This is a follow up post on my earlier blog post: ‘Why boards don’t work for startups and how to do it right’. If you missed that post, I suggest you read it first. It gives the right context for this post. Find it here.
My last post argued that boards were invented to solve a problem that startups don’t have. I argued that boards should be replaced with a Mastermind. This is a post on how to construct the Mastermind and how to make use of it. Ideas are power. Use them.
The purpose of the Mastermind
The fundamental purpose of the Mastermind is to help the founders turn their startup into a company. Startups are eighty hour weeks and burn money. Companies are forty hour weeks and make money. How can that be? How can input not equal output. Something isn’t right.
The difference is effectiveness. Companies apply their resources effectively. Startups don’t. And the reasons for this are relatively simple.
Startups need to spent time on plumbing. Founders need to set up payroll, implement a CRM system and assemble furniture. Companies got the plumbing done. Employees can spend all their hours on execution. But that fact only accounts for a tiny part of the difference in effectiveness. The big culprit is hidden elsewhere.
The real difference is this: Companies know exactly how to sell their products and who to sell them to. They know because a long time ago, their founder did eighty hour weeks. His picture is now framed on the wall.
Startups don’t know how to sell their products. Or to who. But they try. And try. And try. Trying is really experimenting. To be experimenting is to approach things differently every time. Founders approach customers in different ways. The times the approach doesn’t work is time spent that didn’t result in money. Bingo! We found the culprit of the ineffectiveness of startups. The main reason why twice the work hours do not equal twice the money. But how do we solve this problem?
Unfortunately, the problem can only be solved by continuous experimenting. By checking of things that don’t work and getting closer to what works. All human progress has been a result of experimentation. Thomas Edison knew this better than anyone.
The good news is that experimentation can be done wisely. So founders need a tool that makes them smarter. And by now you know where I am going.
The Mastermind is that tool. Groups outperform individuals every time. Humans have become the dominant species because of we are good at collaborating. Few would like to face a lion alone.
The Mastermind is the group that must help the founders experiment wisely. The question is how to create it?
Construction of the Mastermind
First the Mastermind must be constructed right. This is the most important part. Boards are constructed to protect interests and secure influence. Advisory boards are mostly constructed to look good towards investors. The mastermind must be different. It must be constructed with the single purpose of helping founders experiment smarter.
Now for the practical part. How to do it. And I want to start with an apology. I will give you a guide. I don’t like guides. They are simplistic and force multidimensional things into a linear format. I feel ashamed. But I found no better way to do it. I have rewritten this section over and over. Anything else than a “step by step” format becomes messy. Sorry. So here we go:
Step 1. Choose the right people. I mean the RIGHT people.
Getting the right people in the Mastermind is the most important. First of all, each member must want to do it. They must fundamentally want to help. They must be people who have experimented a lot and learned from it. Titles and career success can be a bad proxy for this. Take long walks to understand how much they have really learned. They must be reflective. They must fundamentally respect the other people. They must be factual and honest. If you doubt any of these qualities, find someone else. Find 3 people that match.
Step 2. Establish the Mastermind on a clear philosophy
The Mastermind must be constructed on a coherent philosophy that every member agrees upon. The philosophy should be something close to this: Every member is here to help the founders experiment wisely in order to speed up the process of turning the startup into a company. Any member not buying into this philosophy will disturb the work of the group. Be sure everyone is aligned. That includes the founders.Get everyone together and shake hands. Maybe even sign something.
Step 3. Execute meetings often and structured
Use the Mastermind. Make it your most important institution. If meetings are too far between, most the time is spent bringing everyone up to date. It becomes reporting. Each meeting should pick up from the last meeting. Weekly meetings work. Keep them short. Maximum 1 hour per meeting. Do long sessions once in a while.
The meetings should have a fixed agenda with only one topic. The topic should be experiments and learning. The founders must give insight into the latest experiments. The Mastermind will discuss how to interpret the results and what to do next. Limit the topic to this. Save the rest for other forums.
Step 4. Appreciate your Mastermind
Treat your Mastermind right. They have chosen to help. Don’t choose people who will only help if they get paid. But pay people who help. Most founders are not good at this. Pay them with recognition. Pay them with acknowledgement when you succeed and get interviewed. Pay them by showing respect for their time. Start meetings on time. End them on time. Make the time they spent productive and pleasant. Pay them money or stock if you want. Pay them anything you can. A true Mastermind is worth it.
Step 5. End the Mastermind
I said that startups are not companies. I said that companies have boards, but startups should have Masterminds. I said that the purpose of the Mastermind was to turn the startup into a company. Consequently, I must also conclude that the Mastermind must end. It will make itself obsolete. The day it happens the group should celebrate. They succeeded.
One day the startup has found an effective way to sell their product. One day they have identified the people who want to buy it. Now they just need to do more of it. The founders raise series B, C and so on. They go into hyper scale. They hire lots of people. Professional management will join. The founders will bring more investors onboard to finance the growth. New problems will arise. But the new problems well dealt with by the traditional board.
The board has stood the test of time. It works. But no governing structure has yet stood the test of time for startups. The modern tech startup is still a new invention. The Mastermind just might be what we have been missing.
- The purpose of the Mastermind is to help the founders turn their startup into a company by speeding up the process of experimenting their way to a viable business model
- The right construction of the Mastermind is vital
- The successful Mastermind will make itself obsolete over time