Part-time doesn’t cut it

Over the last decade or so that I have spent in start-ups, I have seen many instances of part-time managers, both in the companies where I was and elsewhere. I have never ever seen this work out. Quite the opposite, it tends to be a disaster.

It is obvious that at some point a situation will arise in any business where there are so many people in a functional area, that one person has to be appointed to coordinate that group (aka the manager). However, it doesn’t seem to make any sense to appoint a part-time person when there is so much work that multiple people are required to get it done.

Think about it, a manager’s job is to manage the people who are working for this person. By definition this means that multiple people work for one person. Let’s depict this in a diagram.

Part-time-manager

Looking at it, this doesn’t make sense. If I have enough people to fill full-time roles, why would I appoint a part-timer to manage them?

The real world problems that I have seen arising with part-time managers are:
- Part-time managers are not in the loop, they need to be caught up with events and ‘management’ meeting are de facto catching up sessions;
- Lack of respect of the team as the manager is perceived as not lifting enough weight / working as hard as the team, or not contributing enough;
- Other managers at the same level have issues interacting with the part-timer as they are not in the office in a full-time capacity;
- The manager is not mentally as fully occupied with the company as other people in the company.

People may say: “But Jens, even Steve Jobs managed Apple part-time initially and look at what a great job he did. Clearly one can be a part-time manger and do a fantastic job!” In this situation I find it useful to figure out whether his success is a consequence or a correlation of the part-time role. My reply would be: “Was Steve Jobs so successful BECAUSE he was part-time? Or was he so successful DESPITE being part-time?”

I think the answer to that question is quite obvious. I am confident that there are individuals who are so exceptional they can overcome almost any obstacle. However, most people aren’t as exceptional as Steve Jobs was. The other thing to consider is that Jobs attributed his pancreatic cancer to the time where he was so stressed due to his two CEO jobs.

Being a part-time manger undoubtedly makes your job harder. Much much harder. So, why would a company want that to happen? All things being equal, does this actually make sense?

Part-time managers are not to be confused with individuals working part-time. There is absolutely nothing wrong with that. Again, let’s look at the organogram.

Full-time-manager

This looks far more logical, doesn’t it? You have a team of individuals, some of whom may be specialists or maybe you don’t have enough work for them to fill a full time role. Great examples of this are part-time accountants who do your books. Or maybe customer service reps, who only work three days a week. Other examples are individuals whom you bring in as and when needed, for example your auditors or lawyers.

So when you are working in the context of a startup trying to not die, why would you make your life harder? Why would you hire a part-time manager? In my experience, this has never worked. I think life in a startup is hard enough; there is really no need to make it any harder.

Fast 50 – A better methodology

The Fast 50 competition run by Deloitte is a great idea. You basically figure out who the 50 fastest growing technology companies in the UK are and you honor them for their achievements.

However, the current competition (in the UK) has some methodological problems. As a consequence, fast growing companies are sometimes missed, thus the list is incomplete, pundits start criticizing the whole approach and the end result is diminished from what it could be. That is a shame.

I personally have made some very half-baked comments on Twitter about this and thought I would put some more effort into suggesting some minor changes to the methodology that would make the competition more inclusive, more interesting, and more just. Here it goes.

The current approach

The Fast 50 are calculated by taking the revenues of a company, comparing it with the revenues five years later, calculating the increase in revenue, express that as a percentage increase and then rank companies according to percentage increase. Sounds great. And actually, it is not a bad approach. However, it has two problems associated with it:

1. Shooting stars are ignored. You found a company. Three years later it could have £100m revenue. You are nowhere to be seen in the Fast 50. That feels somewhat wrong to me.

2. There is a minimum amount of revenue in the first year of Euros 50k. If you have £10k in the first year, you have to wait another year. This might be despite that fact that in four years, you have grown faster than anybody else, but because your first year value was so small, you are basically ignored. Even worse, you are then forced to take your second year value, which might be £1m and as a result, you are placed far lower in the ranking than you ought to be. Again, this strikes me as wrong.

I think with some subtle changes to the methodology, both problems could be avoided.

Suggested changes

I would introduce the following subtle changes to the methodology as follows:

1) Abolish the five year period. Replace it with a flexible period of a minimum of one, and a maximum of five years. With the last year being the most recent accounting period. This allows for the accommodation of shooting stars, but will still keep long term solid growers in the race and high up in the rankings. Because you take a combined percentage amount for the rankings (not an annualised one) this should have no adverse effects on long term strong performers.

