As I sit in the Leaf & Bean in Pittsburgh's Strip District this fine Saturday morning, the NY Jets are arriving at their hotel to challenge the Pittsburgh Steelers in tomorrow's AFC Championship game. Whats interesting about both teams is that arguably the key to their success thus far has been a handful of Generation Y players - young rookies or second or third year veterans who are no older than 23 or 24 years old. However, what makes players like the Jets' Mark Sanchez or the Steeler's Mike Wallace successful is the support, leadership, guidance and experience of the Generation X players around them. In short, for Generation Y to be a success they need Generation X.
While the case in professional football is evident, I believe the same holds true for the economy, especially start-ups. Across America's colleges and Universities the fashionable thing is to become an entrepreneur, start a business in your dorm room. Role models: Facebook's Mark Zuckerberg and Groupon's Andrew Mason. This generation is remarkable, focused on innovation and able to leverage the tools and power of the web like no previous generation could in the past. But the key for their success will rest with the involvement of Generation X. Here is why.
Successfully running and growing a business is an art that knows no exceptions. It doesn't matter how smart you are, how fast you are (Gen Y are very quick), or how much risk you are willing to take - you have to create value, earn a dollar, keep your costs low, and turn a profit to survive. And most importantly you have to be able to execute flawlessly. As relentless and exciting as Gen Y are, it takes experience, focus and luck to be successful, no different than previous generations.
I am involved with a number of start-ups across the country by sitting on their Advisory Boards. Its one of the most fulfilling experiences, and I can honestly say I learn as much from these young, hard working entrepreneurs as I hope they learn from my experiences. The past two years of activity prove the case for more involvement from experienced generations. While the products and concepts these young companies create are truly remarkable, the challenges they face are pretty much par for the course:
Funding - while funding for start-ups took a big hit as a result of the financial crash, there is more money available today than we have seen since early 2000. Angel Investors are providing enough of a lifeline for anyone with half an idea to take a shot at entrepreneurship. The issue is that both parties rarely know what they are doing. Angel Investors are either roulette players who place small bets on dozens of numbers in the hope that one hits, or they are simply inexperienced individuals masquerading as investors. Majority of Angel Investors have nothing to offer the entrepreneur other than money, and this leads to the majority of early start-ups failing as they burn through the little cash they get. This creates little value for anyone.
Cash Burn - more often than not a business goes under because it runs out of cash, not opportunity. There are lots of great ideas in the graveyard. Many start-ups burn through cash in dramatic fashion, spending as if they were IBM or Capital Hill. Mistakes include paying hefty salaries, trying to build a product, and market it and shot-gun sell it all at the same time, or outsource development, legal services and other functions before even having a proven product. It doesn't make sense. Bootstrapping is the way to go. Develop a product first, prove there is a market second.
Focus – A lack of focus is like a cancer that slowly kills you. One start-up I am involved with wanted to set up a sales organization before it even had a product. Half a dozen people paid hourly to develop business with customers, partners and other organizations. It was like hunting an elephant with an Uzi when what you really need is a Sharp Shooter. Getting customers when you have a concept is really about finding one or two potential companies who are willing to help you build a prototype because they believe in your vision. Thats it. Focus on what is necessary, not what is nice to have.
Simplicity - if lack of focus is cancer then failure to keep things simple is suicide. As part of my supporting a start-up I agreed to coach a few key team members. I was blown away by how smart these kids are. But its also their biggest weakness. They take the simplest problem and over-intellectualize it to the point where nothing happens. We forget that the majority of people are not rocket scientists, data crunching consultants or intellectuals. They are average people and if you can't make something that is simple for them to use or understand, then you will fail. If Apple has taught us anything its that simplicity (and nice design) will beat sophisticated complexity every time.
People - Venture Capitalists will tell you the reason many investments fail is because of the people involved. You wouldn't expect a small start-up to have HR issues, but they do. If you don't have the right leader then you are going to have major people issues. And sometimes its not the leadership, its the ‘too’ intelligent Gen Y team member who forgets his place and doesn't understand team dynamics. I recently experienced this first hand when a company I'm on the Board of had to part ways with three of its key people. They didn’t get it, and refused to listen expecting instead to be listened to. This episode probably set us back 3 or 4 months, which is a lifetime in start-ups. Good people management means having people in the right seat on the bus, and exiting others off the bus.
I believe the role that experienced advisors and mentors can play in start-ups, or even Fortune 500 companies, is key to helping younger generations be successful. As I work to build my own business my game plan for talent is simple: establish an experienced leadership team across all aspects of our business and recruit the best young talent our schools produce under them. My leadership team will do a great job of teaching the inexperienced team members and getting them to produce at the highest levels in a relatively short time. Its not an age thing, its a quality thing. Hiring smart, hungry people is not enough if you don't have the right experienced leaders to support them and get them producing fast.
