Tony Wright

[edit: I should probably have made a stronger point that I am talking about early early early stage startups. 2-5 people, pre-funding. Carry on!]

There is a tremendous amount of venom loosed towards so called “business guys” or “idea guys” (as I’ve called ‘em) in the startup community. They can’t catch a break.

A big part of the reason is that we’ve all had that hellish experience with the MBA. The guy who has his “big idea” and “just needs someone to build it”, presumably why he stands back and waves his hands a lot (and occasionally plays golf in space). You can find CraigsList littered with ads by biz guys, incredulous that hackers aren’t falling all over themselves to execute on their ideas.

It doesn’t take a lot of hunting around to learn that great technology startups aren’t generally built on the shoulders of a great business guy. Here’s a gem of a quote from a gem of an essay:

If you work your way down the Forbes 400 making an x next to the name of each person with an MBA, you’ll learn something important about business school. You don’t even hit an MBA till number 22, Phil Knight, the CEO of Nike. There are only four MBAs in the top 50. What you notice in the Forbes 400 are a lot of people with technical backgrounds. Bill Gates, Steve Jobs, Larry Ellison, Michael Dell, Jeff Bezos, Gordon Moore. The rulers of the technology business tend to come from technology, not business. So if you want to invest two years in something that will help you succeed in business, the evidence suggests you’d do better to learn how to hack than get an MBA.

Take a look at the genesis of your favorite startup and find me the MBA. Find me the program manager. They just aren’t there.

So your startup doesn’t need a business guy. In fact, there seems to be pretty compelling evidence that having a business guy in your software startup has a reverse corrolation with success.

So, take a walk, biz guy. We don’t need you.

Or do we?

It turns out that it’s not so simple as that. Startups are diverse– each startup has different needs. How do you think SalesForce.com would’ve done if it’d been started by a bunch of hackers? How do you think Zappos.com would have fared if it wasn’t started by a zealot for customer service and support? There are plenty of examples of great software startups with a critical founder who wasn’t really a technologist (arguably, Apple is a great example of this). And there’s no denying that for startups that have something that they intend to CHARGE for, a business guy is incredibly valuable– so long as he actually can dive in and do sales largely full-time. Most business guys I know turn there nose up at cold-call style sales– which is really what you need.

So what does every startup absolutely need?

Startups need BUILDERS. People who make stuff. Absolute animals, as Paul Graham puts it. People whose output is positively awe-inspiring.

But startups also need a product genius. Someone who has great instincts about what people want and need.

So what’s to stop a business guy from being a product genius? Not a darn thing. Sure, there are plenty of biz guys who are stupid about products, but it certainly doesn’t take much work to find a hacker who has a truly awful idea for a product.

It’s just not so simple.

But I’ll tell you something that is simple: a hacker or designer’s output is strongly correlative with their sense of ownership. Here are a pile of modifiers that can effect a sense of ownership:

The builder *IS* the “idea guy”. It’s his idea. (+50)
The builder isn’t the “idea guy”, but has the problem that the product is trying to solve. (+40)
The builder isn’t the “idea guy” and doesn’t really have the problem that the product is trying to solve, but can really empathize with the problem. (+30)
The builder is a principal author of HOW the solution is built, even if WHAT is being built isn’t entirely his baby. (+20)
The builder stands to make truckloads of money if the product takes off. (+20 * the number of truckloads)

In a world where startups are beset with endless challenges and frustration, anything you can do to heap on a feeling of ownership among the people who are actually building stuff is critical.

If there’s any indisputable advantage that startups have over big business, it’s the insane amount of sheer output that a startup can generate. Part of this is just being lean and bureaucracy-free, but a huge part of it is the motivation that comes with a sense of ownership. I think it’s pretty safe to say that the bigger a company gets and the more pure-play “managers” that get hired, the farther away the builders get from this feeling.

For all the startups out there who have a biz guy playing golf in space while a collection of hackers and designers slave away on the idea that they don’t really love…. Well, I don’t think you are necessarily doomed to failure. But I think you’ve taken an uphill road that’s a bit too steep for my tastes.

http://www.tqcblog.com Tom Clarkson

Keeping the builders happy isn’t too hard – you’re probably working on a project that is more interesting than a typical corporate intranet. The problem is finding the right people to start with.

