His lovely wife, Anna, started a business selling attractive reusable bags. Mitch was helping Anna cover a booth at the fair. Anna’s idea for the product and company came two years ago when she saw a need to design a resuable bag that pretty and strong.  EnvBags was born. It’s a great bag and we use it all the time.

It’s always fun to see a family business in action. Good luck, Anna and Mitch.

When my son was about 2 years old, I repeated an experiment that my grad-school economics teacher told me about. I offered my 2 year old some candy. Then I gave him a choice. If he chose not to have candy that day, I would give him two candies the next day. He went with getting the candy right away. I upped the offer: three candies. This went on to about 6 candies when he started to think about it seriously. I quickly cut off the experiment then (Mom would have killed me) and we had a nice candy break.

As a father, a real scenario of choice is the act of disciplining a child and suffering short-term grief and trauma with the hope that this is a good long-term life lesson. This can be a very grueling experience and the easy path (giving the kid what they want) is sooooo tempting.

Business is the same way; startups especially so. The pressure to move quickly and keep moving “up and to the right” is very strong. Getting momentum and KEEPING momentum feels paramount above everything. So when a decision to take a short-term hit for a long-term gain comes up, the decision is always harder than it should be. What looks so sensible on paper feels so counterintuitive to an entrepreneur.

But take that deep breath and be like a responsible dad: live with the temporary trauma and headache of a sobbing, pouting, screaming kid so you can have a well-balanced child in the long run.

So what’s the chart? That’s our monthly unique visitors: one of the key currencies for consumer Internet startups. The pressure to grow “uniques” is very strong. Recently at Boxxet, we decided to make some big changes to our site (improved algorithms, new page link styles, moving out certain types of content) to make it stronger and healthier for the long term. But there would be a big short-term hit.

One of the benefits of being experienced entrepreneurs was that we knew we had to do it. So we took a deep breath and took the hit. And so far, we are seeing the gains. Whew.

2. Evaluating Relationships
3. Conversation
4. Handling Difficult People
8. Giving
10. Saving
13. Debtor Responsibility
15. Practicality
16. Politics of Advancement
18. Positive Thinking
19. Personal Accountability
20. Setting and Achieving Goals

 I wrote a contributing piece on Venture Beat that makes the argument.  Check it out.

We had a great time.  We made some upfront decisions on philosophy, product, pricing, positioning and go-to-market strategy, but as in any “startup,” it did not go as expected.   Here are some highlights and lessons:

Clear Corporate Goals and Philosophy:

I figured the lemonade stand will help my son learn about cost of goods, the potential monetary profit of work, salesmanship, and responsibility.  I also wanted to do it because (1) I never did it as a kid and (2) I wanted him to get a taste of the entrepreneurship (see my line of work at my startup, Boxxet).

Maximizing profit was not our philosophy that day.  We wanted to learn, have fun and share our great product.

A Unique and High-Quality Product:

I’ve bought lemonade, hot cocoa, cookies and smoothies from kids all over.  I am a sucker for the stand and will stop every time to buy.  But I don’t often buy truly great product from a lemonade stand.  Yes, that is not the point (and why I always stop at stand), but I felt there was room for improvement.

The week before, we had made ice cream cookie sandwiches as a family for a party.  We had fun making, eating and sharing these desserts.  They were fun to make, easy to handle, delicious to eat and were a hit at the party.

It became clear to us that the ice cream cookie sandwich would be a unique and desirable lemonade stand product.

Product Pricing:

This was a discussion between my wife and I about this.  These types of sandwiches would go for $2-$3 at a store or restaurant.  I felt that the lemonade stand needed to keep a $1 threshold for someone to the stop the car and help the kid.  Also, I felt that we need to leave value on the table by giving more to the customer.  We looked back to our Corporate Philosophy and went with $1.

Of course, it was the five-year-old who nailed it when he said, “if they have money, it costs one dollar; if they don’t have money, it’s free.”

Go-to-Market Strategy and knowing when to change it

Our first plan was to market via cute kid and kid-created signage along a high-traffic road in the heat of the afternoon.  We abandoned the strategy after about 10 minutes.  In the end, I believed we would have sold our inventory, but hanging on the side of a busy road was not that pleasant and it wasn’t fun to watch 30 cars pass by without stopping (people are intent on getting from A to B when they drive).

