I’m working on my second tech startup now. Before that I was a Management Consultant1. Consulting teaches you many good things. Some are useful for starting a company, others are not.
This article shares the lessons I learnt. I hope it helps you get to startup success faster.
Scope of this article
The focus of this article is building a fast growing tech startup. Different rules apply for building a small company or boutique consultancy.
If you’re leaving a consultancy to join a 2 or 3 year old startup, some of these rules do not apply. Startups grow through phases. Eventually they become the big companies, that future consultants will come to serve! Naturally, how the company works will change through these phases.
Two years of consulting drilled a number of lessons into me. This was my mode of operation after two and a half years:
1. Hypothesis driven
Almost everything I did on a project was to backup an initial hypothesis. We’d carry that hypothesis from analysis to customer interviews. If a hypothesis was proven incorrect, it would be back to the drawing board to figure out a new hypothesis, then test it all again.
2. Think in frameworks
Consultants love frameworks. If the study I was working on fit into a framework, we would use it. Frameworks fit under the broader theme of thinking in a structured way. For example, every study would start with a problem solving session where we would break down the problem into a mutually exclusive, collectively exhaustive (MECE) tree of issues.
3. Make lots of slides
“I could not believe how much PowerPoint is created at a consultancy”. I had a rule of thumb to create at least one good slide per day - many created more. A slide had to contain valuable knowledge, therefore this rule forced progress each day.
4. Fact based
Everything said had to be backed up. This could be with hard data, a model, interviews, etc. You couldn’t just make up a statement.
5. Best practice, best practice, best practice
"Best practice”: a phrase used almost every day on an engagement. This gets to the heart of consulting - bring the client the best ideas from their industry and beyond.
6. Always 80/20
The classic. 80% of the outcome can be achieved with 20% of the work. In theory this allowed you to go home early at night… though it never seemed to work out that way!
7. Look good and make others look better
Consultancy is tied up with politics and appearances. You need to look good in front of clients and managers. But even more important is making your manager, partner or client look good. Unfortunately this sometimes took priority over getting the best answer.
Some consultancy approaches work well in startups
Consulting prepares you well for a startup. Here are the consulting approaches I believe work well in startups:
1. Work hard
Startups are hard work. Consulting prepares you for that. If you think that because you are your own boss you can work 4 hour days, a startup’s not the right thing for you2.
2. Fake it
“When you first start out you have nothing”. Much like day one on a study. But you need to convince other people to help you - faking it helps.You can extend this thinking to product features. One of my favorite early stage hacks is replacing product features with buttons that sends you an email, upon which you can manually carry out the action.
3. Be hypothesis driven
You don’t have time to analyze every option first. Go with your gut and correct later if you’re wrong. This is one of the foundations of the lean startup.
4. 80 / 20
I apply this principle every day.
Other consultancy approaches do not work in startups
This list is longer than the previous. Some of these are obvious, but others took me a whole startup to realize:
Only do things that grow your startup
I have two specific examples to share here:
1. Stop making slides
They achieve nothing in a startup. Instead, solve problems through conversation, and quick sketches. Nothing needs to be documented - your product is your output. Slides should only be created for the outside world, e.g. raising investment, and sales.
2. Stop doing things to just to look good
Ask yourself each morning: “what will help my startup grow today”. Do that and nothing else.
Here’s a list of things that probably won’t help grow your startup:
- Coffee with old colleagues, investors, friends, etc.
- Talking to investors (unless you are actively raising)
- Going to startup events
- Long meetings
- Working on your startup’s strategy
- Be short term focused
The timeframe of concern in a typical consulting engagement is 3 - 7 years. When you’re building a startup, you should be thinking about weeks. The only long term thinking needed is your vision. Don’t plan the steps to get there, just make sure you’re pointing in roughly the right direction.
- “Thinking short-term was one of the hardest mindset shifts I had to make.”
- It makes a big difference once you make it.
- Think differently
- If your startup follows “best practice” you’re unlikely to win. As the name implies, there’s someone out there doing that already. For a startup to succeed you need to be 10x better than what exists today. This requires you to think differently.
- Execute, execute, execute
- In consulting the output of your work is a strategy, or a plan for change. This is what’s needed when you’re trying to change a 10,000 person organisation. A startup is different. First, with a small team of smart people, you don’t need complex plans. Set goals / vision and work towards them so they happen.Second, a startup operates in a very uncertain world. You’re doing something that has not been done before. Every week you will learn new things that will change your direction. A plan needs some amount of certainty to be useful.
- “Every plan I have built since working on startups has been scrapped within a few weeks.”
- Almost all your time should be executing. Specifically: building your product / service, talking to your users, marketing/selling your product.
- Iterate quickly
- Most studies have a few days of iteration at the beginning as you’re trying to understand the problem and how you might solve it. The outcome of this is some form of work plan which you then stick to for the remainder of the study. This is not what a startup looks like. Your first idea is almost certainly wrong. A startup is not a study that follows a defined path once you’ve figured out the exact problem you’re trying to solve. A startup’s success relies on effective iteration. Making something people want - the first goal of your startup, implicitly requires iteration. You create something, try it on real people, then change what they don’t like. Repeat. Once you achieve this goal, iteration continues. Next you figure out how to reach more customers, scale your product, support more customers, etc. Your first approach to each of these problems will probably be wrong. Iteration is what gets you to a great solution.
- Be scrappy
- One thing that always got to me in consulting was the amount of polish that everything had to have. People think if a slide is beautifully formatted the content must be correct. The major downside of this is a lot of time is spent on polish. In a startup, you can ignore polish on most things. Especially at the beginning. The only exceptions I make is your core product UX/UI and marketing materials. Polish has a big effect on their effectiveness. During YC we heard talks from the founders of many successful companies. One thing that surprised me was how broken many of their startups were in the early days. But this scrappiness allowed them to be nimble, iterate quickly and grow fast.
- Your CV counts for nothing
- “Some of the most successful startups have been started by college dropouts. This can be hard to stomach when you leave an industry dominated by CVs.”
- The quicker you realize this, the better. In the startup world you’re judged by the growth rate of your startup, not on what you did before.
- A startup is not a job
- This is an easy one to forget. We’ve all done it - days when you look like you’re working, without actually achieving anything. In a consultancy you still get paid. In a startup you fail. If you spot yourself doing this: Stop. Take a break. Come back later.
This morning I read an article that startups are the new business school. I believe this.
If SketchDeck failed today, I would look positively on the last two years. I have learnt a lot, and had some amazing experiences doing so. If it continues to grow, even better.
Consulting is good training for a startup. Just stop being a consultant when you start one.
- I was a business analyst at McKinsey & Company, London from 2011 to 2013. In my last few months at the firm I teamed up with my co-founder to start Datoral. Datoral failed towards the end of 2013. SketchDeck, our current company is backed by Y Combinator and at the time of writing, has been around for almost two years, growing strongly during that time.
- There are tremendous upsides to starting a company. But this should not be your primary driver. If it is, there are more certain ways to get rich.
Thank you to David Mack for reading this and providing suggestions.