Turning an idea into a good technical solution requires a lot more skill than you will find in the average developer. You have limited resources and the product has to be good enough that people will use it by choice, so you need someone really good.

Really good developers usually can’t be found by advertising a position. Last time I was looking for a new job I was available for all of three hours. That translates to a really small probability of seeing your ad, and an even smaller chance of considering it worth responding to.

While you may be extremely lucky and find someone good enough by advertising, the only real way around it is to know someone. You need to know that they have the technical skills to get the job done and they need to know that your idea is worth putting time into.

Of course, the reason that the business guys are posting the ads in the first place is that they don’t know anyone. If you come from a technical background, you probably just finished working with a team of developers, and you know who is good. With the technical background you not only have an advantage in being able to start building the product yourself, you can bring in more people when needed far more easily than the business guy can.

While both business and technical skills are needed to make a startup successful and lacking either will cause problems, the big difference between business and technical people starting something is when the gaps in their skills become an issue. For the technical guys it happens when you get to making sales, which isn’t too hard to deal with if you have a working product. For the business guys it happens before you even start.
http://www.aninternetvoice.com Edoardo Piccolotto

You have a good point. I think that people know how to manage a business not from any MBA or any school, but from themselves, it’s inside a person. People that has ideas comes from technica areas because they know what they want, what people want and what can be done. You have a good point, and explained well…
http://snaptalent.com Sumon Sadhu

Hey Tony, i still feel you are scratching the surface in terms of your argument, and you know that i would be someone who would be appropriate to comment.

So for Snaptalent, i’m not the ‘biz guy’ you describe – i’m a no holds barred, action man entrepreneur

There are three primary skills i have that provide value to the business

- Sales: i can sell anything. Hiring is sales, Motivating people is sales, investment raising is sales, customer acquisitionis sales, market research is sales. On any medium in any setting i can and will sell.
- Product: I’ve got an insanely deep understanding of the fundamental drivers of the internet having been on both the investment side and on the entreoreneur side. Fundamentally i’m a product guy, i care about interfaces, mockups and iteration on customer feedback. This is also stuff i do.
- Networking: If networking was an olympic sport i’d be a gold medalist. My existing network and the network i’m able to create generates opportunities for my company that wouldn’t otherwise happen. Whether it means getting mentors, partners or customers. I can make it happen.

So the ideal complement to a team of hackers is someone who isn’t a ‘product builder’ but a ‘company builder’. someone who can sell, network and gets product well.

Ideally that person should be a great communicator and awesome with people.
http://www.skmurphy.com/ Sean Muphy

Labels aside, every team needs to be able to leave the BatCave and listen to strangers to understand the “outside in” or customer perspective on their product. This goes beyond instinct in my experience, it’s a willingness to hear “you’re baby is ugly” and watch people “using it wrong” and learn from them.
http://www.bestengagingcommunities.com Mukund Mohan

Very good points Tony. I especially like the quote from Forbes for the context. Wonder if you expand the list to beyond the top 100 if you would get similar results. i.e. most heads of large companies are experts in their field first, then business minds next.
http://www.tonywright.com Tony Wright

@Sumon – Heh, it’s a blog post. Of course I’ve only scratched the surface! If I added all of the caveats and exceptions, we’d be here all day. That’s why the comments are interesting.

I actually amended the blog post to emphasize that I’m talking about pre-funding early stage companies (the first few months). I also added a note about sales. That’s a no-brainer a company who has a product for sale from day 1. FWIW, I use you guys as an example of having a biz/sales guy in the early days and benefiting from it.

Regarding product– I think I covered that. If you’re SnapTalent’s product guy, that’s great. I think it’d be better if the product guy was a dev of some flavor, but that’s just me.

Regarding recruiting– I think that falls outside of the stage that I’m talking about… (though I admittedly didn’t make that clear in the OP– amended)
http://www.tonywright.com Tony Wright

@Sean – Totally agree that the customer/user rules. Getting “out there” is huge. That’s one of the reasons I was emphasizing how valuable (but NOT essential!) it is for the builders to “get” the problem they are trying to solve.

