My friends and family claim that I am a wasted companion on trips if anything resembling a pool (natural or otherwise) is found in the vicinity of where we go. They claim that if there ever was a hotel on water, it would be a permanent vacation for me, and you could not get me off that property for the rest of my life!
Though such a venture sounds unrealistic and insanely expensive to operate, I agree with my circle and secretly hoped that someone built a hotel on the water!
Therefore it was a pleasant surprise when I found a video that such a venture was undertaken in the late-1980s! The hotel looked majestic, and I thought it would have been on the “things to do before I die” list of many an adventure traveler.
However, things did not exactly pan out as the owners would have hoped, and the hotel has changed many hands (and locations) in its chequered 30-year history.
Here are 4 things that I took away from the video:
There is a thin line between a 1st mover advantage & 1st mover curse
The second mover usually has the most significant advantage!
Monopolies exist in the short-term, and you can lose your market leadership if you do not continue to innovate and improve on your original idea
You must get prepared to lose your moat almost overnight if it gets protected by government regulations, oversight, or tensions.
Every Monday, I sit with my team to review the funding activity of the previous week. From that list, I pick out a few companies that I would have loved to invest in or find founders doing similar things. Here is my rationale behind this weekly exercise.
Last week, 17 startups raised $157 million, therefore continuing a strong revival in our ecosystem’s funding interest. The recent rise in COVID19 cases, especially the fear of mutant strains, does lead to a bit of concern about this growth’s sustenance; therefore, it is crucial to monitor the overall situation carefully.
This week, 13 deals were in the early-stage rounds (compared to 23 last week), making my weekly analysis cut. After sifting through the news (aggregated from Tracxn, Inc42, and YourStory), I picked three as my favorite funding news from last week!
Edited from Tracxn: Express Stores is an online platform offering groceries. Their product catalog includes beverages, snacks, spices, daily needs, etc. Some of the company’s brand associations are Limca, Amul, Rajdhani, Cadbury, Oreo, etc.
Why do I like Express Stores?
I am interested in Express Stores’ type ventures because they band the disaggregated and slowing dying Kirana stores to fight off their much larger competitors. The idea makes a ton of sense from the store owners’ viewpoint and the customers – maybe even the brands selling through modern retail.
The store owners can get better deals from brands by negotiating through a single group, but more importantly, they can improve their visibility by sharing a single brand. The Express Stores founders’ primary speed bump is to control the quality of the customer experience at the n-th store. The individual store owners have an incentive to screw the brand to make few extra bucks for themselves (read: game theory), and how the founders can solve this would decide their company’s fate!
Edited from Tracxn: Cross border neo bank for individuals. It offers services such as deposit accounts, prepaid cards, money transfers, bill payments, cross-border transactions, and more. It provides tools for monitoring transactions, expense & budget management, and more.
Why do I like Zolve?
Although this space might take some time to evolve, it is fascinating.
As an Indian in the US for over a decade, it took me about 2-3 years before building enough credit history to get a credit card. Cross-border transactions are (and continue to be) costly due to the monopoly of the large banks. This asymmetry was a primary motivator for my investment in Interstellar a few years back.
Targeting the 5+ lakh Indians migrating to the US every year to study, work or move there permanently is an exciting audience. These are usually middle class to upper-middle-class folks who must spend a decent sum of money to get themselves set up in a foreign land. It would take these folks a decent sum of effort to navigate the US financial ecosystem, especially before they have a social security card. It could lead to some interesting ARPUs and stickiness in their customer base.
Whether this magic could get reflected in other ecosystems where Indians migrate to would be interesting to track!
The post to kick-off my 2021 blogging year got inspired by two things.
The 1st was a piece of advice I received from the owner of a leading Mumbai based bakery brand. He was sampling the 4 cheese spreads my sister sent for the new year’s party, where both of us were in attendance. My sister recently started an artisanal foods business from her home kitchen.
From the 4 cheese spreads, he loved 3 and “did not care” about the 4th one. He recommended that my sister focuses on just selling the 3 cheese spreads and eliminate the 4th choice. He explained that the consumer business, especially food, is one of recall and repeat.
Therefore, if someone tried the 4th cheese spread first, that person would not come back to try the much more amazing first 3 spreads. Not only would she lose a set of customers, but these people would also alienate others by complaining about their own not-so-great one-time experience.