2) Abolish the Euros 50k minimum requirement. Replace it with a levelling approach. For all companies with revenues smaller than Euros 50k in the first year, replace it with a Euros 50k value. This means you always have a base to compare against and companies with £0 in the first year are not discriminated against.

A few hypothetical scenarios, let’s see what the effect would be

Scenario 1:

a) Company A posts £50k in the first year and has consistent growth of 100% year-on-year for five years. They post £1.6m in year 5.

b) Company B posts £50k in the first year, as well as the second, third and fourth year. In year five, revenue jumps to £1.6m. The company submits years 4 and 5 for consideration.

According to the current Fast 50 methodology, both companies are equal. Under the new methodology, this still holds true. Consistent growers are not squeezed out by companies with a short term boost, even when such companies use two years as the time period for consideration. However, under the suggested changes, one could state the time period and as a consequence, the achievement of Company B looks a bit more impressive, but both companies would still have the same score.

Scenario 2:

a) Company A posts £50k in the first year and £5m five years later.

b) Company B posts no revenue in year one and £5m in the second year.

Under the current rules, Company B is ignored twice. First because they don’t have Euros 50k in the first year and second because they don’t have a five year accounting period. Under the suggested rules, both companies would get the same score, as Company B’s first year revenue would be set to £50k. Again, Company B would look more impressive, as it should.

Scenario 3:

a) Company A posts £1m revenue in the first year and £25m five years later, a 25x increase.

b) Company B posts Euros 25k in its first year and Euros 5m in its second year of operations, a 100x increase (assuming a Euros 50k base for calculation purposes in the first year).

Under the current methodology, Company B is ignored. Under the new rules, Company B outranks Company A. It think this is actually the correct way of doing it. If companies get to Euros 5m so quickly, then I really want to hear about them!

Conclusion

I think there good reasons why the current Fast 50 methodology makes a lot of sense. It is objective, it is quantitative, it is revenue based. But is has some limitations. By tweaking it slightly, you stand to lose very little, but you allow for a wider pool of fast growing companies to enter, and you make it a more interesting and a more just competition. Sounds good to me.

2010 in review

The stats helper monkeys at WordPress.com mulled over how this blog did in 2010, and here’s a high level summary of its overall blog health:

Healthy blog!

The Blog-Health-o-Meter™ reads Fresher than ever.

Crunchy numbers
This blog was viewed about 33,000 times in 2010. If it were the Taj Mahal, it would take about 4 days for that many people to see it.

In 2010, there were 3 new posts, growing the total archive of this blog to 80 posts. There were 3 pictures uploaded, taking up a total of 434kb.

The busiest day of the year was March 17th with 204 views. The most popular post that day was Online Marketing Example with a Halo.

Where did they come from?
The top referring sites in 2010 were coheda.typepad.com, crane.hr, thebln.com, ttpventures.com, and avc.com.

Attractions in 2010

These are the posts and pages that got the most views in 2010.

1

Online Marketing Example with a Halo September 2007
5 comments

2

Evolution and Marketing August 2007
1 comment

3

VC Fund Raising Manual – 2 Documentation June 2008
6 comments

4

Monopoly Game Discount by Tesco December 2008
1 comment

5

The Role of Internet Marketing September 2007
5 comments

It’s the conversation

Last weekend, I spent some time with my wife Iris, discussing the right Facebook strategy for her program Apps for Good that teaches young people how to create apps that change their lives.

Iris wanted the ability for her organization to talk directly to their target audience. In order for this to happen, you need to be in the news feed of the relevant people on Facebook which is where these kids spend most of their time. Facebook allows organizations to communicate directly with individuals, but you cannot initiate a request. Individuals have to become a fan of you site and once they are, then you can communicate with them directly. This is obviously there to minimize spam. Nonetheless, this makes is tricky to approach the right people that you care to contact. Facebook is all about conversation. Why is there not some ‘networking’ ability to start talking to people whom y0u don’t know, yet?

At the same time, I had to think of a blog entry by Bruce Cleveland of InterWest Partners on the Mythical VP Sales & Marketing. The rationale of the article was that there are very few great VPs of Sales & Marketing in the world, because these two disciplines demand very different skills. To summarize it briefly:

“Sales is a 1:1 game”

“Marketing is a 1:many game”

I have now come to see the conversations on Facebook or Twitter as essentially a new category of interaction between a company and a potential customer. Let’s call it:

1:some

Companies actually want to talk to the people that they care about. Not in the sense of selling them something, or in the sense of marketing something to them. But rather in the sense of conversing with them, befriending them to their course. This is a different skill set from both sales and marketing. If sales is the realm of the “oral communicator” and marketing is the realm of the “verbal/written communicator” (Bruce Cleveland’s words), then social networking is something of a personality/chatting communicator. I think this is very different from the others.

