I was honored to talk to the latest cohort at Ari Horie’s Women’s Startup Lab accelerator in Menlo Park recently. As we closed a discussion of early stage investing I offered up three high level pieces of advice on achieving startup success. This was based on my observations of shared winning behaviors of startups I have had the privilege of being invested in.
This was my 3X advice on winning:
- Run with a posse:surround yourself with a small, diverse group of people you know and trust. People who will be there for you when you need them and who are not afraid to tell you the un-sugarcoated truth (as they see it). This posse might include other founders, investors, domain expert advisory Board members and definitely fiduciary Board members (if you have a Board). Of course a multi person founding team is a core posse of itself.
- Take, but never follow, advice:Don’t hesitate to seek multiple inputs when making decisions but process them quickly and 100% own your decision. So take aggressively seek out advice from your posse, and beyond, but know that only you know what really matters to… you. Be confident that you know your business, your customers better than anyone. Take the inputs, yes, but be willing to (respectfully) dismiss ones that don’t seem to make sense, however elevated the source. Then move forward decisively with your (And, as John Maynard Keynes memorably said when questioned on why he had changed his mind on something: “when the facts change, I change my opinions Sir. What do you do?” i.e. facts trump opinions, even your own. So don’t be slow to change when the facts change.)
- “Never, never, never give in”:Churchill uttered those words at a moment of existential crisis for a whole country. One of the underpinnings of the loneliness of a startup founder is the sense that every day marks a moment of existential crisis for your company: whether it’s a new product release that simply has to go well, a hire that you need to make even though you can’t pay enough, the new client you need to close and yes the very frustrating (and seemingly interminable) challenge of raising outside capital while your runway evaporates! Never giving in requires huge mental fortitude and self-belief. (Belief that you need to project to your team to carry them with you regardless of your own personal angst.)
I suggested that following these three mantras would also enhance a founder’s appeal to investors. I say this from the perspective of an angel investor. It has become increasingly obvious to me how the founder/founding team needs to be THE key investment decision variable.
For myself, and I am sure many other investors, the three mantras are a key part of the investment decision making process.
These are my 3X thoughts on how winning behaviors help get you funded:
- How good is your posse?The fact that you have smart, loyal people in your corner tells me a few things: a) that you are not a loner and appreciate the value of advice (and moral support). Hence you will likely have help through the inevitable dark times and have a higher probability of making smart decisions b) you have the ability to identify and engage with people of substance now, so are likely to do so with others in the future thereby enhancing your chances of business success. It also signals that you are likely to be a good “people person” with your inside team, certainly one with charisma that people gravitate towards and want to be around. Bottom line a good posse is a force multiplier – good news for you and an investor too. Of the founders I respect, Kathryn Minshew and Alex Cavoulacos at The Musefit the model of founders building out and engaging with a strong posse.Erika Trautman at Rapt Media and Kelsey Recht at Venuebook are great examples too.
- Are you open to advice, yet can act decisively? Many investors like to say they target founders who are “coachable”. I have come to the conclusion that can be a euphemism for “malleable”. In other words, founders who make investors feel good by taking AND following advice. I certainly wouldn’t invest in a founder who is obnoxious or dishonest. But do I really want “coachable”? I have concluded – not. (Does anyone think Mark Zuckerberg and Steve Jobs were coachable?) Based on my experience, what I seek out are founders who are smart, who listen, who soak up advice like a sponge but then act quickly and decisively based on their own judgement. (When it comes to speed, the Hire an Esquire#JFDI approach espoused byJulia Shapiro and Jules Miller comes to mind!) Overly “coachable” founders seem at greater risk of derailing to me. I have seen them be more prone to going against their own better judgment because a sage investor, advisor or whatever (who can NEVER be as close to their business as they are) tells them “this is the way to do it”. And they do it. But markets and technologies change so fast that even the best-intentioned member of your outside posse will struggle to be current and, especially when it comes to subjective decisions, they (obviously!) are not “you”. Being open minded but acting fast comes more naturally I think to serial founders. They also tend to have an even stronger sense of urgency and hence appreciation of the need to be decisive. Steven Cohn at Validately is a great example of this in my portfolio.
- Does a founder rate 11 on the 1-10 scale of determination?By definition all entrepreneurs are doing something very hard: their idea has not been executed before. So a determination to battle the odds goes with the territory. But not everyone has the same level of determination. And I am convinced that a truly exceptional level of determination, verging on the crazy even, distinguishes the most successful founders. Unlike my other two mantras this is harder for an investor to gauge on a going in basis. That 11 of 10 level of determination is only evidenced when, on striking a seemingly impassable wall, a founder bulldozers through it, goes round it, over it or maybe outright dynamites it! The earlier the startup the less likely a seemingly killer wall has been hit – VCs have an easier job of judging this trait simply because they are investing much more based on concrete traction and demonstrated product market fit. But I think a very early stage investor can still see clues: how scrappy is an early founder?; how much time and focus they have put into to bringing their idea to fruition?; and of course how do they express their passion and commitment (which underpin determination) to you in words? I have written before that this assessment of 11 out of 10 for determination is a key reason why I invested in Allison Dorst’sPinks and Greens. But sometimes the 11 of 10 is more of a gut feel. For me that proved to be the correct call at Snaps. Having hit a social media 1.0 wall with the original app concept, founder Vivian Rosenthal pivoted to a social media 2.0 messaging solution … which is now killing it under Vivian and CEO Christian Brucculeri
Picture note: At the top of this post Ari Horie is in action with one of her grads Jaclyn Baumgarten at a WSLAB class. Jaclyn is the founder and CEO of boat sharing platform Cruzin. Cruzin merged with Boatsetter in September 2015 and she is now CEO of the combined company – which kept the Boatsetter name.