MUST raise capital now.
MUST hire team now.
MUST build more product features now.
Listen, I’m all for teams that run through walls and take the hill and press on toward the prize rah rah…but…
There are some things when building a startup that just take time. Pushing too hard or too fast in certain areas may lead to future regret. At Promus Ventures, we see these mistakes all the time:
1. Marrying up with a founder with whom there is no past relationship:
You don’t walk down the aisle to marry the man or woman of your dreams that you just met last month. A marriage lasts a lifetime, and you should think of your startup partners the same. Better personally know those in the boat with you and have watched them go through difficult moments in their lives. Newsflash: building a company is hard and there are more tough times ahead together, better be prepared.
2. Hiring someone good rather than someone who is great:
Character is the most important piece of every hire, and too often teams want to bring in needed talent too quickly. Hiring starts on day 1, and if you let this discipline lag you’ll find yourself behind the ball when a important slot needs to be filled. Don’t jump at the first good opportunity you see, and don’t make quick decisions because the candidate says he or she needs to make a decision in the next week. Move according to your schedule – if you’re good, people will wait for you, not the other way around.
3. Giving too much equity to nonfounders and advisors too fast:
We are all in favor of giving everyone in the organization equity, but be careful on how much and when. I’ve seen cap tables upside down even before the Series A, and it’s not pretty. Do your homework on what the market is paying to hires and advisors you want. It’s not about greed – it’s about being able to scale a business properly and bringing in employees that are smarter and more talented than the existing team (the key to hiring for what it’s worth). Only way to do this is to pay fantastic people what they are worth in the market and you’ll be surprised how much it takes to retain this cadre of people.
4. Bringing in the wrong capital:
Whether angel or institution, everyone who invests in your company should bring something to the table that is unique to the entire investor set (if they do what they say they will do is another story). Too many teams jump at the first investors that want to put capital in their business without waiting to talk to others that could be more value-added. Don’t believe that ALL you should be doing is building product and the faster the fundraising process is done, the better. It’s grueling (I know), but it’s unfortunate to say no to someone to whom you wished you could have said yes. Always try to leave a little space in the round 30 or 60 days post-close to bring in investors that could be helpful (any good investor will agree to this).
5. Mistaking following up with pestering:
Act like you’ve been in the end zone before. If you are an enterprise company and have been working for months to sign a large customer, endless calls and emails only make you look desperate. When raising capital, pounding investors asking to set up a call “in the next day or two” only signals that your round is not coming together well. Look for momentum from the other side in signing a deal or investor. Always ask the other party what their next steps are. People aren’t good at saying no (unfortunately), so if you detect any fudging, then followup later and move on.
Desperate startups and companies fool no one. Instead of wildly slinging yourself and your team at anything that moves, instead take a breath (!) and build a world class team, vision and product. You’ll always have to work for customers, talent and investors, but this time you won’t have to beg.
Fantasy Football is everywhere these days and it has completely changed the way NFL games are watched. You can be in a position of both rooting for your local team (go Bears) and against them at the same time. Sign up for two (or more) different leagues and you may be rooting against yourself. Ah, I remember the days of just watching a football game…
Just like fantasy football, hiring in startups is never easy. The complexities of finding and integrating people that fit with your vision and culture are great. Who to put where, when to fill the position, changing personnel – you may find yourself feeling like a NFL head coach every week.
The rigors (ha!) of playing a season of fantasy football can teach us much about hiring teams. Yes, maybe there is some saving grace of weekly frustrations with your fantasy team never producing their projected numbers after all:
Have a Game Plan – The Chesire Cat once said, “If you don’t know where you are going, any road will get you there.” You must start with understanding a) what you want to build, b) the makeup of each person you want with you in the trenches and c) how everyone fits together into a team. You won’t get it right (no one does), but map out a strategy first before just drafting away any player that looks good.
Amazing how many founders we see that say they have a hiring strategy but aren’t patient enough for the game to come to them. These founders try to force the action by hiring people that may not fit into the overall game plan at that appropriate stage.
Build for the Entire (Long) Season - You build a fantasy team to make sure at the end of the year you can put the best team on the field for the playoffs. That means picking up (and letting go) players through the season, bringing on strength and cutting the chaff. Players also get injured and you have holes that immediately need to be filled, so you need to know what players are out there to be called on if needed.
