Startups, Products, and Projects: Cutting Through Noise

Recently, there have been numerous articles and blog postings about alleged boardroom and executive staff drama at twitter. People are spending a lot of time and column inches speculating about what happened at what board meeting, who said or did what, and what leadership changes were made for what reasons. You can speculate endlessly, but that’s a waste of time. When evaluating a company’s health and future prospects, it’s much simpler to focus on four simple questions:

1. Does the company have revenue?
2. If not, does it have a credible plan for generating revenue?
3. Does the anticipated revenue support the current company valuation?
4. If not, does the company have value as an acquisition target to acquirers who can afford the company’s desired valuation? (For example, the product or technology may enable the acquirer to enter a new market quickly or increase the value and revenue of the acquirer’s other products. The acquirer may be able to increase revenue from the startup’s existing product via its greater size and sales and marketing power.)

If the answer to all four questions is “no,” then one of two things will happen: either the company will make changes to increase its anticipated revenue and/or value to an acquirer to match its valuation, or its valuation will decrease to match its anticipated revenue and/or value to an acquirer. The first scenario is more pleasant than the second!

Startups can save themselves a lot of time by asking themselves these four questions. These questions keep management and staff honest and avoid getting distracted by politics, personalities, power struggles, or boardroom and executive staff meeting drama. Note that “revenue” in this context is a broad goal that can be achieved by indirect means such as measures to increase reach and usage. LinkedIn grew into a very successful company by focusing in order on reach, usage, and revenue growth. Early focus on growth in reach and usage provided the foundation for later growth in revenue.

Product managers can save themselves time in product planning by focusing on these four questions. Everything you’re working on should in some way be contributing value to your product or the company as a whole. (Providing greater value to your customers is absolutely one way of doing that, of course!) If some of your activities seem to have no credible prospect of increasing revenue, cutting costs, or increasing the product’s or company’s value in other ways, ask yourself whether you should be doing those activities. Then ask whoever is making you do those activities!

Project managers can likewise save themselves time in project management by focusing on these questions. Projects are normally intended to increase revenue, cut costs, or do both. Project managers should continuously ask themselves whether the things they are doing (or are being asked to do) will likely increase revenues, cut costs, or achieve other specific targeted goals. If not, they should ask themselves whether they should be doing those activities!

Agile project management and Scrum make it easier to do this kind of ongoing evaluation of the usefulness of plans and activities and adjustment whenever needed because:

• Agile project management discourages companies from making monolithic long-pole commitments of resources that only provide value at the very end. When you’re working on individual user stories, each user story provides value, and each user story requires less than a sprint (or ideally a day) to implement, little or nothing will be lost if you change the next week’s or month’s planned activities at the next sprint planning meeting. User stories are independent, ideally, and the value of past user stories depends little or not at all on the implementation of user stories that may or may not come later.
• Scrum features regular sprint review meetings that provide a regular, scheduled opportunity to review the results and value of the most recent sprint’s activities. Therefore Scrum encourages self-awareness by the individual and the team and continuous evaluation of outcomes.
• Scrum also provides regular sprint commit meetings that provide a regular, scheduled opportunity to discuss what SHOULD be done next, regardless of what was done previously or what the team PREVIOUSLY thought should be done next.

Agile project management and Scrum therefore provide many more points during a project (the end and beginning of each sprint) at which it’s easy and natural to identify the need for changes and make those changes to future plans as needed. As intended, this encourages enterprises to be agile!

At a healthy, functional, well-managed company, people should be free to ask questions about the value and credibility of current plans and ongoing activities. If the plans and activities have value, people responsible for them should be able to easily and credibly demonstrate the actual or anticipated value with data or credible forecasts, and they should not feel threatened by being asked. They should welcome the interest and concern for the company’s future success and the opportunity to have their assumptions and progress reviewed and discussed.

Unfortunately, many companies are not healthy, functional, or well-managed, and many managers are insecure. Insecure managers discourage having their statements or assumptions questioned because they misinterpret questions as personal attacks on them instead of as healthy discussions about the company’s future. Insecure managers can create a toxic company culture that discourages open creative thinking and debate and is antithetical to the sprit and practice of Agile and Scrum. If you’re an insecure manager, get help so you can grow into a more secure, effective leader. If you have an insecure manager, unless you or others can persuade them of the need to change and they follow through on the work needed to change, either you’ll have to put up with irrational behavior driven by insecurity and the resulting inefficiencies, or you’ll have to find a new position working for a different manager!

As for twitter? They don’t currently seem to have a credible plan for generating enough revenue to support their current valuation. However, they have tens of millions of users and the opportunity to change that. Tweets provide a natural target for context-sensitive advertising. Google got rich through careful placement of context sensitive ads near content! twitter has been curiously slow to move forward on this opportunity. twitter needs to find a way to harvest that potential without alienating too much of their existing user base or creating a large enough incentive for users to jump to an alternative ad-free system after they make the changes. twitter also continues to be an attractive acquisition target to many companies with deep pockets. Therefore I’m not losing any sleep over the possibility that I’d wake up one day and no longer be able to tweet. The drama at twitter is really about how much money the founders, early investors, later investors, and common shareholders will get back, not whether the company will survive. I’m not losing any sleep over that!