Accounting for Startup-ers

For most start-up leaders, accounting is low on the priority list. After all, you have product, hiring and all of that fun stuff. But don’t forget: cash is king. You must understand how much of it you have so you can make informed decisions for product and hiring. 

The Good News: This isn’t the boring accounting you slept through during freshmen year. Real business accounting is actually really interesting, and when done right, incredibly powerful to help you grow your business. 

How and when do you start with accounting? Let’s break it down:

1. Start as soon as cash is involved

If you are hacking away at a software product and haven’t bought or sold anything yet, it’s too early. But as soon as you start buying or selling, you need to be tracking those numbers like a crazed sports fan pouring over Fantasy Football scores.

2. Think of it as $ in and $ out

Your business is made up of cash in and cash out. You sell and buy stuff. You send invoices to customers and pay vendors. So, that is the kind of stuff you need to be thinking about and tracking. When you write a check to pay a contractor, will you remember how much you paid them and why? Yes, if you account properly.

3. Get a new friend: Quickbooks Online

I have a close relationship with good old Quickbooks Online. This $27 per month cloud software from Intuit handles everything from invoicing to payroll to bank reconciliations. As soon as cash gets involved in your business, grab a Quickbooks Online subscription. 

4. Build out a Chart of Accounts

A Chart of Accounts is essentially a list of all of the ways that you spend money and make money. There are Salaries, Facilities, Office Utilities, Service Revenue, etc. You can use each of these broad items to categorize your revenue / expenses and understand which parts of your business are the most expensive. For example, a few items from the influnencers@ Chart of Accounts include:

5000 Salaries, 5010 Contractors, 5040 Promotional Goods, etc. The number next to each topic is just a handy way to quickly reference it. 

5. Break your business down into departments

As you grow, you’ll want to know how much it costs to sell vs. how much it costs to build product and how much you spend on office supplies. To do that, we break the business down into different departments, referred to as “classes” in Quickbooks. Your executive team should all sit down to think these classes out together because it is an excellent way to keep everyone on the same page with how the business is structured. For example, I sort the influencers@ departments into:

G&A, Sales, Service, Product, Account Management. Boom, simple. Everything I spend money on is for one of those five areas. 

6. Get an accounting mentor

When I first joined influencers@, I barely knew anything about real business accounting and our Quickbooks looked like a scene from a horror movie. Through Northeastern’s IDEA program I got connected with Ed Jaworski from SMB Partners who together with Ryan Durkin taught me everything I know about how to leverage Quickbooks.

7. Get it right the first time

Figuring out these categories and setting up Quickbooks is confusing. The worst thing to do is mess it up the first time and have to fix all of your old transactions months later. I’ve been there – it’s a scary place. Do your research, grab an accounting mentor and get it right the first time. 

For any Boston entrepreneurs who are reaching the point of needing to understand basic business accounting, feel free to shoot me an email – I’d be glad to help!

The Little Details

How fast do you think I can bike from my house to the influencers@ office? Turns out it’s 8 minutes and 51 seconds. I started the timer while standing in front of the house and stopped it when arriving in front of the office. However, that time doesn’t tell the whole story.

Sure, it did take me 8:51 to go from door to door, but is that the time that I care about? Probably not, because we need to take into account turning off the lights, picking up my bike, putting on my helmet, locking the door and going down the stairs.

These are the “little details” that we often overlook, yet they play a key role in making decisions. If I based when to leave on 8:51, I’d be late every day. If I was getting paid for my time and I overlooked those details, I’d lose money. When it comes to business operations, it is critical that we look at the details and account for them in our cost and time projections. In a real business, the small intricacies compound and have a magnified effect.

The People Roadmap

Every product needs a roadmap: that cool chart that CTOs and Product Managers use to explain how a technology will get to market, complete with important features and timelines. What if we take this roadmap concept and apply it to people?