Instead, if she concentrates on engaging with the clientele that loves her 3 cheese spreads and keeps coming back for it, i.e., her fans, they will tell her the next best thing that she should do for them. She can create customized items for her fans and test them out with other fans. Whatever clicks with most of her fans becomes the new item to her menu! Through this process, her menu will only have things that her fans love, and each item will be a best seller.
On the flip side, her fans will forgive her for the experiments that do not work out. She tried something based on their advice, so in a way, they have ownership over the experiment. Besides, they will always come back for the 3 spreads over which they became her fans.
While he spoke about just her food menu, I found his simple yet profound advice applicable to most startup founders. A founders’ common belief is that if they offer several options, then the customer will “eventually” get enticed by one and buy. In most cases, the exact opposite is true.
Too many options create decision fatigue, a condition in which an individual makes irrational choices or avoids deciding at all – both scenarios that do not bode well for you as founders. Therefore, a limited number of options is better.
The next question to answer was whether a limited choice, slowly expanding product portfolio could create large enough results. That is what I found this tweet, i.e., my 2nd inspiration for this post
Casper became a unicorn by offering just one type of mattress, without any offline presence, and delivered mattresses directly to one’s home. It created a ripple in a multi-billion-dollar industry, and today its portfolio has expanded to include pillows, bed frames, sheets, duvets, blankets, etc.
The incumbent brands allowed Casper to capture the customer’s mind space by offering too many options that confused them. Casper was the more straightforward choice.
Therefore my recommendation to my sister is that showing too many menu items will confuse her customers. Her real genius will be in keeping things simple.
Would you stop your friend if they were driving off a cliff? Or would you encourage them to drive faster? VC’s should not be trying to win a popularity contest, therefore it’s more important for us to be ‘shareholder friendly’
Sanjay shared this article over WhatsApp last night, How venture capitalists are deforming capitalism. I guessed that it was probably a regular VC bashing op-ed, pointing out how VCs are the root of evil. The article did do that (a lot!), but it was something else that stood out and it resonates with me.
What is founder-friendly?
It is an obsession for VCs to get termed as being founder-friendly. It makes perfect sense because we make our bread and butter by attracting the top founders. Therefore, if any of us are browbeating our founders into submission – it would make the founders flee.
However, as this piece points out, many VCs have decided that they are themselves the biggest obstacles in the founder’s path. Therefore, to move out of the founder’s way and allow them a free run with their resources is the best service a VC provides- besides (of course) investing in their company.
I strongly beg to differ.
Founders have a tough job. They must build a product/service, attract customers, sell them at a price point where the startup makes a profit and at which the customer derives value, do it at a frenetic pace and ensure that they stay two steps ahead of their competition.
Oh yeah, they must do all of this while recruiting a team, building a solid team culture, raising successive rounds of capital, building/promoting their company’s brand, and (most importantly) preparing the company for scale.
Offering researched, well thought out, constructive and continuous feedback to founders is the investor’s expected role. Therefore, playing the devil’s advocate and debating out decisions is essential.
Founders are prone to tunnel vision fighting in the trenches, and when a founder loses sight of where the war is getting fought, it is our duty as investors to get them focused on winning the long game. Many times, that means I must debate decisions with the founder, get them to think from different vantage points, and sometimes if I strongly feel so – oppose their decision.
To rubber stamp, every founder diktat is a disservice to the company and, as the WeWork fiasco taught us – to society as a whole!
Does this process take a bit longer?
Do founders love it?
Not all of them.
Do they appreciate it in the long run?
Every single time.
I have numerous messages from founders/employees/family members that I have disagreed with in the past but realized the value of the opposing view later. On many of these occasions, I was wrong in my suggestion/opinion. Still, I get emails an opposing view sharpened their strategy, i.e., it got them to think critically. I am often not an investor in their business, but that is the habit I want the founders I invest in to incubate.
After a brief hiatus, I started #DamaniTalks Season II with Anil Joshi, Managing Partner at Unicorn India Ventures, last night.
I have known Anil for over 8 years, and I credit him for introducing me to angel investing. He raised the flag for angel investing in India when it got spoken about in hushed tones. His efforts in scaling Mumbai Angels created an incredible impact on the early-stage venture capital ecosystem.
During my research for the episode, I found out that Anil had been an Executive Assistant (EA) during his formative professional years. In India, the EA role gets misunderstood as an administrative function; therefore, most people would hide their EA stint. Anil displays his 2-year EA stint on his LinkedIn profile – I knew that he had a great story to tell there.
