a few weeks ago, I was in attendance at Pioneers, in Vienna. It’s a great conference, and there were quite a few really interesting startups on display, including several of our own, like Claimair, TeskaLabs, and Satismeter. What’s more, it’s the right kind of conference for startups. Why is that? Well, as we’ve talked about in the past, there are a multiplying array of “startup industry” events out there, many of which deliver little benefit to actual startups.
Pioneers though, is pitched at investors for its exclusivity. Startups not only have to be selected for the Pioneers top 70, but they also attend for free. Investors, rightly, pay for the event, and for the opportunity to talk with so many promising founders.
There are a lot of VCs at Pioneers, and that’s a good thing. But there were few accelerators, and I think that’s a shame. Here, I’m going to talk about why I think so, and why we still need accelerators.
VCs and Backwards Goals
Part of going to Pioneers, for startups, is identifying fundraising goals. These are included in the company descriptions, and used to match startups with investors at the event. Fine so far.
Most startups, knowing that the event is aimed at tech VCs, say they’re looking for anything from 1 to 5 Million Euros. The average seemed to be about 1.5 Million. While it’s generally true that VCs want to invest in specific ranges, at specific stages, the truth is that most of the startups who are asking for those amounts don’t actually need the money right now. But in order to appeal to as many as they can, startups try to optimize their “ask,” before talking with the investors.
Instead of assessing their near-term business goals and funding needs, and narrowing their focus on a specific type of investor, they’ll craft a pitch for investors that portrays them as emerging companies that are “months away,” from a breakthrough advance that will turn the industry on its head.
The customers are just waiting to buy. The specific market need is a foregone conclusion. So really, in their imagining, it’s just a matter of the VC believing in the long-term prospects of the company and its industry, and assuming that the money is going to help them ride out their short-term challenges.
It’s a case of “get the money now, and figure out how to grow after that.”
It Doesn’t Work That Way
In order to paint rosy pictures about the future, founders tend to make startlingly bold predictions about their ability to do things that literally no one else has ever done in business. A new technology is new; and proving the market need for it is really at the heart of what an early stage startup should focus on. When I hear from a startup that their new technology is going to “change the way that X does Y” (eg: doctors diagnose cancer, or manufacturers bill distributors, or parents teach children), the first question I ask is “does X really want to change the way they do Y?”
Maybe they do. But then again, maybe they don’t. Maybe they do, but they want to do it in a completely different way. Maybe, maybe, maybe. Startups assume that investment is going to paper over those questions.
Ironically, VCs seem to operate according to the exact opposite assumption: a company that needs their money is not a company they want to invest in. Ideally, they would only invest in companies that have already proven they can make partnerships and sell, and the capital they receive will go mainly to doing more of what they already do well.
In effect, venture capital is an accelerant, not a fuel source. Startups treat it as a first step, when really it’s somewhere near the end of the process.
Why It Happens
Why then the disconnect? I think there are two problems:
1- Founders have been convinced that the “funding gap,” between early stage investors, -like business angels- and VCs is an artifact of the business; a bug rather than a feature. They become persuaded that they need to conform to what VCs expect, because VCs are too rigid, and need to have items checked off their list in order to invest. If they just tick the boxes, they’ll get the investment.
It doesn’t help that in some overheated markets, that’s really true. Some startups do seem to raise investment by ticking the appropriate boxes at just the right time.
But in reality, the funding gap is there mostly because it’s a bad idea for most investors to get involved with a company that doesn’t have product market fit, but wants to commit significant time and resources to developing new technology.
Simply, too much money at the wrong stage can be a bad thing. It can encourage a startup to build up technical debt without solving key issues of market fit. The funding gap can keep that from happening, by making it harder for startups to raise money at the wrong time, or for unsound reasons.
2- VCs are not always motivated to tell founders about these concerns. They stay positive and encouraging, in case the startup suddenly proves it can really grow.