Engaging with the users is a great way to do this, but if the builders ARE the target market (or at least empathize with it), I think that’s an important foundation.
rick d

Hi Tony, I’ve seen a couple of posts and here’s a quick ‘nice job’ comment- now onto the real meat:

I just wanted to mention, since it wasn’t called out directly, the key differentiation factor between Hackers and Idea Guys is that ideas are a dime a dozen! Further- hackers have ideas (some great, some terrible) ALL the time! It’s sorta the nature of hacking. Get an idea, play with it, spin it out, move on. Truly good ideas stick!

MOST of the “Idea ONLY guys” – as I’d call your version of MBA types – either:
1. have a crap idea (no harm here, just calling it like it is. I have bad ideas all the time)
2. have a decent-to-great idea that almost nobody wants (maybe they think it’s niche… etc)
3. have an idea for something that people already have, or that already exists

And again, most hackers have ideas that fit into all three of these groups constantly. The truly great “idea guy” that has a one-in-a-million idea, THOSE are the MBAs on the 400 list. They’re as rare as a phenomenal hacker.

The fact that an idea guys is incredulous about hackers not begging him for work pretty much validates that their idea is in category 1-3.
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http://www.tonywright.com Tony Wright

@rick I totally agree- the concept of “idea guy” is pretty goofy. PG has a great essay on ideas– it’s a good read: http://www.paulgraham.com/ideas.html

However, there is the concept of a “product guy”. A guy who has ongoing great instincts about what people want, and does a great job of translating feedback into what users need. It’s is critical that someone on the team be really really good at this (the unfortunate thing is that almost everyone is convinced that they are really really good at this!).

I think it’s best if the ideas/product direction comes from a builder rather than a hand-waving biz guy (more “ownership” = more output), but there are plenty of examples where a brilliant biz guy drove an amazing product.
http://www.jowba.com/ Luke G

Hey Tony,

As a non-technical guy who’s really into early stage companies (cough), I think I’m pretty cognizant of how easy it could be for me to become dead weight. I think that this awareness, and the total dread that it inspires, definitely helps keep me useful. So I do whatever it takes: ideas/product/sales/marketing/customer service/evangelism/strategy/making breakfast for the dev + design guys. I can’t go as far as Sumon, but I’m as dedicated to building something as lasting & important as anyone I know.
I really do think (and hope) that I’m making myself pretty useful. That being said, a big part of that may be because of the chip on my shoulder that comes from having the technical abilities of a seahorse. So maybe that’s a lesson for “business-types” who want to be in this “business”: you’re already behind. You better outwork, think, hustle, build, sweat, and bleed everyone else, or you’re just gonna be an anchor.

We got that interview, btw…
http://treadaway.typepad.com Chris Treadaway

If you want evidence that developers need business talent, look no further than Facebook. There is enough junk there to suggest that business folks are absolutely critical to build things of lasting success.

That said, you are absolutely right in pointing out that there are two types of MBAs — “idea people” and “product people.” I’d love to see an example of an “idea person” on the business side actually succeeding without having built a product before. I’ve never seen it. BTW it is “idea people” that give us MBAs a bad name.

Great post.

Chris
henry albrecht

Interesting post. As an MBA and a stats geek, I would be interested in another question that is less about the biggest 100 home runs — many based on true technical innovation — and more about solid singles, doubles and triples. What % of startups started by people with MBAs vs. those started by techies succeed (e.g. as defined by “in business 5 years” or “made the founder $1M” or “profitable” something like that).

My favorite MBA-startup-turned-great-company is Intuit.
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http://www.marinamartin.com Marina Martin

Loved the post, Tony!

As an efficiency consultant I’ve never been able to justify the investment needed to obtain an MBA. I can read case studies all day long, too, but better: I can actually go out and fail and try again and talk to others and learn my mistake for a whole lot less money/time. At the risk of brushing too broad a stroke, MBAs are too formulaic and not dynamic enough to be successful in a startup environment. MBAs are really good at being “managers” in conglomerates, however.

I’m not a very good coder, but I can run my own server and hack my way through a PHP script. If I run into something I don’t know how to do, I know how to find a way to get it done, whether it be a tutorial or someone from Saturday House. I question the biz dev people I’ve met in the startup community whose technical skills don’t extend beyond email. If you’re really committed to the cause, you’ll stay up late learning Ruby so you can get your idea launched yourself — or at least get a decent prototype that other, more experienced coders can build upon.