In my professional career, I was in a de-facto EA position, which is why I have a tremendous amount of respect for excellent executive assistants.
Given an opportunity of two EAs talking to each other, I urged Anil to speak about the role, its importance, and, most notably, its impact on Anil’s career. Here is an excerpt on his EA role from our conversation:
As Anil states, an EA gets a helicopter view of the business with the clear intention to take over an executive management role in 2-3 years. The timeline could get longer if the purpose is to groom someone for a C-suite role.
An EA role should not be that of a glorified personal assistant, from the perspective of the management or of the employee. The position holds a significant amount of power, and the EA is not only supposed to represent the executive they work with; in many cases, they must also decide on behalf of that person!
I have had executive assistants for as long as I can remember. My last EA is the current COO at Artha Group, the one before founding an events management company. Hopefully, I have given them a ton of varied experiences and decisional latitude to expand their horizons, preparing them for their current and future leadership roles.
Simply put, an EA role is the fast track into a position of power and authority, and it should not (and does not) handed out to anyone that will bite. The roles require you to get organized, be well-read, trustworthy to keep organizational secrets, be fiercely loyal, lead meetings, provide well thought out opinions, and do whatever it takes to increase your boss’ productivity. It is one of the most challenging professional experiences for which one could sign up.
But Anil and I can tell you from our EA experiences that those were the highlights of our careers.
Here are some Executive Assistant and the notable assignments that they are doing today
Yesterday, I was on a pitch call with a consumer brand creating a niche in a mass-market commodity with strong incumbents. Their legacy product-buying customers are looking for a change. The founder understood the space well, he made a good differentiation with his product positioning, and I liked his overall approach to entice the aspirational customers in his target market to upgrade from the run-of-the-mill offerings.
Where his pitch fell flat was in offering his product at a 5% premium to the incumbent. Quizzically I asked him about his odd pricing strategy, and after going through the 5 whys, he frustratingly blurted out that it was the ‘safe‘ thing to do. He revealed that while he felt safe selling at the current prices, he would raise prices in the future.
I tested the founder’s resolve on raising prices, asking him what prevented him from pricing his product at 30% above the incumbent and proving to his customers that his creation was a notch above what they were consuming. His response was a plan to raise prices 2-3% a year, i.e., at the rate of inflation, therefore not alienating the customers as the entire category would be increasing their product’s prices. I queried further that if he (as the founder) was willing to sacrifice blood, sweat, tears (and a lot of working capital), why sell a premium product to the mass of the market?
His discomfiture to raise prices was evident as he pushed off the decision to a future timing when things would be ‘right’. I ended that call wondering how a founder who wants to raise venture capital, both extremely risky activities, justified his stance on playing it ‘safe’. I attempted to explain the fallacy of playing it ‘safe’ and the inaccuracy in the founder’s romantic belief that he can increase prices on their consumers in my feedback.
It is insanely difficult to raise prices on your customers, and infinitely easier to drop prices on them instead. This argument holds even if your COGS are like those of the incumbent. Instead of selling at the same price, utilize the extra margins from your higher prices to increase your market differentiation through branding, trials, and marketing campaigns. That is when you could truly disrupt the market, and disruptions do not come by playing it ‘safe.‘
I could not distill this feedback in the way I had wanted to during the call. Therefore, I kept looking for the best way to explain why startup founders should take risks that their much larger competitors cannot. I found it in the opening chapter from Do More Faster India, written by David Cohen:
If there’s one competitive advantage that most startups have, it’s that they can do more, faster. And because they can do more, faster, they can learn more, faster. Startups can immediately throw things away that don’t work, because no one cares, anyway. Nobody is trying to protect a brand that doesn’t exist, and there isn’t any reason to be afraid of small failures. Startups know that that’s just part of the process.
Therefore it is sage advice to founders to experiment with pricing like they would with the product. To not experiment for your need for safety is not the approach I am looking for in founders I?d love to back.
Today, I heard that Smaaash shut down as a result of the pandemic. Being a place I had created numerous great memories, this made me sad. However, I quickly picked myself up and realised that its (premature) death still had
Yesterday, an icon in the sports entertainment space – where I have innumerable memories with family, friends, team, and even a surprise birthday celebration, shut down. A few minutes after the news got out, my WhatsApp Groups got flooded with messages.
Most of the messages revolved around
How difficult it is to do business in India
How the idea was never going to work
That Indians are challenging to sell to
The classical – “there will be more startup casualties from the pandemic.”
