The Management Team - Guest Post From JLM

Next up on our guest posts on the subject of The Management Team is AVC community regular JLM. For those that don't know, JLM runs a public company and before that built and sold a large real estate operation. He's also written one of the best guest posts ever on AVC. With that intro, here's what JLM has to say on the topic. I love the way he ends the post.

—————————-

 

Congratulations, you have built a prototype.  Got it to work.  Debugged it.  Even sold a few copies.  Have some real customers.  Now you are ready to scale up and make some real money.

 

You have crossed that Rubicon from having an idea to having a product and customers.  Now you have to build an organization, a real company, to manage the entire process.  Or your fledging little company has to evolve from crawl to walk to run.

 

You may look yourself in the mirror and say — “Well, I know a lot about my product, even its market and competitors but what the heck do I really know about building a company?”  Can I do this?

 

The simple and truthful answer is “Yes, you can!”  If you don’t think so, here are some tips to take you from the garage to the executive suite.

 

Bad news — your generation did not invent sex.  It does not have to invent the crafting of companies either.  Someone else has also done this before.

 

Create a clever and insightful graphical representation of the business model which will become your company.

  1. Identify who the customers are and why they will pay money for your product.  This is the revenue side of the model.

  2. Identify the elements which must be incorporated into your product to create it.  This is the expense side of the model.

  3. Identify all the management functions which are necessary to transform the ingredients into the product and to educate the customers and to make the sale and to manage the money.

  4. Identify the competitive forces that are lurking in the darkness wanting to destroy you — the ones that are real and the imaginary ones.

Make a drawing of all of this on a single very large piece of paper and then marvel at what you have done.  Do it about ten times until you have perfected it.  It keeps getting better each time.

 

This is the company you will have to create.  The one that can operate this business model.  The one which can deliver your product to the marketplace and make a buck in the process.

 

Make an organization chart which shows each of the functions that are necessary to operate the business model.

  1. Make it a functional chart and don’t worry that it turns out very close to what every company ever created looks like.  That is good.  Remember, you did not invent sex.

  2. Identify the functions which are “essential” and those which are “nice to have”.

  3. Now identify what you can afford and what you can stretch to afford and those which are simply out of reach for the time being.

You have now identified your immediate, short term and long term organizational imperatives.

Take the business model and the organization chart and color code it to identify your own personal strengths and weaknesses.  If you have a co-founder, put his up there also.  Now you have identified those elements of leadership and management that you can provide and those you will have to hire from the outside.  Be tough on yourselves; don’t undertake a task you hate just for the ego enrichment of it all.

 

Be prepared to hire people who are fabulous in their fields.  Hire a Chief Financial Officer you cannot possibly afford and tell him he is the “financial conscience of the company”.  Meet with him weekly and never miss a meeting.

 

Now take the business model and the color coded organization chart and create a schedule of how you will build the organization.  Which functions will be added first and why?  The business model will tell you what and the color coded organization chart will tell you who and the schedule will tell you when.

 

That is really all there is to it but you will want to consider the following considerations:

  1. It will not be perfect out of the chute.  You will do some stuff that does not work.  Just re-engage and do it over.  It’s going to be OK.  Really punish yourself — just kidding.  Learn to laugh at yourself.

  2. Understand that everything in life is iterative.  You do something.  Get better at it.  Get better at it some more and one day you laugh to remember how naïve you were when you started.  Ever learn to ski or snowboard?

  3. Do the formulaic and fundamental stuff and get it done but only do what you really believe.

Vision, Mission & Values

  1. Vision — big dreams and little dreams all cost the same, so go with the big ones so that if you only accomplish fifty percent, it will still make your Momma proud.

  2. Mission — simple, direct and jettison every extra word.  The mission of the Infantry — “Find ‘em. Fix ‘em.  Kill ‘em.”

  3. Values — sweat this one because you will have to live this one.  If you are going to take risks and run with the bulls, this is where you let everyone know.  Don’t be afraid to say that “frugal” is a value.  I like frugal.

Every new employee hears the values part of the company from you and only you.  Wear a suit and a crisp white shirt and a tie and tie shoes.  Do it in the first five minutes of their employment.  They will never forget that.  Don’t discuss them, tell them.  Difference between a tattoo and magic marker.

  1. Job descriptions — don’t hold out for a Pulitzer but put some thought into it.

  2. Copy the absolute best exemplars you can find out there.  They are out there.  Be a copy cat.  Read Drucker.

  3. Make all your decisions about equity upfront and don’t be afraid to say that you have to “earn” it.  Understand that equity is an element of compensation and sometimes it is not even in the top three.  

A good comp plan includes: 

  1.     Salary;
  2.     Benefits;
  3.     Short term incentives (measurable performance based bonus);
  4.     Long term incentives (equity); and,
  5.     Something special (work from Colorado two weeks per year).
    1. Develop a philosophy of management.  Write it down.  Try it out on some folks whose wisdom you admire.  Put it to work.  Live it.

    2. Get a mentor, a rabbi, a gray haired eminence who is willing to work with you.  Golfers get swing coaches but great swing coaches work on the golfer’s head as much as his back swing.  Get a professional coach.

    3. Do not be surprised that everyone in the company does not share your passion.  That is the curse of being an entrepreneur — you see and care about things other people don’t even know exist.  I would rather be a Captain of a rowboat than the second in command on the QE II.

    4. Do not make changes, conduct experiments.  Nobody can resist an experiment.  Experiments that work well have a thousand fathers and mothers.  It becomes their idea.

    5. Brainstorm at least once a month.  Honest to God, uninterrupted brainstorming.  There are no bad ideas.

    6. Learn to critique yourself.  Learn to talk yourself down off the ledge.  Be thoughtful.  Take the lowest echelon of the company to lunch once a month.  And then talk to them.  Listen to them.  Make one change they came up with and you will become a legend.