Then we went to the local park where people were hanging.  While we thought we could sell stuff there, we did not want to “sell” to or bother people who are relaxing.  Once again, we turned to our corporate philosophy and we moved on.

So we did what my son wanted to do in the first place.  Sell in front of our house.  It was lower traffic but much more highly targeted: neighbors who were more motivated (guilted?) to buy.   Turned out to be a great move.  We hung out, brought out music, chairs and drinks, had neighbors hang with us and caught up with people who were walking and driving by.  We had access to corporate HQ for freezer needs and potty breaks.  There were a great deal of intangible value. 

Building The Right Team

We knew we had the back-office and operations all handled (mom and dad).  Once the people saw the product and price, they were willing customers. But we knew we had a hole on the sales side.  My son is a great closer but not a good opener.  He’ll engage in a great conversation once warmed up and the customer will want to buy.  But he’s not the “jump up and down and holler at the top of his lungs” type (pretty useful for a lemonade stand).  So this leads me to..

When to Hire Your VP of Sales

At one point, our ten-year-old neighbor came over to see what was going on.  He volunteered to help.  We quickly agreed as we just gotten to our final selling spot after unsuccessful attempts elsewere.  He hopped on his bike and started tracking down cars and bringing them to the stand.  We had our “opener,” some would call him a “hunter.” He insisted on helping for free but we made him take a commission (need to have a “Win Win”).

Relying on Friends and Family:

In a startup, you often rely in friends and family to help get the company started: financing, the first few sales, moral support.  No different here.  Our neighbors really put fuel in our tank.  One came over and bought seven (for his extended family who was having dinner later but had no dessert planned).  In fact, it turned out that two party goers would buy about half of our inventory.

The Sweet Feeling of Momentum

Startups are a struggle, but there is nothing like the feeling of momentum.  And we had it as people stopped, bought, and enjoyed.  We sold about 22 of these things.  After a few discounts, commissions to the ten-year old and paying $5 back to mom/dad for COGs, our son netted about $10.   My wife and I had a great time, we hung out with neighbors and I think our son learned something.

And, of course, we saved a few ice cream cookie sandwiches left over for us to eat for dessert that night.  We enjoyed our day and our treat, and that turned out to be a great exit strategy.  

Earlier today, he had a post titled When Does An Entrepreneur Need “Experienced Help”. Give it a read. I left the following comment:

From the wording of the question, I would have guessed that your friend has not had success working with entrepreneurs. The obvious clue was the judgmental “real smart ones that know when to bring [him in]“.

And his lack of success says to me that he has come into his COO/CFO roles with the wrong attitude. If I can rephrase the question as an entrepreneur with his similar wording, I may say this:

“I was interested in your thoughts on when experienced Series B executives realize they are part of an existing team and culture that needs to bring an additional perspective to the ones the entrepreneur and other executives have at the company. The real smart ones that understand know that they are bringing their experience to an existing table and are not the next great hope of the company.”

It is the very difficult job of the entrepreneur to create and the equally difficult job of the “experienced help” to come into a startup and have the entrepreneur and the rest of the team want to listen and follow. The “real smart” entrepreneurs do not roll over and the “real smart” experienced help do not expect a handover.

So how to avoid? Your advice to your friend is fine, but that may test the social interaction of the participants rather than their working style. While it does not always work, I try to set up a few business scenarios (from mundane to difficult) that we can discuss (say, how to launch a difficult product, how to turn around a difficult but loyal executive, the merits of a particular go-to-market strategy) and see how the discussion goes. Do we reach the same conclusion? Do we reach different conclusions respectfully? Does one person always give? Do we give build on top of each other or do we debate?

It is unlikely we will be friends, but we must become great business colleagues.

Bringing “professional” executives into a startup is the one of the most delicate stages of a startup’s development. I have not seen a consistently good best practice for this. If anyone else has, please share with the world.

• Leaders point the way
• Managers decides the route
• Leaders start the fight
• Managers calm the nerves
• Leaders pump others up 
• Managers help others grow
• Leaders say yes
• Managers searches for the yes
• Leaders favors far-sightedness
• Managers favors near-sightedness
• Leaders creates work
• Managers complete work

Organizations need both; precious few of us can do both.  If you can’t do both, look for someone who can be your counterpart.