I had the opportunity to make a quick trip out to visit one of our portfolio companies at the end of this past week. The goal was to spend some time helping them distill their digital strategy down to a nice tight operating plan. As I have come to learn in the past several months, this is a special part of the VC’s job — a part that some VCs seem to put more emphasis on than others.
Taking the redeye is never optimal, but spending a day with an early stage start up is more envigorating than a double mocha latte by far. As is often the case, the company in question finds themselves running in several directions chasing the opportunity ahead of them. So the goal is a focus, focus and more focus. Breaking down the drill in to three steps is a way to help any group go from what seems like an overbearing set of strategic options to a refined operating plan that can be pursued over the near term while at the same time helping the company filter all future opportunities in to an “above the line” and “below the line” set of prioritization.
And what are these three steps? I think of them as Goals, Sprints and Iteration
1. Set clear and measurable goals
This may seem obvious, but it is often the part that is most overlooked. I start with the financial goals — these are the ones that typically decided success or failure right? Pretty straight forward stuff like “how much revenue do you need to generate to get cash flow positive?” is a good place to start and keep coming back to during the planning session. You need these numbers laid out in a simple way so that everything that follows can be built up to support getting to these goals.
And as for how far out these goals stretch, in a start up I like thinking about 6-month and 12-month planning windows. Yes for the board meetings and other investor related conversations you will need to lay out a 3-year plan, but in the day-to-day operations it’s the 6–12 month window that you need to focus on and execute against.
2. Define a sprint every 30 days
Depending on the stage of the company, this list may be product focused, BD focused and/or sales focused. Either way, what I’m talking about here is coming up with a very concise list of what needs to get done across the company over the next 30 days. And, more imporantly, the 30 days window is used to focus on an even shorter subset of this list to see what kind of traction you can actually get, particularly in the context of trying to close partnerships or sales (e.g. revenue producing) deals that will help validate the assumptions you built in to your financial plan.
I like this 30-day cycle because it fits with today’s notion of doing product development in similar “sprint” cycles and it keeps the company thinking about how they have to be in a mindset of ‘urgency’ to get stuff done incrementally to reach the 6 and 12-month targets.
3. Rinse, repeat and iterate
The company needs to be in a mindset where everything operates as an iterative loop. While the 12-month plan needs to be fairly concrete, the 30-day “sprints” within that window are repeatable events that provide actual feedback that can be used to revise how the group intends to reach that annual plan. This is the nature of how start ups essentially “course correct” or “keep tinkering” until they get on a hyper-growth path.
But without a conscious “rinse and repeat” mindset it sometimes becomes too easy for start ups to either stay on an aimless path that burns cash without delivering the traction that can deliver either another round of investment or the ultimate goal of reaching the cash flow milestone.
This may seem overly simplistic — and in a way it is, but that’s kind of the point. Too often companies that face the constant struggle of trying to manage an overwhelming list of priorities with a relatively small set of resources falls in to the trap of constant planning and trying to cover everything. The reality is that the former keeps them from actually getting out and “doing” things that will inform them as to what really matters and what doesn’t which helps them with the latter challenge.
Originally published on Medium on May 9, 2009. This Substack version is maintained as the canonical archive.