Refine and document your founder thesis

You have identified a market opportunity, made a hypothesis about how it could be addressed profitably, and tested that hypothesis with your product. This is the crux of your initial business thesis.

Fleshing out your thesis in a concise, formal(ish) document can help foreshadow potential challenges and ensure you are constantly testing your most important assumptions. It also keeps all initial stakeholders aligned through the hazy early days. Here are some practical tips for writing your thesis:

• The basic components:
  • Problem and solution
  • ‘Why now’ (i.e. what conditions make the timing right)
  • How you will build, distribute and deliver the solution (incl. resources required)
  • How (and when) you will make money
  • Your unfair advantage
  • How you will defend your position (the moat)*
• List the hypotheses underlying each, in the order in which you intend to validate them
• Attach relevant metrics (e.g. our first customer will pay $100 per month per person for our product). Use these metrics to test the statement: “if we hit these metrics, our hypothesis is validated, and our business will work”
• Regularly revisit your thesis and update your metrics. Ask your team to contribute – they may be able to identify additional assumptions or hypotheses that you need to test.

*Most don’t consider moat until much later. We believe it’s highly valuable to consider this even in the early days. See Emery’s post on this here.

Craft your mission & vision statements

Your mission & vision statements answer the questions: “Why do we exist?” and “Where are we going?”. Organizations need a north star to provide clarity and alignment, especially in the fog of war. As Patrick Lencioni writes, “employees at every level need to know that at the heart of what they do lies something grand and aspirational.” Effective mission & vision statements inform and inspire the critical stakeholders that surround your business, including customers, employees, investors, and candidates. Your statements should help them understand the value of your company and product, as well as where you are headed. It captures, in a few sentences, what gets you out of bed in the morning. For your mission statement, keep asking “why?” or “in service of what?” until you reach something grand and aspirational – usually ending just short of “to make the world a better place”. Try using the five whys technique to get to the root. Your mission statement should feel human. It should be emotive and should be an authentic source of inspiration. Your mission statement should be created with intention. It’s okay to write it while your values and strategy are still emergent. Your mission statement is not your competitive differentiation or marketing plan (though it should align with your marketing after the fact). Your vision statement should communicate where you are going. It’s about the future state you intend to achieve. When Vocap Managing Director Vinny Olmstead was CEO of Bridgevine, a B2B and B2C marketplace for home services, he led the creation of a compelling mission and vision that ultimately lasted for 14 years until the company sold. A few best practices from Vinny based on this experience:  

• Welcome all input: include both senior management AND major influencers regardless of level. This helps immensely. During the development of mission and vision, titles don’t matter.
• Use a facilitator: if possible, use a facilitator who has done this before. We first attempted on our own and failed. An objective and experienced outsider is instrumental.
• Iterate over a month or so to get comfortable. Time space to allow ideas to settle. The goal is to create a lasting vision and mission, and a two hour session won’t suffice.
• Communicate purposefully: create a grass roots communication plan. Celebrate the mission and vision, and invest in merchandise and collateral that reinforces.
• Share with key customers! It sounds odd, but we even asked feedback from key clients.

  Here are some better known examples:  

• Google:
  • Mission: To organize the world’s information and make it universally accessible and useful.
  • Vision: To provide access to the world’s information in one click.
   
• Uber:
  • Mission: Uber’s mission is to bring transportation — for everyone, everywhere.
  • Vision: Smarter transportation with fewer cars and greater access. Transportation that’s safer, cheaper, and more reliable; transportation that creates more job opportunities and higher incomes for drivers.
   
• LinkedIn:
  • Mission: To connect the world’s professionals to make them more productive and successful.
  • Vision: To create economic opportunity for every member of the global workforce.
   
• Tesla:
  • Mission: To accelerate the world’s transition to sustainable energy.
  • Vision: To create the most compelling car company of the 21st century by driving the world’s transition to electric vehicles.
   
