Jess and Jeff (who are two of my most insightful friends) came to the same realization at HostingCon: most people they met "operate a company", while very few "run a business".
Jess explains that operating a company means jumping in the trenches and rolling up one's sleeves. Lots of multi-talented web hosting company founders, for instance, get personally involved with closing sales, configuring servers, writing code, answering support calls...
Running a business, on the other hand, means setting goals, developing procedures and delegating as much as possible to appropriate talent. Jeff points out that just as bureaucracy stifles innovation within large organizations, the reluctance to hand off responsibilities hinders smaller companies from reaching the next level.
An interesting corollary to Jess' and Jeff's discovery is, most folks at the show target do-it-yourself customers (smaller/lower growth?) instead of those who are looking to delegate (higher potential?).
As a point of reference, let's consider 1&1, whose CEO obviously doesn't spend his time in the trenches. Its web hosting service includes a bewildering array of features: in addition to my site creator/form builder/Perl syntax checker, I could install SMF, Brim, Mantis and many other applications I'm not familiar with. If I were a multi-talented customer who's ready to roll up my sleeves, I might even be able to take advantage of the pay per click and CitySearch ad vouchers.
But... is learning to use my web hosting account the highest and best use of my time and attention? Should web hosting CEOs help me recognize that it isn't - and offer to take on more of my responsibilities even as they hand off tasks on their own plates?
I heard this quote yesterday, "business strategy without execution is hallucination.”
Most hosting entrepreneurs value business strategy (and dream of the day they can focus solely on that aspect of their business), but they are also smart enough to know if someone does not attend to operational matters, their company will cease to exist.
The low barriers to entry in the hosting market means a lot of hosting entrepreneurs are bootstrappers. Wearing multiple hats is a critical part of being able to start the business.
The reason a CEO from a company like 1&1 can focus on “running the business" is because they have access to resources that most hosting entrepreneurs do not (ex. money, people, etc).
If there are even as little as 10 people in a company, one could focus on strategy and one could focus on operations, one could focus on…. If there is only one or two people in the company… well they have to wear multiple hats.
Perhaps this leads us to an idea of that investors may want to consider making micro investments in promising up and coming hosting companies?
Posted by: Scott Mendenhall | July 27, 2007 at 09:05 PM
I just finished reading http://www.fourhourworkweek.com - you might enjoy it. It's about learning to wear fewer hats and delegating everything to a virtual assistant in India. The author makes the point that delegation has more to do with your habits than your circumstances, which is true.
I used to work at EV1Servers. Since the company had hundreds of employees, you'd think division of labor would be a piece of cake. But somehow, as VP of Communications, I spent lots of time reconciling billing statements and answering support tickets about firewalls.
I wanted to minimize important customers' wait time, and it *seemed* easier to handle any and all requests myself than pass tasks along to someone more qualified and follow up later. But in retrospect, my wearing of any necessary hat was neither efficient nor scalable.
As for investors giving startups money so that they can focus on strategy? I'm guessing they'd probably rather fund entrepreneurs who manage to be strategic even as they juggle multiple responsibilities.
Posted by: Isabel Wang | July 27, 2007 at 10:26 PM
My current favorite phrase that addresses what you are getting at here is the idea of the CEO/founder working IN the business instead of working ON the business (a la Michael Gerber, http://www.e-myth.com/pub/htdocs/aboutmeg.html ). That may be a clearer distinction than "operating" vs. "running". Lately, I also like to distinguish between a business and a company. Not every business is a company.
The very tempting trap for small company CEOs is to follow the quick path of direct hands-on intervention "in" the technical aspects of the business as the many very real problems come up. The better path I think is focusing "on" building the systems that deliver the sales, marketing, delviery and support processes. The term I heard several times at HostingCon was "service delivery model". Focusing there is the only way to sane and scalable company growth.
In my own entrepreneurial adventure, I started my business as an experiment in survival, and only several years later started to really build a company. I so wish I was working on it instead of in it from the beginning. The tyranny of the urgent sidetracked me for a long time. This is where the multiple hats come in. The CEO needs to make sure everyone in the organization has the right hats on. And, more importantly, that the hats which only the CEO can where are not sitting on the ground.
Posted by: Dave Monk | July 28, 2007 at 02:44 AM
The tyranny of the urgent - I like that. It's so hard to separate issues that are immediately at hand from high level priorities. Objects in mirror are closer than they appear?
Posted by: Isabel Wang | July 28, 2007 at 08:31 AM