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Wil Schroter

Blog Post Detail
Who's Setting the Expectations at your Startup Company?
November 19, 2007

In less than 2 years from its launch, YouTube sold for $1.65 billion to Google.  You hear startup stories like that and you start to ask yourself "What's taking so long in my business?"

It's not taking too long for your startup to be successful.  You probably just don't have realistic expectations!

Companies take a long time to become successful, if they even make it at all.  The fact that some of them start and blossom so quickly doesn't mean all other startups by comparison are failing.  It just means a few of them were incredibly fortunate.

Notice I say fortunate, not "lucky".  Luck is what happens when you hit the lottery.  Fortune is what happens when you work toward a goal and achieve it.  The YouTube guys were fortunate, not lucky, so let's not take anything away from them.

Don't Let Investors Tell You

There's no magic date or number that indicates that you've made it any faster than you should have, or that you're falling behind.  The fact is no one knows how long it's going to take you to "hit it big", no matter what your definition of "big" is.

Venture Capitalists will often tell you that "big" is a sale or an IPO that occurs in less than five years.  While that's a really nice goal, and it happens to fit well within their business model, the fact is 99% of companies don't fit into that model (VC's invest in less than 4,000 businesses a year, yet 550,000 are started every month).

Of course if your goal is to get funded by a VC, then by all means your expectations for the businesses performance better be in line with theirs.  Just keep in mind even the businesses that they fund rarely meet those expectations!

Don't Let the Media Tell You

I led off with the story about YouTube because it's so spectacular in nature.  The media gravitates toward the spectacular, which makes you think that after you've burned through Forbes magazine, every company must be doing that well.

The truth is even the ones that are being profiled are rarely doing that well.  Most stories in the media are propped up on a single discussion point while conveniently overlooking key details like "the Founder just got fired" or "we're $20 million upside down in debt to our investors".  All you read about is "Over 1 million people are already using their product!"

The media is giving you the highlight reel, not the entire game.  That's because companies don't just shoot up overnight (although I wrote a whole book on the contrary), they are built over time with consistent dedication and focus.  Unfortunately, that story doesn't sell magazines.

Don't Let your Staff Tell You

As it happens, your staff probably reads the same headlines that you do.  They compare their performance in the company, the company's overall performance, to what's happening in your startup to the headlines they read.

In some cases, your staff probably came aboard to live the dream of wild success.  Everyone wants to be one of the 1,000+ employees that became millionaires at Google.  So if your staff feels like they're not on that magic gravy train, they may start looking elsewhere, or pressuring you to deliver on that dream.

If your staff is looking for overnight success - for a company that they can work at for two years and become millionaires - let  them keep looking.  No one can realistically promise guaranteed overnight success, although there is no shortage of attempts.  Most people would be fortunate (not lucky!) enough to be involved with one company that does well, let alone trying to bounce from many in hopes they make it.

Set your Own Damn Expectations

Only you can determine how big and how fast your company can grow.  If your expectations are that you're going to take the company public in three years from launch, that's great.  If you think you can pull that off through your own actions then I'll be the first to say "hell yeah, go BIG!"

But if the only thing setting your expectations are what investors are telling you, what you're reading in the press, or what your employees are making up on their lunch hours, you're setting yourself up for complete failure.

The barometer of your success should never be graded with someone else's milestones.

Set your own damn expectations!

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Comments About this story
Great article and some great tips. Lot of stuff we should already know, but helps to be reminded of.
Posted by: David Mackey 11/20/2007 at 9:58 PM

Very good points, particularly the reality check of what is/is not focused on regarding the debt of the company and the favorable news.  While that is not necessarily a bad thing, the point that success and milestones can only be set from within, from those having all the knowledge and information is a good one.
Posted by: Brian Longest 11/23/2007 at 1:35 AM


Why take the time to write a book and then easily contradict the basis for it? I only wish I could take back the two days I spent reading it!
Posted by: Donna M. 11/26/2007 at 7:49 PM

Donna - I hope you don't really mean that!  And thanks for reading the book btw!

I meant that I write about companies that seem to get huge overnight, but in reality they often take a long time.  You just hear about the rocketship growth when it's in full force.
Posted by: Wil Schroter 11/26/2007 at 8:52 PM


Wil,

In my opinion, there are reasons that you had a hard time getting your book published. It appears that you're talking out of both sides of your mouth. Do you realize this? You build a momentum with lots of evidence toward one end and then you turn things upside down to tell the other side - albeit a truthful side. It comes as a surprise after HOURS of dedicated reading (and, in my case, taking lots of notes in longhand on Thanksgiving Day in hopes of surviving a severe crises.) You set out to detail a plan, and, midway, get caught up in supporting the opposite side...and then go back to your original undertaking. Hmmm...

This may stem from having experienced both sides of the coin regarding work/financial situations. You're blending opposites in your explanation process, somehow, as if turning a sphere of thought full circle - maybe without realizing it - which comes across as contradictory, keeping you from proving your point clearly. Or worse: having the reader disbelieve your point altogether - losing trust.