Whoever wins tomorrow's game in Pittsburgh will demonstrate my theory. Watch the rookies on both teams and see how the veterans have allowed them to succeed. More importantly ask yourself how many talented Gen Yers do you have around you that would benefit from your support and leadership?
Go Steelers!
Successfully running and growing a business is an art that knows no exceptions. It doesn't matter how smart you are, how fast you are (Gen Y are very quick), or how much risk you are willing to take - you have to create value, earn a dollar, keep your costs low, and turn a profit to survive. And most importantly you have to be able to execute flawlessly. As relentless and exciting as Gen Y are, it takes experience, focus and luck to be successful, no different than previous generations.
I am involved with a number of start-ups across the country by sitting on their Advisory Boards. Its one of the most fulfilling experiences, and I can honestly say I learn as much from these young, hard working entrepreneurs as I hope they learn from my experiences. The past two years of activity prove the case for more involvement from experienced generations. While the products and concepts these young companies create are truly remarkable, the challenges they face are pretty much par for the course:
Funding - while funding for start-ups took a big hit as a result of the financial crash, there is more money available today than we have seen since early 2000. Angel Investors are providing enough of a lifeline for anyone with half an idea to take a shot at entrepreneurship. The issue is that both parties rarely know what they are doing. Angel Investors are either roulette players who place small bets on dozens of numbers in the hope that one hits, or they are simply inexperienced individuals masquerading as investors. Majority of Angel Investors have nothing to offer the entrepreneur other than money, and this leads to the majority of early start-ups failing as they burn through the little cash they get. This creates little value for anyone.
Cash Burn - more often than not a business goes under because it runs out of cash, not opportunity. There are lots of great ideas in the graveyard. Many start-ups burn through cash in dramatic fashion, spending as if they were IBM or Capital Hill. Mistakes include paying hefty salaries, trying to build a product, and market it and shot-gun sell it all at the same time, or outsource development, legal services and other functions before even having a proven product. It doesn't make sense. Bootstrapping is the way to go. Develop a product first, prove there is a market second.
Focus – A lack of focus is like a cancer that slowly kills you. One start-up I am involved with wanted to set up a sales organization before it even had a product. Half a dozen people paid hourly to develop business with customers, partners and other organizations. It was like hunting an elephant with an Uzi when what you really need is a Sharp Shooter. Getting customers when you have a concept is really about finding one or two potential companies who are willing to help you build a prototype because they believe in your vision. Thats it. Focus on what is necessary, not what is nice to have.
Simplicity - if lack of focus is cancer then failure to keep things simple is suicide. As part of my supporting a start-up I agreed to coach a few key team members. I was blown away by how smart these kids are. But its also their biggest weakness. They take the simplest problem and over-intellectualize it to the point where nothing happens. We forget that the majority of people are not rocket scientists, data crunching consultants or intellectuals. They are average people and if you can't make something that is simple for them to use or understand, then you will fail. If Apple has taught us anything its that simplicity (and nice design) will beat sophisticated complexity every time.
People - Venture Capitalists will tell you the reason many investments fail is because of the people involved. You wouldn't expect a small start-up to have HR issues, but they do. If you don't have the right leader then you are going to have major people issues. And sometimes its not the leadership, its the ‘too’ intelligent Gen Y team member who forgets his place and doesn't understand team dynamics. I recently experienced this first hand when a company I'm on the Board of had to part ways with three of its key people. They didn’t get it, and refused to listen expecting instead to be listened to. This episode probably set us back 3 or 4 months, which is a lifetime in start-ups. Good people management means having people in the right seat on the bus, and exiting others off the bus.
I believe the role that experienced advisors and mentors can play in start-ups, or even Fortune 500 companies, is key to helping younger generations be successful. As I work to build my own business my game plan for talent is simple: establish an experienced leadership team across all aspects of our business and recruit the best young talent our schools produce under them. My leadership team will do a great job of teaching the inexperienced team members and getting them to produce at the highest levels in a relatively short time. Its not an age thing, its a quality thing. Hiring smart, hungry people is not enough if you don't have the right experienced leaders to support them and get them producing fast.
Whoever wins tomorrow's game in Pittsburgh will demonstrate my theory. Watch the rookies on both teams and see how the veterans have allowed them to succeed. More importantly ask yourself how many talented Gen Yers do you have around you that would benefit from your support and leadership?
Go Steelers!
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Shahriar - Terrific - I subscribed and very much look forward to future issues. Nomad Influencer is a perfect fit and description of you.
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