Why can’t Facebook and Twitter set up accounts that enable this kind of communication to happen? Give free accounts to individuals and paid accounts to companies. Simple. People who spam get shut down. This would enable companies to have meaningful conversations with people. People obviously have to opt into these discussions. If they stop liking them, they can opt out again. This prevents spam from the start.

Doing a rough back of the envelope calculation, I think this market is easily in excess of $10bn per year.

For me personally, I now class company / customer interaction into three categories:

Sales – 1:1

Social networking – 1:some

Marketing – 1:many

When Facebook accelerated Twitter stopped growing

Some blogs are asking, why Twitter doesn’t grow anymore.

Look at this chart:

In March 2009, Facebook changed their layout to mimic that of Twitter. Their growth accelerated markedly at that point. Twitter’s stalled shortly after.

It is possible that this is coincidence, but somehow I don’t think so.

First Impressions Count

What do you think? Which phone is cooler?

Launch of Apple iPhone

Launch of Google NexusOne

Nice to see that even Google has a lot to learn! :)

About Start-up Passion

TechCrunch Europe had an interesting article by an anonymous VC the other day. The essence was:

“I am in London-based startups’ offices all the time and I am gobsmacked when they are nearly empty by 6:30 PM…European startups need to work as hard as Valley ones – or forget it

I have been thinking about this for a little while since that post. To me, this is about passion.

Start-up Passion

When you care so much about the company, that you would rather work on it than do anything else. I think you could also call it an obsession.

Some personal observations:

1) When a start-up with high ambitions goes out to change the world, this kind of passion develops. It is not sufficient for success, but most companies that really want to win develop that kind of working environment.

2) I think most UK, US and German start-ups that I know have this kind of environment. Of course, I only have my personal reference frame for this observation. I don’t have any detailed data.

3) This passion tends to wane over time as the company matures. Many later stage employees are just paid a wage with few or no share options. They are not in it to kick ass, but to earn a living. This is a normal process. I have seen many mature and very successful UK, US, and German companies, where staff work more or less normal working hours.

4) UK VCs invest typically later stage than US VCs. This means that they may miss this early stage of passion. Or they may have invested in the wrong kind of company.

My personal opinion:

1) This kind of passion and team spirit is, for me personally, the No.1 reason to do a start-up. It is a fantastic feeling and many long lasting friendships are formed during this period.

2) I personally think that passion and success in a start-up go hand in hand. You need this passion. If you are not passionate and obsessed, how do you expect to kick ass and make a difference?

3) The passion is not a question of being a workaholic. It is simply that the founders and early employees go out there to change the world, kick ass, and make money. It simply absorbs you. It draws you in.

4) If you are passionate, you prioritize what you are passionate about above other things. It is not that I have to work twelve-hour days, I WANT to do it. I love doing what I do. Why would I want to do other, less interesting things?

5) Passion doesn’t necessarily mean twelve-hour days every day of your life. You can’t go 100% all the time. Something will break. Pacing yourself is important. But the principle attitude to working with a passion is just there.

6) If you don’t want to be passionate about your company and would rather work a solid 9-5 job, then this is perfectly fine. However, it makes little sense to work for a start-up, if that is your preference. I suggest you work for a large company. This is a much better paid, better perk option.

7) It is unrealistic to expect of all people at a maturing start-up to continue this kind of passion-based work attitude for many years. I am aware that some company such as management consulting firms and banks institute a similar kind of behavior amongst junior staff. But most companies just cannot sustain this kind of behavior beyond a certain point, as they cannot afford the salaries or equity share to fuel it.

8 ) If you are a VC, you should probably steer clear of young companies that don’t exhibit this kind of passion. When you are dealing with older companies (say 3-4 years+), you should not expect it. It is simply unrealistic. If you can find a company that has managed to instutionalize it: all the better.

9) I doubt that young start-ups without this kind of passion are actually VC investible. VCs want companies that grow very fast. Unless you push hard, how is this likely going to work?

10) Finally, passion can only get you so far. You can’t build a great company without it, but you cannot rely on it either. At some point, your company will become mature. Unless you have turned your company into a cash generating machine by then, it will likely fail, as early employees turn their backs.

Final thought:

I think everybody is living their passions. It is up to all of us to decide and discover what they are. For some, it is starting companies. For others it is other things. All of that is fine. Doing things we like and enjoy will make us happy. Even if we don’t get that much sleep. Just like the (stupidly) smiling people in the photo below. :)



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