ever had. And I’ve worked for small 10 person companies before. You have to prioritize.
  7. Tough decisions - You continually have to make difficult decisions which have significant downstream effects. If you’re a procrastinator stop it and make decisions. Afterall a decision is better than no decision at all.

Many employees dream of having their own company. The reality is that it’s whole new world. In a startup the highs are higher and the lows are lower. It much more of an emotional roller coaster of a ride than being an employee.  The challenge of building a company is extremely exciting. And the ability to create in a startup is immensely rewarding. However the workload, responsiblity and uncertainty can sometimes make the whole process  seem overwhelming. There certainly is never a dull moment in the life of a startup.

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