For a start-up to be a success, there’s a lot that entrepreneurs have to get right: having a good idea; finding money to turn the idea into a product; developing and then executing a successful strategy; connecting with partners and customers; and much more. But if there is a single task entrepreneurs all have in common, it’s building relationships — not only between and among founders, but also with sources of financing, suppliers and, eventually, the buying public.
Relationships are so critical that they were the theme of the most recent Wharton Entrepreneurs Summit, “Building Transformative Relationships,” held at Wharton San Francisco. Speakers and panelists — including Silicon Valley entrepreneurs, executives and venture capitalists — focused their comments on the life cycle of a start-up, with an emphasis on the relationships that need to be built as the company moves along its growth path.
Keynote speaker Heidi Roizen, an operating partner at venture firm Draper Fisher Jurvetson, characterized such relationships as “fellow travelers who will be in your world a long time.” As opposed to being simply transaction-minded at Draper Fisher Jurvetson, “relationships are central to how we do business,” she noted.
For Roizen, there are five guidelines to establishing successful, mutually profitable relationships. The first is to “make yourself easy to help,” Twitter which, Roizen said, mainly involves knowing enough to avoid unreasonable requests of people you barely know. Her personal examples: entrepreneurs she has only just met, who promptly mail her a lengthy PowerPoint deck containing a business plan. She also urged listeners to “lead with their humanity” when starting a business relationship. No one, including a VC, wants to do business with someone they don’t like, she pointed out.
No one, including a VC, wants to do business with someone they don’t like.
And the best way to begin a relationship is to start not with what you want, but “with what you can give.” Roizen recalled the entrepreneur who wanted a few moments of her time, and so offered to drive Roizen to the airport. That is related to another key idea, she noted: Find a way of arranging the relationship so both parties benefit — or, as she put it, “making the pie bigger for everyone.”
Finally, Roizen spoke of the virtues of introducing “controlled randomness and serendipity” into your life, which for her often means deliberately sitting next to people she doesn’t know. A number of important career milestones, including board seats, have resulted from these encounters.
That last idea was echoed in the panel discussion on “Building Your Entrepreneurial Ecosystem” that followed Roizen’s keynote. Ann Winblad, a partner at Hummer Winblad Venture Partners, told the audience that she tries to meet five new people every week. “You’d think that continually renewing your network is easy in these days of LinkedIn,” she said. “But it’s actually hard work, and you need to do it. Otherwise, you’ll be sucking on your own exhaust after a while. Especially if you’re a leader, your advisory group needs to keep changing over time.”
Another panelist, Karen White, president of financial technology firm Addepar and a former Oracle executive, agreed that while relationship-building was critical, it’s important to be mindful of the time you are spending on it. “Sometimes, people are perfectly comfortable with a short text rather than a full meeting,” she said. White also urged the audience to “not be a slave to email,” as doing so puts other people, and not you, in charge of your schedule.
“You would think that continually renewing your network is easy in these days of LinkedIn. But it’s actually hard work.”–Ann Winblad
Hiring to Grow
The afternoon sessions were devoted to how relationships matter in the later stages of a successful company’s life: When it begins to grow, and when, with any luck, it goes public or gets bought. Alon Amit, a co-founder of marketing intelligence firm Origami Logic, said that a desire to accommodate growing networks of relationships might lead companies to hire more than people than they should. “Growth is exciting, but it’s not always the right thing to do. People need to learn to work with what they have,” he noted.
Carl Showalter, a general partner at Opus Capital, said that when companies do hire, they need to do so very carefully. “You can’t just hire fast when you’re growing; you have to also hire well. Your company is going to have a culture, and it’s important for everyone to understand the culture, as well as what they do and why it matters.”
Davis Smith, founder and CEO of outdoor gear and apparel firm Cotopaxi, said that while it’s common to have friends that are much like yourself, it’s a mistake to bring too many people with the same skill set into your company as founders or early employees. “You need to look for holes in your organization, and then fill them.” The alterative, he said, is to find yourself in a company that is, say, full of engineers, but without any marketing experience.
And how should a career-minded new hire act the first day on the job? Dan Rosensweig, a former Yahoo executive now president and CEO of education firm Chegg, said don’t try to fool people with a persona that isn’t you. “Stay authentic to who you are. Don’t try to be someone you aren’t. You simply won’t be able to do it.”
“Sometimes, people are perfectly comfortable with a short text rather than a full meeting.”–Karen White
Entrepreneurs also need to keep their egos in check while on the job, and to seek out different opinions rather than assume they have all the answers, according to Leonard Lodish, Wharton emeritus marketing professor. “We’re all wrong a lot.”
The day’s final bit of advice about relationships: Use your relationships with your board of directors to do a reality check on how things are going.
“Everything is always going to seem perfect to you in your head,” said Christian Gheorghe, founder and CEO of private enterprise performance management firm Tidemark. “You want to get board members who can challenge you. But then you need to listen to what they say.”