A few weeks ago, I locked myself in the conference room at influencers@ and created a “People Roadmap” for each of the members of my team. Each Roadmap outlines:

  • Goals: What do they need to accomplish and when? This is how their success is measured.
  • Core Responsibilities: What are the most important things they should be working on?
  • Daily Focus Areas: What should they be thinking about outside of their core responsibilities? 
  • Skills to Develop: What should they learn and improve on? Hard skills (PHP) or soft skills (writing).
  • Strengths and Areas for Improvement: Where are they strongest versus where are there opportunities for improvement?
  • Progression: What are their next steps in our business? Ex: Designer > Creative Director > Chief Creative Officer.
  • Notes: What else is worth noting about the teammate? Qualitative description of what they do best, how they work most effectively, etc.

Creating these Roadmaps takes a lot of thought – it forces you as a leader to analyze your team and gain a deeper understanding of your people’s abilities. Once the Roadmaps are created, the next step is to schedule meetings with each team member to walk through the document, get their insight on it and collaboratively edit it (this ensures that both you and your teammate feel ownership for the process). 

Every team member should keep their Roadmap close and reference it often. This allows everyone to always be on the same page with what their goals are, what they should be focusing on, and how their success is being measured. 

For full transparency, take a look at my Roadmap here.

How to Learn to Code

As the former President of the NU Entrepreneurs Club, I would receive an email almost daily from someone in the community looking for a developer to join their team. Now as COO of influencers@, I recently had to send those emails myself to recruit a new technical lead for our product and saw how challenging it is if you don’t have technical skills in house. That is what pushed me over the edge to learn back-end coding. I’m now finishing my first web application built in PHP. It was hard, it was scary, but I taught myself to code, and you can too. Here’s some advice to get started:

1. You need a real project

In order to teach yourself to code, you need some sort of tangible problem to focus on. You can’t just go into the project saying, “I want to learn PHP.” That won’t work. What works is, “I’m going to create a web-based grocery list that reminds me when to pick up milk, using PHP”.

2. Write out what you want to do

Coding is all about logic and process. You are essentially writing instructions, explaining to a computer how to do something. So before you try to code it, write it down in plain english. For example:

  • Have a form that asks the user what their favorite color is.
  • Take whatever text the user enters into the form and display it on the page.
  • Make that text blue.

3. Start with the basics: HTML

HTML is the fundamental language of the web. It is what your web browser (ie Google Chrome) uses to display websites. You will use HTML to figure out how your website will look. Focus on that for now before you think about functionality. Make text display on the page. Make the text blue. Put it in the center of the page. That stuff is easier… get it down first.

5. The Internet is your best friend

The Internet has absolutely every piece of information you need to learn how to code, and it’s all free. When you want to know how to code something, just type it into google. If you’re like me and don’t have Internet at home, practice coding at a local cafe with Wi-Fi. Once you learn enough, you won’t need an internet connection to code.

6. Take it one step at a time

The thought of coding a big web application can be really daunting. Don’t think like that – take your project in small chunks. Your only objective is to put blue text on the page. Once that is done, then you can think about centering it.

What you need to get started:

  • Computer with an Internet connection
  • Notepad/Textedit or a basic code editor like Sublime Text 2 (also free)

What you should learn (in this order):

  • HTML
  • CSS
  • jQuery
  • PHP / MySQL (or another back-end language like Python or Ruby)
  • Frameworks like Codeigniter

What you should do right now:

To start, Google HTML and start going through a tutorial. Open Notepad or Textedit and follow along. Save your file as a .HTML file and open it in your web browser. While tutorials are good to read and simulation sites are handy to practice syntax, they alone will not teach you how to code. The best way is to get your hands dirty and try building something yourself from scratch.

Good luck and feel free to shoot me an email if you get stuck.

No More Internet

On Sunday June 3rd, Drew D’Agostino unplugged the router and cable modem in our apartment and put them in the closet. Since then, we’ve been living without Internet at home, and surprisingly, it is fantastic. Here is the story.

