JumpStart: IdeaExchange Blog

Content provided by Josh Gordon of Knotice, a JumpStart Ventures Portfolio Company, and The Lunch Pail, a blog by Knotice 

For Akron, Ohio, the transition from Rubber Capital to something else has been gradual. Once a thriving centerpiece of industry in the United States, many rubber companies have moved from the region, though Goodyear remains. The legacy of rubber is still all over the city. In fact, I am writing and posting this article in a refurbished B.F. Goodrich building. The Spaghetti Warehouse that now sits across the parking lot from the cluster of buildings that contain Knotice’s headquarters was once the world headquarters for the rubber giant when it first got its start in March of 1871.

As the rubber companies moved away from the region in the 1990s, Akron’s economy needed to transition to a more service based economy. The entrepreneurial, lunch pail mentality fortunately still thrives within the city, paving the way for a successful transition that is bearing more fruit now than ever before.

As successful economic development and job growth thrive within Akron, many benefit. Improvements have been made in the job market with successful and fast growing businesses beginning to populate once dormant buildings along Main Street, and residential real estate has also seen a positive impact. In fact, NBC’s Today Show recently highlighted Akron, Ohio as the second best residential real estate market in the country, taking into account job opportunity, housing costs, and house size for the investment.

“Not the old rubber capital,” remarked the real estate expert who made an appearance on the show. “Akron has research, financial, and high-tech businesses moving in. Jobs are easy to get in Akron.”

Good jobs plus cost-efficient real estate is the right mixture to keep talent in Akron and attract more.

Economist Joe Cortright, president of Impresa Economics, recently spoke in Akron about the many opportunities the city has within its grasp. Cortright is an expert in attracting quality talent to ambitious cities with opportunities. Cortright underscored the importance of connecting researchers and talented people with good ideas.

One forward-thinking and aggressive way to attract and maintain a strong talent pool in Akron is to provide a business environment talented people can thrive in both short and long-term. The city is taking many steps in the right direction on this front, with one of the larger steps coming in the form of the Connect Akron downtown Municipal WiFi project. The goal of the project is to blanket the Main Street corridor and surrounding areas in downtown Akron with free WiFi enabling professionals to work on the go and congregate to encourage new business growth and development. The network seamlessly links the university downtown, too, enabling students to access the school’s network throughout the city - not just on campus.

Community transitions can be slow at times, especially when transforming the economic foundation of a region. Akron was once a thriving hotspot in the Midwest, and is well on its way to becoming that again - and Knotice, recently named Akron’s fastest growing company, is happy to be playing a small part!

Knotice, a JumpStart Ventures Portfolio Company, is an on-demand software firm that, with their breakthrough software platform Concentri™, delivers direct digital marketing solutions designed to maximize ROI through process automation, increased relevance, and improved performance. Visit their blog, The Lunch Pail, for more thoughts from the team at Knotice.

In June, I told Crain’s Cleveland Business that startup companies should always be on the lookout for talent, even before a formal need or open position exists. As Findaway co-founder, Christopher Celeste once said, “I’m climbing a mountain and always looking for mountain climbers.” Indeed, getting to the Promised Land requires that entrepreneurs be opportunistic both about spotting market needs and top talent. Likewise, job seekers should always be interviewing prospective employers. I’m not saying that you should have your resume with you at all times or be out on the street looking for better opportunities instead of doing your job. I mean that every interaction (with partners, co-workers, managers, subordinates, consultants, customers, Ted from Accounting…) is and should be treated with the same care and respect as a job interview. Great results, hard work, diligence, and respect never go unnoticed, regardless of the audience. Credibility and trust are like baggage (the good sort): they travel with you wherever you go, and prove beneficial in some of the most unexpected ways.

This all might seem obvious. That’s because it is obvious. However, most people make two mistakes. First, many people see their professional relationships as a one-way affair. “If I sell to you or work for you, I’d better treat you well and be on my game. If I buy from you or you work for me, who cares?” However, when you become a job seeker (or the more politically correct, “professionals in transition”), everyone you’ve ever known, in any capacity, becomes an ally (or impediment) in the journey to your next job. Second, it’s just as important that you create opportunities to work, engage and network with people in a real way. With all of the tools available to connect with people, from blogs and Twitter to global discussion groups and social networks, we cannot replace good, old-fashioned relationships. Earning trust and credibility is still a contact sport. Engaging with a broad and diverse network of people creates opportunities for you to grow professionally and make an impact. This is not just about passing out your business card or attending as many networking cocktail hours as you can. It’s about getting to know people, providing value, and bringing people together in ways that create opportunities. Finally, many people neglect keeping their relationships fresh and real, or forming new ones, until they need something (like a job). Don’t be that guy/gal who only calls when they need something.

