BMA Marketing’s blog

Editor’s note: The following guest post is written by Glenn Kelman, the CEO of Redfin, an online real estate broker.  His industry went into recession a year ago, so he’s had a little more time than most startup CEOs to think about how to deal with the current downturn. Below is his advice to his fellow entrepreneurs.

Startups can be the most conservative organizations in the world. We spend so much energy nurturing our delicate egos against naysayers and self-doubt that we can hardly admit mistakes. This is especially true of first-time CEOs. Thousands of new web companies were born in the last few years, and many of us just got the job.

We set off with the same directions: tackle a big problem, listen to customers, work hard, pinch pennies, hire slow, fire fast. Still good advice. But I think we’ll have different advice for one another once we’ve come through this downturn, about how we had to change to survive. Since real estate crashed before the overall market, Redfin (my online real estate company) has had a year’s head-start sorting out which changes seem to be working for us.

Not that we don’t still have a long ways to go.  We’re still on track for our first profits in 2009, but we’re going to have to fight to make it.

The time we have left to succeed or fail is really just the measure of how long it took to adapt to our downturn. If I had been more experienced, we’d have adapted faster. Here’s the survival guide I’d give my former self, the one just starting to face the storm:

1. Compete With Your Successor

I often think about what my replacement will do after I’m fired. She won’t have emotional commitments to decisions that I already regret. She’ll look at everything as an outsider—as a customer—refusing to tolerate problems that have lasted so long I’ve forgotten they’re there, re-considering initiatives we already passed over for want of imagination or energy. And she’ll have nine or even twelve months of leeway to build the business, so she can think long-term. Worst of all, she’ll get credit for turning Redfin into a successful, thriving business. I think, “I hate her! I hate her!” And then I try to be her.

2. Act Like an Owner

You’ve probably spent most of your life hating your boss, pleasing others (so you can blame them later) and spending other people’s money. These are hard habits to break. When I was still settling into being a CEO, I wasted a lot of time driving initiatives designed to please others, acting as if someone wouldn’t let me do what I wanted to do with Redfin. My moment of clarity came when a board member said, “as far as I’m concerned, you’re the owner of this business.” And he was right: you won’t own all the proceeds if the company succeeds, but you’ll certainly own a failure in its entirety. This sparked several reptilian impulses:

• “I can’t blame anyone else if this sucker goes down.” This made me feel powerful and savage, like Arnold at the end of “Predator.”
• “If it were all my money, I’d invest it in Redfin today — but there’d be some big changes around here.” We’re making those changes now. (This is about focusing on the part of the business that you really believe in.)
• “If we had to get our wallet out every week for that expense, would we?” (This is about focusing on the part of the business you don’t believe in.)

3. Get a Board You Connect With (Not Just One With Connections)

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