I’m REALLY sick of hearing business folks refer to hackers as some sort of inanimate commodity, when the truth is closer to the opposite

With hackers and no biz, you still get a product in the end (though not many people may hear about it). With all biz and no hackers, you’ve got a PowerPoint presentation.
http://www.adUup.com Dylan Rosario

Tony,

Your post sure has been getting around the block. I had to jump over and check it out. Wow there are some passionate people reading your insights. Congrats.

It seems to me there are many different arguments and I personally believe that you need both sides to hack it in the tech startup world.

Just a fact: If you want to do anything it requires resources, so having only hackers is no good for generating revenue, and having a sales heavy team with no understanding of how to create a quality product is shooting yourself in the foot.

I like what Alyssa commented about your post. Read here: http://blog.seattlepi.nwsource.com/startherup/archives/136357.asp

All said, a Technical person can be a Business person also. I happen to be one of those. I started off a a programmer and inherited my business aptitude through trial and error. Of course i hire bean counters and CFO’s to crunch my companies revenue models out into pretty spreadsheets, but as Alyssa says it takes a special kind of individual that no orilley book nor Ivy College can teach you. I have several Ivy guys working for me and never attended any those schools myself. It takes Passion, courage, and guts.

It comes down to the Entrepreneur skills that cut the mustard. In the tech world it requires both biz and hack skillz.

As Napoleon Dynamite says ” Girls like guys with skills. Bowstaff skills, nunchuck skills, computer hacking skills…”

Truth says that tech businesses likes entrepreneur with the multiple qualities. If you can not drill down into the code to find a bug one minute, then walk into a VC presentation the next and close a funding round, well heaven help you.
I hope you have a great team who looks up to you like your the next messiah or something. Its tough out there and it takes a real Entrepreneur to challenge themselves. The competition is fierce and you do not have the luxury to claim in the tech startup industry that “I’m a biz guy and I leave the coding to the hackers” nor can you say “I wrte the best code in the world it is worth all the gold in Ft. Knox”.

Arrogance and denial will crush a company in 2 months flat. Competition is crazy, and your perfect little ideas can be nullified in days flat when companies like Google and Microsoft are willing to throw Billions to control the market place.

I have worked with thousands of companies in the space I will tell you, great ideas today are ghost town tomorrow, unless the leaders of the organization are the best of the best, and the top side of the tech start up company is equally balanced.

We startup entrepreneurs must learn that at a tech startup it requires vision, product genius, and technical chops to get the job done.

It is important to understand the threat of competition. As a Software Architect at heart, I can look at any (I mean any) business model online and decipher the software patterns within minutes. I can put my 4 developers to the task of replicating the technology, while that is going on, I can put on my Marketers hat, and spin a better message, sales pitch and Power point in a few hours.

You gotta understand, there are people out there like myself, who wouldn’t even bat an eye at stealing your concept and earning bigger cash and more traffic than you ever could.

In my organization everyone on the dev team is involved in the product design, unfortunately, biz team does not get involved in the code design. So in a tech start up the importance is to find the balance of the two that work for your individual biz model while keeping your competitive edge.

I happen to be the rare biz/tech combo that is deadly in this industry. I keep my skills honed sharp by coding daily and personally presenting and selling our service every week.

In the end knowing when you need help and when to delegate is critical.

I look at my status every day, so I know where I need help and where fall short on either dev or biz. And knowing is half the battle.
That my two cents.

Ciao,

Dylan Rosario
adUup.com – Founder & President
http://www.thodla.com Dorai Thodla

I think you need both – most of the time. Instead of Engineers and Business Folk, we can think of them as

The Idea Team
The Idea Validation Team
The Implementation Team
The Sales and Marketing Team

All these teams may be just two guys in a garage. Or even person (though that is a less likely scenario). For a good idea to succeed you need validation. You need a way to describe it to people. You certainly need to have people promote and sell it.

It also depends on what you need from your startup. I have done four. Three of them (moderately successful) was just me with a small group of developers. The one that did better than the other three was actually started by two Wharton MBAs and I came in for generating and implementing ideas.
http://www.blockbeta.com Robbin Block

How many times have I experienced this conversation in my career? About a gazillion (oh yeah, I’m not an engineer or a statistician, so you’ll excuse my hyperbole).