A couple of stories…

In 2005, I was living in London and looking for a job. A year prior, I had been transferred to the UK by Netflix to help launch their first (and heretofore last) attempt at expanding their DVD-by-mail service into an international market. After Netflix pulled the plug to fend off competition at home (my wife and I decided to stay in London), I spent three months in formal interviews for a job with eBay’s European business development group. Three months! The same day that I finally received an offer, I learned of a different position at Apple that was a perfect fit with my background and would give me a chance to do what I had hoped to do with Netflix — launch an American product into European markets. I interviewed for the position, received an offer and accepted in six days. Bam! How did it go down so quickly? I wish I could say that it was my incredible ability to close. The truth is that I started interviewing for the position three years earlier.

In 2002, I was working at a Virgin Mobile, partnering with independent record labels whose catalogs we wanted to convert into ringtones and sell to our wireless subscribers. To help broker introductions, and to advise on the deals, I worked with a consultant who came out of the music industry and had previously founded his own record label. He’s the guy that recommended me for the Apple opportunity three years later. But wait, there’s more. Prior to joining Netflix, I had talked to a recruiter about a position — one that didn’t quite match my skills — at Apple. Though I didn’t get that job, the very same recruiter was staffing the position in London two years later. She knew me and my work by that time and expedited the interview process (over pints in a Covent Garden pub).

While at Apple, I was able to sit on the other side of this equation. Our group grew from five to thirty people in two years and we were always looking for smart and entrepreneurial people to recruit to our team. While working on a co-marketing deal, the project manager assigned to the deal by our marketing partner impressed me with his work ethic, smarts, and personal style. He wasn’t interviewing, or even looking for a job. He actually had an awesome job. But to me, every interaction with him was another interview where he came through with flying colors. A few months after the project was completed, we created a position for him on our team. He’s still at Apple today, doing great work. This is one of a half-dozen instances where I’ve found great people and recruited them to join my team outside of a formal interview process.

Many of the job seekers I meet lament the fact that the only professional relationships that they have are with a handful of former co-workers. These are important, to be sure. After all, Ted from Accounting can open doors or act as a reference to your next employer. But most people don’t think of their customers, subordinates, or vendors that work for them as future opportunities as well. Be sure to treat all of these relationships with care, and to keep them fresh and real in good times and bad. With startups, this is especially important, since serial entrepreneurs love getting the band back together. Companies start, grow, and crash really fast in startup land. So a team might work together through multiple iterations and incarnations. By actively engaging with a wide sphere of contacts in real ways that demonstrate your Adaptive Excellence and winning charm, you have a safety net(work) when you need it most.

Robert Hatta is the Vice President of Entrepreneurial Talent for JumpStart Ventures. He has worked at several startup companies in Northeast Ohio and Silicon Valley, as well as other high growth, technology companies across the U.S. and Europe. Through these experiences, Robert has gained an extensive understanding of the culture and needs of high growth companies with a particular focus on talent.

Ten years ago, I joined a 2 person wireless startup in San Francisco. The good news is that I had a job with an employer that didn’t have a “.com” in its name. Silicon Valley in the summer of 2000 was a bloodbath. I had just been laid off by a trendy, “can’t miss” internet startup funded by a “can’t miss” dotcom icon, Marc Andreessen; scores of friends and former colleagues were jobless; and applications to business schools soared nationally. The bad news is that our office was located in a  tenement building, above a buffet-style Asian restaurant specializing in chicken feet, in the heart of San Francisco’s 6th and Mission neighborhood (for a flavor of what the 6th and Mission neighborhood is like, a fun and colorful report can be found here). In the first 6 months, there were 6 of us sharing less than 400 square feet of office space with no air conditioning, shared bathroom facilities that required the use of a key (gas station style), and some unpleasant smells from the aforementioned restaurant. We started our days early, 7 AM typically, so that our 12-hour days didn’t require us to leave the office after dark. It was cheap and we were running on a lean budget. It was then that I learned the importance of culture. 

