Open up your mind and say, ahh...

Job number one as an entrepreneur is landing the first 10 or so core employees. You need to have a clear idea of the kind of talent you want to attract, because this core group sets up your employee brand and your startup’s DNA. As a startup, you’re unproven. You need to have a clear sense of the different types of people you need in the company and how to unify them under a common culture with its own customs, beliefs, and procedures. You also need to be a leader who’s easy to follow, with a clear mission and a strong sense of the results you want to achieve. Your employee brand is the kind of people who represent your company’s values, work style, and personality.

Thinking in terms of employer brand and employee brand can be a powerful strategy for creating a culture that champions its people and helps them flourish. Having a strong internal brand can help grow your business, because you’re more likely to attract the best talent and everyone will feel challenged.

Creating A Growth Culture

You’re not trying to run a social club. Your goal is to win in the market. But to do that you need to create a special culture.

Make sure that you hire people who have skills, resources, and knowledge that you don’t have. Even the most well-rounded entrepreneur isn’t good at everything. You’ve got to figure out your shortcomings and fill the gaps with team members who have those aptitudes. Otherwise, it is unlikely that you’ll be around after the start-up phase. Make sure that you have people who can help you land business and bring in revenue–critical tasks in the start-up phase.

You need to create a workplace with the right amount of challenge and expectations, the right amount of freedom and control. You want everyone to be a growth agent empowered to do her job and help grow the business.

Studies show that the worst work environments are those in which people have little say over their day and always have to follow someone else’s orders. They feel like a cog in a slow-moving corporate machine and consequently don’t do as well as those who work in companies where people have more freedom to decide how to handle projects and assignments. According to these studies, money isn’t the key driver for most people. It’s working in an environment where people have the ability to grow and develop their potential.

Radical Creativity

How do you create a dynamic, innovative culture where it’s everyone’s job to come up with ideas and grow the business?

First, create a culture where it’s OK to fail. The most innovative people are the ones with the most ideas. Most of them are bad ideas that fail. Some companies are even rewarding risk-taking that fails with employee-recognition bonuses and trophies, or setting aside time in the week for new idea generation.

Second, set up the offices and common areas so that there is lots of mingling in the workplace. Contrary to the image most people have of the solitary inventor or entrepreneur, it turns out that most breakout ideas don’t come from loners. Innovative ideas aren’t solitary things. Most successful ideas come from people interacting with each other in environments where ideas are discussed and shared.

That’s why there is a long history of simultaneous inventions. Transformational ideas like the electric battery, the telephone, and the radio were all made by several people who came up with the same idea at practically the same time. Most of them didn’t even know each other, but they were plugged into what was happening in their industry and influenced by similar ideas, what some researchers call the hive mind. That’s the kind of culture you want to create for your business, with all your people, not just the senior people, reaching for innovative ideas.

You want to create a company where people are dying to work because it’s not just work–it’s fun and things are happening. To win the war on talent, many Silicon Valley companies offer elevated perks like free gourmet lunches and on-site haircuts and dry cleaning. You can take your pet to work at some companies; game-maker Zynga will even pay for pet insurance. (The company is named after the CEO’s dog, after all.)

Resist the Copycat Syndrome

Groupthink is when everyone in a group starts thinking alike, and it’s alive and well in the business world. Most entrepreneurs generally resist group-think and the copycat syndrome, but they can creep in as your company expands. People in the same company share so many of the same influences and belong to so many of the same clubs and organizations that they can even start to dress alike.

Don’t try to copy the competition’s culture no matter how successful they are. You want to stay on top of what your competitors are doing to be competitive, but you need to create your own company customs and ways of staying in the lead. The best way to be a leadership brand is to harness the creativity and business thinking of every member of your diverse organization. That can only happen when you encourage and reward out-of-the-box thinking and new ideas for making the business more competitive.

The business world is dynamic, so you have to be strong with your external customers and with your internal customers–your employees. Don’t leave an opening for a new entrepreneur to gallop on the scene with something new and steal away your best talent. You want your company to be the one everyone is clamoring to join. To do that, you need to:

· Make everyone a corporate entrepreneur who is a growth agent for the company.

· Encourage innovation and ideas at every level, especially the frontlines.

· Create a culture with customs and rituals that are special to your company.

· Make sure all employees know their objectives and key results

· Be easy to follow as a leader.

Image: Flickr user dvidshub

This is a big deal, as the firm’s philosophy is to focus on only the 10 or 15 companies it thinks are going to matter in the long run. (See: Facebook, Airbnb, and Groupon, among others.)