• Southwest Airlines:
  • Mission: The mission of Southwest Airlines is dedication to the highest quality of customer service delivered with a sense of warmth, friendliness, individual pride, and company spirit.
  • Vision: To become the world’s most loved, most flown, and most profitable airline.
   

We favor a mission statement that is broad and not overly concrete. This pairs well with a vision statement that gets more specific. The vision statement should help you visualize the mission statement in a way that makes it come to life. It might even describe a magical user moment as a mental anchor. Some examples above follow this formula more closely than others. Making the mission & vision stick:

• Make it lofty
• Be descriptive
• Be human
• Be true
• Be concise
• Avoid jargon

Articulate your values

Your core values are the bumper rails for your culture. While the mission statement explains why your organization exists, your core values explain how your company gets there. They guide significant processes like hiring decisions and employee evaluations as well as everyday interactions like who cleans up the kitchen space. While your mission statement does not need to be unique, your values should reflect your distinct personality.

At this stage you’ve defined your purpose and your organization is transitioning into adolescence: it has an identity of its own, but it’s still quite malleable. This is a great time to formalize the core values that have likely emerged unconsciously.

We like how Twilio approached this process, which is described here. Convene a diverse group of 8-12 people to crowdsource ideas, distill to the ~10 most critical values, then test with the organization to determine which ones they can't live without. They are called ‘core’ because they transcend all other values. We suggest narrowing to a maximum of 5 core values. Make sure they are concrete and avoid generics (e.g., integrity). Remember: you are trying to get your tribe personally invested in these values. This is the opposite of a top-down decree.

"The goal is to identify who you are through introspection and then pull out and articulate the things that you like. Be aspirational but know that the seeds of these values must already have been sown." - FirstRound Review.

A couple good hacks for uncovering your values:

• The clone test: list three people in your business that you would clone if you could. What are the attributes that make these individuals awesome?
• The Click Down Method

Making the values stick:

• Keep it simple
• Make it your own
• Spell it out (verbalize examples of what is expected when the calls get tough)
• Invite intrigue (the “why” is what gets remembered)
• Try out one shocking / weird rule: in his book What You Do Is Who You Are, Ben Horowitz describes strong cultures with rituals and practices that are memorable, so “bizarre,” that people wonder why they are necessary
• Consider making it literal (see XOi example below)

Examples:

• Draw the owl (Twillio)
• Open company, no bullshit (Atlassian)
• Put your name on it (Unknown)
• Deliver WOW through service (Zappos)
• Remember the man (re the late Bill Bowerman, Nike co-founder) (Nike)
• Stay inquisitive! (Bridgevine)

Systematize company objectives (OKRs, EOS, et al)

If you want individuals and teams to row with strength and coordination, ensure they know their boat’s next destination. This next destination is not the fuzzy promised land over the horizon, it’s the port directly within sight. The point of company-wide objectives is to provide context for how everyone fits and contributes, and to drive greater cross-functional communication and support.

There are several effective methods for setting and driving accountability around company objectives. We are fans of both the Entrepreneurial Operating System (EOS) and the Objectives and Key Results (OKR) methodology. In each case you can start with your senior team, but eventually the process should cascade down the organization at all levels (company, departments, teams and individuals).

The OKR Methodology

Best practices for setting objectives:

• Make it measurable (you either hit key results or you don’t)
• Make it time bound (typically by quarter or year)
• Limit the number (3 to 5 is a good rule of thumb, otherwise you risk dilution)
• Address the most important things, not everything
• Define upfront, update and reinforce throughout
• For company-wide objectives, solicit input and complete buy-in from leadership team

A couple good examples of company-wide OKRs:

• Zume, an automated delivery food truck startup

• Intel in the 80s during “Operation Crush”, designed to address rising competition


For more on OKRs, we suggest the original text: Measure What Matters.

The EOS Model

In a nutshell, EOS is a management system that helps align and synchronize all the pieces of your business to produce the concrete results you want. The system is designed around 6 key components (Vision, People, Data, Issues, Process and Traction) to unite leadership around where the company is going and specifically how it will get there, including who plays what role, repeatable processes and data backed accountability.

