Your Founder Got Strategy?

A couple weeks ago, I attended a cocktail reception for Emergence Capital, a newly formed $125MM venture fund focused on information technology enabled services, similar to my fund's strategy but West Coast based.  We bonded quickly, as Jason Green's prior fund Venrock backed a company I founded in 1995.  (Fred Wilson of Union Square was there too; he passed on the predecessor company AdOne but we've become much closer over the years.)

As we were talking shop and riffing on what we were doing as funds, and compared it to what they were doing, Gordon Ritter asks me about one of our founding CEO's he had met earlier in the day.  This CEO is a veteran Sales guy on the surface.   Gordon wanted to know if he "got Strategy?".  So I knew exactly what Gordon meant, as Sales guys are often tactically oriented to win the day, versus strategically oriented to win the war-- not that there is anything wrong with that-- I'd almost take the day winner over the war winner, because sometime's there isn't another day if you don't win today.

So anyways, I confidently said, sure this guy's "got Strategy".  My proof? I said that when we walked into his sparcely furnished loft apartment stuffed with staff, I saw only two books, on window shelf: Into the Tornado (from Crossing the Chasm fame) by Geoffrey Moore and Innovator's Dilemna by Clayton Christiensen.  Gordon nodded his head; our CEO's got strategy.

That's not to say that if you read these 2 books that's all you need to know about technology marketing strategy.  But I'd say if you haven't read these 2 books, deeply, and absorbed their lessons you probably don't got strategy.  Strategy is the great leveller that allows small early stage companies to become crushing guerillas over established incumbents in a relatively short period of time.  It's almost the only advantage that a startup have: the roadmap to the future of that technologies' development.  While often entrepreneurs tout "proprietary" technology, patents, or unique distribution relationships, in my book, pun intended, this often doesn't amount to mush and an incumbent can throw cash at these issues.  So the only thing left is a keener savviness on how the game is played, and getting to where you need to be before the incumbent does.  Why I and I think other VCs gravitate to serial entrepreneurs is that they have either have read these two books and experienced them and others like them, or have either by luck or sheer intuition figured strategy out.  The issue with the latter group is that they can't communicate it to others internally or externally so have a greater chance of failure in my view.  That's OK, and correctable, but I'd prefer if an entrepreneur can communicate vision to others, because if he can't that severely cramps the one advantage a startup has.  The other thing is that strategy is often counterintuitive, and few entrepreneurs can intuitively grasp and then communicate a counterintuitive strategy, especially if the strategy is based on rapidly flipping back and forth between different directions, depending on what stage of development your company and industry is.  Try and explain that to your management team or board without assistance. 

Let's just say this: on my bookshelf, I keep 5 or 6 spare copies of each book, so I can give them away to friend and comrades without delay.  I spend 15-30 minutes a week at least refreshing myself.  I am not joking.

So you want get Strategy?  Start with these books.  It's surprises me almost everyday how many founders and CEOs still go without.

I am always on the lookout for these types of tomes.  If you would post here or email me what other books you think are critical to understanding strategy or other VC/entrepreneurial books, I and other readers would very much appreciate it I am sure.  Even if they are obvious or a bit out of mainstream, so much the better.

Comments

[Ravi]

My eternal favorites:
1. Wealth Of Nations by Adam Smith
2. Bhagavad Gita (ancient Indian text)

I dont think there are any better books than the above to learn strategy.

[Steve]

While I am familiar with Adam Smith, I had not thought of him as a thought leader on strategy. Also, the Indian text idea is intriguing. The Art of War (translated from the Chinese best by James Clavell I think) is also a winner. I'd like to find non U.S. native books that address strategic topics that are not as mainstream as Art of War like the text you suggested.

Excellent, thanks!

Steve

[Dick Ward]

A great book:

Steve, although I've never met them (but Laura and I have exchanged email POVs several times) I wholeheartedly recommend authors Al and Laura Reis' new book, "The Origin of Brands." They are a remarkable father/daughter team who "get branding" much like your plea for CEOs to "get strategy."

I've followed Al Reis's advice for many years, and this latest book is one that I hand out to all my friends and clients who are creating new firms or new products and services within existing firms.

Another book I've been gifting to associates and clients for years is "Selling the Invisible" by Harry Beckwith. One of the world's best short reads on selling services!

I enjoy your comments, keep them up!

Dick

Richard Ward, Chairman & CEO
Providence Business Group, Inc.

[Brent]

Per your requests, I thought I should send along a quick note with the books I keep multiple copies of on my shelf to hand to people I bump into. (I keep the Christensen and Moore books too, which made me think that our lists probably overlap)

- Good to Great by Jim Collins - All of Collins books are great. I like self-help books that are data driven.
- Rapid Development by Steve McConnell - Any entrepreneur developing software needs to read this!
- True Professionalism by David Maister - Brilliant guidance on managing people, managing clients, and developing people
- Unleashing the Killer App by Larry Downes and Chunka Mui - I stopped giving this out 2 years ago but still have 2 or 3 copies left.
- SPIN Selling by Neil Rackham - If your background isn't in sales, this is a great book to improve your sales skills. Another book that differentiates itself from the pack by being data-driven.

Maybe there is a book in here that you have not read! It is always great to make a good book recommendation.

Keep up the good work.

[Danny]

For a comprehensive philosophy on doing business I would suggest works by David A. Silver. At last count, the author was the president of the Investment Company Institute (ICI). Particularly, if you are staring your first company- or trying to find a consistent approach to serial entrepreneurship; try

1) Close Any Deal : A. David Silver's 6-Step Formula For Success
2) Entrepreneurial Megabucks
3) Up Front Financing: The Entrepreneur's Guide
4) Venture Capital : The Complete Guide For Investors

I find the main lessons for me were:

1) Companies exist to solve explicit economic problems experienced by customers. Growth markets, proprietary technology, strong management, exclusive distribution and endorsements are useless if the company is not solving a homogenous problem experienced by a large number of people.

2) Customer financing must be the primary sources of seed finance for new ventures. It turns out that by leveraging information; small companies can successfully compete with large players.

Finally, in my experience, there is no substitute for entrepreneurship education like studies in venture capital. I find it that learning business is best done from the VC perspective. Needless to say, I think, studies in due diligence should be an essential part of any business degree.

[Rajan]

I totally agree with your post on "Your Founder Got Strategy?" ,
technologist need to have strategy. The two books you have recommended
are a good indication of the understanding of technology strategy.
These two books are definitely in my "To Read" list.

Technology landscapes/dynamics change in a hyperfast way. Hence
new strategy needs to devised again & again to keep up with it.

My suggestion would be to subscribe to blogs of Gordon Moore or
Clayton if they blog or some other smart guys like them. Thus I would
look at a person's blog roll rather than the book shelf :)

My Strategy source in my blogroll
www.bubblegeneration.com ( Blogger called Umair Haque )
www.teleapocalypse.net ( Blogger called Martin Geddes )

In fact I reached your blog through Umair's blog. His post on why
there exist no Chasm anymore is a must read.
http://www.bubblegeneration.com/?a=a&resource=pastchasm

As far as books are concerned here is my take
http://thiyagarajan.blogspot.com/2005/01/strategy-books-to-read.html

Cheers,
Rajan