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8 Lessons In Creating A Lasting Enterprise Startup

Oracle

I’ve been around startups for 15 years. I was involved with three startups from the beginning, and each was acquired for well north of nine figures.  I’ve thought a lot about how to do the things that need to be done to create a successful startup, and I’d like to share some of those thoughts.

First let me clarify a couple of points. The word "enterprise" is used undefinedin the headline because I’m writing about launching a company that can scale to work with the largest brands in the world. No mom-and-pop strategies here—go big or go home.

I offer experiences mostly from my time at Vitrue, a cloud-based social marketing company that I founded in 2006. Vitrue originally sold software that let companies offer a video platform to their customers. We changed focus in 2008 to a service that lets companies organize and execute their marketing campaigns across social networks such as Facebook, Twitter, and YouTube. That dramatic business model “pivot” was a difficult but valuable learning experience.

1) Believe with conviction.

It’s not enough to have an idea—you have to believe in it strongly. This is important when it comes to making potential investors, employees, and customers believe in your idea and your vision, too.

Your idea must be born of conviction. When conceiving of Vitrue, I noticed there was a tremendous shift toward consumers looking for ways to connect. I was aware of research that said the majority of consumers buy products or services based on peer recommendations. Traditional modes of communication were changing before our eyes, and people were spending more time online.

That convinced me of social media’s growing importance as a marketing tool. As a result, at Vitrue we were talking about the social marketing imperative to the largest brands in 2006, well before other companies had realized its significance.

2) Be passionate about your idea.

To really leverage the power of PR and the media to create credibility and influence in the marketplace, you must exude passion about your idea 24/7. You need that passion to convince people to sign on, join up, or pony up.

It takes a leap of faith to start a company in a brand new industry. When I appeared on Bloomberg News to talk about Vitrue and the emergence of social media marketing, I knew I’d have to do considerable proselytizing and I was prepared for that.

Not that you won’t have peak and valleys. It’s a matter of “contagious enthusiasm” from the leader: You have to be the person people get behind or they will not follow you.

3) Be prepared for change.

I used to think that “pivot,” when applied to a business model, was a bad word. Now I realize that change is constant in today’s world; in fact, it is the only guarantee.

Vitrue pivoted. It started in a very different place from where it ended up. If we had stayed with the idea of a video platform for brands on their websites, we probably would have gone out of business.

You’ve got to break things. Look at how Google and Facebook constantly reinvent themselves. More than a simple exercise, it’s emblematic of a thought process: not being stuck in your ways. And you’re going to need to find investors and employees who think along the same lines.

4) Be open to all opportunities. Take the risks.

 You’ve got to take big risks and make big bets if you want to change the world. Let me put that another way: The startup world requires intestinal fortitude because behind every startup is a borderline ulcer.

When I was chief marketing officer at WebMD in 1999 the online healthcare startup was attempting to raise capital. We had about $800,000 left in the bank. So we bought a full-page ad in the Wall Street Journal that cost $400,000. The ad would call out major healthcare companies over their lack of online strategies.  At the same time, we told potential backers that if they invested in WebMD we would run their logos in the ad as “partners in practice.” We figured that savvy members of the healthcare community would want to be indentified on the forward-looking side of the Internet debate. That ad ended up bringing in $32 million dollars in much-needed capital investment for WebMD.

There’s a reason why Silicon Valley is a relatively young culture, and it has to do with a tolerance for risk. As I get older I’m more conscious about decisions, more risk-averse. That’s not to say the startup game is only for the young, but risk is a critical element of strategy and must be enthusiastically embraced.

5) Expect the best; prepare for the worst.

Back in 2009, when we were in the throes of the recession, my family and I built a garden in the backyard to grow our own vegetables. It might seem trivial but it exemplifies an important point: You have to be prepared for when your idea and your vision hits turbulence and your confidence gets rattled.

It’s important to play out potential disasters in your head. After all, as many as three out of four venture-backed startups fail, according to research.

Once you do have capital raised, communicate downside scenarios to your investors so there are no surprises. Going forward, an effective way to manage expectations is to under-promise and over-deliver.

6) Build the right team.

Any great startup is all about the people. Surround yourself with people who have credibility, and seek out mentors who can help guide you in raising capital or finding employees.

It’s equally important to know when to make a change. An early VC mentor of mine told me that the two biggest mistakes startup companies make is that they under-price their products and they hold onto underperformers (employees or management) for too long.

At Vitrue we had a great team. We were approached by a lot of great people, so we had our pick. Unfortunately, the team didn’t gel. When we went through that big business model pivot we ended up replacing a lot of senior people, many of them in management. The problem: These people knew big media but they didn’t really know social.

So we promoted people underneath them who did know the social environment. Then we insulated that younger core team with veterans who brought operational and business savvy. That way we achieved the right mix of enthusiasm and experience.

Finally, building the right team involves a personal support system. Being a founder can be lonely, especially in tough times. Having my wife Holly as a partner, to support and challenge me, has been a momentous factor in my life.

7) Build a culture with strong values. Give back.

This was a deeply felt lesson learned for me: We are on this earth for only a short time and we should strive to be a positive influence on others. Therefore, your startup should have a vision and a goal that’s aligned with helping people. An example of that would be allowing employees to pursue charitable causes.

There’s a practical element here. Good employees are attracted to companies and cultures that have a purpose, that aren’t just all about the bottom line. That’s why you’re seeing more and more startups that have a philosophy of giving back.

8) Clarify goals early and often with all constituents.

A successful business strategy involves open communication and transparency—with employees, investors, and customers. At Vitrue, we tried to do the right thing by being overly communicative and keeping people up to date with what we were doing.

It’s not necessarily about what’s going to happen in a month but instead clarifying the long-term goal repeatedly and consistently. For instance, the business pivot at Vitrue happened over a couple-year period. Several incidents—this customer fired us, we had to reduce employees, we’re seeing a kernel of success here—helped define the new goal and the new strategy. We communicated those turning points openly and regularly with all interested parties.

Success with a startup is a matter of constant iteration, trying new things, seeing what sticks. It’s answering the question: How do I add value and how do I improve every day?

The upshot with Vitrue is that Oracle acquired the company in 2012. Now I’m helping to drive Oracle’s cloud-based initiatives. But I keep my hand in the startup world by serving on several advisory and non-profit boards.

(In my next column I will expand on the point about the socially aware corporate culture and the importance of giving back, which is very important to me.)

Reggie Bradford is Senior Vice President, Product Development, Oracle.

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