What do you need to pay attention to when launching a startup? I was asked this question recently from an aspiring entrepreneur. Both of us having a strong project management background, I replied that “kicking off and managing a startup is like managing a project”. The more I explained the life of an early stage startup and compared it with managing a project, the greater the similarity between both became obvious.
A phased and planned approach
Projects aren’t carried out in one block, they’re cut down into separate phases such as idea, concept, realization, rollout and closing. This is exactly what founders should do for their startup project. The phases of a startup have different names (pre-seed, seed, growth, exit), but the same logic applies.
Just as project managers articulate the project’s objectives, so must founders nurture and articulate the startup’s business vision and exit strategy. This vision must then be fractioned into phases, each having specific objectives and deliverables.
Project managers never start a project without a plan. Founders too should never kick-off their startup project without one. It’s very tempting to rush straight into product development and somehow hope the rest will fall into place. This “enthusiasm trap” will inevitably lead to wasted resources and inefficient progress.
“The first thing that founders should produce is paper: essentially a plan where objectives, milestones, activities, resources and staffing are spelled out to make it through the pre-seed phase.”
The first phase
The first phase of a startup is the pre-seed phase. The main objective for this phase is to raise a round of seed financing from investors. Nowadays, an idea and a PowerPoint presentation aren’t enough to convince investors. A founder must show customers using the product or service and some basic traction metrics.
Consequently, the main activities to include in a plan for the pre-seed phase include building a minimum viable product (MVD), gaining customer feedback & usage metrics, demonstrating product-market fit, quantifying the value of the product/service, defining a revenue model, preparing a business plan, contacting investors, following up and closing the seed round, incorporating the company.
Important milestones and deliverables for this phase are market and competitor analysis, cost-revenue model, MVD, product and company description, customer feedback report, team & company structure, business plan.
Aligning objectives and resources
“Launching a startup without a plan and adequate resources is like running off into the desert without a map and enough water to reach the first oasis.”
Most founders tend to underestimate the number of things to do – and the time needed – to achieve this first phase. This phase only ends after the seed financing round. That’s why it’s important to carefully plan the activities and resources (committed people, time & money) that will get you there.
Most founding teams have no other choice than to bootstrap their way through the pre-seed phase. Founders can work for free in exchange for shares in the future company, they can keep a parallel job to assure income, they can raise a bit of money from family and friends etc. Whatever the solution, it is essential to formalize the time, money and effort (sweat equity) that each member will pitch in. This commitment can be a good yardstick to agree on the share options that will be distributed between the founders as compensation.
“Having a first timeline for the pre-seed phase, I always recommend founders to multiply it by 3. That’s how long they should be prepared to bootstrap until the completion of this phase by obtaining seed financing. I don’t consider a plan under 1 year to be realistic.”
When staffing their projects, project managers make a clear distinction between core team members and outside experts. Core team members will do the heavy lifting. They commit to the project for over 50% of their working capacity and for the entire phase. Experts on the other hand, are independent contractors, freelancers or professional acquaintances that are brought into the project when needed. They do their work and disappear.
Likewise, founders should identify not only candidates for the core team but also seek out experts that can be involved in the project. In an early stage startup, the core team usually consists of the co-founders that manage the product development, go-to-market and business development activities.
“Project teams move faster when the core team stays small and when all necessary experts are readily available. This holds true for a startup project.”
When setting up their core team, project managers clarify precisely the role, responsibilities and commitment of each core team member. Indeed, one of the greatest source of frustration and tension in teams originates from a lack of clarity about roles & commitment. So it’s a good idea to get clarity early on. Founders should do the same. This is done by initiating a dialogue that seeks validation from other members, for example, “with your skills and background, I think you can be responsible for A, which means you will be in the lead for activities such as B and C. This requires you work at least D days a week for E months. Do you agree on that?”.
Once a core team is defined, it’s necessary to identify potential skills and resource gaps by comparing what your core team can do with the plan. Gaps are to be filled either by increasing the size of the core team or by working with experts. Founders, like project managers, should scout for experts early on and arrange for a clear working relationship to facilitate their onboarding without losing project momentum.