I can’t say how many times I’ve talked to a really impressive startup team, with really impressive technology, who are having problems raising money, and don’t know why they can’t. Investors seem impressed with them and their tech, and yet they don’t pull the trigger on investment.
“Everybody really likes it, and we’ve had really positive feedback. Some VCs are very interested in what we’re doing.” Of course they are, because why wouldn’t they be? But eyeing someone in a bar, and marrying them are two different things: startups can easily fall into the belief that “interest” equals “appetite.”
The Rule Book is No Good
Knowledge about the “startup industry,” and about investors has grown among startup founders. They’re now able to suss out and learn about the way VCs work, and the way they make decisions.
I was recently handed, at another conference I will not name directly, a literal book called the Startup Playbook. This kind of thinking predominates among people who neither invest in startups, nor run their own.
My belief is that this leads some founders to the mistaken conclusion that because they understand how VCs work, they can therefore get investment from VCs. However, the fact that a startup understands a cap table and has a clear idea of the kinds of things a VC invests in does not mean that they can get that VC to invest in them.
And this is where accelerators still play a vital role. There are plenty of stars in the tech industry who are simply unaware that they are stars. Because they play by the “rule book,” that everyone is increasingly aware of, they may forget that the rules don’t have to apply to them. And accelerators are, at the core, about breaking the rules.
We Still Need Accelerators
If you compare accelerators with other investors, we should look like odd ducks. We shouldn’t behave according to typical patterns. Because our appetite for risk should be unusually high, our tolerance for uncertainty should also be commensurately wide. Open questions, to us, should be good things, and sure things, less interesting.
That approach can really help startups to focus on doing what they do best, which is solving problems no one else knows how to solve. Where a lack of certainty may be a negative to a VC, it is ideal for us as a starting point. Uncertainty is something you can work with, and something you need in order to be truly unique. You have to question everything, and be questioned on everything.
Founders usually seem to expect an accelerator to behave the way a VC would: to be encouraging but vague. But more often than not, startups in the situation I’ve described end up expressing a sense of relief after a meeting: “I’m so glad we talked about this. I never get feedback that’s so direct.”
This is part of why VCs look more and more to accelerators to be the first movers in new market categories, new technologies, and new business concepts. More and more, our own contacts in the VC world turn to us not only for opportunities to invest in startups, but also to steer startups in our direction, hoping that the accelerator will be a proving ground for the team, the business, and the technology itself.
Attending an accelerator is not for every startup, but it is increasingly becoming a badge of confidence that VCs are looking for. And every year, we see VCs paying closer attention to our program, and others like it, to gain insights and opportunities they can’t get anywhere else.
Last week, we announced a new series on the topic of Exponential Innovation. The piece began with a clear premise, which we restate here:
“The central premise of our series on Exponential Innovation will be this: exponential growth in the complexity of technology, reflected in increasing computing power and capacity, the explosion of data and increasingly complex and powerful material sciences, is a reality in our society, and will have an ever increasing influence over society and the world economy for the foreseeable future.”
Exponential and Linear Innovation
An important part of talking about technological trends is addressing how and why exponential trends differ from linear trends. Why is technological progress exponential, and why does that make such a big difference in how we talk about the future?
It’s common in ordinary speech and thinking to envision most trends as being linear- in part because most of the “trends” we encounter on a daily basis appear to be linear in nature. Linear trends are easy to recognize: the population grows at a more or less steady rate, the price of a liter of milk increases fairly regularly over the years, and one’s age steadily increases.
So we are good at understanding linear trends, but not good at dealing with exponential ones. That’s because evolution has optimized the human brain for dealing with linear functions. These are far more important to our immediate survival than exponential functions are. Worse still, because our brains have been adapted to viewing trends in a linear way, we can very easily make the mistake of assuming that any trend we observe is a linear one.
As Ray Kurzweil put it in his book The Singularity is Near: “the subjective experience is the opposite of the objective reality:” what we experience in a linear fashion subjectively is different from what the data actually says. Because we think in terms of only one or two “steps” on a trend line, trends always appear to us to be more stable than they are.