    7. In any organization, you rarely receive power.  You take power.  You wield power.  The most powerful people will things to be done they don’t order them to be done.  That is real power.

    Ooops, I see the hook.  So I must go.  Good luck.  Remember — you can do it.

    #MBA Mondays

    Comments (Archived):

    1. testtest

      “into” should be “intro”?

      1. fredwilson

        where is that typo so i can fix it?i tried to find it but could not

        1. testtest

          “With that into, here’s what JLM has to say on the topic. I love the way he ends the post.”may not be a typo?

          1. fredwilson

            ah. my typo not his. thanks!

    2. John Best

      This is one to bookmark and revisit over and over.Thanks JLM.

    3. testtest

      “In any organization, you rarely receive power.  You take power.”true of life. kudos to you, for this. and to me (for no particular reason)

      1. JamesHRH

        This is a tough one for classically ‘book smart’ people to learn.Knowing what should be done is not the same as getting yourself into a position where you can affect change.

        1. testtest

          yup. the game of life is different from ‘book smart’.i find business reflects life. if you’re good at business you’re generally good at life, as well. 

    4. Rohan

      ‘big dreams and little dreams all cost the same, so go with the big ones so that if you only accomplish fifty percent, it will still make your Momma proud.’Amen. Straight into my quotes list.Thanks JLM. Sublime. As usual.

      1. Brad Lindenberg

        Thats my favourite quote in the post.

    5. Michael FitzGerald

      Wow! This is so timely for us. Has to get added to the morning reminders. Thanks JML and Fred for sharing.Mic.

    6. Rohan

      And, for some reason, I can’t see the numbers on the left. Ended up reading it on Google Reader.Not sure if this is something only I’m seeing. 

      1. Bala

        I don’t see it either but I see the outline of a number

      2. fredwilson

        yeah, there is something wrong. and i can’t figure out how to fix it. i think i’m going to focus on more important things this morning

        1. Cody Robbins

          Something is wonky with one of the stylesheets. If you change line 329 of style.css from 1em to 2em it should fix it. I’m not sure if that’s the sheet for your design or just the default underlying theme.

          1. fredwilson

            Thanks!I will try to get to this later today

          2. Aaron Klein

            Pro tip I learned recently: if you install Firebug into Firefox, or use Chrome, you can edit those things and see if your change works in advance.Saves me a lot of iteration with designers. “Change that to 3px instead of 12.”

    7. Bala

      All the bullet points are pearls… and needs to be framed. I wish every entrepreneur has the discipline to do this as described. I think it has been said before, written about and talked about but rarely implemented. Lot of what JLM writes about is common sense but common sense is never common practice. The difference between those who make it and those who don’t boils down to this post! well said… let go and do it

    8. RichardF

      Work from Colorado (or Whistler) three months of the year is my goal for something special 🙂

    9. LIAD

      Fucking A!

      1. Humberto

        fucking A x2.plus, a fun read.has he written anything lengthier on the topic?

        1. LIAD

          We’re blessed that Jeff pens highly insightful comments on AVC very often.I think you’ll need to go through his Disqus history to uncover the gold.

          1. karen_e

            I agree about JLM’s Disqus history and I’ve gone back through it more than once. I’ve been smitten lately by a 1997 biz book, *The Power of Alignment,* which I heard about in one of JLM’s comments here. Basically, “For a business to be successful it must align the four essential elements that together create growth and profits: strategy, customers, people, and processes.”

            1. JLM

              The Checklist Manifesto

        2. RichardF

          I’ve curated some of JLM’s wisdom here http://www.startupboyo.com/…It’s only a few of his comments but they are all nuggets imo.

          1. Humberto

            awesome! thanks!

    10. William Mougayar

      This is the most PRACTICAL& PRIMORDIAL  set of cookbook advice I have ever seen concentrated in one place.  Every startup should do exactly that, and almost in the right sequence of steps prescribed. Only minor thing I might add is that brainstorming is a weekly if not daily thing with startup. It’s as critical as your meeting with the finance person. These JLM principles are a sure recipe to build a sustainable business. 

      1. JamesHRH

        I am with Charlie here.A lot of people in a startup love being there, but that does not mean that they share the founder’s enthusiasm for innovation, improvement and re-invention.Not only can you wear them out, you can confuse them and cause them to delay what they are on the button to deliver.

        1. William Mougayar

          I wasn’t referring to pie-in-sky brainstorming…You have to give it to them in micro-chunks, and repeat it, and they will get it. – posted via Engagio

    11. William Mougayar

      Hey JLM, I’m curious- who dared giving you the hook? Looking forward to your comment replies too.

      1. fredwilson

        someone from his family i betwife, daughter are most likely

        1. JamesHRH

          He gave himself the hook – JLM knows to leave them wanting more!

          1. William Mougayar

            I’m vouching for that case actually :)- posted via Engagio

            1. JLM

              I have become so completely transparent and obvious?

            2. William Mougayar

              Not at all. To the contrary,- you are predictably unpredictable…and you have more than one trick in your bag! Today, you gave us a whole Enchilanda, a piece de resistance…the whole ribbon roll as they say. But I’m sure you’ll have more coming :)- posted via Engagio

    12. Anne Libby

      Bravo.

    13. JimHirshfield

      Thanks JLM!!!

    14. awaldstein

      JLMThe best advice has new value every time you use it. This will.Straight talk that I’ve already turned into a PDF that has a spot on my desktop.Thanks!

    15. brookllew

      I know that the advice is great,of course, but we sell a service rather than a product.Most of the advice/comments/vision on here centers on product-based companies, rather than service-based ones.  I understand that products have a better chance to be disruptive and new than the agencies that implement those technologies, but I do feel like we get short shrift.End of rant.

