written by Jeb Ory, CEO of The App House
I’m one of the lucky ones who has had the opportunity to pursue my MBA while building professional skills through concurrent, continuous employment (first with DCI Marketing, and now solely for myself at The App House). Now, after almost 3 full years, including scores of late nights, early mornings, and far too much Wolfgang Puck soup, I am about to graduate from the University of Chicago Booth School of Business Evening MBA program.
I have distilled my MBA lessons into three major buckets that directly impact my entrepreneurial pursuits: Productivity and busy-ness are highly correlated; picking a great team makes all the difference; and entrepreneurship means making payroll long before making payola.
Productivity and busy-ness are highly correlated
My former classmate, business partner, and mentor, Kelly Schwedland, often says that he “does his best work when he is time constrained.” This from a father of two, serial entrepreneur, and part-time MBA graduate. And in the words of another former classmate and Booth grad, Alice Gallen (or maybe it was just her Facebook page), “If you want something done right, ask a busy person.”
Why is this? Anyone that has ever worked in a deadline-oriented situation, whether in a newsroom, preparing for a major presentation, or putting the finishing touches on a final paper, knows how everything seems to come together at the end, at least most of the time.
At DCI Marketing, my previous employer, we could have anywhere from one month–or two days–to complete retail design oriented work for any number of Fortune 100 clients. Yet for some reason, no matter what, every job would always end in a mad dash to the finish line. Yes, the work was usually brilliant, but what I learned was that no matter how much we try to plan, the creative process needs time to breathe. I know there is a major business opportunity available to anyone who can figure out how to get creative organizations to complete work ahead of time.
But what I would also notice, during these crunch time projects, is that all of a sudden, when they were on a deadline, people’s capacity to get things done seemed to increase exponentially. Jobs that used to take hours could be done, with good quality, over lunch breaks.
My theory is that the more things someone has going on, the more they are incentivized to do something right the first time. While this is not always the case, the constraints placed by limited time seem to spur people towards efficiency. Busy, engaged people don’t have time to do things two or three times. Such is an explanation why some of my fellow part-time students at Booth are successfully employed, have families, and are actively working on a number of innovative side projects. So, reflecting this back on my own business, The App House, my goal is make sure that my staff is always very busy. Even if things they are busy with involve blue sky brainstorming, I find that structure breeds success. Don’t get me wrong–we still have fun–but we have to move the ball forward.
Picking a great team makes all the difference…as long as you are self-aware
Sage advice from early in my Booth career was to identify and recruit a team as soon as the class roster is published. It only takes one team with poor dynamics for someone to learn the value of a great team. The first step is to understand what value you bring to the equation and build around that. I am a commercially-minded person. I’m the cheerleader, the biz dev guy, the sales guy. Earlier in my career, I was somewhat embarrassed about being a salesperson. But now, I embrace it, and could not imagine doing anything else. When I build a team, I look for quantitatively inclined people, accountants, statisticians, technical people–pretty much the type of students my business school has in spades–to complement my skills.
The application this has to building a start-up team is straightforward. The chances of an individual succeeding with out a team are very low. Ask any seed stage venture capitalist, and they will tell you that they almost never fund individuals. They fund a team. So when putting together your first team, you have to be very deliberate in surrounding yourself with complementary talent that address your weaknesses. And if you aren’t clear on what your weaknesses are, you will have much trouble succeeding as an entrepreneur, because, and trust me here, it is hard enough being fully self-aware.
This insight is also instructive to making those first key hires. When The App House was recruiting programmers, we were looking for a very definite type of person. We need young, hungry people who won’t stop pushing until they win. People who speak up, show off their work, but who are open to constructive criticism. People who respect the principles’ authority, but aren’t afraid to make their opinions known. People who can be the leaders of our firm tomorrow. We tested this by giving our employees technical tests in the interview phase, much like consulting firms give case interviews to prospective hires.
Making payroll before you make payola
In one of my favorite episodes of Southpark, “The Underpants Gnomes”, Stan, Kyle, Cartman, and Kenny spend the night at Tweek’s house. In their efforts to give an oral presentation on “business,” they follow the Underpants Gnomes to their lair, where they describe their business plan:
Phase 1: Collect Underpants
Phase 2: ?
Phase 3: Profit
Reference Wikipedia for a much more nuanced analysis of this episode, but the gist is that the gnomes do not understand their business. Or even business.
(editor: or enjoy this clip…..)
The fundamentals of successful business, at the macro level, are taught in many MBA classes. While a top level vision is critical to leading a business, the nuts-and-bolts–setting up payroll processing, creating offer letters, invoices, quotations, establishing human resource policies, filing for taxation status, etc–are the underpinnings to a successful business. These steps are not sexy. They are the kind of things most students tune-out when they are taught in a class on clinical entrepreneurship. Or at least, things I had tuned out. They are not fun. And they are easy to overlook. But overlook them at your peril, because correcting such mistakes will suck far more time that doing it right the first time.
Clerical errors can be costly. We had to appeal a $1,000 bill from the IRS for incorrectly filing our taxes in 2010. We appealed, and they waived the fee, but it took a lot of our time to resolve.
So for all those thinking about leaving the day job, be sure you pay attention to all of the little things that you might be taking for granted, because very soon you will be responsible for all of them. Fine print on the quotations? Payment terms? Those are critical things to establish up front in negotiations; they are also some of the easiest things to overlook. But by structuring your business with positive cash flow dynamics–where you can receive a portion of your payment due up front–can fund operations for months, reducing your reliance on outside capital–ultimately decreasing the cost of any venture or angel money you may eventually raise.
What about payola? It will come. But make sure you have a clear idea about phase 2.
Jeb Ory is the chief executive and co-founder of The App House, a mobile applications development and publishing business based in Chicago. He is also an MBA candidate at the University of Chicago Booth School of Business. He lives in Wicker Park with his wife Lea, and when he’s not busy playing Angry Birds testing apps, he likes to play poker, swim, and cook.
