I believe that early stage startups, or businesses looking to foster innovation, have needs (or rather that the group of people involved in the process, collectively, have needs). Whether these needs get met and how they get met day-to-day determines how successful a business will ultimately be.

Based on my personal experiences I believe there are 6 primary needs. So what are they?

[contentheading]The first need is the need for co-creation:[/contentheading]

People support things that they create, if you want to enlist people to a common cause allow them to be part of the creation process.

[contentheading]The second need is the need for decision-making:[/contentheading]

Business is not a democracy, progress requires someone to make the call and then for everyone to align. Decisions are best built on a foundation of mutual respect and there can be no hidden agendas.
Notice the tension between these two needs? Collaboration helps people feel vested in the process, but at the end of the day someone has to be in a position of mutual respect and make the tough calls or there’s no action?

[contentheading]The third need is the need for stability:[/contentheading]

Things take time, people need a period of stability to be able to focus on getting the job done. If  there’s constant change or new ideas keep coming thick and fast it’ll just disrupt people’s flow, lead to lack of progress and frustration for all.

[contentheading]The fourth need is the need for instability:[/contentheading]

Mix it up from time to time; question the status quo; look for ways to make things even better; identify new opportunities. Don’t get too inwardly focused on day-to-day execution or the next great idea will pass by unnoticed.

Again, notice the tension? People need stability to effectively execute, the vision, idea or direction can’t be constantly in flux, yet get to myopic on getting the job done and innovation grinds to a halt.

Now, while the first four needs relate more to execution, the next two are all about heart and soul.

[contentheading]The fifth need is the need for a compelling vision:[/contentheading]

Vision is the track along which the train rides, without vision co-creation runs amok and decision-making lacks a framework of reference and cohesion over time. Vision provides people with a sense of purpose to what they are doing. If there’s one thing that needs stability, it’s the vision of a business.

[contentheading]The sixth need is the need for an empowering culture:[/contentheading]

Culture is the fabric that knits everything together, it must provide people with a sense of autonomy, an opportunity to master what they do and stamp out internal politics. An empowering culture combined with a compelling vision provides all the motivation in the world for people to give their all to the business.

What would be the top 2 needs that you excel at satisfying? Does your business contain a balance of people to ensure all 6 get meet at a high level on a day-to-day basis? Are the needs getting met in a positive way that’s good for the individual, good for the business and good for the world at large?

In July 2004 I was Chief Technology Officer (CTO) of Versant, a medium-sized software company, I’d been there 8 years, first joining their European organization and then growing to the point that I transitioned in early 2000 to the headquarters in the US. Four years later I found myself unchallenged and de-motivated. I needed a change and so after a three-month transition I left that October. I had no idea what to do next, continuing my career and going to work for a bigger software company just didn’t grab me, I needed a new direction, something that would stretch me.

Well, during my transition, Manish Chandra, at that time Versant’s VP of Marketing, asked me if I’d help gestate an idea he’d been toying with since earlier in the year. He’d pulled together a group of people to meet at his house Saturday mornings to kick it around. That was the beginning of Kaboodle.

In January 2005 Manish and Chetan Pungalyia, our other co-founder, committed fulltime to Kabooble and we were off. We moved into Manish’s garage and spent the first 4 months refining a prototype to prove we could build the underlying technology behind the Kaboodle concept (in those days we were Chaboodle Labs) and fundraising.

Everything came together in May as we closed $1.5M in angel funding and started building the Kaboodle site for real, the 3 of us plus Chetan’s cousin, Alok, who’d joined a month earlier.

Our alpha site was ready that September and as we continued to build the site and the team, we planned for our official ‘beta’ launch and next round of fundraising (in a startup you never stop fundraising). Somewhat last-minute we decided to launch at the Demo conference in February 2006, a high-tech showcase event. You can see Manish’s demo pitch here:

After a successful launch and with our fundraising close to closing I headed off to Colombia for my ill-fated paragliding trip.

Well, my accident took me out of the business for 3 months. Thankfully we had enough critical mass of people (by this time there were about 9 of us in the company), that my departure didn’t completely derail the business. However, fair to say it probably took until October that year for us to regain our direction. End of 2006, going into 2007, was a dark time for us as we faced the need to raise additional money, but lacked the business results and compelling vision to build a strong story for new investors. Our original investors, whilst very supportive, wanted to see growth as proof we had a real business. And so, in October we got real about what it would take to be successful, what had resonated with our users and what we were all about. The holiday season was upon us and since our chosen niche was in the e-commerce space, if we were going to make it work, now was the time.

Solid execution through the end of the year gave us the momentum to work with our existing investors to extend our financing, but come end of January we were out of cash and out of options. We either closed the extension to our financing or we closed the doors. Thankfully, we got the commitment from our investors; although Manish still had to go pick up a check from one of them so we could pay payroll prior to the financing itself closing. That was a close shave.

From that low, we continued to focus on our core business and of course fundraising, come May 2007 we were deep in discussions to finalize the terms for our next round of funding with an East Coast Venture Capital firm. Then just as we were finalizing our financing in New York we got a call from Hearst Corporation, they were interested in talking to us about an acquisition. From that first meeting things snowballed and by August, Kaboodle was acquired. Myself and Manish stayed on and built Kaboodle into a top 150 website in the US with over 16 million visitors a month, but, after 3 years post-acquisition it was time for me to move on to find my next challenge in life.

In the process of building Kaboodle I have learnt a lot about what it takes to start a company, build a team and make a success on many dimensions and since I’m taking a bit of time out it’ll give me a chance to reflect and capture my thoughts so I can share them with you all.