      1. fredwilson

        I think much, if not all, of this advice applies equally well to a service business

      2. JLM

        In a lot of ways, providing a service rather than making a product is an even better application of these principles.It is face to face and the organizational dynamic does not have the necessity of making a factory.A service can easily be defined as a product by intellectualizing what the end result will be.

      3. JamesHRH

        This is not the post for your complaint.Services companies are less disruptive and Fred could probably break down why they are not VC fundables typically (I think that is the case, but would be happy to have someone show otherwise).It is a scaling issue, I assume.I like the ‘end of rant’ sign off – that could be a signature!

    16. Carl Rahn Griffith

      Thank you, Fred/JLM. Love it.

    17. Trish Burgess-Curran

      Great all around! Particularly useful: ‘Create a clever and insightful graphical representation of the business model which will become your company.’ I bet you it is bloody difficult but priceless.  I’m going to do my best to follow that recommendation!  And it can be applied to so many things…

    18. leigh

      Other then I don’t think I”d look good in a crisp white shirt and tie, great post JLM.  Favorite line:”Bad news — your generation did not invent sex.  It does not have to invent the crafting of companies either.  Someone else has also done this before.”I’d comment more but I have to go draw a diagram 🙂

      1. JamesHRH

        I dsagree on the shirt and tie look…..you could totally rock that.I totally agree with JLM on the ‘game face’ approach – take your role seriously, but not yourself – and bemoan the casual dress code of modern business.Fred is lucky to live in Manhattan where, at least, people dress with style, if not formality.

        1. ShanaC

          You’re pushing boundaries when you do that (having done that).  In some professional enviorments, no matter how cool, you’ll still get raised eyebrows.

          1. JamesHRH

            Totally agree.I don’t wear ties – even though I like wearing a full suit – because it throws people off.And I can’t do ironic.

            1. JLM

              Here’s the thing — ties says “Better pay attention” because the boss is wearing a tie.Makes it clear this is important stuff and it is.

            2. ShanaC

              This doesn’t work for women. Gah

            3. JamesHRH

              This is actually why I don’t wear ties everyday. I really like your suggestion to put one on for first day chat with a member of the company.If you wear a tie everyday, you can see people thinking ‘what is so important about what we are doing today that he needs a tie?……Maybe he’s got a big lunch?………not a black suit, so, funeral is out…..’ etc.

            4. ShanaC

              I can do ironic. And I’ve worn ties. And I wear men’s shirt (the shoulders fit better, and they tend to look good with belts….side question..who makes good men shirts that are not ridiculously expensive)Still, not everyone can push boundaries.

        2. fredwilson

          the khakis and blue shirt dress code at microsoft always bummed me out

        3. John Revay

          Intersting to have watched Steve Job’s working attire change over the years.Early on he would be dressed in suites w/ bow tie, eventually got to his classic rogue look of black mock turtleneck, levis and tennis sneakers.And then there is Fred, I don’t know how he dressed during the flatiron days, my sense is suite/tie……the images that I see of him now – it looks like blue jeans w/ dark tan/brown jacket w/ white dress shirt.JLM still makes a geat point about chaning it up when you first hire the person. – I will have to try that.

          1. JamesHRH

            Steve was obviously trying to refect the brand. He eventually nailed it, but like all great design, it took some [email protected]:disqus is tieless suits a lot, or blazer I think.

      2. ShanaC

        Actually, you’d probably look fine in the shirt. 🙂

        1. leigh

          and it would be really Annie Hall of me with if i decided to rock the tie – posted via Engagio

          1. Carl Rahn Griffith

            Don’t start me – my girlfriend at that time was a double of Diane Keaton and happened to also dress in the style of the Annie Hall character.I was her Woody Allen; without the stream of wisecracks 😉

            1. leigh

              Or without the……message censored due to potentially inappropriate content 🙂

          2. ShanaC

            Same with me! I get compared to her all the time.- posted via Engagio

            1. Dave Pinsen

              Help, I’ve been flagged (editing my comment got me the flag).

            2. ShanaC

              You’ve been unflagged! :)@disqus:disqus  – umm editing shouldn’t cause flagging…..

    19. Brad Lindenberg

      Amazing post!!!!!

    20. truth_power

      “That is really all there is to it”awesome

    21. panterosa,

      I love the simplicity of this, the cut to the chase. I love that diagramming is part of visualizing, and color coding is how to sort thru the diagram – it makes my transition from artist/designer to company builder look feasible. I would really like to see some of these diagrams after I make my own. JLM, you keep some of these roadmap gems? 

      1. leigh

        oh that would be cool to see….

      2. JLM

        I once backed a restaurant in Austin, TX and mandated that they had paper tablecloths so I and others could work out deals on the table top.It worked like a champ.I still have some of those paper tablecloths and can look at them and remember they were the first step on the way to the pay window.I have almost a third of a century of Moleskine notebooks.I read through some of those old ones recently looking for something and I wondered who that naive kid was.  It was me.

        1. panterosa,

          LOVE paper tablecloths. I routinely steal the neighboring crayon selections and make a better palette. To me a good palette is akin to a proper mission statement.I would love to see some of these artifacts. I have too many notebooks and scraps. I still haven’t worked out a great system for me since I work in many media and sizes. It’s a goal this year to solve that. I propose the diagrams you mandate be named “JLM diagrams”. I would love to see an exhibit of them from many different types of businesses. They can be paper tablecloths, or as Charlie says napkins, and in that case it brings a nice social aspect of breaking bread to making bread. Maybe that should be the show title.- posted via Engagio

          1. Aaron Klein

            Totally agree.My wife and I still love Macaroni Grill. First date there. The waiter or waitress will always come up to the table and write their name, upside down so you can read it, in crayon on your paper tablecloth.I can imagine JLM saying “please don’t crowd my writing space.”