Back in December, we told you about Belly, a Chicago startup that created a new digital-based loyalty program for small businesses. At the time, it was just one of a jumble of startups crowding into the local commerce space. Today, though, Andreessen Horowitz is announcing it’s putting $10 million into the company. That’s notable since the firm’s philosophy is to focus on only the ten or 15 companies it thinks are going to matter in the long run. (Facebook, Airbnb, and Groupon are all in its portfolio.)

All of which leads to an important question: How did a startup, that’s barely a year old, that only has 1,400 customers, and whose founder is a first-timer become in a mere 12 months a company that the experienced hands at Andreessen Horowitz not only believe is going to be a game changer, but will be a leader in its class?

Would-be super startups, listen up:

Choose a big problem

Local stores are in a quandry. Customers can walk into their stores today, take a look at what they’ve got, and then, thanks to smartphones, figure out if someone else has their stuff for cheaper. “The Internet has enabled incredible transparency on pricing,” Andreessen Horowitz partner, Jeff Jordan, who’s joining Belly’s board, tells Fast Company. “There are a whole bunch of models that are providing pricing pressure, particularly to small merchants.”

If stores can no longer compete on price, they have to compete on something else. Both Belly and Andreessen Horowitz believes that means relationships–giving people a reason, other than price, to keep choosing particular merchants over cheaper alternatives elsewhere.

Don’t boil the ocean

There are myriad ways of strengthening the merchant-customer relationship, but Belly founder Logan LaHive, who started working on the business a year ago, didn’t try to tackle everything at once. Instead, he chose to focus on just one aspect: loyalty programs.

He’s come up with a system where merchants can get creative with the kinds of rewards they offer. It’s no longer the generic “buy 10, get one free.” Rather, merchants can choose to offer something unusual they think their customers would actually like. Some actual examples: A sandwich store will name a sandwich after you. A grocery store will let you cut in line. And a comic book store will let customers who make 50 purchases punch a store employee in the gut. (We’re assuming that’s been cleared with OSHA.)

But build in the foundation for a wider play

The Belly service is powered digitally–through an iPad in the merchant’s store and iPhone and Android apps for customers. (Customers without smartphones can track their purchases on a paper card.) That means Belly has a built-in launching pad for adding more services later that can further fuel the merchant-customer relationship–and further solidify its appeal to merchants.

“A by-product of what Belly is doing is putting a connected computer into soon-to-be tens of thousands of small merchants,” Jordan says. “We think that has very interesting potentials for strategic applications down the road.” (He declines to elaborate, though, saying, “We don’t want to telegraph where we’re going.”)

Gain traction quickly

Once investors bet on you, they’re going to expect you to be able to scale faster than you ever expected. A lot of the technology and ideas that are being developed today aren’t defensible on their own. It just doesn’t take that long to build a lot of the apps coming into the world today.

So investors are looking for other indicators that you’re going to be able to own your market. Getting rapid uptake is one slice of evidence that you’re the person they’re looking for. It means that you’ve developed an offering that’s appealing (as opposed to one that’s just OK or, worse, doesn’t actually work very well) and that you’ve figured out how to get people to adopt it rapidly.

Belly has 1,400 merchants using its system so far in six cities, with two more being added today. That’s impressive considering, again, that the system was barely a flicker of an idea 12 months ago. “We think the most important thing in this market is to be the first mover and to get out there fast,” Jordan says. “These guys probably added more merchants last month than any of the competitors have in aggregate.”

Take up residence with some of the hottest investor-operators of this generation

LaHive, who previously was in charge of new business at Redbox, got himself hired as a Founder-in-Residence at Lightbank, the venture firm belonging to Eric Lefkofsky and Brad Keywell, the original investors in Groupon and former entrepreneurs themseles. As part of the deal, he got to move into their offices and hammer out his idea while sitting mere feet away from Keywell.

LaHive says that helped him move faster. There were various things about getting a startup off the ground that he didn’t have to figure out on his own. He could just ask.

Plus, his proximity to Keywell and Lefkofsky gave Andreessen Horowitz confidence to invest in the otherwise unproven first-time entrepreneur. “Brad and Eric grew Groupon out to hundreds of thousands of merchants incredibly quickly,” Jordan says. “That DNA is critical in this model.”

Image: Flickr user Oregon State University

E.B. Boyd is FastCompany.com’s Silicon Valley reporter. Twitter | Google+ | Email

It’s been baffling and aggravating to watch the tech press gnash their teeth about Facebook’s $1 billion acquisition of Instagram, a service that lets you add old-timey filters to your camera phone pics, and share them with friends. This thick-headed post on CNET–titled “Facebook Buys Instagram…But For What?”–is a good example of the genre. In it, the author notices that other, even less savvy tech pundits seem to think that Facebook bought Instagram either for users, a better mobile presence, or to squash an upstart competitor. And then, she procedes to torch each one of these straw men. Instagram’s users and mobile mojo don’t mean anything, because they’re not monetized. As for competitors, the writer, in essence, says, ‘Who cares about filters? I bet most people don’t.” Case closed! This Instagram thing is the worst idea in the world, the symbol of a bubble in the making. As if there were no other reasons for Facebook’s move.