I stopped reading the messages after a few minutes as I felt my energy levels plummet with the negativity. While I loved the concept, I had not studied the Smaaash business model very well; therefore, I started to research to educate myself better. I am blown away by what I have learned about them:
It operated 30+ locations spread across:
the Middle East
one location at the Mall of America
₹600+ crores revenues in the last 3 financial years
Employed over 700+ team members
Raised $68.1 million from a slew of marquee investors
This story could have ended very differently, but external circumstances landed it in the cemetery of startups that could have been. But Shripal Morakhia’s efforts would be a total waste if we only concentrated on the result and not the journey this founder went through.
Shripal took a massive risk with his time, money, and reputation to bring a world-class gaming arcade to India. His venture not only fed 700+ families for several years but also entertained 100,000s of people across India. It took guts of steel to build this venture and at a scale that no other entrepreneur achieved in this space in India.
Now, unfortunately, an event outside his control led to the demise of a promising venture, something the entrepreneur calls a “premature death.” His experiences are something for us to learn from – not to get further depressed over. If you, as a founder (or investor), are to grow, and if our ecosystem is to reach the global zenith that we all want it to – we must start sharing the learnings from our failures and celebrating the end of a journey!
I, for one, would love to learn from Shripal’s experiences of exciting innumerable Indian consumers for almost a decade so that I can utilize his learnings to help my ventures. Also, I would love a sit down with the investors who sat on the company’s board (Nikhil Vora) as it scaled heights and then watched it plummet to its eventual demise. He must have tried his best to save the ship, and it would be foolhardy for people connected to him to avoid gaining from his learnings.
But in the end, I will congratulate both for taking a risk and creating a permanent pivot in Indian gaming – their Smaaash journey is a unicorn learning for me.
What's common between the worlds largest brewer, the 5th largest food & beverage company, and the 7th largest food chain in the world? They're all owned by 3 guys - the co-founders of the PE firm 3G Capital.
3 guys from Brazil own all 3 companies – directly or indirectly. They are the co-founders of private equity firm 3G Capital, i.e., Jorge Paulo Lemman, Marcel Hermann Telles, and Carlos Alberto Sicupira – the 2nd, 4th, and 5th wealthiest Brazilians!
Francisco goes into minute details around the trio’s management system based on Dream, People, and Culture. Their strategy gives them the ability to turnaround great companies bogged down by bad management and poor culture. What is most commendable about the 3G culture is how it churns out reliable leaders that live and breathe the same system. The system’s stupendous success got them the opportunity to partner up with their idol; the Oracle of Omaha, Warren Buffet, in the Kraft Heinz transaction!
The chapters on Meritocracy, Growth, the Talent Factory, From Dreams to Goals, Gaps and Methods, Ownership mindset, and Costs and Budgets left a lasting impact.
What I love about this book are the charts, formulas, and diagrams that I could utilize in resolving issues that I face at Artha or in our portfolio companies. The simplicity of 3G’s management style based on simplicity and transparency provides a strong pull for me.
Not just me; any founder could easily see instant results by following the guidelines provided in this book – I strongly recommend this book to all founders!
Here is a list of my highlights from the book:
They’ve followed Warren Buffet’s famous tenet: “I try to buy stocks in businesses that are so wonderful that an idiot can run them. Because sooner or later, one will.”
We’re a one-trick-pony: our trick is to leverage people. That’s what we know how to do. Find people that have talent, a spark in their eyes, and a desire to grow, and open up their path, to help them get ahead. – Marcel Telles
In order to have great people, a company has to invest in several fronts:
Foster an environment where great people feel great.
Create a constant pipeline for great people to enter and climb the company’s ranks.
Compensate great people dis-proportionately.
Get rid of the poorest performers, so that the average talent pool improves constantly.
According to Brito, great people like working for companies that have three key traits:
Meritocracy: the best are recognized and the worst are driven out of the system.
Informality: hierarchy is not imposed, but earned, and where they can express their opinions openly without peer pressure and political concerns.
Candor: there are no hidden agendas. Fact-based discussions and a clear notion of where people stand in the company is the rule and not the exception.
It is very important that the company has a constant pipeline of talent in all its ranks.
Leaders are all required to have at least two team members identified as potential successors, from which at least one must be ready to take on the position within the next six months.