            1. panterosa,

              ET calls that ‘content real estate’. And he’s driven mad when UI invades that space.

        2. LE

          “I once backed a restaurant in Austin, TX and mandated that they had paper tablecloths”The ability to come up with simple creative twists like that are the basis for being an entrepreneur.  I’m sure children also appreciated that feature.

      3. ShanaC

        Doesn’t anyone beyond me find standard paper sizes/moleskin a little too small?I would alter a uml diagram

        1. JamesHRH

          TANGENT!;-)

          1. ShanaC

            :)- posted via Engagio

      4. JLM

        I have a graphic artist daughter and I am convinced that the ability to message using graphics — good graphic design — is an essential skill just like a web presence has gone from being nice to have to essential.The quality of the message is one half content and one half packaging.It is all about visualization.

        1. LE

          “I am convinced that the ability to message using graphics — good graphic design — is an essential skill “Very true. Good design creates emotion and emotion is a very effective way to sell an idea. 

        2. panterosa,

          JLM,I could not agree more – content + packaging > form=function. I can imagine the rigor of a graphic daughter of JLM!Before I went to RISD I summer interned at Milton Glaser. Amazing, set type by hand. I majored in Sculpture but always kept a hand in graphics, for fun and money. I do the specialty stuff for other artists and high end designers, translating their vision into 2D. Got an award, should have more but I was too lazy (and not vain enough) to chase them, and I do other work as well so I only take the really fun jobs.The grand awakening was last year taking Edward Tufte’s seminar. Amazing between the books and his commentary. Marry the story your data sets tell as woven together by choosing the right data narrative tool/format/graphics to combine. He is a top level critic and always spot on.Since then I pester him periodically to look at my work. I am on him to mentor my current gig. He is part of my dream team, and I am persistant.- posted via Engagio

          1. JLM

            RISD — wow!

            1. panterosa,

              I loved RISD!I have just gotten some whiteboard vinyl for my wall, the removable kind. I plan to make my “JLM Diagram” on it, so it can evolve. Have every color dry erase marker, of course, for my daughter.Re graphics, I have just produced a very high end design game prototype. I gave it to many of the AVC crowd at the November meet up. If you’d like to receive one then please send your mailing info to panterosa at (same name) dot com. – posted via Engagio

      5. Mark Essel

        I just commented on the visual version of JLM’s business framework. I think what he describes could be a reasonable web app, but there’s an element of physically writing things down that would be lost.

        1. panterosa,

          Maybe not…stylus?- posted via Engagio

    22. muratcannoyan

      Thanks for the terrific post JLM! I especially like thatpart about conducting experiments and what that means for team building.I’m at the point of building a team and have always had inthe back of my mind that it’s good practice to be advised by and hire peoplethat would serve as a “check” for the grand vision especially when related to the position of CFO. Related to your comment about values “don’t discuss them, tell them”.Since values are a strategic decision what is the best way to think about building a team that has both the passion and the pragmatism to execute the vision?

      1. JLM

        I look at values as stating the obvious but making sure that everyone knows it.  Sometimes the assumption is not true.  It is particularly true with young folks today.Not saying anything bad about young folks but sometimes they simply do not have the same life experiences.It is very difficult to create passion but you can summon it up and most folks have some of it hidden below the surface.Everybody does not get to be the QB but good QBs revere the pulling guard.  

        1. JamesHRH

          The first thing we did when we had all of our founders together was to spend a lot of time iterating through these issues.We created 2 documents: General Business Philosophy and Principles; Market Vision and Growth Principles.If I was grading us generously, we covered off 70% of this post.Fit is the key and without your own Values & Principles stated, how can you ever determine a good fit?

          1. Reddy_s

            great you guys captured   this  METHODOLOGY/PHILOSOPHY/PRINCIPLES  into  frameworks Two documents: 1/ General Business Philosophy and Principles 2/ Market Vision and Growth Principles

        2. Carl Rahn Griffith

          What frustrates me is just how simple it all is – business nous, hard work, passion, transparency and intelligence, is pretty much all that is needed – yet so often the process is made so unnecessarily complex and inefficient by politics and egos…

    23. Richard

      What percentage of entrepreneurs (particularly software) have the skills or tenacity to meet the demands of this list? This post should be stapled to every term sheet.

      1. Cynthia Schames

        Probably roughly the percentage that succeed. 1/5?

      2. fredwilson

        coaching/mentoring and occasionally a good VC can help

    24. FlavioGomes

      This is great! What an inspiring way to start the day!Thanks JLM

    25. Tom Labus

      This was great!!  Thanks.Part of the equation is a great HR person that you value as much as your financial one.  The right talent at the right time is invaluable and can save a lot of heart ache.On the flip side of this is the ability to fire, quickly and as Matt said last week when someone is rejected like a heart transplant then immediately.

    26. JamesHRH

      The most effective Build a Company 101 framework I have seen.Bang on.

      1. fredwilson

        and based on the tone and tenor, i think he banged it out in about twenty minutes while some loved one was on him to put the laptop away and go to dinner

        1. LE

          “some loved one was on him “In yiddish that would have been “hock me a chinick” or simply “hock me” which means “on my case” or “bothering me” but literally translates to “rattling the tea kettle”.As an entrepreneur you find that people are always hocking you about doing what you see as the best use of your time.

          1. fredwilson

            one of my favorite entrepreneurs Isaak Karaev used to accuse me of hocking him. i love that line.