My hands were literally shaking. I clenched my fist and wanted to slam the table. I was bored. There seemed to be no distraction, no comfort. I just sat there, helplessly, unaware of what to do.

This was the feeling (and my real reaction) during the first few hours of unplugging the Internet. While it looks pathetic, it is the result of a society and generation that is constantly plugged in. We cannot go for too long without checking Facebook, tweeting/sharing something, opening an app or reading an article. The Internet is an incredible tool and the defining aspect of our generation’s technical comfort. It gives us unparalleled access to information, makes it effortless to communicate and can provide endless entertainment.

But it also has a dark side: it allows us to get really comfortable wasting a lot of time. We flock to our screens to “browse” the web… that’s a fancy way of saying “do nothing.” Hours can pass by that might feel like we are doing something but in reality we didn’t think, didn’t produce… we just sat there staring at people’s LinkedIn profiles. Additionally, consider how much the Internet can distract us from projects. Whether I am writing or coding, the lure to click a link or check Facebook is powerful. Truth be told, I might stop every few minutes to be distracted by something in my web browser. That’s why tools like SelfControl for Mac were created – to literally block people from accessing sites like Facebook when they are trying to study for finals.

Not having the Internet at home has forced me to discover other things to do. I socialize, ride my bike, write and think more. I don’t aimlessly check my email because I now understand that it is irrelevant whether I respond now or in a few hours for non-business messages. When I am at the office and have Internet access, I spend much less aimless time on social networking sites because I value my time with the Internet more to get stuff done.

Put simply, not having the Internet is allowing Drew and I to break a very bad habit. It brought us to the realization that the constant plugged in nature of our generation is causing some serious issues. In many ways, it is making us less productive and less smart.

What if we really need to get online?

First off, we can use our phones. But using your phone for the Internet is a pain – it is slower and the screen is small. Because it is less pleasant, it discourages us from using it unless we really need it. We spend less time watching silly YouTube videos, but we can still check an email or look something up if we need to. If we urgently need to connect on our laptops, we can go outside to a local store with wi-fi. Again, this is an inconvenience, so it discourages us from plugging in until we legitimately must.

The Results

We are happier. We exercise more and spend more time outside. We don’t feel guilty about wasting away a day staring at nonsense. We don’t overwork ourselves, yet we get much more done when working because we are less tempted by online distractions.

What can do you do?

Well for one thing, you can try to disconnect a bit. Don’t text constantly or open an app every time you need something to “do.” More so, you can consider embarking on the same journey as Drew and I did and cut the cords to your Internet. It’ll be hard and painful, but it might be one of the best things for you.

Ultra Reliability

There is a certain breed of people who are what I call “ultra-reliable.” They have an innate knack for getting things done, and when you assign them something, you can sleep well knowing that it’ll be complete on-time and with the utmost quality. As I sat in a meeting last week with Mike Irvine, COO of PXT Payments, I was reminded of how valuable these people are to work with.

“We’ll need the app done by August 15th to meet the outlined deadlines, and development must start now” declared Mike as we reviewed the detailed schedule of an exciting update to PXT’s mobile payment app. Mike was organizing a team of developers and was sharing a meticulously designed Gannt chart as he discussed how each department needed to provide deliverables for the complex development process.

When you’re running a real business, there is an immense amount of intertwined moving parts that depend on each other. Development needs input from finance and marketing. Project Management has to talk to sales and vice versa. Things start to get very complex, very quickly. The technology world demands people who can handle engaging with a multitude of stakeholders of different disciplines, and coordinating between those people is challenging. 

As Mike explained his timeline and how he was rallying the team, it become clear that he is a member of that rare group of people who get it done. As a COO, he needs to be communicating with everyone in the business and constantly stepping into every department, even when it isn’t his expertise, to ensure deliverables are completed the right way. I see the exact same thing on a smaller level as COO of my start-up company. Mike and I are pulled in every direction to assist members of our teams and are relied on to deliver every time. 