Okay, I’ll fess up. I have an MBA, and yes, I consider myself an idea person. However, that doesn’t mean I’m not a doer as well (strategist, writer, trade show planner, chief cook and bottle washer, willing to leap tall buildings in a single bound). They’re not mutually exclusive. In fact, the two sides inform each other. Just like ideas and dare I say marketing (and sales, which is part of marketing), and the technical, must inform each other. It seems to me the most successful companies find a way to make these work together, not as opposing forces. For how can tech alone understand how to create a product/service the market wants, and by the same token, how can tech marketing exist without someone to build it? It’s not a black and white thing. Sure, it’s possible that these talents exist in the same people, but in my experience it’s extremely rare for a whole host of reasons. That’s why it takes a team that respects each other for the talents they have — whether that’s technical or (god forbid) non-technical.

All you non-technical people out there, please stop making excuses for the talent and hard work you do. It just makes it harder for the rest of us.
Adam I

Another reason biz types have a bad rap in the startup world is this:

We had a bubble in tech in the late ’90s. Bubbles draw in a lot of bottom-feeders and money-chasers. Thus, the tech industry is littered with businesspeople who just want to have a tech company and who want to find some hackers to “do it for them.”

I have personal (and miserable) experience with this phenomenon. I got sucked into such a startup for a while, and ended up wasting a lot of time.
Jeff

I’m a “BSEE with an MBA” so I probably have the right mix between tech and business.

I’d say “how could you possibly not” and expect to be more than marginally successful. Products generally don’t sell themselves. The occasional anecdote to the contrary is not a good business plan. Also my reasoning comes from my first start-up which didn’t pop because we didn’t delegate enough which affected both the business and the technical quality. I haven’t made that mistake since.

But also I don’t automatically attach as much meaning to degrees (or schools) as most people seem to. I see all degrees as simply Bayesian proxies for skills I’m looking for with a inevitable rate of false positives. The MBA degree has an especially high rate of false positives. In fact, there are some schools that set off loud warning bells. Stanford MBAs are the worst and most lethal tech-oriented MBA, IMO. Harvard MBA are scary also.

You *do* have to be very careful before you delegate the business role though. I recently advised a “hibernated” start-up on re-start strategies. The primary reason they had to hibernate was that all their VC money was squandered by an “Idea Guy” CEO who was brought in by the VC (you’d know them if you heard the name – one of the reasons I encourage bootstrapping).

Apparently this bozo wasn’t even able to create a business plan or pro forma in the 2 years he was there. He was able to burn through nearly $8M. On what the founder still isn’t sure but it seemed to include a lot of purchases, expenses and perks that ultimately didn’t get the product out the door. You ought to *at least* get one lousy business plan and pro forma from a hired CEO, BTW. I created first pass drafts of both that afternoon while I was talking to the founder.
http://www.tonywright.com Tony Wright

I think there’s a fundamental disconnect here with a lot of these comments. Believe me when I say that I don’t subscribe to the “build it and they will come” philosophy. Business smarts and sales skills are critical in all companies.

What I question is whether a business guy has an significant part to play in the earliest stage (the first three months) of MOST startups, unless he is the “idea guy”. And if he is, I’m saying that when the idea guy isn’t part of the team who actually builds stuff, the company and product usually suffers.

I think if we look at the startups who have “made it”, they tend to have hands-on founders (coders/designers) who also led the charge on the vision and NOT pure-play idea guys.
http://www.cre8buzz.com Antman

Tony, as the biz guy at cre8Buzz, ya post hit home. There is an absolute correlation between output and ownership. There a few other interesting components as well. As the biz guy, and the idea guy, gaining credibility with the builders (hackers) that I’m not just some “dumb business” guy has been a challenge and the key to success. The second, defining output. Different people perceive their contributions differently and unfortunately not all provide “out-put that is awe-inspiring” regardless of their ownership; financial, effort, commitment or percentage.
http://khanatif.blogspot.com Atif Sultan Ali Khan

A start up (in the initial stage under question) can not afford cost centers. each and every person on the project needs to be contributing to the top line, or some how reducing the costs. Every penny saved will make a contribution towards the possible success of the business.