      2. Reddy_s

        +1The most effective “Build a Company 101”  framework 

    27. Carl J. Mistlebauer

      Yes, learn to laugh at/with yourself!  Oh, and yes, learn to talk to yourself (talk yourself from the ledge)!  Not everyone will share your vision, but trust me, people just want to know that someone has a vision and sometimes that is all it takes to be a leader.Learn to doodle….I always am drawing things out for people:  I take notes for people, draw out the steps, and then I give them “my doodles.”  In fact, I have employees who come into my office and say, “…lets talk, pull out your pad of paper….”Challenge those around you, and let them know its okay to challenge you because you are all in it together.  We love to talk about going sailing, or mountain climbing, or skiing but the reality the greatest excitement in life is what you do every morning after getting up…..Always experiment and always study; not so much books or blogs but rather just the world around you….

      1. JLM

        Being able to coach yourself.  To admonish yourself not to take counsel of your own fears.To recognize exactly where the risk barrier lives. To know when you have crossed it.These are the skills of time and dues have to be paid to develop them. CJM has them because he has the gray hair to prove it.Being able to engage your superiors, peers and subordinates in a lively conversation is a pursuit that is not valued enough.  I have learned more about a person playing golf, discussing politics and hearing them talk about their families and backgrounds than almost anything else.

        1. Carl J. Mistlebauer

          JLM,Thank you for the compliment! As I have a tremendous respect for you your kind words are deeply appreciated.

        2. JamesHRH

          @fredwilson – Too true.This beats being able to draw.

        3. Robert Thuston

          Be a copy cat. read drucker. Respect.I onced asked, how should a company be managed, when working for one that wasn’t. Went to the library 2 months straight every weekend to read management books, figure it out. Read 19 before coming to “The Practice of Management” by Drucker… I stopped reading everything, and that book became my world for one year.Be a copy cat. Read drucker, then reread drucker.

          1. Donna Brewington White

            One of my favorite gifts to give is: The Daily Drucker: 366 Days of Insight and Motivation for Getting the Right Things Done

      2. fredwilson

        i wish i could draw

        1. testtest

          this guy is awesome as well: http://www.youtube.com/user…

        2. LE

          Some day I will have the guts to show people the cover that I drew for a computer supplies catalog  business I was going to start after college.  This was a year or two before CDW and right at the dawn of the IBM Pc. In the mean time consider the impact and popularity of xkcd.com and just do it. http://en.wikipedia.org/wik…

        3. Brad Lindenberg

          I think being able to draw is really important in a startup. It converts into being able to design (UI/UX)…. Turning an idea into something people can see, look at, discuss and iterate on. It also shows developers what the end game should look in terms of a an application interface. This makes it easier for devs to think of behind the scenes nitty gritty like database fields, logic, field validation, error handling etc.My favourite tools for representing my thoughts graphically are:1. OmniGraffle for flow charts, site maps, hierarchical diagrams and so forth (mac)2. Axure RP Pro for wire framing 3. Photoshop for final designs4. SQL Editor for diagramming database tables and relationships (mac)I make diagrams for everything for example:Site map for web appSite map for marketing siteSite map for admin sitePSD’s for all front end vision including web and mobile appsI also draw flow charts of logic flows so that I can show my developers how I want things to work. Even though I cant code, I do understand the logic behind the scenes and this helps me convey product vision.Pictures tell 1000 words and enhance speed to market in a startup. 

          1. fredwilson

            i agree with you

      3. Reddy_s

        Excellent  points Carl1. Not everyone will share your vision, but trust me, people just want to know that someone has a vision and sometimes that is all it takes to be a leader.2. Challenge those around you, and let them know its okay to challenge you because you are all in it together.  We love to talk about going sailing, or mountain climbing, or skiing but the reality the greatest excitement in life is what you do every morning after getting up.3. Always experiment and always study; not so much books or blogs but rather just the world around you.

      4. andyidsinga

        I also love doodling and drawing .. I’ve been doing way more paper these days. I need to get a good stylus for my ipad so I can draw in my autodesk sketchbook app.I think we must have evolved the desire pick up a stick and draw .. unfortunately it gets skooled out of us as we get older.

    28. ShanaC

      Thanks Jeff

    29. Cynthia Schames

      “Your generation didn’t invent sex”.  Best, most insightful comment I’ve ever read about startups.  Too many entrepreneurs get themselves bogged down in reinventing the wheel when it comes to business process.  Scale up the innovation as you create a product, but use established, hardcore business sense to actually build a company. This entire post is just…simple.  In the best way.  Simple is not the same thing as Easy, but here’s the framework to KISS. Bravo, bravo, bravissimo, JLM. (and Fred). 

      1. JamesHRH

        A simple approach is not the same as a simplistic approach – forget where I first heard that.I think it was Ross Perot who claimed ‘there’s only about 5 rules in business, the tough part is showing up everyday and making sure that nobody breaks any of ’em’.

        1. Cynthia Schames

          And he rode a HORSE to work, for goddsakes.(Really)

          1. JLM

            And he was a trade school grad.  I have a lovely story of when I was interviewed by Ross Perot.  It was a priceless experience.

            1. Cynthia Schames

              I would love to read that.  

    30. Rik Wuts

      Wow. Great post, very insightful. Love the style, too.I will follow @awaldstein:disqus ‘s lead and put this somewhere visible. 

    31. MartinEdic

      Really great stuff.He mentions coaching. I’d really like to see or have recommended a good piece on choosing and getting the most out of an executive coach…

    32. Richard

      As to step #2 of the business model, assuming time and money are two of your limitingnconstraints, please insert “iterate but stop when you have satisfied step 1”.

    33. Miljenko Hatlak

      “It does not have to invent the crafting of companies either.  Someone else has also done this before.”To many times we may catch ourselves discovering the “hot water”.Reality is that you may always trace your own path, but you should never get to far from the known road, or to boldly go where no man has gone before.There are so many organizations aimed to consult entrepreneurs in running and building their companies, students learn entrepreneurship at their colleges and universities, but yet to often we could hear that some interesting young company with brilliant idea dies.    

    34. gleslie

      Thanks, JLM. This is incredibly helpful.

