Dave Naffziger's Blog

Startups rarely launch the way they are intended. Jeff and Todd had spent the better part of a year working on the groundwork for their apparel company, Out of Print Clothing.

They had spent months obtaining license rights for the original cover art from a number of cult classics such as Atlas Shrugged, Brave New World and On the Road. Tracking down the artists that had created artwork 80 years ago took a bit of work. In one instance they traveled to an old mansion in Brooklyn to meet with the widow of one of the artists.

Both Jeff and Todd were pursuing a certain look in their shirts. The quality of the shirt and silk screening was essential - they tried lots of shirt/printing variants until they were satisfied.

More importantly they struck a relationship with Books for Africa to donate one book for every shirt purchased.

They had a launch date planned for several weeks down the road. Everything was coming together nicely. They were lining up influencers to wear their shirts and had developed a media list to reach out to.

Then JD Salinger died.

And they had license rights to the original cover art from Catcher in the Rye:

They had a few more weeks of solid work before launch, but knew they couldn’t miss the opportunity. They worked through the night, polishing as much as they could, cutting requirements where they could and launched the day after the news broke about Salinger.

The result is pretty awesome. Check out their line-up of shirts. In addition to the JD Salinger shirt, these two are probably among my favorites:

Oh and of course, they have the cover art to this post’s namesake:

While there are tons of measures of a startup’s success, one of the more amusing ones is the degree to which your competitors take notice.

We have been fairly quiet in public about BrandVerity and our growth, so I always take a special interest in how new prospects find us (good practice at any stage of a company). We make trials incredibly easy to start, so we often know very little about the party on the other end that creates the account. Occasionally, someone will create an account that just doesn’t seem to fit with what we do.

So far we’ve had at least two accounts that I can directly trace back to a competitor. In one case, the CEO of a peer opened an account using an email address from her husband’s company. She never contacted us directly, but looking at her usage patterns in the site it was pretty clear that she was conducting a feature comparison.

The more recent one was particularly brazen though. An employee of a larger competitor created an account (using a hotmail address), and then sent a note asking to speak. The employee represented themselves as a marketing consultant that managed campaigns for several brands, but over the course of the conversation it became pretty clear that she wasn’t a typical customer. Questions about unrelated aspects of the service, size of company, and customer counts just didn’t fit with a typical customer’s behavior. I declined to answer the more sensitive questions, and after the call I created an excuse to call her back to clarify something. The response at the other end of the call was ‘Hello, ’.

Competitive research is an imperative in business and I certainly expect competitors to try and learn as much as they can about us. I actually think that more direct approaches yield better success (eg just reach out and introduce yourself), but as a startup you should just be aware that anything you say to customers and prospects becomes generally available information.

Oh, and it is great if your competitors accept your Terms of Service!

The layoffs in Silicon Valley have started and will likely continue for some time.

Friday on Techcrunch, Arrington asserted that some of the layoffs weren’t being done because of the economic conditions, but because the companies were utilizing the changing public sentiment to trim underperforming staff.

This is the wrong approach to reducing staff. The two forms of staff reductions are significantly different and confusing them provides a mixed message to employees that destroys morale.

Reductions In Force (RIFs) are layoffs that abolish positions. They are not performance-related and typically result from a company that downsizes or restructures. Many states have legal guidelines that govern RIFs, but in general they offer more protection to employers than performance-related firings. Nearly all layoffs you read about are technically RIFs.

Performance-related firings require much greater documentation on behalf of the employer. Lazy managers may not counsel or document poor employee performance properly. This leaves companies vulnerable to lawsuits. So, some companies choose to fire poor-performers en-masse and describe the action as a RIF.

I think we went through 3 layoff cycles on our way to stabilizing Quova. The first cycle was truly a layoff - we had built the company far faster than our customer base. We lost some very good people, but our burn rate was way too high and startup economics were different in 2002 than they were in 2000. In general, morale survived intact.

However, we began to mix layoffs and performance-related reductions in the next two cycles. After each layoff, the message would typically be that the company was stable now and people didn’t need to fear for their jobs. This was a true statement and it remained largely true throughout, but it felt hollower after each successive layoff. Morale plummeted and took at least two years and nearly full turnover for it to recover.

If you are disguising a mass-firing as a RIF, you cannot provide open and honest communications to your employees. This breeds mistrust and all of the bad things that accompany it.

The bottom line is fire your underperformers for underperformaing. If you are firing several of them at the same time you’ve already fucked up. You need to be asking why you didn’t fire them individually earlier. Don’t be lazy and don’t allow your managers to be lazy.