andrew frame david copithorne dfj entrepreneur ooma silicon valley stanford venture capital warren packard wavesonPat Phelan over on his blog mentions Ooma and its founder Andrew Frame. Frame has a hell of a resume which Pat linked to on the Entrepreneurship Education Resources website from Stanford.
The site is a fantastic resource for videos and podcasts from Silicon Valleys (and beyond) top talent, take a look.
Frame and one of the directors of Draper Fisher Jurvetson, a VC investor in Frames company Ooma are recorded giving a hour long talk titled “Adventures of a Startup CEO: No Guts No Glory, 10 Lesson for building a successful start-up” which I’ve paraphrased below:
Warren Packard - DFJ
Andrew Frame - Ooma
1. Pick the big markets
It’s very, very difficult to start a company, why would you pick a small market. Idea started in a market, despite the technical background. Ooma are targeting telecoms - large market, low bar for innovation. 100 billion dollars in residential calls in the US alone.
2. Recruiting
Always actively seeking talent. Their hires were superstars in their last jobs. First get them out to lunch/breakfast, then get them in the building and pitch them. Slow process. Took several meetings to get the Yahoo Head of Customer Care in for example, try to get them emotionally attached. Don’t offer contract too soon, wait until they’re ready to close. Remove the risk before they sign. All of his executive team signed as soon as the offer was made. Talk about the numbers after getting them hooked. They should be willing to join on the opportunity alone. Employee fifteens fulltime job is to sit on LinkedIn every single day looking for staff. They have org charts for all the different companies and end up taking happy people from their current jobs. Recruiting gets easier once good talent is seen to be on-board.
3. Organisational Design
Important to get right from the start. Product management in the middle of everything. Product management controls the process. They are driven by the market and the ideas pool which everybody can contribute to. People need to know how they fit into the organisation. Lots of collaboration but clear demarcation concerning decisions.
4. Board Construction
When choosing a VC, try get a pro-entrepreneur firm, who understands the issues start-ups face. As long as the company is trending in the right direction. Get experienced CEOs. They’ve seen it before. Need to establish personal relationships with everybody on the board. Open, direct board conversation. Safe environment to talk about the ‘ugly’ [information]. You need to talk about the world as it is rather than the one that you wish that it is.
5. Alignment
How do maintain alignment as the company grows. Everything is governed by the company ‘playbook’. The playbook is revised each year by the leadership team offsite. Start with the vision - shared vision from among the leadership team which they also use to keep alignment in the company. Ask yourself where do you want to be in two years and try to get group buy-in. Six strategic imperatives in their playbook. If they meet all six of their strategic imperatives then they’ve reached their vision. Each strategic imperative is broken down to three or four strategic objectives. Each strategic objective has a set of tasks with an owner and a due date. All the tasks necessary. Now you have a self managing system. Simple Red/Amber/Green (RAG) tracking of tasks which are discussed at weekly meetings. Very clear to see how people are performing.
6. Mis-hires
Every successful CEO says their biggest mistake was waiting too long to fire a bad hire, especially in the leadership team. Best case scenario is a few million dollars, at worst the company will die. When you identify a bad hire, mightn’t be that they are bad, just not the right fit for the company, it’s vision. You have to move quick. Using the already agreed upon playbook it’s easy to communicate a problem. You don’t just fire someone. Praise publicly, criticise privately. Be open with your communication. When you have a bad situation, you need to act fast.
7. Build for scalability
First you need a leadership team that can scale. If they can scale, then the company can scale. Four questions each executive is asked - if you don’t meet these four then you don’t get in.
- Do you have start-up experience? An exec with only big company experience might struggle in a start-up experience.
- Do you have big company experience? An exec with only start-up experience mightn’t be able to scale the business.
- Have you experienced a massive success? You need to know what that feels like.
- Have you experienced a massive failure? You need to have felt ‘gravity’ and the bad times.
8. Product Development
Ooma is strict with the engineering department particularly not having control over where the product is going. Bad experience in a company where the engineers build something ’supercool’ but didn’t sell after four years of working on it. The product management role there was trying to keep up with what was going on so the PR department could be kept informed. The opposite of what was supposed to happen. In Ooma, you need to have a process. The requirements cannot change after their signed off. You won’t nail the specs 100% first time but fairly close.
9. Intellectual capital
Believes marketing is an intellectual exercise. Traditionally customer acquisition is seen as function of marketing spend but now there are lots of examples of companies getting market share with great products and not a lot of marketing. Examples of intellectual capital are things like designing ‘virality’ into the product. Creative strategy better than the standard press release.
10. Mentorship
Very important to give and receive mentoring advice. Lots of ways to successfully lead. Frame has a mentor named Keith Krach who was the youngest VP in General Motors - head of the robotics division at 26. He started and sold several businesses including Ariba.
Saw him at a talk and begged him to help him out. Believes that if you show passion and enthusiasm they’ll more than likely help out.
Commentary and Q&A
WP - 75% of their decision process goes into assessing the entrepreneur themselves.
WP - How did you come up with concept for Ooma and when did you decide to do something about it?
AF - It seems to occur over a long time, it’s an evolution. The idea started as something very boring, keep figuring it out. Focused on the market first and came up with a ‘base case’ but it had a lot of holes (from the VCs). You need to take that feed back, not take it personally, and keep going. You need to stick with the idea, hardening it and eventually it will happen.
WP gives an example of Mike Campbell and his Ultimate Arena product which allowed gamers to compete against each other for money. Problem was the great gamers were just stalked the novices and eventually the novices didn’t play anymore. The assets Ultimate Arena had was access to some great gamers so they changed Ultimate Arena to XFire which is an network for gamers. The entrepreneur wasn’t invested in the particular product itself, he was invested in helping gamers have a more enjoyable experience. The vision evolved a lot over time.
WP - What percentage of your time is spent recruiting?
AF - Probably 15-20%. He interviews every single potential employee for a ‘cultural’ fit. They need to be hungry, excited about the product, see the position as more than a job. You need to make sure the person is driven. Has rejected people because of their ‘negativity’ towards their previous jobs.
WP- Not everything works. You could have a great team and still not make it. Would bet on the team again in a heartbeat.
AF - Celebrate each success quickly.
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