    35. Mark Essel

      I’d love to see this business framework post taken a step further and see a visualization of JLM’s post. Any graphic artists want to take a cut at this?This framework may be a viable web product.

      1. panterosa,

        As I make my diagram I will think. I requested to see other’s diagrams to see how they saw things.

    36. Pascal-Emmanuel Gobry

      JLM is awesome.That’s it.

      1. fredwilson

        ^10

    37. Chris Waldron

      Great post JLM. Thank you.Are there some prolific bloggers that write about this phase of the company? 

    38. CamiloALopez

      Great post! My two favored points are: -You can will your desired output-Its ok if you dont get it right the first time! Try again! Thanks!

    39. Elie Seidman

      JLM – Simple, fantastic! thank you!

    40. karen_e

      What is it about JLM? Is it the military seriousness leavened with teenage humor? The permission he gives us to make mind-maps all day long? The Texas charm? Texas barbecue?

      1. fredwilson

        and dropping the word sex not once but twice in the same post

        1. John Revay

          Sex sells

      2. LE

        JLM is authentic. He stepped out of character a bit when he said this in a reply below:”Not saying anything bad about young folks but sometimes they simply do not have the same life experiences.”Could have been written as:””Not saying anything bad about young folks but sometimes they simply do not have the same life experiences.”

        1. andyidsinga

          Authentic – exactly.

      3. JLM

        I have known this JLM fellow for a long time and he was not always so.  I have watched him through the years.His secret is not very transcendental or flattering — he is a simpleton.  A complete and utter simpleton.  In the very nicest use of that word, mind you.His joys are simple and his intellect is simple.  He would charge Hell with half a thimble of water if he thought he was right.He worships luck and he believes it is the absolute essence of all good things that have ever happened to him.  Everything has been luck and he is not afraid to prostrate himself before that goddess.  A true simpleton.  He takes no credit for anything other than being awake at the dawn of fortune.He believes that we all can do anything and it is only the trying that is difficult not the doing.  Friction unearths the character and capabilities that lie within the soul of every person. We can all do anything if only we will try.And he was born on Ash Wednesday and, if you are Irish, you know what that means.

      4. JLM

        Nothing in the world cannot be improved by a bit of BBQ.  Nothing.Or roses.My favorite thing in the whole world is to go to the wholesale flower market and buy my wife four dozen roses.I demand a credit chit against any future wrongdoing as part of the deal.  I am about 127+ on chits, so there is some real wickedness available to me.My wife who does not revere BBQ the same as I do, will even trade a chit or two for some Q and doesn’t that make the whole damn world better?

    41. LE

      A great writeup. One thing I would add after “you rarely receive power.  You take power.  You wield power”… is that you have to be absolutely single focused and selfish with your time. If you’re not prepared to make unpopular choices with regards to the demands of others on your time, you’re certainly going to have a much harder time pulling off any startup.  You will be working all the time. If you’re not your competition is.There is going to be sacrifice  and if your significant other and family are not on board you’re going to have problems. Doing a startup or running a business is a full time job, and with few exceptions you really can’t take your eye off the ball for very long.  It’s total immersion. Of course all of this depends on the particular circumstances as well as luck in the mix. If you have partners you also have to make sure they share the same philosophy as well. I had someone who worked for me at one time who wanted to be a partner. While there were several reasons I wasn’t interested in bringing him on, one in particular was that he insisted on taking off on Wednesday afternoons to golf quite frequently. I liked this:Wear a suit and a crisp white shirt and a tie and tie shoes.  Do it in the first five minutes of their employment.  They will never forget that. While there are certainly examples (Andrew Mason comes to mind) of people that can be goofy and pull off amazing success (or organizations like Southwest and Zappos) that is certainly not the norm (at least in the traditional business world).  Being professional matters. As a general rule clients don’t want to give business to clowns. This may come as somewhat of a surprise to what JLM calls “younger folks” whose only exposure to business is focused on the angel/vc startup world. 

    42. matthughes

      Kudos to @JLM:disqus A pep rally for crushing it.I like the comparison to skiing/snowboarding – well said. 

    43. ErikSchwartz

      Nice.Excellent.

    44. Aaron Klein

      Amazing advice, JLM. Simple, actionable and so incredibly valuable. Wish I had this post to simplify my thinking the last time around. Glad I have it in hand this time.Your advice on “experiments” has instantly changed how I manage.Now excuse me as I get over the shock of my generation not having invented sex.

    45. pointsnfigures

      Great advice.  Wonder what he has to say about sex?

      1. fredwilson

        plenty. he used it twice in this post

    46. sigmaalgebra

      Nice.  “As simple as possible but not simpler.”  “Well played”.  I needed that, saved and indexed it, and can and will use it.  Thanks.

      1. fredwilson

        the twitter version of sigma!!!!!

    47. Luke Chamberlin

      I love 90% of the advice in this post, especially the personal growth parts, but I have questions on the wisdom that building companies “has been done before.”While it’s usually good advice to learn from the past sometimes it isn’t.When you’re in the middle of big big change, like say the Ice Age, you don’t want to look back and learn from the dinosaurs.The internet is the Ice Age for modern business.I have read Peter Drucker but do you really want to copy GM’s org chart from the 1960s? I know this is management apostasy but some of Drucker’s good advice for companies like Kellogg and GE is bad advice for young tech startups.This org chart of famous tech companies is meant to be humorous, but there is an underlying truth: http://www.bonkersworld.net…Telling people not to reinvent the wheel is good advice until the person who invented spokes comes along. I think we might be in the middle of one of those ages.I would be interested to know if JLM thinks there’s some truth here or if I’m just young and delusional.

      1. Dave Pinsen

        The Internet isn’t the first Ice Age, and putative dinosaurs can stick around longer than you might expect.