Thus we predict the future based on an incomplete view of the data- assuming that the current rate of change is going to be continued, without noting that the previous rate of change has been accelerating.
Tim Urban also highlighted this predictive problem in his recent piece on the subject, and produced a helpful graph:
Kurzweil used a concrete example: In 1985, what then comprised the internet had about 2,000 “nodes,” or servers in its network. That was more than double what the number had been only a few years before. If you asked computer specialists in 1985, how fast the internet was likely to grow over the next ten years, you would likely get some function of the past rate of change, projected into the future. If in 1985 there were 2,000 nodes, then we could expect that there would be up to 10,000 nodes by 1985, and perhaps 20,000 by 1995.
In the event, there were millions of nodes by 1995. How could the predictions be so wrong? Well, engineers in 1985 were dealing with the complexity of growing the internet using 1985 technology. But by 1990, new technology had effectively octupled the effectiveness of computers on a cost basis, and the internet had grown exponentially, doubling its own size every few years- rather than growing by 2000 nodes a year, it grew by 4,000, then 8,000, then by 16,000, and so on.
The engineers can be forgiven for seeing that as it concerned them and their work, they did not have the capacity to double the size of the internet in only two years. But because the growing size of the internet also allowed more people and more computer power to be applied to growing it even further, their predictions were based on incomplete assumptions. It would have been very hard indeed to octuple the size of the internet with 1985 technology. But every day that passed, the very same technology was also making that work easier to do.
Imagining An Exponential Future
So we understand that exponential trends make our normal predictive powers pretty weak. So what does your gut tell you about technology in the near future? How do you imagine the world of 2060?
Let’s try a thought experiment: suppose there are 3 Billion smartphones in the world today. Now suppose that all those smartphones have an average computing power of about 2 Gigaflops. An exponential progress curve suggests that within about 45 years from today, a device of the same cost of a modern smartphone should surpass the computing power of all smartphones in the world today. This means that by 2060, every human being should have access to the computing equivalent of the entire world’s personal computers from 2016 combined.
And that level of advancement will actually arrive much sooner than 2060: that year is only the time at which such computing power will be generally available at low cost.
Now, how do you imagine that people will be using that technology in 2060? Will it actually be that we will have smartphones capable of all the computational power of the entire world’s computers, in our pockets? What would we do with all that computational power?
You already can’t keep track of what your own personal computer is doing most of the time- it already does many things of which you are not actively aware. So in a world where all of those processes that are happening today, outside of human observation or awareness, all over the planet, could be happening in a device as small as a smartphone, what would a smartphone actually be used for? In a world of pervasive human-level or superhuman level AI, would it even be necessary to own such a device?
The answer for Kurzweil, and many other futurists, is no. A person would certainly not interact with future technologies in any of the same ways that we currently do. In the same way that we do not operate computers today using punchcards and levers, so too will we stop interacting with computers using keyboards, screens, mouses, or even our voices. At some point in the not too distant future, computers will cease to be treated as mere tools, and will instead become an extension of everything we do and interact with- they will be just another part of us.
The Exponential Is All Around Us
Exponential change is hard to see, because it also takes place over incredibly long time scales. While we can observe exponential trends that are on a human time scale, like the size of the internet, we can’t very well appreciate exponential trends that we are a smaller part of.
Kurzweil makes a compelling argument that the current exponential growth in technology and computing capacity is part of a trend that dates back to almost the beginning of the universe, but has concrete origins in the development of human civilization. The only difference is that we just happening to be living in a time when that trend has started to become a part of our perceptible reality.
Tim Urban, in that same piece on WaitButWhy, asks us to consider the life of a farmer from 1750. If you brought such a person to the world of 2016, what would his reaction to the modern world be? The modern world would be a fantastical, baffling, and overwhelming nightmare. Bright colored capsules that roar down the streets and overhead. Glowing boxes that speak and display images and make sounds, windows of light into other parts of the world, where you can talk to distant people instantaneously. Weapons that can bring the power of the sun to the surface of the world and open gateways to hell.