A bizguy on the payroll waiting for the product to go to market, a consultant, and additional not optimal used techguys are cost you cant afford.

So I believe its not a matter of a bizguy vs a techguy. its about weather or not the resource is needed. if not, off with his/her payroll!
Jason

I am not going to agree, or go against the grain on this one. I will address Tony’s specific question.

Does a business guy have a place in the first 3 month’s of a startup?

Yes. He has a place on day 0. If you look at those fortune 100, and EVERY single other successful company ever there has been a thing called Vision. It might not have been perfect, and it may have changed over time but this Vision is the beginning of the whole process.

The skills of a techie can identify a market need simply by being out there and saying “Hey what if I could do X?” He then might say to himself “Oh thats how I would do it” and then he could start designing/coding. In the early stages (First hours, days of work) he will start to form a vision of what it will look like and why it has value. He can then go on to develop a product which provides this value.

The skills of a business person can identify market need in a different (but often more effective way) by being able to analyze needs and gaps. He in some way has to be out there however. A sales guy for example could very easily spot an opportuniy for a spin off, know how to add value, know why people would buy it, and form a vision about what it would look like not from coding some stuff, but from how a customer will take value from it.

There are both bad business educated people which you all seem to refer to as Idea Men. And there are also glass tower techies.

I think the Fortune 100 list is misleading, because a start up today is not what a Microsoft was in 1980. And I strongly believe Google is an exception to the general rule.

When it comes down to it, I think it depends how you define what a business guy is. Is a techie guy with guts and some pick it up as he goes know how a business guy? Not to me. He might be a great entrepreneur turned CEO. Is Bill Gates a business guy? Absolutely, and he always was, from the very first day. Why? Vision.

I think alot of technical dismiss the body of knowledge that is required to be successful as a business person, manager, etc. It is a brutal task as a company grows, but not particularly cumbersome in the early stage. When I say business person I mean Executive Visionary, Strategic Leader. The old HR manager is clearly not needed, neither is the director of finance. They are needed later, sure.

So does a startup NEED a business person at the start? Yes. A start up is a business. Do they need someone with a business education. Not necessarily. Business students can seem frustrating because we are taught from cases about McDonald’s, Coca-Cola, blah blah blah. They have no sense of what a start up is so they come in and start getting to administrative work, which in the beginning is unneccessary.

You have all gained great consensus on the Sales issue, which is beyond crucial. As one poster said “Techie has product, idea man presentation” Let me tell you that you are far better off with a presentation that took a few days to slap together and a chance to learn what the market needs, than you are with 3 months of useless code.

A start up needs technical know how, and business leadership. What form that comes in is not important. I would suggest that a strong techy with a good technical competency in a niche area, and a business educated entrepreneur sales person, as partners, could very well be quite a formidable duo because after those 3 months elapse, there will be no holding back, roles will be defined, market will be known, and you will be off to the races, and have a distinct advantage over idea men with craigslist hackers, and techies who are still hiding in the garage.

Competitive Advantage.
Washington

I’d like the article and from my point of view, you need both. You the developers to execute the technology aspects of trying to accomplish the product launch. And you need the business guy, to make sure there is a sustainable business model that can produce revenue.

I’ve been involved in a startup where my task where restricted to the “accountant”, and it seems the tech guys did alot of wheel spinning. One of the 1st questions that needs to be asked is “How is the biz going to make money?”…Whats the product? How’s the audience ?

As a business guy, it amazes me of the increasing number of tech startups that obtain millions of VC funds, only to answer the “How am I going to make money” question later.

Although I’m a not a MBA, (i’m an accountant) and I can see how they seem overrated, due to the fact that of whats taken place in the “internet space” is changing at pace faster than the textbooks they learn from can be updated.

What evolved into Microsoft won’t happen today, w/the acceptance of open source, etc…

I hopefully has studied the internet space, enough to be able to define a business model for my upcoming launch.

So I think the biz guy and tech guy, are both important. and should be valued equally..

Last thought- With the improvements in finding freelance tech guys,and outsourcing, open source, etc.. ….Will the value shift more towards having a Biz Guy first, followed by finding a component outsourced tech solution.
http://www.dcmentors.com/articles.html chiropractic marketing ideas

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