Up to that point, I’d worked for a handful of now-defunct, trendy startups that defined company culture as air hockey tables, “crazy shirt Fridays” or an endless stream of catered happy hours for every possible birthday/milestone/holiday. In that stinky, sweaty, cramped office, I learned that real culture is not about how you play together, but how you work together. We shared a focused, united vision of what we were trying to build. The room was filled with talented, experienced entrepreneurs still willing to learn from each other as we scribbled on white boards and threw ideas against the wall to see what stuck. Further, we shared the same personal values and would talk shop over drinks after a long day working the trade show floor, when we should have been catching an hour or two of sleep. I was lucky to be there and had the time of my life.

From that experience, I’ve learned three things: 1) chicken feet are an acquired taste; 2) be wary of companies that talk about their cultures in terms of dress codes, Xbox gaming systems, and company parties, and; 3) it’s critical that you hire people that fit into your startup’s culture. This may seem obvious, since startup teams are small groups, spending long hours together in non-ideal working conditions. Cash is tight, the margin for error is razor thin, and the stress level can be measured by the number of crumpled Starbuck’s cups piling up in the waste bin. However, many startup entrepreneurs do not take the necessary time to establish core values in their young companies. Core values are the behaviors and skills sought out in all new hires (and existing staff) that define the culture of your company. Real core values are not just a plaque on the wall or a page in your employee handbook (Enron had their core values pleasantly engraved in its marble-walled lobby: “Integrity. Communication. Respect. Excellence.”). Real core values are a set of shared principles that unite a team, big or small, and are reinforced each time someone is hired, rewarded or fired. They are non-negotiable, even as strategies, competitors, and business challenges come and go. Further, core values by definition cannot easily be taught. They are part of a person’s character. As Jim Collins puts it, “People can learn skills and acquire knowledge, but they cannot learn the essential character traits that make them right for your organization.”

What are the right core values for your company? There is no single, universal set of core values that can be applied to all companies, even startups. They are a reflection of the dynamic entrepreneurs, early employees and managers at your company. That said, I’ve gathered a few that I think, in some form or another, are important in any entrepreneurial culture:

Tenacity
What it is: Tenacious confidence in the pursuit of your vision as well as the avoidance of that which is not core to the vision.
What it’s not: Unwillingness to consider alternative perspectives and outside input. Irrational optimism.             

Entrepreneurial Intelligence
What it is: Makes wise decisions despite ambiguity. Quickly grasps key concepts and focus areas before diving into details. Can re-conceptualize issues to discover practical solutions to hard problems. Broadly knowledgeable about industry, market dynamics, competitors, trends and technologies relevant to the job. Intellectually curious, seeking deeper understanding of topics that are outside of specialty area.
What it’s not: Deep technical knowledge, but cannot relate to business objectives. Overly analytical and unwilling to act or make decisions with limited data. Needs to be the smartest person in a room.

Adaptability
What it is: Thoughtfully but quickly adapts strategies or tactics to changing market conditions, available resources or underlying assumptions. Is comfortable with ambiguity and is able to speak off-script. Embraces and initiates change. Considered an “athlete,” able to contribute effectively in multiple roles.
What it’s not: Job-hopper. Dilettante who has done lots of things but not to a level of excellence.

Initiative
What it is: Acts like an owner. Executes with a sense of urgency, seeks to “get there first.” Spots opportunities for improvements in efficiency, product quality, customer service, etc. that are not core to their responsibilities. Never says, “that’s not my job.”
What it’s not: Easily distracted by opportunities not core to strategy or at the expense of critical activities. Ball-hog: “if you want something done right, do it yourself” attitude.

Impact
What it is: Accomplishes amazing results in a short period of time. Surrounds themselves with A+ Players in order to achieve superior results. Seeks to eliminate complexity at all times. Identifies root causes, and gets beyond treating symptoms. Smartly separates what must be done well now, and what can be improved later.
What it’s not: Someone who is merely busy, works a lot of hours, but not much in the way of results. Works hard, but not very effective.

Communication
What it is: Seeks to understand before being understood (good listener). Is concise and articulate in speech and writing, explaining complex details in simple, understandable terms. Provides frequent and consistent relevant updates to stakeholders, investors, customers and employees. Not afraid to say what you think even if it is controversial.
What it’s not: Someone who talks a lot, but says very little.