Would the shock of all that overwhelm him? Would he die from fright?
Next, he asks us to consider the following: if that farmer were to bring someone of a similar remove in history to his own time, taking a peasant from 1500 to the world of 1750, what would that farmer’s reaction be? Surely he would be mightily impressed, but nothing the farmer of 1750 could show that peasant would cause him to die of shock. There would be no apparent magic in anything he saw. Just impressive and exciting new technologies.
The fact is that if exponential innovations in technology continue, then the periods in which such technological changes occur will continue to grow shorter. The world of 2060 may be as shocking to a normal person of 2016, as the world of 2016 would be to a farmer from 1750. And Kurzweil’s contention is that superintelligent AI is the inevitable result of that progress.
Exponential Innovation: Then and Now
In our next post, we’ll discuss the evolution of technology from the distant past to the present, and talk about what technology is capable of doing today. If we’re going to be discussing what technology’s effects will be on society in the near future, it will be important to touch on what we are already capable of doing.
If you’ve got an opinion, please share with us on Twitter, Facebook, or LinkedIn. We will include your reactions in future posts.
As our 9 startups leave us, and begin the real journey of growing into their own companies with their own bright futures, we thought it would be valuable to look back on some of the things that many of them learned in the past 3 months. I asked our teams: “In what way has your thinking changed in the last 3 months, and why? What lesson did you learn that you couldn’t have learned any other way? Some of the answers are collected below. Here are 6 things our startups learned in 2016:
The Customer is Not Always Right, and a Customer is not a Client
Many of our startup teams have experience in business, but many have also spent the earlier part of their careers working on technology projects as consultants, engineers, or project managers. That’s vital experience for any startup founder, but experience is a double edged sword. We as often as not encounter situations where our founders’ experience in business works against their judgement as startup founders.
As a consultant, or a project manager, one works at the behest of a client who understands what they are paying for, and why. Their needs have already been laid out in clear terms, and the solution, including the work needed to solve it, has in a sense been sold even before the work begins. Because projects have clearly established parameters for success, a project manager or consultant has something to work towards, and clear feedback on the work already done.
But it’s just different with startups. Startups typically have customers, not clients. They produce something new, and find people (customers) who understand and want the value that product provides. A client asks for something, and it is delivered. A customer doesn’t know what he or she wants yet, but can be convinced that they need what the startup provides.
Most of the time, startups are working on concepts and products that customers not only didn’t ask for, but may not even understand. Much of the early work of a startup is to figure out what a product actually is, and how that can be communicated to a potential customer. Instead of working toward a common goal, a startup has to do the work, and then convince a customer that what they’ve made is worth buying or investing in further.
Because so many founders are used to tailoring their work to the needs of a client, they can start to adopt the objections of the potential customer as their own objections. Every week, we hear some variation of the result
SY Team: “What about x feature you were working on?”
Founders: “we talked to a potential customer, and they said they didn’t want that.”
SY Team: “How did you try to convince them that it would be valuable for them?”
Founders: “We were really just listening.”
Just listening is what a consultant does in the first meeting. But a startup is pitching something new; something probably unexpected, and something that customer doesn’t yet know that they want. First meetings with customers have to sound out the idea, in order to see if it is being communicated properly. If the customer doesn’t like the idea, then it may be time to talk to others, before changing the product.
We also hear a variation of that story, where the startup adopts the ideas of its first potential clients, instead of selling its own vision:
Sy Team: “Why are you doing x feature now? Why focus on that now?”
Founders: “Because a potential customer said they wanted that.”
Sy Team: “Did they agree to buy from you if you had it?”
Founders: “Well… not yet. But we think they will.”
This is of course an ideal circumstance of a customer, They now have an expert team developing a dream product for them, and best of all, they’re doing it for free. If the customer doesn’t like the result, they lose nothing in the exchange; while the startup has invested time and resources into something it may not be able to sell at all.
