Doctors conduct postmortems to figure why people died. They do this to solve a crime, prevent the death of others, and satisfy curiosity. However, once somebody dies, it’s too late to help him.
Entrepreneurs and their investors also often analyze why a product, service, or company died—especially if it’s someone else’s company. And, as in the case of dead people, a postmortem is too late to do much good for a defunct product, service, or company. Enter the concept of premortems, coined by Gary Klein, chief scientist of Klein Associates, and author of Sources of Power: How People Make Decisions.
His idea is to get your team together and pretend that your product has failed. That’s right: failed, cratered, imploded, or “went Aloha Oe,” as we say in Hawaii. You ask the team to come up with all the reasons why the failure occurred. Then each member has to state one reason until every reason is on a list. The next step is to figure out ways to prevent every reason from occurring.
You can’t ask the team to report the issues and challenges because regular meetings are governed by mind games and unwritten rules—for example, not embarrassing your friends, not looking like a poor team player by criticizing others, and not making enemies. You can’t tell me that everyone is completely open and honest in these gatherings.
By contrast, people are not laying blame on one another and on other groups in a premortem (a properly conducted one, anyway). Everyone is compiling a list of all the hypothetical factors that may come into play. And “all” means “all,” because it would be shame if someone had thought of an issue but then dismissed it as not important enough to mention.
This post is a tiny part of Guy Kawasaki’s latest book, The Art of the Start 2.0. Read it and reap…
The post Startups: How to Do a Pre-Mortem (and Prevent a Post-Mortem) appeared first on Guy Kawasaki.
Over this weekend I celebrated my tenth anniversary as a Venture Capitalist. When I joined August Capital 10 years ago, things weren't so different than they are today. There had been a period of real exuberance in venture investing but it had come to an unceremonious end. The momentum in momentum investing had run out of steam. And it was back to the basics in Venture Capital -- fund smart folks building interesting companies that didn't require a pile of cash. I felt grateful then, as I do today, that I had joined a firm that focused on the fundamentals of Venture Capital and company building.
August Capital has always been a big picture firm -- build great companies for the long run and everything else will work out in the wash. I don't think that ten years ago I quite understood just how long the "long run" really was. But Venture Capital is definitely a long term business. There are hundreds (if not thousands) of opportunities in any given year to be short sighted and to optimize for the near term, but those decisions will assuredly come back to bite you. Venture Capital is about thinking long term. Venture Capital is about paying it forward. Venture Capital is about being honest, and forthcoming, and helpful and hard working. And, in the long run, you may have the good fortune to fund a great company or two along the way.
I was chatting with one of my partners recently about the fact that I wanted to write a blog post looking back at my first ten years in the venture business but that I wasn't quite sure what wisdom I could impart. He said, "that's because you're just getting started." Just getting started? Ten years and I'm just getting started? It seemed hard to imagine. Yet he was certainly right. Ten years in Venture Capital is a drop in the bucket.
In my first ten years in the Venture business, I have funded 15 companies -- that's one and a half companies a year. And of those companies, the majority were funded in the latter half of the decade and are really just getting started. While there are a few anomalies out there, the vast majority of "meaningfully large" companies require 6, 8, even 10 years to get to scale. Which means that only my earliest investments have any hope of being "meaningfully large" at this point (I guess the good news is that a half dozen of my companies will likely do around $50M or more in revenue this year, which is certainly progress, but is in no way conclusive). It probably takes about two decades for enough companies to ripen on the vine before one can know with any degree of certainty if he's going to be a good wine maker or not.
One of my partners is fond of saying that success in the Venture business is largely a product of effective pattern matching -- observing the characteristics of successful businesses and then finding new businesses that match those characteristics in material ways. After a decade in the Venture business, it is abundantly clear that he's right; pattern matching is among the most powerful tools we VCs have. Yet without a playbook full of patterns, there's not much matching to be done. So, arguably, the first decade in Venture is all about pattern acquisition so that the second decade might be about successful pattern matching.  I'm looking forward to that second decade. I've got some great patterns at this point and can't wait to put them to good use.
I am certainly grateful for the incredible first decade I've had in the venture business. I owe my partners a huge debt of gratitude for betting on a punky young lawyer with no business experience and a penchant for running his mouth off. It has been my tireless effort to prove that gamble a wise one. I also owe the entrepreneurs with whom I work an equally large debt of gratitude. They have trusted me to join their teams and help steward their companies through the challenging gauntlets that each has and will face. I don't take that responsibility lightly. I value their friendships and their trust, which I hope I earn each and every day.
I may be just getting started, but I've got one hell of a running start. I look forward to my next decade with great partners like Dave Marquardt, John Johnston, Andy Rappaport, Vivek Mehra, and Howard Hartenbaum, and phenomenal entrepreneurs like Selina Tobacawalla, Al Lieb, Josh Silverman, Rene Lacerte, Martin Gates, Jim Heeger, James Currier, Rick Marini, Stan Chudnovsky, Travis Kalanick, Ben and Mena Trott, Barak Berkowitz, Chris Alden, Matt Sanchez, Dave Lerman, Kevin Sladek, Bob Philips, Bharath Kumar, Denis Stradford, Frank Rhode, Erik Swan, Michael Baum, Rob Das, Godfrey Sullivan, Paul Wasserman, Alessandro Isolani, Kevin Johnson, Touraj Parang, Philip Mobin, Konstantin Guericke, Bahman Koohestani, Bill Trenchard, Jim Everingham, Lloyd Tabb, Maynard Webb, Dave Sifry, Richard Jalichandra, Paul Ryan, Tom Lamb, Tom Furphy, Paul Hanson, Susan Wu, Don Neufeld, Rex Ishibashi, Max Ventilla, Damon Horowitz, Garrett Camp, Geoff Smith, Amit Kapur, Steve Pearman, Jim Benedetto, Bill Clerico, Rich Aberman, Ashvin Kumar, Chris Estreich, Philip Kaplan, and the thousands of other entrepreneurs in my portfolio who are working tirelessly to build amazing companies that matter. I consider myself incredibly lucky to be going into my second decade as a Venture Capitalist. I used to say "it's a great job if you can get it." Now I joke "it's a great job if you can keep it." I plan on keeping it for many years to come.
 Unfortunately, one of the most powerful patterns one can have in his playbook is the "Failed Company" pattern, but it's an expensive one to acquire. I suppose this is why partnerships are so helpful. I get to borrow the playbooks of my partners who have been in the business for three decades or more. It would be hard to overstate how helpful that really is.