        1. Luke Chamberlin

          To what extent do you emulate them as opposed to embracing your mammal self?

          1. Dave Pinsen

            Maybe that question should be addressed to Fake Grimlock.

      2. LE

        I think if you’re young you start with something that is proven to work and then make changes after you gain more experience. You simply don’t know what you don’t know. Being creative in management, at least when starting, is not something you have to spend time on. This is not a decision like where to locate your company or what technology to use which is very difficult to change over time.  Apple reorged a bit.Here is one prior to Jobs:http://scripting.com/davene

      3. JLM

        You are not “young and delusional”, you are “young and unjaded”.  Never stop being so.Life will beat the crap out of you soon enough — so don’t rush it — and while you are figuring out how to pay your bills that brainpower which is necessary to invent the Segway or the iPad will be hearing a busy signal.Don’t listen to all the naysayers who catalog all the reasons why THEY cannot do what you know needs to be done.The key to applying things that have already been learned is the temporal frame of reference.  There is a lot of stuff that Drucker still works for and there is some stuff that “Re-Work” works for.  The embezzlement of ideas does not have to be OLD ideas, it can be ideas with only a three-day growth of whiskers on them.And there is some stuff that you have to know to reject even if it is classic and old school.Like the 72 virgins business — 72 chicks who know nothing about sex is supposed to be a reward?  Give me 6 New Orleans hookers any day.  Take Sundays off.

      4. JamesHRH

        I think Amazon is flatter than that!Drucker’s specific advice is only useful in those specifics. There are plenty of eternal truth Druckerisms. Those are the ones to copy.Our company philosophy is based on a simple, eternal Druckerism: “all organizations exist to attract and retain customers (customers have many names: donors, voters, volunteers, etc.”That’s not specific advice – that’s eternal and universal. Use those rules to build your organization and make it successful.Doing whatever it takes, when it comes to ‘ breaking the rules’ for you to create innovative value in the market and to attract  / retain customers, short of breaking the law.I think that is what JLM is getting at on copying.

    48. rlasa

      Awesome post. Really enjoyed it. It is very useful to think about growing a company from a visual perspective. Thanks for the great information.

    49. jason wright

      Is Melvin Udall on here?

    50. kirklove

      Great post JLM. Thanks for taking the time to write it.

    51. hypermark

      Great piece. As others have noted, this is so crisp, clear and readable that I have PDF’d.  May we all be so centered in our thinking and approach. Thank you. 🙂

    52. Andrew Guttormsen

      Love that the advice is actionable. Love that’s it’s simple.Great post, JLM!

    53. Ghaus Iftikhar

      I would like to add a few points. If your dream/vision does not fit in the world, try to find a way to fit it, even if you have to mold it. If all else fails, try to find a vision that is different but parallel to the first one.I agree that entrepreneurs shouldn’t be surprised if their employees do not share the same passion but talk to them. Keep smaller objectives and goals so they can accomplish them and then you should reward them. They will find a passion in accomplishing smaller goals. Long term plans are for the founders and management. That doesn’t mean that you shouldn’t tell them what the long term goals are but if you need to keep them passionate, you need to insure there is internal competition among employees to finish the smaller objectives and goals. If you manage to make one group passionate, it is enough. Other groups will just follow along and you will see your entire team sharing your passion in no time.Also teach. Even if you don’t know how to teach, just shut up and teach. It doesn’t matter whom you are teaching, just teach. You will be surprised how much you will learn while teaching others about something. Sometimes the best feedback you get is while teaching because it gives the other person a chance to ask those questions which you have never thought before.Just my 2 cents.

      1. JLM

        The very best companies have excellent training programs.Wells Fargo is the only remaining bank which invests 6 months in training financial analysts.  They are the most profitable bank in the US.I agree with you in regard to teaching more than you agree with yourself.Well played!

    54. K_Berger

      Excellent as always.  Thank you.

    55. andyidsinga

      “Create a clever and insightful graphical representation of the business model which will become your company”…”Do it about ten times until you have perfected it.”…”Make it a functional chart and don’t worry that it turns out very close to what every company ever created looks like.”That’s some major respect for learning-by-doing ..vs filling in the madlib or painting by numbers.Love that . thanks for the awesome post.

    56. jason wright

      Employees know that they’re employees, and they also know what air freshener smells like.Am I about to be mocked and misunderstood? I hope so.

      1. LE

        “and they can smell the bullshit”Totally not true Jason. In fact, the majority of sheep seem to get into those team building exercises and other paraphernalia.  It’s one big happy family where everyone cares about each other. At least until tough decisions need to be made.My guess is that when growing up your parents called you on any bullshit. Yes?

      2. FlavioGomes

        Totally agree…lots of folks can smell the bullshit…BUT real teams, real leaders don’t deliver bullshit…they express what can be possible. They live, breath and walk the walk… they’ll tell you the risks, and work hard at mitigating them…and if you got what it takes…and a decent set of balls…then you can be a part of that possibility.If you smell bullshit…then the only choice you need to make…is how fast to the exit door.JLM – bless the man for sharing his wisdom – is the type of leader I’d follow all day…every day.

    57. Ted Sullivan

       “I would rather be a Captain of a rowboat than the second in command on the QE II.”Pure genius. Amen. 

      1. fredwilson

        that is the tag line for entrepreneurs

      2. FlavioGomes

        But if you can get the Yacht…don’t settle for the rubber dingy

    58. Terry J Leach

      Great advice!! I’m going to use this post for years. 

    59. Carter

      I would also use this as a gauge when joining a new company, especially a startup. Questions related to these topics will not only show your sincere interest in the position but also uncover which companies have truly thought about being a successful, long-term enterprise. 