There are a few other people I know that I can always rely on to get things done. Matt Bilotti is one of them. So is Cory Bolotsky. These folks are the ones that are destined for senior leadership positions like Mike has… because at the end of the day large teams can rely on them to make it happen under pressure. 

Why Business Students Make Great Developers

If there is a gold rush equivalent in the entrepreneurship world, it is without a doubt a hunt for developers. One surprising place where more high quality developers are starting to appear is in business schools. One of the best business student developers I know is Northeastern senior Drew D’Agostino.

It was the Husky Start-up Challenge (HSC) of fall 2010 at Northeastern University. Third year student Drew D’Agostino was pursuing a new website idea where frantic gift givers could find talented writers to craft a custom poem for their significant other and deliver it online. “I’m trying to figure this out in PHP” Drew explained to me as I hovered over his table during the first HSC Boot Camp. As a skilled marketer and salesman, Drew was exceptional at dealing with people but he didn’t have much experience with web development. Every evening he was camped out in the library with his laptop open, picking apart websites and hacking together a page of his own. By the end of the semester long competition, Drew had built GoRomeo.com and become his own “technical co-founder.”

Fast forward a few years and now Drew is an incredibly competent web developer with expert skills in both back and front end development. He is constantly leaning new technologies and each project he embarks on gets more impressive. In fact, he even wrote a tutorial on the subject.

What makes Drew so special is that he has a deep understanding of people before code. He can talk to customers and translate business requirements into functions. He appreciates design because he knows how important it is for selling a product. So the code he writes and products he creates all excel in both function and user experience. Most importantly, when Drew talks to colleagues, he doesn’t default to “programming-speak.” He knows how to explain technical concepts to non-technical people. This is absolutely critical: it makes him easy to work with, communicate with and ultimately trust. I’m proud to call him my friend and learn something new from him every day. 

As I continue my quest to recruit world-class technical students and grads to join the team at influencers@, I use Drew as a model. He has the ideal mix of qualities that make for a wonderful teammate and technical lead. This new hybrid developer with both technical and business acumen is going to start to become more and more desirable. While you may want to get in line to hire him, for now he is embarking on a mission to unbug the world. 

Business Assassins

“Every business should have a team whose entire purpose is to destroy the business”

Sounds a bit insane, but it actually might be one of the more brilliant pieces of advice I’ve heard as I sat at dinner with PXT Payments Chief Marketing Officer Rivka Tadjer (an influencers@ client) last week. Considering the fast pace of today’s business climate (especially in technology and entrepreneurship), if we want to survive, we need to innovate and find new ways to delight our customers before our competitors do. However, many businesses don’t do that. They get comfortable with products or services that people liked last year, and assume they will continue to work in the future. Consider Blockbuster’s bust – when Netflix first came out, Blockbuster management didn’t think much of them.

Now suppose Blockbuster had a crazy internal destruction team. Let’s call them the assassins. When brainstorming “what might mess up our physical retail locations?” online streaming might have made its way into the conversation. The thing that could “destroy” your current business might actually be your next product or service release. 

Even for earlier stage start-ups, we need to constantly be thinking about how our business model and product can evolve. We start early be leveraging lean principals to continuously user test and iterate rapidly (Jason Evanish is my go-to expert there). While it might not be feasable (especially at the early stages with limited capital) to have an actual team dedicated to “business destruction”, you might consider implementing the following at your venture:

1. Make it part of the culture

Everyone on the team should always be thinking about innovating and identifying potential threats to the business. Consider encouraging openness and collaboration where people are comfortable enough to say “look what this other company is doing… this might hurt us, how can we beat them and do it ourselves?”

2. Apply pressure

Blockbuster must have not felt much pressure or anxiety to address Netflix’s entrance and rise in the market. We need to apply pressure that says to teammates “while we are doing a good job now, this won’t be enough to last forever. Lets push harder.”

