How startups can out-execute the big guys

I couldn’t miss an event billed “How I beat my competition by out-executing them with Gurbaksh Chahal and Lyle Fong “, a VLAB Emerging Business Event in their “Entrepreneurs Uncensored” series. Gurbaksh and Lyle are two very inspiring entrepreneurs. Just hearing their stories made for a great event.  But they were there with a message to start-ups: you can compete with bigger competitors by executing better, by competing – and winning – on execution.

Panel moderator Ravi Belani of Draper Fisher Jurvetson kicked off the discussion by sharing the story of an accomplished pianist. When told by an admirer “I could never play as well as you” the pianist replied, why yes you could, if you practice 6 hours a day, year after year, giving up lots of other things you could be doing. The lesson of execution is nothing is wrapped up in a bow, the reality is a lot of hard work just do it get it done.  Ravi’s story reminded me of the “10,000 hour rule” from Malcolm Gladwell’s book Outliers. Behind every “natural genius” or “overnight success” is 10,000 hours of hard work – and some luck.

Lyle left UC Berkeley because he hated learning from books, and started doing what he loved (gaming). He turned that into a series of increasingly impressive businesses. Lyle is now CEO of the Social CRM company he founded, Lithium Technologies, the largest in its space.

Gurbaksh had a problem to solve (he needed to make some money). He was turned down for a job flipping hamburgers, so at age 16 he started an internet advertising business and never looked back. He sold his second company BlueLithium to Yahoo! for $300M in cash. He is off and running again with a virtual currency platform company gWallet, a best selling inspirational book about his journey “The Dream” and even an Oprah interview.

Lyle is a case study in “do what you love and the money will follow”. Gurbaksh is a case study in “just do it”. Both are entrepreneurs who, in Gurbaksh’s words, “started with a low-capital plan and executed. At the end of the day, it’s all about execution. It’s sweat equity.”

As true as this message is, hard work is not the same as execution. Many people work really hard at their jobs, but their company as a whole doesn’t execute well.  Many more entrepreneurs don’t create a successful business than those that do. Yet with very few exceptions, they all worked really, really hard. Hard work is necessary, but insufficient.

Gurbaksh shared this insight: “There is a reason startups exist. They exist for an ability to execute. It takes big companies a long time to execute.” So do startups have some natural ability to execute? Well, no, not any more than there is a natural pianist; it takes many hours of hard work. But we know hard work isn’t enough.

Let’s do some quick math. Let’s say you are part of a team of three co-founders. You’ve committed to working really hard for one year to get your first product out the door.  You put in the hours so in one year you have roughly 3500*3=10,500 hours into your first product. Now add people. Everyone’s working hard and the hours add up. But not quite as smoothly.

When you were three people, you knew what to work on, and differences were resolved quickly. As you grow, it gets harder and harder for everyone to know what to work on and when, what to prioritize, how to solve issues. You gain hours but you also lose hours, hours on miscommunication, hours working on the wrong things.  Left unchecked, the bigger you grow, the more hours you lose. It slows your output, your ability to execute.

Big companies usually don’t execute well because they lose a lot of hours. There’s just a lot of unproductive or counter-productive stuff going on. Startups have less, and so can typically execute better. But not always, and not for long. Not unless startups are mindful of, and build in, what it takes to execute as they grow.  Successful execution is about alignment and motivation that grow from and are sustained by core values. It’s about building a company where you would want to work.

Entrepreneurs often resist the idea of core values as more of that big company unproductive stuff.  Zappos’ CEO Tony Hsieh was one.  In a NYTimes Corner Office interview, Hsieh recalled “I was very hesitant, because it just felt like one of those big-company things to do. But within a couple of months, it just made such a huge difference. It gave everyone a common language, and just created a lot more alignment in terms of how everyone in the company was thinking. If I could do it all over again, I would roll out our core values from Day 1.”

Execution is about hard work, but it’s also about all that hard work moving in the same direction. Gurbaksh and Lyle are remarkable entrepreneurs. Their advice is golden: Pick a vertical where you can be very strong. Solve one problem really well, learn and grow into the entire space. Execution is everything.

How startups can out-execute the big guys, part two

Tagged as: Business Execution, core values, Entrepreneurship, Gurbaksh Chahal, Lyle Fong, Startups, Tony Hsieh, VLAB