Editor’s Note: This post was originally published on Seattle 2.0, and imported to GeekWire as part of our acquisition of Seattle 2.0 and its archival content. For more background, see this post.
By Nathan Parcells
Just about everyone right now knows that the newest buzz word and latest thinking in the startup community is the “lean startup.”
This is not without good cause – with the cost of everything from servers to marketing becoming infinitely more inexpensive and accessible, huge funds are no longer a pre-requisite to success. A lot of questions are thrown around about the number of real boot-strap success stories, and whether this is a trend or a turning point, but regardless the lean startup model is flourishing right now.
Closely tied to the model is the concept that developers are king, and the question of what’s the role of the business guy? When something like SEM can be implemented from a Starbucks by a tech founder and reach more consumers than a super bowl commercial, what is the role of the business guy?
This debate really took flight when Mint founder Aaron Patzer argued that the pre-money value of any business guy on a startup team is negative $250k (compared to a tech guy’s worth at $500k!). I am a business guy for a lean company and I don’t cry myself to sleep thinking of all the value that I bleed from our company, so I thought it was time for me to write this post about why I think business founders are so critical and to ask readers what they thought about the subject.
1. Having someone dedicated to the non-tech components of a business creates economies of scale.
Tech founders are more empowered than ever to do marketing, business development and other traditionally business roles, however, to switch between the two sides is inefficient and creates a diseconomy of scale.
The most glaring example is raising money. Raising money is a full-time job and while I no doubt believe many CTOs are capable of raising money (our CTO included), the idea of trying to balance building the core technology of a company with the Jupiter sized task of raising money seems loony.
Raising capital requires constant networking, relationship building, deep understanding of financial and legal complexities, a constant focus on emails and a knack for selling at its highest level – these are all skills more traditionally held by the business founder. Not to mention the difference of a highly honed fund-raising strategy to one that is not, can create critical differences in the business structure, from how board seats are allocated, to valuation of a round, or an impending legal nightmare.
2. The same goes for marketing.
Online marketing is all about optimizing for higher conversions, lower cpcs, and bringing on board new users at better margins. Most online strategies work best as a blend of online tools and offline partnerships. SEO campaigns are strengthened by networking with top content distributors, bloggers, video promoters and other people who can accelerate such campaigns.
Once again while a tech founder can tackle this project, it is a full-time job and often building content, networking with co-marketers, and extensive email correspondences are best suited for a business founder.
3. A laundry list of other critical business-centric items.
- · Dealing with lawyers
- · Dealing with pay roll
- · Managing new hires
- · Networking and targeting new hires
- · Networking and contacting new biz dev partners
- · Talking to the press and generating PR
- · Content creation and more
The business/tech guy founding team has its roots in a long history of successful startup companies, beginning with Apple. However, I highly recommend business founders to try and develop a level of tech know-how so that they don’t have to pull their tech founder away from critical projects to implement campaigns (and vice versa). Both sides work better when they achieve a level of capability in the other’s sphere, but can totally focus on and dominate the sphere they are responsible for.
Ultimately I have no doubt that a learn startup will fail without a highly talented tech founder. I don’t believe this is necessarily the case for a lean startup without a business founder. However, as a team the two roles are very symbiotic and I strongly believe the combination of skills elevate the effectiveness and success of the company (and that the business guy is far from inflicting negative value).