    60. William Mougayar

      A great companion to this would be a check list that follows your recommendations, sort of the field version, or maybe an App in the form of a checklist.Business Model:- Customers – Product- Functions- CompetitionManagement Functions:- check – check etc…

    61. OS1

      “simple, direct and jettison every extra word”Keeping this in mind is the ultimate ally in life. I remember the first week of my first job as an m&a analyst when a 30yr partner explained how the biggest deal of his life had been done on the back of an envelope (no joke it was the only blank paper on his desk and to this day he still has it). Two years later and thousands of hours of work and the results were the same.It shows the value of simplicity and clarity: if someone says it has to be complex to be right, their wrong, too lazy to simplify, or not gifted enough to to see the basics.

      1. fredwilson

        deals that happen quickly are often the best deals

    62. Scott Barnett

      Very well played JLM!  This is what I took away from your post…. please advise if I’ve over-simplified:Focus.  Listen.  Be Humble but Firm.  Execute.  Repeat.

      1. John Revay

        And enjoy what you do – have some fun along the way.

        1. JLM

          The “fun” of life and business Is the unique currency in which entrepreneurs are paid.If you aren’t having fun stop what you are doing.Life is fun.

    63. Dan Epstein

      I would favorite this post if I could.

    64. John Revay

      I think these guest posts are great. Between Matt & JLM – these are great blue prints to help build the company – great practical reads.Between Fred’s practical VC view, the great comments from the community, and then throw in great post – that’s all you need. MBA from AVC.

    65. paramendra

      What is the hook? 🙂

    66. Donna Brewington White

      JLM — While I am about to share this post on Twitter for the second time, I never got around to commenting — was on a whirlwind business trip when this came out.    The beauty of this advice is that it can be taken as a whole, in chunks, and even as one line gems — such as: Do not make changes, conduct experiments.  The advice about not trying to reinvent the wheel came through loud and clear.  As someone with a creative spark that leads me to want to reinvent the wheel just because I can (or at least I am under the illusion that I can) — I am reminded that the energy used for reinventing things that really don’t need to be reinvented could be better placed in creating disruption.  Thank you for sharing your wisdom so generously with this community.  I like to share your wisdom generously as well.  An aside:  I was recently in Houston and had the privilege of meeting someone I’ve nicknamed the “$6 billion entrepreneur” — he bootstrapped what has become a $6B company (no outside funding) and still has the thinking of an entrepreneur after all these years.  You came to mind often as I was talking to this man and not just because he is a Texan.

    67. JLM

      Real non-judgmental brainstorming is a very difficult exercise and requires some real discipline and rules to make work.I have shoplifted some very good ideas from others over the years.

    68. William Mougayar

      I slightly disagree. Regular brainstorming is a way to keep communicating what’s changing in the business and what the priorities are. I do micro-brainstorming sessions focused on very specific things.- posted via Engagio

    69. JamesHRH

      Copying is an interesting topic, in the context of value and culture.I totally agree on the inventing issue – smart people have come before you, take the learning and move on.But, the real key is to not try to copy someone else’s values or culture or personality. I think a lot of founders lack the confidence to be themselves.My wife just had someone use this saying in a meeting:’ We are going to do it the COMPANY NAME way, because if you copy someone else, you can only be second best. ‘I loved it.But, you should still copy all of the best thinking on non-core thing you can get your hands on!

    70. William Mougayar

      What ideas do you have? Mine is a micro-brainstorming…Time limit, very specific scope of discussion, and clear outcome. I’m talking 10-15 mins with 3-5 people tops. – posted via Engagio

    71. JLM

      Not copying verbatim but mixing it into your own stew.  Lots of money gets made by being the second guy to do something but having extraordinary execution.VisiCalc, Lotus 1-2-3, Excel

    72. JamesHRH

      I don’t think of that as copying, but more as ‘tweaking the mix’ on the product, services & distribution offering.But, I get your drift. No 2 stews ever taste quite the same, which is what I was getting at.Thanks for doing this post, btw.

    73. JLM

      I like brainstorming on a full day session about twice a year.Off site and with whiteboard and specifically designed brainstorming note materials — tabloid paper folded and stapled into a booklet.Give folks lots of time to know about it ahead of time.Totally non-judgmental.  No response at time of receipt of the ideas.  Go around the room and get everyone’s input and catalog it all without identifying the author.Then identify the 5 best and spend the rest of the day talking about them.Good breakfast — no business discussed here.Good lunch.  Get done by 2:00 PM.Save the materials.

    74. William Mougayar

      I would add…Well Played!

    75. andyidsinga

      totally agree – shop talk posts are the best.I still like bar-talk posts the 3d thing the other day ago – but nothing beats shop talk 🙂

    76. fredwilson

      i can’t deliver them every day and i may have to get more guest posts in order to do that

    77. Mark Essel

      That’s how Hugh Macleod started out 😀

    78. awaldstein

      The larger the group becomes, the more culturally difficult it becomes to add brainstorming into the daily dynamics of the work place.With 3 or 5 people easy. With 20+ really hard. It can be done but human behavior across the medium of personalities is not always empowered by flux.

    79. panterosa,

      I so appreciate your point about reducing noise from the mission.As an artist I work in series. Every time too much is happening in one piece I start a new piece, and anther, until each piece is integrated to be just what it’s about and no noise. The series is a conversation, which I am never sure where exactly it goes. The editing is fun and hard. I usually end up with at least 20 pieces. It is my working style.I guess in business terms the edits would be someday/maybe file stuff, and actually that is a favorite file of mine.

    80. William Mougayar

      Good one…We used to put the ideas on post it notes (no authors on them) that you stick on a board, and play a game of moving them around into categories of similar topics so that trends can emerge. – posted via Engagio

    81. William Mougayar

      I think so. There is Company-wide/strategy brainstorming vs. Product-specific/short term brainstorming. I was referring to the last one.- posted via Engagio