In your blog above you shift in the same way, causing distress to the reader. "You've got to be kidding!!!" comes to mind. Proof in point:

"The media is giving you the highlight reel, not the entire game.  That's because companies don't just shoot up overnight (although I wrote a whole book on the contrary), they are built over time with consistent dedication and focus.  Unfortunately, that story doesn't sell magazines."

Wil, see if you see it (over and over) in your statement above. If not, get back to me.

Consider this: It isn't unusual for gifted people to have a hard time in "getting it all out properly and concisely." The people you thanked at the end of your book really didn't do the best job on your behalf...and it's holding you back. (Punctuation and typos are evident too.) I can't help wondering if the other 800 pages you wrote held connective thoughts that got shot down. I'm very curious.

*Observations from another (gifted) high school graduate who home-schooled her (gifted) daughter.  :)


Posted by: Donna M. 11/26/2007 at 10:09 PM

Donna - As I mentioned, I'm just happy anyone read my book at all - including you!  So first off, thank you again.

I don't think there is only ONE way to build a business.  My preferred way involves lots of risk and gain, but that just happens to be my method.

What I pointed out in my blog is that although many people want to go the Go BIG route, it's just not always realistic.  There are plenty of great businesses that are as big as Google that have grown very slowly and steadily.  I'm just not writing about them.

So I don't think it's bad to make one point and then prove the opposite can be true.  You really need to look at both approaches (building fast vs. building slow) and ask yourself which ones fits your style.  It's not a binary proposition.
Posted by: Wil Schroter 11/27/2007 at 3:55 PM


Wil,

Have you read your book word-for-word since it was edited down from 900 pages to 200 pages? Are you able to follow your thought processes as they stand? There is something very problematic going on.

I wrote an important message to you in this spot which I have erased. Reason: I don't think you're ready to "hear." My longer message above says it all. Someday, it may be meaningful to you. Not now, obviously.

All the best, Wil.

(I won't be back. I have all-important things to attend to for our new non-profit.)

Posted by: Donna M. 11/27/2007 at 9:03 PM

Hi Wil,
I think I see where you were trying to go with this, but it seems a strange piece of advice to give.

I agree that you should not let a system influence the value of your company at a given point, and I agree that you can set your own targets for what your company should be worth as a milestone.

But both of those are expectations (hopefully based on some element of fact or trend) and are not what the market (the customer) has dictated. (On the plus side, if the street vibe is you will be worth x by y, you may well be, because the market believes it too.)

But I don't think we can afford to forget that it is the customer who ultimately decides what comes to fruition.

So my point is that surely the thought any entrepreneur should have in his mind, the foremost plan, the largest objective, is not to set a limit or threshold and aim towards it.

Surely the entire mindset of an entrepreneur is to determine what is the best he can do to maximise what the customer values his company, as much as possible, all of the time.

That may seem pedantic but "customer focus" is one of the ingredients of many successful businesses. AKA "what would the customer want us to do". If we try to deliver this, as best we can, then we can expect the customer to reward us.

You'll appreciate the long term loyalty and branding that his can bring.

It also focuses the mindset to achieving the most possible at that time.
Strangely this reduces the strain of a target. Personally I've never believed in targets, because you don't sell more just because a piece of paper says you should. And if you go over that target, you don't stop. And if you don't meet that target, you shouldn't give up. So why is there a target at all then?
Obviously targets are a measure to remind you to do something to reach them. Why aren't you doing that all the time any way?

By delivering as much as you can of what the customer wants, that may be a little or it may be a lot. But it as much as you can realistically do. And by focusing on what is the most beneficial thing you can do all the time to please the customer, you will achieve as much growth as it possible.

You don't need a target to tell you when to get more staff or stock or marketing. a) You base that on what you can afford and b) You only need do as much as the customer can stomach.

And also note how neatly that means you are in touch with what the customer wants ;-)

So whilst I greatly appreciate the "chill man" sentiment for the systems expectations, entrepreneurs should never chill, they should maximise. But in my experience, by maximising you do not burn out, you do not get stressed, you do not fail in any bodies eyes. It's just very calm and simple. "What can I do now to make this better for the customer".

Then the money almost just looks after itself.
You are happy. Your customers are happy. Your staff haven't failed. And you aren't dead form stress. I also think it builds much stronger foundations.  The fast buck ends quickly.

Value yourself and what you do for your customer and they will value you, and vote with their wallets and purses.

People can value your company all they like. It's only the customers opinion that really counts. Perception is nine tenths of a sale :-)

Peace and Light.
Peter
Posted by: peter b. 12/5/2007 at 7:12 PM

Hi Wil,

I just wanted to thank you for your post above, it makes alot of sense to me and I understand what your were saying. Some people just look at things the wrong way, or make there on comsumption on what they believe. Alot of think that is posted on these blog are very educational and help the begginner get started the right way.. Thank you for all your help and keed up the good work.
Posted by: tbennett 2/8/2008 at 9:18 PM



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