Four Secret Advantages Corporate Managers Have In The Startup World
Downtown warehouses vs. midtown highrises. All-night coding sessions vs. all-day meetings. Hoodies and flip-flops vs. business casual.
At first glance, corporate managers and startup founders look like they come from different worlds. But doing time in a large enterprise can actually help you become an outstanding startup CEO.
Advantage 1: You know how to use structure
Starting at the beginning, there’s corporate formation. A large multinational is a complicated web of legal entities, with each one set up for specific business reasons. You may have helped set up some of these entities, or you might run their operations. You know how they’re taxed, what they have to do to comply with the law, and how to protect them from unnecessary risks. So while other founders are frantically searching “difference between LLC and corporation,” you’ll be able to set up your own company with a few mouse clicks (or a call to your lawyer).
The much-mocked corporate bureaucracy offers a useful template as well. When a company is so big that employees need to specialize, they have no choice but to define roles and responsibilities clearly. As a corporate manager, you focus on your own area, and delegate support tasks to functions like IT, sourcing, risk management, and legal.
During your startup’s early days, you’ll have to set up your own network, manage your own supply chain, buy your own insurance, and read your own contracts. But as your company grows, you’ll delegate all that support work. Here, your team-player corporate instincts will serve you well. In fact, they may save you from the burnout that so many founders suffer when they try to go it alone.
Corporate structure even affects how you spend your time. You don’t become a manager without staying on top of your calendar, whether that means clearing an hour to strategize, or knowing exactly how many times to follow up with an important prospect.
If you come from a meeting-heavy culture, you may be used to regular status meetings. Scheduling these check-ins may not come naturally to startup employees. But they’re immensely helpful for staying on top of problems and hearing about your team’s day-to-day frustrations and triumphs.
Advantage 2: You have experience building effective teams
After years in the corporate world, you’ve hired (and maybe fired) quite a few employees and contractors. You have a realistic approach to managing, and you don’t believe in charismatic CEOs who emit a reality distortion field. Instead, you understand how to motivate your people by helping them meet their own goals, so that they’re willing to put in the effort to grow your company.
Everyone’s An Influencer These Days
Until you hire your first employee, your business colleagues will be independent players with their own agendas. They don’t report to you and you can’t give them orders.
As a manager in a large corporation, you’ve been here before. People above you in the hierarchy, as well as peers in different departments, have to be gently encouraged to do the things you need them to do. You’re probably already a master of the favor trading that needs to be done to finish your projects on time and within budget.
This skill will be a great help as you wrangle your new startup team. When you talk to an advisor, cofounder, or industry expert, they have other things to do than help your fledgling company, and you both know it. A little creative bargaining can go a long way.
Using consultants the right way
You may find yourself having to balance between enthusiastic yet inexperienced employees, and self-proclaimed experts who claim they can put you on the fast track in exchange for hefty fees.
If you worked for a big multinational for long enough, you probably had the experience of making a major investment in management consultants. You may have chafed at the number of meetings, bemoaned the six- or seven-figure price tag, or heard comments about stealing your watch and telling you the time.
It’s always surprising to see startups repeat this process on a smaller scale. The reliance on consultants starts when the founder hires a retired friend from his old company to “help with strategy,” then another to prepare the tech roadmap. Next up is someone to draft the business plan and a designer to create a world-class website. Before you know it, an entire outsourced company has sprung up, without a cent of revenue to show for this work.
Don’t be that founder. For every consultant you hire, you should know how exactly what return you can expect on your investment. In a big company the benefits can be more strategic, like gathering market intelligence, analyzing new product ideas, or getting advice on how to expand or downsize. A startup has more tactical, immediate goals. As CEO, use a best practice from the corporate world: give your consultants a fixed fee with a clear list of to-do’s and timelines, and hold them to it.
Advantage 3: You know how to execute
Being a corporate manager means you’re used to reporting to someone else, like a senior executive or a board of directors. These higher-ups demand year-over-year improvement, often while cutting your funding. Thanks to this scrutiny, you’re well-prepared to deal with demanding investors and a fickle market.
Can you imagine what your boss would say if you decided not to hand in a budget for the year? Many founders make an equivalent mistake by failing to plan for a range of financial outcomes. Their market analysis assumes billions of dollars’ worth of demand. Their sales plans rely on closing a big deal every quarter. Their financial projections, when they have them, confidently predict hockey-stick growth.
Corporate managers who have to defend their numbers often have more reasonable assumptions. Coming from a mature organization that has yearly ups and downs, they don’t assume that growth will be endless. They build in a financial cushion in case the economy falters, or so they can wait out an especially long sales cycle.
Financial modeling is hard – so much so that there are advisors who offer this service uniquely to startups. If you know your way around a budget and a spreadsheet, you’ll be more convincing as you explain your value to customers and investors.
Delivering something the market actually wants
Too many founders think a great product is enough. They fall in love with their solution, and expect that customers will do the same. They fall prey to the “if you build it, they will come” syndrome – and when buyers don’t materialize, they try to make up the difference with pricey marketing.
Another mistake is targeting a niche that’s too small. Products tailored for an elite few don’t scale well, and competition is fierce to sell to the top 1%. Worse, some founders double down on the advice to “solve your own problem,” when their needs in no way represent those of the broader market.
Founders who have spent time in large corporations can avoid these kinds of misfires. They’re informed by numbers, not just inspiration and emotion. They cut costs ruthlessly, and focus on customers who will be profitable long-term.
The care and feeding of demanding customers
Big corporations usually have other large, sophisticated corporations as clients – or a large number of individual consumers. Either way, these customers can be demanding. You’re probably no stranger to all-nighters to finish a proposal, tense negotiations over pricing, or soothing a cranky buyer.
This time spent solving real world problems will prepare you for the customers you’ll find as a startup. These customers can be hard to find, and picky. Many are looking for deep discounts in exchange for being an early adopter.
Even if you aren’t in a buyer-facing role as a corporate manager, you probably have an idea of the costs and benefits of running a customer service organization. This knowledge will be very helpful, since the way you handle your first few clients can make or break your new business.
Advantage 4: You have perspective
If you’ve gotten to the manager level, there’s a good chance you have several years (or decades) of experience under your belt. You’ve been through more than one market cycle. You’ve seen cheap capital come and go, and weathered countless fads in tech, HR, and investing. Others with less experience may panic and make bad decisions when things don’t go their way.
According to the inimitable Felix Dennis, “working too long for other people can blunt your desire to take risks.” On the other hand, working for other people for a while can teach you how to take the right kind of risks – the kind that pay off in the long run.
This article is my opinion only, and not legal advice.
If you’re looking to start a new company and have legal questions – whether you come from Corporate America or not – please feel free to contact me.