A Pilot is Not Just a Pilot
We happened to have quite a few companies in this cohort that struck deals for piloting their products with prospect customers.
That’s great progress, and it opens the door to future business. But it’s not the customer’s job to push the sale, or to evaluate the pilot by themselves. A startup that runs a pilot without specific goals and success metrics is like a car dealership that finishes test drives by dropping the customer off at home.
Maybe the customer will come back after the pilot, maybe not. But you’ve failed to do your part in the transaction if the pilot you run doesn’t have a clearly defined goal.
If possible, a startup should run a pilot that can easily become a long term business relationship. There should be a conversation before the pilot begins, that covers these questions: “What will define a successful pilot?” “Who will determining that a pilot is a success?” “What will be the next step after a successful pilot?”
Ideally, a pilot doesn’t end, it just becomes a business relationship. If a customer wants to “evaluate” a pilot after it concludes, then very convincing evidence needs to be prepared that the pilot actually worked. It should not be a question of expense for the customer, but of opportunity: the pilot should prove that an opportunity exists, and that the customer can’t afford to skip it.
Customers can readily agree to a pilot, if it costs them very little of their time or focus. They can agree to a pilot just to get out of a meeting with a startup- and we’ve seen that happen plenty of times. The startup comes back with the good news that they’ve agreed to a pilot, but when it comes to taking the steps to make that pilot customer a paying customer, no progress has really been made.
Partnerships Should Cost Something
Like the aforementioned pilot, a partnership can be an easy thing to agree to. We’ll put your logo on our website, and you put your logo on ours. That is the extent of a great number of tech company partnerships, and there’s nothing inherently wrong with that. It is good to give customers a sense of who you are connected with in your industry.
However, a partnership in name-only is not as good as a partnership that costs both you, and the partner, something real and tangible. I’ve touched on this in the blog before, but it bears repeating here: you should partner with companies that need something real from you, and which you need something real from in return. Without a mutual interest on the table, a partnership is at best an unnecessary distraction
Play to Your Strengths as a Founder
One of the hardest things about being in an accelerator, from what I’ve observed, is that every mentor has a different view of the kind of company you should be. Often though, a mentor’s ideas about your company are as much a mirror of their own desires, as of what kind of company you should really be building.
That kind of feedback is very valuable- it gives you insight into what makes others passionate, but it can’t replace your own passion.
Founders sometimes run into what I have started to call a “passion gap,” between the passions of their advisors, and their own desires. They try to be like the mentors they admire, instead of trying to do what they really love doing. This can lead a founder to feeling frustrated and worthless, when he or she isn’t as good at what they’re trying to do, as at what they really love doing.
What we’ve learned over the last few years, is that you need to play to your strengths. You just have to do what you love- and you can’t make yourself love whatever you are doing. It can be a magical thing to see a founder find the sweet spot between what they love to do, and what makes sense from a business perspective. That balance can be very hard to find, and it may only come up after many brainstorming sessions, and a great deal of work that doesn’t go anywhere.
In one case in recent memory, a team in our program went from a pervasive sense of failure and disappointment, to make increasingly positive steps- and it all started when they took themselves off the hook for what they thought others expected of them. Once they started doing what they were actually good at, things turned around in a hurry.
How to Ask For Help
The startup life attracts a certain type of personality. You have to be a little crazy to want to start a company, with no guarantees that there is a real market for your product, or investors actually interested in funding it. We look for the type of person who is comfortable dealing with uncertainty, rejection, and oftentimes, failure.
We stepped down from being managers lecturing and teaching rookies in our business workshops to becoming students and listening what others had to say. Others that we by all means respected. So the chance to realize and re-discover humility or meekness was not only useful in the process of mentoring but also further down the road as this attitude helped us see things we might have not seen in our previous business, or wouldn’t have seen without Startupyard.