Dealing with poor performance, for example, takes manager discipline to face the facts, confront the employee, and fire him or her after three feedback sessions have not brought about the intended performance improvement.
Letting employees know how their performance relates to their colleagues’ achievements fosters healthy competition.
Bosses should not use their position or their clothing to impose respect; they should earn their team’s respect through example, performance, and argument.
According to Brito, a candid environment is one where “everyone in the company can speak up as long as they are respectful and constructive,” and where “people know where they stand” in terms of their performance and the company’s plans for them
According to Vicente Falconi, encouraging employees to speak up brings them great enthusiasm, since they’re able to persuade colleagues and take an active part in the direction taken by the company.
Leaders must always provide reports with open, candid feedback that allows them to improve their weaknesses and enhance their strengths.
Great people like to know if the company has great plans for them
But the fact is that growth and talent must walk hand-in-hand, or everything falls apart.
The company only grows when its people grow.
From the “big dream,” which is the company’s long-term business goal, achievable in three to five years, the company breaks down its yearly plan, and then the goals and tasks of every employee, from the CEO to the plants’ janitorial staff.
When people stay at the first layer of a problem (the first “why”) they tend to overlook the real root cause. Therefore, the tool is to ask Why five subsequent times (or as many times as needed) until the final root cause of a problem is found.
The root cause often makes an action plan to solve the problem obvious.
80% of an employee’s goal/gap (or the company’s, for that matter) has to be achievable with the skills presently owned by him. The other 20% are the stretch that makes the employee go the extra mile
Everything, throughout the company, has to have an owner: someone clearly responsible for the outcomes of a process, decision, or project.
Owners produce more and better work.
First, owners are committed to businesses for the long term, and therefore think long term.
The trio views a hands-on attitude as a fundamental attribute of great people.
A big trait of the trio’s 3G management style is adopting the world’s best practices, when available, and then improving upon them, instead of trying to reinvent the wheel at great cost of time and money.
The practice of shaving costs and expenses and out-spending competitors in activities like product R&D, marketing, and branding, was inspired by a little-known book that has been repeatedly distributed by the trio amongst their executives over the years: Double Your Profits: In Six Months or Less, by Bob Fifer.
Great companies underspend their competitors on non-strategic costs, and overspend them on strategic ones.
Leaders are those who “need a team in order to reach goals.”
A leader’s role is to recruit people that are better than him- or herself, and then train, challenge, and retain them.
Strategic costs are those that “clearly bring in business and improve the bottom line.”
Great businesses have to ruthlessly cut non-strategic costs, and even underspend their competition, while overspending in strategic costs.
Great people grow at the pace of their talent and are rewarded accordingly.
We will be judged by the quality of our teams.
We are a company of owners. Owners take results personally.
If a man gets known by the startup he keeps, then a founder should be known by their legal professionals. Think about it, out of the vast sea of capable professionals available, the founder’s ability to separate the chaff from
If a man gets known by the startup he keeps, then a founder should be known by their legal professionals. Think about it, out of the vast sea of capable professionals available, the founder’s ability to separate the chaff from the wheat gets judged when they choose untested people to represent them in front of investors (or acquirers).
In a recent transaction, the partner of the law firm signed up our founder to protect them, but then the transaction was quickly hived off to an associate who was (at the time) working on their 2nd or 3rd term sheet. The “associate” relying on the legal knowledge taught in textbooks versus the knowledge gained from doing real transactions merrily redlined every single line of our term sheet. It was as though the associate was grading a college assignment.
The founder didn’t understand why there were so many redlines. They did not take the time to know whether the issues redlined were issues (for them) and forwarded the email to us. The entire episode made us reevaluate our assessment of the founder’s maturity.
Note to founders: When your legal help sends back term sheets with more than 10 red lines, you either have the wrong law firm or the wrong investor.
Founders erroneously expect their legal help to do three things that inherently have conflicts of interest:
Represent the startup
Represent you as a shareholder
Represent you as an employee, i.e., CEO/CTO/etc
With three different vantage points to look from, which one should the legal professional put as first, but most importantly – which one comes last?
Who an investor will want lock in their legal agreements can be explained by this diagram from a Pear.vc presentation:
In the early stages, your startup derives its value from your role as an employee. Your startup ties you in as an employee by providing you with a large chunk of equity as a shareholder. Therefore, the startup doing well is directly proportional to you doing well. If you (as an employee) do not perform, i.e., cannot execute on the business plan or leave the startup mid-way, then the large chunk of equity given to you must go back to the startup. Regardless of your involvement in your startup, the startup must continue to operate. It could mean that they must find someone who will execute the plan on which the startup got valued or end up liquidating.
