Welcome back to VentureStart. Things slowed down a little over the summer, as they often do, but we’ve noticed a very quick resurgence of energy in the start-up space this week and expect the momentum to continue through the fall now that Labor Day weekend has passed. While a lot of people were relaxing, or at least working summer hours, we spoke with Jay Batson of Acquia, Inc. Jay is an experienced entrepreneur who has started multiple companies. In addition to his day job as Co-Founder and Vice President of Acquia, Jay is also a mentor to young start-ups at Mass Challenge and the TechStars Boston, as well as a guest speaker at entrepreneurship events around the Boston area.
We asked Jay the tough questions that you want answers to. Not surprisingly for a guy who’s been in the start-up and small business space as long as Jay has, he had an answer to every question.
Here are the answers you’ve been looking for:
Q: How do you know when to scale your company vs. when to close shop?
A: That’s really several questions rolled into one and they’re worth exploring individually. Scaling is a funny word…and it’s better for me to think about it as a question of when do you invest in something. In retrospect I think it’s easier to make the investment decision. Investing means where should we burn cash at a higher rate than we had planned? There will be points in time when you’ll say “it’s now time to spend extra money in this particular space.” You have to have your own logic why you’re going to do that.
Jay discussed that knowing where to invest in the company is based on knowing what you’re doing well, and knowing where, if you invest a little more, you can convert more prospects into revenue.
Q: When a start-up gets to a certain point, it sometimes hits a crossroads. How do you know if you’ve got a project that’s good enough that if you invest more capital, the project will accelerate in the right direction, vs. knowing that this project isn’t going to take off and you need to fold?
A: The question of knowing when to hold, fold, and walk away is a tough one. Do you have metrics that will show you if you have enough traction to go forward. Those metrics will tell you about how your business is going. I’ve grown in the last decade to really appreciate the value of knowing which metrics are right for your business and then being honest with yourself about whether or not you’re making those metrics and then whether you have options to change those. You have to listen to the metrics and they’ll tell you when to hold and when to fold if you want to use those terms. It’s somewhat trendy, but the best, most through description I’ve read of this recently is in the lean start-up. It helps you think about what are the best metrics for your business.
The most interesting thing that Jay told us, and an affirmation of what VentureStart has espoused in previous posts, is that hiring is one of the keys to a successful start-up. There’s a book called “The Smartest Guys In The Room” by McLean and Elkind. The book is descent, but the title is catchy. People generally assume that he CEO is the smartest person in the company, or the senior executives are the smartest people at the company. Jay told us that he learned a long time ago that the smart, especially the smart start-up CEO, surrounds himself with people at least as smart, if not smarter, than himself. You want to be in a room surrounded by people who are at least as smart as you are, so that they can execute your strategy and potentially suggest improvements to it.
Next week we’ll post part 2 of the interview with Jay where he’ll answer the questions: What’s the one skill or skill set that entrepreneurs absolutely must have to be successful? and What’s the biggest challenge you had to overcome as an entrepreneur? As well as other questions.