What that means, is that we attract founders who don’t take “no” for an answer. That’s a good thing generally, but it also presents problems. Knowing when one should listen to negative feedback makes the difference between a naive founder, and one who is able to adapt and thrive despite problems. Drive and independence of thought can as well lead a founder to ignore important feedback, as it can cause him or her to persevere when others would quit.
Listening well and actually getting the help you need often comes down to what questions you’re asking. To me, there are essentially 3 types of questions that founders ask most: “open” questions, “closed” questions, and “save me” questions.
An open question can be: “what type of email marketing service should we use?” That’s fairly straightforward- the founder is just asking for input and options. Nothing amiss here.
Closed questions are productive as well: “do you think this landing page is good?” While it’s a yes or no question, it starts a useful conversation.
Finally, “save me” questions are where some founders run into real problems. “How do you reach out to the press to get good PR?” Or, “what should we do to improve our sales funnel?” Worse still, would be a startup founder asking an investor: “is there any appetite for this kind of investment?”
These are “save me” questions because they aren’t really questions, they are cries for help. The founder is really asking: “what should I be working on?” “What should I do right now?” These questions first fail to instill any confidence, and second, don’t elicit very useful responses. The response will depend almost entirely on the mood of the mentor, and put all the work on their side of the table.
A far better question is an open or closed one, which essentially asks: “Am I doing the right thing?” “Am I missing something?” A mentor or advisor is far better equipped to react rather than to dictate. And when a founder puts the work in ahead of time, shows their thinking, and asks questions that shed light on that thinking, they are much more likely to get substantive and useful feedback.
It’s Not About Dreams, It’s About Vision
“It is not about dreams. It is all about a vision. And StartupYard helped us to find a path, how we can make our vision a reality. So we just need to roll up our sleeves and get busy. There’s a lot of work to do. “
One of our founders told me this week that for them, the realization that the work of a startup is about vision, instead of dreams, was a core part of their experience at StartupYard.
I had never thought about it that way, but I think he was on to something. A lot of founders have dreams, and there’s nothing wrong with that. But dreams don’t necessarily come with a coherent plan for dealing with the reality of any given situation. You may dream of big valuations and great achievements, but without a clear vision for how you will achieve them, they’re just dreams.
Vision, on the other hand, is about having a concrete, realistic set of objectives, and a way of achieving them that makes sense, is aggressive, and can be clearly communicated to investors, advisors, and partners. While we look for startups that have big dreams, we end up pushing them to pursue a clear vision.
A user persona can be a powerful analytical tool, if it’s done thoughtfully. But it’s something we regularly struggle to persuade startup founders to do with any enthusiasm.
That’s not surprising, really. Building a user persona can seem like voodoo, if you don’t appreciate the point of doing them. Or, it can feel like a kind of homework- something you have check off the list in order to get on with the really good stuff, which is building your product into something you can be proud of. But fear not- it’s neither voodoo nor homework. It can be fun, and more importantly, it’s extremely helpful in making you a better team, and a smarter company.
What is a User Persona?
Definitions vary, but here’s the one that I think is most useful for early-stage startups: a persona is essentially a description of your ideal customer. It includes general and detailed information about that user’s motivations, their goals, their situation in life, and the type of person they are.
Some user personas are written as a kind of narrative, including fanciful details to make the person feel more real. Others are utilitarian, like a government file or a social media profile.
While many templates and types of personas exist, the most important point is that they provide your team a target for their sales, marketing, UX, and design goals. Your user personas, particularly for startups, serve as a kind of ur-user; a face, name, and personality you keep in mind when you are working towards releasing a product.
Whatever format makes that most accessible and useful is ok to use, but we will also talk more about format later on.
What a User Persona is Based On
In a startup without any customers, or even without a finished product, it’s not always clear how to get started with a user persona. Who are your ideal customers? Since you don’t have any yet, it’s hard to say.
Should your personas be based on real people? Yes, and no. For a lot of startups, a “best guess” is necessary to get you started. This is often called a “proto-persona,” and it deals more with the basic needs and goals of a user, than with the specific ux expectations that user might have.
