There is one recurring, and unacknowledged, reason that potentially great employees leave a startup.
It's because they can't articulate to outsiders what they're job actually is, according to Marc Andreessen, general partner at venture capital firm Andreessen Horowitz.
"It's actually a really funny thing. People quit because they get just embarrassed," Andreessen said Tuesday, speaking to a packed house of hundreds at the Lean Startup Conference in San Francisco. "If they can't explain to their spouse, if they can't explain to their kids, if they can't explain to their neighbors what they're doing -- that's a big issue for a lot of people."
So how can CEOs avoid losing their top talent to abject embarrassment? They can be as thorough when describing their business plans to employees as they are when describing them to VCs, Andreessen said.
Drill Down: Be Specific
"Actually explain to people at your company: here is what we are doing. Here is that plan, and here is how we conceived the plan. Here are the things that we know. Here are the things we don’t know," he said. "Then every week, every month, every quarter, update: we have learned the following," He added that the CEOs that do this well are remarkably good at retaining employees, even during tough times.
How to Describe Your Plan
This is opposed to describing your business plan in terms of top down market sizing, which is a huge turnoff to both employees and investors, Andreessen said. For example:
"They literally come in and they'll be like, 'We have this new thing we're going to build, some new wearable gadget. The wearable computing market is going to be $35 billion in three years … All we need to do is get three percent of that,'" Andreessen said, describing a common pitch format.
Instead, he recommended creating a projection timeline that includes solid estimates of how many customers the company will have down the road, as well as how much they will pay for the product. The actual results will more than likely prove to be different, but thinking about growth in these terms will demonstrate to whoever is listening that you deeply understand your market.
"And by the way, if you can do this with your employees, then investors are a slam dunk," Andreessen said.