But they do exist, and they have everything to do with design and product development.

People take tons of pictures on their smartphones. Why do so few get shared?

In our recent coverage of Facebook, one thing is clear: The company views itself above all as a design-driven company. You can hate them for their actual designs–given all their talent, it really is surprising that Facebook isn’t better than it is. But they do think of themselves as user-minded and hyper-focused on product improvement. Therefore, you have to look at their purchase of Instagram through the lens of: How does Facebook think Instagram will improve their product. If you fancy yourself a great product company in the vein of Apple, that’s your lens, always.

Instant artiness, thanks to Instagram

From that viewpoint, Instagram’s accomplishments start looking pretty impressive. Consider these two competing facts about social-networking and picture-taking:

1. People take tons of pictures on their smartphones. But almost none of that content gets shared.
   
2. The thing we all love most on the Internet is seeing other people’s pictures.

Instagram stepped into the gap. They managed to get people to share more of exactly what their friends want. And they did it simply by providing filters that allow people to turn any crappy old camera-phone pic into something resembling a snapshot by William Eggelston. In other words, Instagram is tapping creative instincts while eliminating the effort required to create something good. They’re satisfying our social-curiosity with pictures, helping us grab hold of fleeting moments that we might never share otherwise. They’re tapping into user emotions.

Moreover, by allowing users to feel as if they’ve created something worth sharing, Instagram is helping users create an image of themselves as they’d like to be seen. They’ve turned the act of picture-taking into a performance, whose message is: Look how cool my life is. Wasn’t that what Facebook did at one point, with all those Like pages and interests? And when was the last time you looked at Facebook and said, ‘Wow, this person seems really cool?” Through dull designs and a straight-jacketed experience, the ability to convey who you are has leeched out of Facebook. Timeline was an attempt to solve that problem, but it’s not a magic bullet. Robert Fabricant, of Frog, just put that point to Inc. quite well:

I think Facebook is getting a little nervous about Pinterest, for instance. There is a new generation of meaningful social networks that are all about personal identity curation. Like Pinterest, Instagram understands that the future is photo-driven, and that those photos are about style and moments. Facebook is playing catch-up. It can either become this fundamental layer, the glue that holds this world together, or they can start creating better environments for users across the the board.

We’re now at a point where technology in and of itself isn’t all that interesting (even if the tech journalists only seem to write about them). When it comes time to buy an iPad 3, most people don’t care how fast it is; instead, they judge it by how fun it is to use. Features don’t matter nearly as much as user-experience. And here’s one stunning metric about how much users love Instagram: The app has a 5 star rating in the app store, on 70,000 votes. Have you ever seen a rating that high?

Tres, tres cool. Thanks to lots of filters.

That says great things about what Instagram has done so far. But the real question is how it will evolve, and how it could improve Facebook’s core product. Again, as Fabricant says, “There are so many possibilities for how Facebook could use Instagram. It’s not hard to imagine how good it could be. Then again, you never know.”

The app is great because it is in such a simple stage in its development. It’s still not clear to me that they can improve that experience while dealing with the inevitable complexity that comes with scale–and there are worrying signs that Instagram won’t be able to do it, including clunky sharing pages and fussy UI details that seem far more complicated than they should be. Moreover, Facebook doesn’t have any track record of being able to absorb other companies and use them to improve their core offering. (This has always been a guiding strength at Apple, from its purchase of Steve Job’s Next operating system to, more recently, Siri, which went from being a surprise acquisition to a main marketing point with blazing speed.)

I’m not saying that the $1 billion price tag was fair: I do agree that the Valley is capable of burning money in ways that defy all common sense. Cash flow is the ultimate judge of how good a company is. But I am saying that viewing the deal simply through the lens of monetization and competing features is a good example of how tech journalists, tech investors, and even tech companies simply have no idea how to absorb design and product development into their world view. Users don’t give a crap if a service is going to make decent margins in the future. But they do care about a product is fun to use. And that is what ultimately makes a company great: It has to make great things.

Facebook has made design a part of their DNA, if their recent hiring spree is any indication. But we don’t know if they’ll be able to draw the best out of their own talent. Can Instagram help inspire them to do better?

All photos by yours truly.