Therefore, the valuing shareholders, i.e., the investors, will include caveats like vesting, lock-in, ROFR, etc., to protect the startup’s interest and its shareholders i.e. you. You must remember the investors are the ones that valued the startup based on your promise to execute the business plan. Any changes that negatively affect the startup’s value will get reprimanded seriously. It may not be in your best interest as an employee, but it is in the best interest of the startup and yours as a shareholder.
As the startup matures, the reliance on you will reduce, and the startup will justify its valuation with revenues, intellectual property, profits, etc. Most founders will move out of the daily affairs of the startup as running day to day operations get too structured for their innovative mindset. However, the startup will continue to flourish without them.
Now imagine that the startup is going an IPO. Would you (as the shareholder) and your startup have the same lawyer representing both of you? No, you would not. It would be unsound legal advice.
Therefore, just like hiring investment bankers to raise early rounds of capital is useless – so is hiring a law firm to negotiate early rounds. The law firm’s partner cannot justify spending their high per-hour legal charges on the nominal fees you can afford; therefore, your transaction will get managed by an associate looking at making a mark.
However, should your startup be the guinea pig for someone else’s career ambitions?
Therefore, instead of pushing off the problem onto your lawyer, who will push it off onto an associate who will eventually screw up your relationship with your investor. You, as a founder, get better served by knowing the monster you are dealing with and leaving the legal firms for rounds where the fees you payout are commensurate to the size of the round you are raising. Then you can demand that the partner personally looks at the documentation.
Two contrasting events took place yesterday. First, as we got to the end of a board meeting, the founders initiated a discussion on when to restore salaries to pre-COVID levels for the team and the management. Later in the day, my dad sent me an article on my investee company, Purplle, [ramping] up headcount. Considering the volatile nature of this recovery, I wondered how you are thinking about increasing salaries or ramping up the team.
Things have not been as bad as they were supposed to be when economies started shutting down. Offline retail suffered, but there is a strong revival in the digital economy as consumers quickly shifted to transacting in the new normal. Many companies that may have had feared major disruptions in work found out that not only did work-from-home work, but people were more productive than they were at the office. Now that the worst of the storm weathered and the coast looks clear – is it time to break open the champagne?
I don’t think so.
It is easy to get lulled into a false sense of security that things are back to normal. Barring a select few, most startups have yet to exceed Feb 2020 revenue numbers, i.e., they would burn more money if they increased costs to pre-COVID levels before revenues got restored to pre-COVID numbers.
You must also not forget that your startup’s budgets are forward-looking; therefore, investments in people and products or services get made today to get repaid through revenue growth and an increase in profits or margins. Thus if your startup has just achieved pre-COVID revenues, it is an achievement to pat yourselves on the back for, but your Jan-Mar budget got approved for much higher revenue assumption for July. Let us not forget that.
We are not out of the woods yet, and it will not only take the successful creation of a vaccine but also the successful mass production and wide-scale distribution of the vaccine to say that we are in safe waters. As entrepreneurs, it is in our nature to be positive, and we should attempt to capitalize on every opportunity that gets presented to us – but you must continue to toe the line of fiscal prudence and make incremental adjustments to your budgets and team strength.
Despite the gloom that surrounds us, it is vital to keep your team motivated to fight, and to stoke that fire, you must get them to buy into your startup’s success – and help them profit from it. To keep the fire lit, I suggested setting up a quarterly bonus for the team based on cash in the bank.
Set up a quarterly budget which whittles down to the exact cash that should remain in the bank account
Share that budget with the team and explain your rationale for the budget. Encourage the team to provide feedback on the budget and adjust if required.
Track the progress towards the budget on a bi-monthly basis and encourage the team to participate in helping with either reducing costs, improving productivity, or increasing sales. If you can get each team member to push 1% harder – they can create energy that could move a mountain.
At the end of the quarter, share the final cash balance with the team. Deduct any costs that are provisioned but not paid out and do not add revenues that got billed but were not credited.
If the cash balance in more than the budgeted number, distribute 25-30% of the excess cash to the team. This achievement is as much theirs as it is yours.
Getting each team member to buy into the success of your startup is the hallmark of a robust culture, and there isn’t a better opportunity than this adversity to build that culture!