Don't Confuse Activity with Progress

It is extremely easy to confuse lots of activity with progress. We all want to do it because activity is much easier to do than actual progress.  It makes us feel better.  The reality is it a delusionary disease that usually attacks early stage start-ups.  It is called "Make Believe Progress Syndrome" or MBPS and can be devastating to a start-up and can even cause death.  It tends to eat up your scarce resource like a tape worm and produce zero valuation growth.  As a start-up CEO or Board member you must be acutely aware of the early warning symptoms and be swift about diagnosing and curing the disease.  I'll go through some of them over the next couple of weeks.  Please write if you are aware of symptoms you would like me to discuss.

Symptom 1. The Toothless Reseller Agreement -- your start-up company has a host of big name resellers in place with no minimums or commitments.  A lot of love back and forth, but no results.  I call these Barney Deals.  These  deals tend to take up all of your time and produce no results.  Your key team members will fly all around the country and even the world to go to meetings and trade shows.  Your development team will spend tons of resources "co-branding the solution" from changing the screens on the software to the marketing materials.  You'll have a "revenue share" agreement in place.  You'll be introduced to lots of potential customers and do oodles of "free pilots" because of the promise of the one deal that will make your company.  You'll send out a lot of joint press releases telling the world about how great your partnership is.  The big company will console you and say that they are going to flood the channel with your product.  You will feel great, but at the end of the quarter the channel will have produced zero results.  Don't worry says the big company, the sales will come.

The Cure:  Don't be afraid to do some of the stuff I described above, but know when to say enough is enough.  In ideal world, you will get the big reseller to commit to sell a certain number of units per quarter.  If they don't meet the volume, they pay you anyway. You will be scared to ask for this in fear of disrupting the love.  ASK ANYWAY. You may have offer exclusivity to get that deal, which may or may not work.  At a minimum, get paid for your time to customize the solutions and get overhead costs like travel reimbursed.  The reseller must have skin in the game.  If they don't, you have to question their level of commitment.  Remember, employees of big company's often get rewarded for activity only, so incentives are not always aligned.  For you, time is as valuable as $.  Make sure you are closing deals within 2 quarters.  If not, they are not ever going to close and you should either back burner the relationship or terminate it.  Too many Barney Deals going at one time can suck up all of your resources and tank your company before you know it.

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