If implemented effectively, EOS will produce a healthier and more productive leadership team, surface and crush issues quicker and ultimately, accelerate results for the business.

EOS Implementers follow a Proven Process to guide a leadership team along the journey, strengthening the 6 Key Components. Along the journey, the leadership team learns to master simple tools designed to help build trust and clarify the issues blocking their Vision (including issues within the leadership team) and then knock those issues down one quarter at time.

For more resources on EOS, start by visiting eosworldwide.com and/or reading Traction.

DIY vs. using a coach:

The most reliable approach to implementing EOS or the OKR system is to hire an outside coach. But for those tight on cash (e.g. seed stage companies), there is the DIY alternative which is still worthwhile.

• With a coach:
  • Pros: more likely to stay on track and succeed, benefit of impartial third party
  • Cons: more expensive
  • Tips: be rigorous in evaluating coaches, ask your investors and advisors for recs
• DIY:
  • Pros: cheaper, can still get 60-80% of the value if disciplined
  • Cons: significantly more effort, requires CEO to spearhead, deteriorates without strong self-discipline
  • Tips: whether you can afford it or not, interview a couple coaches and be upfront about the cost barrier. You’ll learn more about the process and they might even get you started pro bono. Execute and iterate at the leadership level first. Ask individuals to connect their job responsibilities to their core rocks. Be self-aware and clear about your role as visionary or integrator. Never miss an L10 meeting.

Rockefeller Habits:

While not as well known as OKRs and EOS, especially among technology startups, Rockefeller Habits is another fairly established system. Kickstarted by Verne Harnish’s 1999 book, Mastering the Rockefeller Habits and since codified into a planning and implementation methodology called Scaling Up, Rockefeller Habits outlines three fundamental habits key to successful business management: priorities, data and rhythm. Since the publication of Harnish’s book, many leadership teams have adopted the One Page Strategic Plan (OPSP) and corresponding planning frameworks as their foundation for generating accretive growth.

A note on BHAGs:

Though terminology differs, most systems involve visualizing a future state and working backward from there. Instituting a “big hairy audacious goal” (BHAG) is maybe the simplest distillation of this concept. We at Vocap are fans of using BHAGs. When used effectively, a BHAG will cut through the clutter, rally the team and keep everyone’s eyes on the prize. A good BHAG should be simple and easy to understand, such as “the march toward X” with X being some ambitious, measurable achievement. YouTube’s “billion-hour mission” is a great example:

OKRs, EOS and Rockefeller Habits are just a few of the more proven methodologies. Regardless of the specific system you choose, you will do well to incorporate the basic principles outlined above.

MVV onboarding for new hires

Your mission, vision, and values are the lifeblood of your company. Alignment around your MVV breaks down quickly if you’re not highly intentional about it with new hires.

Here are some concrete steps to integrate your MVV with your onboarding process:

• Before day one: if you’ve done it right, the new hire has demonstrated an understanding and genuine interest in your MVV by the time you extend an offer. Before day one is a good time to provide or resurface content that conveys the MVV. This can be a pitch deck (e.g. Hubspot’s culture deck) or it can be a richer format like a voice or video recording of the CEO speaking about the MVV.
• On day one: address the MVV as the first order of business. There is no ‘right’ way, just make the priority clear. If you’re onboarding a group of new hires, try employing a duo of well-respected cultural leaders to deliver the MVV overview message. This format encourages a back and forth dynamic which can be both engaging and effective.
• Foster one-on-one relationships early: new hires most closely emulate their immediate team. Encourage immediate team members to set up one-on-one conversations with the new person and get above the day-to-day logistics. Remind everyone on the team that they play a role in walking the talk for the new hire, regardless of level.
• Show > tell: whenever possible, tell stories. Most companies have a few favorite legends that get recited regularly. A little embellishment around the edges – the natural tendency of legends – can help emphasize the MVV takeaways. Don’t just recite the words behind the MVV, make them come alive with stories.