The only constant in startups is change, so be ready at all times for the unexpected. The season is long so don’t get rattled when things don’t go as planned.
Know the Type of Player You Want – Do you want to draft the cagey veteran who is going to produce solid returns each week or go for the upside with the younger rookie that may make a bunch of mistakes but capable of outsized returns? Hard to trump hiring people who have already succeeded (or failed) in previous startups as they have an understanding of the toughness required to build a successful startup. At the same time, hiring younger talent gives an energy and channel into the next wave of great people that could scale into your company. Good to have a mix of both.
Slot Players Correctly – Most standard fantasy leagues make it easy for you: slot 1QB, 2RB, 2WR, 1K, 1D and 1Flex player into your lineup. Every startup should think the same: what are the best slots to fill for the different stages of the business? What should be the amount of engineers, bus dev/sales and distribution personnel? This optimization will never be perfect, but always coming with a game plan lets you focus on who you want and where you want to slot them.
Think of Your Team as a Depth Chart – When drafting a fantasy football lineup, you must know where the player lies on the team’s depth chart, which ranks all players by position giving you some idea of how much they will play. Building a company from scratch means knowing at all times how each employee fits within their position as well as how they are moving up in their verticals. This is quite important when it comes to scaling a business, and the depth chart analogy is a good one.
Put the Best Lineup on the Field Each Week – Players get hurt and can’t go that week. Sometimes certain matchups present themselves and you are better served to start a bench player over your starters. Sometimes the entire team doesn’t show up, and everyone lays an egg. Startups are no different. Stuff happens, people need to fill others slots at times, and make sure the best team is fielded every week.
Be Laser Focused on Performance – Part of the fun of fantasy football is at the end of the game, based on the rules of the league, you know exactly how each player performed by the number of points earned for that week. Startups should have the same scorecard mentality in all life stages of the company.
Every employee should know what the top 3-5 KPIs are every week, and know at the end of each day if they individually and corporately put up a big number or didn’t show up. Measuring success is crucial especially in early days, so make sure you think through what variables are important each week (don’t just take from other companies) and that your team knows the score at all times. We see a lot of real-time scoring on screens throughout startup offices (just like real-time fantasy scoring on your mobile app).
Make Sure Everyone Sees Playing Time – Give your team a chance to shine, and only way to do that is to call their name and get them in the game. In fantasy football, you actually get to see how your bench players did each week. Life doesn’t happen this way (unfortunately) and you have to take risks. Even if it is only for one play, everyone wants to see playing time, and your team will become stiff and disenfranchised if you only play the same starters each game. Also, you’ll never know how they handle the spotlight if you don’t give them a shot.
The founder’s goal is to get the best out of his or her team, no different than running a fantasy team. That requires a keen understanding of how your team fits together at all times and each player’s strengths and weaknesses.
There are plenty more nuggets to take from fantasy football (who knew), but focus on the list above and you just may take the trophy at the end of the season.
There’s a great saying that describes going down a path that will only yield bad results: “There’s a hole in that road.” So, please, for the love of startups all over the world, avoid doing these common things that we at Promus Ventures see all the time:
- Quickly partner up with cofounders you don’t know well.
- Spend your time reading about how others did it rather than figuring out how you should do it.
- Worry about why your startup isn’t getting enough press (keep your head down and build, they will come).
- Go out of your way to tell investors about all the conversations you are having with this vc or that company.
- Demand out-of-market terms from investors that create havoc when you go to raise again (I don’t say this as a vc wanting better terms – you just don’t want to get too far ahead of yourself and walk the valuation tightrope).
- Think every other startup is raising silly amounts of cash and you have failed because you haven’t yet.
- Start building feature sets when your core product still hasn’t proven itself to be of worth to a group of early-adopters.
- Rush to accept anyone’s capital versus being patient in bringing on investors that are uniquely built for your company.
- Take short cuts by building what you think customers want versus taking the time to watch, listen and capture what they actually desire and do with your product.
- Wait for your product to be “better” before going to customers (you’ll be surprised the quality that customers will accept if your thesis solves a major pain point for them).
Amazing how hard it is to get out of the holes we fall into (me included), so best try to avoid them all together.