Selflessness
What it is: Seeks what is best for the company, rather than what is best for his/her interests. Casts a wide net and is non-political when searching for the best ideas. Gives credit when things go right and takes responsibility when things go wrong. Shares information openly and proactively.
What it’s not: Passivity or inability to communicate a strong point of view. Martyr who goes down with the ship when the market is going in the wrong direction.

Tips to help startup entrepreneurs establish their core values:

1. Start now. Reinforcing, let alone establishing, meaningful core values will become increasingly difficult as your organization grows and adds new people. Each time you bring someone into the company that is a culture mismatch, you run the risk of disrupting the momentum you’ve worked so hard to achieve. Take the time now, which will save you time and headaches later as you scale your team.
2. Seek input. Ask your board of directors, mentor/coach/advisor and management team to list out the personal characteristics that are most important to them — both personal and professional. List the things you enjoy most about working at your company. Describe the ideal employee, the “company” man/woman.
3. Keep it real. Distill it. Boil it down to its essence, its core. But make your core values real, specific, and actionable. Overly broad or pie-in-the-sky, idealistic fluff will get you nowhere. Google famously uses “don’t be evil” as one of its guiding principles. Seriously, “don’t be evil”? Google has done a lot of great things in the last decade, establishing real core values, unfortunately, is not one of them.
4. Talk about it. Start introducing your core values into the everyday language of your company. Recognize and acknowledge when someone on your team displays or exemplifies your core values. Talk about them a lot. Calibrate and refine your team’s understanding of what they stand for and set the standard through your own behavior.
5. Walk the walk. Hire, reward, and fire using your core values as a compass. Your team needs to see that these are real core values, not simply slogans and words. Core values are like trust, they take a long time to build and can be lost in an instant. I suspect there was a time (long, long ago) when those core values at Enron meant something. It likely started with one transgression overlooked, one corner cut, and quickly unraveled from there.

So what are some of your core values?

Robert Hatta is the Vice President of Entrepreneurial Talent for JumpStart Ventures. He has worked at several startup companies in Northeast Ohio and Silicon Valley, as well as other high growth, technology companies across the U.S. and Europe. Through these experiences, Robert has gained an extensive understanding of the culture and needs of high growth companies with a particular focus on talent.

Position: CEO of a breakthrough idea/company

Hours: 60-90 hours per week

Reports to: Board of Directors: 3-5 people who are great and supportive but will also drive you nuts because the whole reason you quit your job to start a company was to not have a boss and now you have 3-5 bosses. Technically speaking, they also could possibly hire in your replacement. (Hey, they’re not your friends; nor are they even the shareholders’ friends; their legal obligation is to consider the best interests of the company as a whole). For the high growth route, a Board is totally worth it because the right Board of Directors extends your reach and knowledge immeasurably.

Company Description: Acme Startup is a totally new, breakthrough idea that will grow to $50 million or more in revenues and will fundamentally change the industry in question. It will be in its industry what Southwest was to airlines, Starbucks was to coffee, Facebook was to social networking, and Amgen is to therapeutics.

Position Description: Since this is mostly an idea trying to become a company, and no one has tried to commercialize this breakthrough idea, you will spend half your time evangelizing about the product and the need, the other half trying to raise money, and the other half (yes, three halves; our executive recruiter isn’t very good with math) dealing with hiring people, outsourcing for skills your company needs, and managing your board of directors and advisors. More specifically, the job entails:

• Developing the breakthrough product
• Evangelizing the need, product, market, and team that’s going to grow it to be great
• Finding cheap office space, and doing this several times over — each time you outgrow the office space you’re in
• Outsourcing for as much help as possible, as cheaply as possible, but without sacrificing quality**
• Creating lots of elevator pitches, executive summaries, and PowerPoint presentations of a gagillion different formats for 50-100 investor meetings, of which only 2-3 investors will end up investing;  Listening to “no” in 18 different ways and for reasons that make no sense, and using the “no’s” to make you stronger; Figuring out how to create “coopetition” with the yes’s in a way that is aggressive and maximizes value but isn’t straight-out slime ball city
• Hiring team members who are also entrepreneurial (and so also don’t deal well with the whole “boss” thing) and strive for excellence in all that they do, and working through with them the whole compensation thing too (see below)
• Holding monthly or bi-monthly board meetings plus regularly talking or meeting with board members individually
• Figuring out who is going to want to acquire this company, and when, and why, so that you and others can make money off of it; Meeting with those potential acquirers, and building something that they want
• Travel is 50% or greater, usually in coach class (unless you have upgrade miles), watching big-company executives sip cocktails in Business Class while trying to rearrange your seat tray in a way that you can see your computer screen so you can create yet another investor presentation.