Project managers are keenly aware of the importance to manage stakeholders. It’s an integral part of their planning. Founders should do this too. Stakeholders are people that can introduce you to important individuals or organizations, challenge you, support you or endorse your project. As a founder, you should start by managing your inner circle (family, partner). That’s essential to assure support in difficult times and freedom to operate when the workload increases. I would also add “friendly customers” to the list of stakeholders to be managed. These are the clients that you want to acquire to try out your product and get feedback once your MVD is available.
As soon as you have a list of stakeholders, start a dialogue with them to keep them informed of your progress and create opportunities to benefit from their support, advice or financing.
A good stakeholder management process is often overlooked because it’s not considered to add value. This is wrong. Founders will be surprised by the number of people that are keen to help if you present them your idea and keep them in the loop. A minimal but sustained effort to manage your stakeholders will result in a strong support network after a couple of months.
Tracking and coordination
On a weekly basis, the project manager’s most important tool is the task list. Tasks are listed with a deadline, lead person and current status. Startup founders should likewise work with a task list and hold regular meetings (e.g. Monday morning weekly kick-off) to coordinate the team, check on progress, identify issues, adjust deadlines and complete the task list. This task list should be shared and made available to all core team members.
“It may be a paradox, but a robust task planning and coordination process is the best guarantee of flexibility and creativity in the team. Indeed, getting into a routine for repetitive tasks will free up time and energy to address the (many) unexpected things that pop up along the way.”
Managing parallel work streams
Project managers are aware of the critical path to success and interdependencies between work streams. That’s why they plan and manage parallel work streams. Founders should also think in “parallel” to avoid problems of sequential work. This is exemplified by the “product trap” that happens when go-to-market activities are started after the product is ready to launch. By then, it’s too late to optimize your product for marketing, sales and distribution based on learnings from your go-to-market activities.
My recommendation to founders is to start testing core assumptions about revenues, marketing and distribution as soon as the pre-seed stage kicks off. Who’s going to pay (customers)? How much will they pay (revenues)? How can they be reached (marketing), served (distribution) and what will it cost to service them (profitability)? By getting clarity on what works best early on, the team will have time to optimize the product to obtain a fit with the go-to-market strategy.
Hard deliverables and soft people management
As the team goes into “plan execution” mode, project managers never tire of reminding members about the milestones, the required quality of deliverables (completeness, consistency and coherence) and seeking clarity about who’s in the lead to achieve them. Those are the “hard” aspects of project management.
Project managers know that mastering these aspects alone will not get them where they want. Mastering the soft aspects is equally important. Soft project management is about creating a dialog and coaching team members to help them figure out ways to reach objectives, identify problems, priority tasks and be on the lookout for unspoken, lurking issues that can affect team work. Startup founders should be keenly aware of the need to coach core team members and should plan the necessary time to do this.
Celebrating success in one of the best tools that project managers have to maintain motivation. Celebrating success fosters team spirit and a culture of performance. Work hard, celebrate hard. There’s no better way to keep the team tightly knit. As a founder, make sure that important milestones and deliverables are celebrated with the team once they are reached. Remember that investors will only invest in your startup if they feel you have a winning team with a proven track record and that sticks together in all circumstances.
And then… iterate!
If execution of the pre-seed stage is done well and you product is convincing, it’s likely you will raise money from investors. So what’s the next thing to do after the seed money is in the bank (besides opening that bottle of Champaign)? Start the planning all over again.
What worked for the first phase will also work for the next ones: planning, aligning resources, tracking progress, involving experts, managing stakeholders, coaching team members… Once this becomes second nature, you will have earned you credentials as “startup project manager”.
Joel Tendon is the founder of 2 VC-backed startups and has over 25 years’ experience managing projects for established companies. His current startup called Fan Valley (www.fanvalley.com) is an app for soccer fans across the world.