One thing is for sure, I will be taking Rivka’s advice and making it a part of my regular brainstorming meetings at influencers@. We will always consider what might destroy our business, and align ourselves so potential destruction becomes profit.

The Importance of Pressure

The best learning takes place under pressure. While you can observe someone making a mistake and learn from it, it is not nearly as effective as making the mistake yourself. Consider the following challenge I encountered back when I was a 14 year old computer repair technician:

“I can’t believe this thing won’t turn on” I said to Jeremy Blum, my business partner. We had built our first computer for a customer that wanted a custom gaming desktop and it wasn’t working too well… in fact it wouldn’t even turn on. The sleek red case glistened under the glow of the florescent lights in our office as Jeremy and I hovered over the desktop with the side of the case ripped open. “It might be the CPU, we can try that again” suggested Jeremy. “We’ve done that like 3 times now… I honestly just don’t know how to fix this. What are we going to do? It costs $1,300!”

This was one of the biggest challenges we had in our computer repair business: a customer had a problem and we didn’t know how to fix it. In fact, sometimes we broke it more. We were only 14, so $1,300 was a small fortune back then. There was tremendous pressure to perform… there was nobody to bail us out if we did not. In the end, Jeremy and I sat in that office and tried part after part until we eventually got the machine up and running.

If we had a boss that was ultimately responsible for servicing the customer and fixing the computer, Jeremy and I would not have felt that massive pit in our stomachs. It is that feeling though that forced us to learn so much. This is the essence of the learning process – pressure forces you to figure it out.

This is why I am a big believer in responsibility – if you want to learn, you need ownership and pressure. Whether you succeed or make mistakes, you are held accountable. This philosophy is the cornerstone of the culture I was proud to build at the NU Entrepreneurs Club and now at influencers@. It makes things harder and scarier – but pressure is an absolute must if you want to truly learn.

You Don’t Know What You Don’t Know

Like many recent college graduates, as I finished my last semester this past May I felt like I was on top of the world and qualified for anything. After all, I had a great GPA, led a massive student club – the real world felt as though it would be in the palm of my hand.

Here’s a realization I’ve come to over the last 3 months: college DOES NOT translate too well to the real world. In fact, college graduates, you’ll be shocked at how unqualified you are for the real world. Unlike school, there are no grades which means it isn’t immediately clear how you are performing. If you mess up on a report, you don’t just get a scowl from your professor but instead could face getting fired. The expectations are enormously higher because generally you are dealing with someone else’s money while in college, you are dealing with your own since you pay to attend.

Especially if you are in the entrepreneurial world, the fact is that taking on jobs at businesses with REAL responsibility is, well, really hard. I was quickly humbled my COO role at influencers@ because I came in thinking it would be a lot easier than it actually is. Don’t mistake the sexiness of a title or company for relaxing… any real business that makes money every month will be challenging and also rewarding.

Schools like Northeastern take a good first step in preparing their students for the real world with co-op. For kids that are currently still in school, consider these pointers to prevent the real world from smacking you in the face when you graduate:

1. Get an internship. Right now.

Students have to do internships. I don’t care if it means taking hours out of your social life or having to work an on-campus job as well. You need to be in real companies that give you real responsibilities. I’m biased, but I recommend interning at a start-up where your desk is close by to the company leaders.

2. Student clubs are good, but not the real world.

Taking on leadership roles in clubs is a great first step for students – highly encouraged. Work your way up to a top position: it will give you confidence and great experience. However, it is not the same as the real world because there isn’t as much pressure. You need to compliment student group leadership experience with real world, revenue-generating, internships with a boss.

3. Talk to everyone.

The more people you meet, the more insight you will get on what the real world is like. Cold email senior executives at start-ups if that is your thing, or your favorite musician if that is your thing.

4. Start something.

Work on a software project or start a non-profit. Entrepreneurial ventures like this give you real world experience with minimal risk and not much to lose.

Finally, this stuff has to start FRESHMEN year. Not junior or senior year. Get started now, you’ll be glad you did.