Background and Skills:

• Adaptive Excellence – Whatever you do, you do it well and this clearly shows in your resume. Doesn’t mean you take the straight and narrow “achievement path” but does mean that, like cream, you rise to the top of whatever you do: video gaming, sports, hobbies are all definitely fair game, so long as you are someone who rises to the top of whatever you do. REQUIRED
• A Predator –- Love capital markets and figuring out how to win in the equity capital markets. The equity market is a brutal, Darwinian place — Everest comes to mind — and it is not getting much better. REQUIRED
• Strong communicator — Communicating consistently and well is pretty critical to retaining that top spot. STRONGLY PREFERRED
• Industry knowledge – The ideal candidate will know her product and her industry, because that’s usually what it takes to have great insights. But, industry knowledge has to come with the above factors. PREFERRED
• Prior successful entrepreneurship –- Has led a startup company to great success — raising capital and growing revenues — ultimately achieving a wealth creating exit. IDEAL***
• For other desirable traits, see also this.

Compensation: Competitive, but bizarre. You will make a ton o’ dough, let’s just say $5-$10 million if the company does well.**** You’ll make out pretty poorly if the company craters, which statistically is more likely than not. More specifically, you should be able to make ~$90K-$300K in salary*****, which is great, and the salary is that amount because if we want someone to successfully grow this biz, we know we better pay that amount. But keep in mind that you’ll have no severance plan, likely no employment agreement (although it’s a possibility), potential months-long gaps in pay (we try to avoid it, but it happens), and few benefits (basic medical; no 401K match). Your equity ownership will be 10-100% of the company, but this will decline to about 7% over time as you build value over about seven years. Which you might think makes NO sense, but it actually does. As you build value, you bring on investors who dilute your ownership percentage. So, you own less of a larger pie, which means your economic stake is worth more $$, but your control stake declines. That’s if it works out well. If it doesn’t, then you have less ownership of a lesser-valued thing and no control either, which most assuredly sucks (sorry - hard to find another word). But that’s what risk is. So, if this story sounds too horrible for you — and it is, like climbing Everest, a very narrow and specific route with change-the-world type glory but many embittering pitfalls — then you should not apply for this position. 99% of management positions are at companies that aim to grow a little slower, at a more sustainable rate, so that the company can avoid all the hassles (no argument from us on that word –- they are hassles) of equity capital.

(Our apologies that our executive recruiter got so carried away on this compensation piece, but we thought that rather than just writing “Competitive Compensation and Benefits”, you oughta know the basics).

To Apply: Do not send resumes. Instead, please come up with a breakthrough idea, and if you believe you can execute it really well, then raise some seed or friends & family capital, quit your day job, and let’s have some fun.

NOTES:
* This is a sample job description. It is not an actual job description.

** Do not sacrifice quality. Instead, if you can’t afford them with cash $$, issue equity in some form to the highest value advisors.

*** It is rare to find these serially successful entrepreneurs — people who have successfully run and grown a company and had a wealth creating exit and who, rather than retiring to Naples, actually want to do it all over again with OPM (Other Peoples Money) and all the hassles therein. But, if that type of person applied for this position, we wouldn’t sneeze at that.

**** The average founder-CEO of a venture backed company owns 5-10% of the company at exit and the average acquisition for an equity backed company is about $100-$150 million, so let’s just say ~$10 million is your take, but less after built-in/contractual preferences of investors are fulfilled, so make it $5-$10 million. The range of possibility is, of course, anywhere from $0 to the low billions.

***** The salary grows within this range as you hit value creating milestones, advance through stages, grow revenues, and add investors.

Becca Braun is President of JumpStart Ventures. She founded and led a number of early-stage companies and organizations, as well as worked as a private equity investor and management consultant. She received her MBA from Harvard Business School and her BA in Linguistics from Harvard University. She is keenly interested in the intersection of wealth creation and broad-based regional economic growth.