If you’re very familiar with the market segment you’re targeting, you can use that experience to construct a composite of the type of user who will buy or use your product. This is usually easier if the product is for professionals or a specific user-segment, because it will likely be based on some existing industry experience.
Say, for example, you’re building a Saas product for professional translators. You probably know a bit about that industry, and the types of people who need your solution. A composite of people you already know can serve as a jumping off point for your user-persona.
Again, the idea is to composite an “ideal” candidate user. This is the person who will be your best customer, and will gladly buy from you. They are the perfect fit for your product. Though most customers won’t fit that mold exactly, a persona should help you steer your efforts towards the people who will want to use (and pay to use) your product most.
You can also find relatively cheap ways of doing market research, such as conducting broad social media campaigns, or a survey, and analyzing the users who fill out the survey, or convert on your landing pages, or who like the posts on your Facebook page.
You are Not your User
These educated guesses can give you an overall view of who is responding most to your product, but keep in mind, the composition of that group will be dependent on the communication of the campaign as well.
Many startups start out thinking that their typical users are basically analogues of themselves. This is most common in startups where the founders might actually be very similar to their eventual customers, because the startup is based on a specific hobby, or interest. It can lead you to many false conclusions about who your ideal customer really is. Many male startup founders, for example, undervalue the appeal of their products to women, and so ignore evidence that women are interested in their products.
Jakob Nielsen, the influential usability expert, puts it this way in Growing A Business Website:
“One of usability’s most hard-earned lessons is that ‘you are not the user.’ If you work on a development project, you’re atypical by definition. Design to optimize the user experience for outsiders, not insiders.”
The lesson extends beyond usability, to marketing, feature design, and many other areas. A very compelling reason for building a user persona is to challenge your assumptions against future evidence, including user testing and user feedback.
If you find, after some period of time, that your user persona isn’t lining up very well with the reality of your sales results, then it might be time to adjust the persona. You may find that the early adopters from that unexpected segment reveal an untapped demand among users like them, who are not early adopters.
If you don’t have a user persona to work with, then you don’t have anything to challenge your assumptions with. New user behavior is just noise without clear context. Why are certain types of users attracted to your product? How can you get more of those types of users? It will be difficult to figure out where to start.
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What a User Persona Looks Like
You’ll find many examples of user personas online, and many twists on the basic pattern. You don’t have to stick with any one of those. There are no rules. But your format should compliment your goals in creating a persona. What will this persona help you to do? Will it be used to shape your marketing message? Will it dictate what features you plan? Will it influence the design?
Hopefully, you have a range of goals you need to accomplish, and the user persona is a kind of benchmark. You can refer back to him or her (they can have a name and everything), and ask yourself and your team: “Is John really interested in this feature?” or “will Jackie really respond to that kind of email?” In time, you can add real observations of your users to flesh out this fictional person. Your team can become familiar with them and their issues and goals.
A format I really like, for its clarity and ease of use, is this one, from fakecrow.com (a service for creating user personas):
The persona is laid out less like a story than a file on an existing person. The kind of thing you might see in a spy movie. It also allows you and your team to see a big picture representation of a person from many angles: what they do for work, what their personal life is like, what kind of technology they use, and what kind of personality they have. Each data point can be a discussion topic, and a test of your own thinking about the product.
Most startups should challenge them to create at least 3 different personas, and test them in the real world, either through marketing, or in person testing of people who match the profile as closely as possible.
Keep in mind, your goal at the beginning is not to find out what is most typical or most common, but which type of user is ideal for you. Usually, that’s the person most ready and able to buy your product. This early testing of your user persona can reveal whether or not the persona you are targeting is in fact ideal.
Don’t Chase the Rabbit
As in all things, moderation is important here too. Your user persona is never perfect, and never complete. The goal of this process is not to nail down the perfect user, and then lock that into your team’s mindset for all time. Circumstances, economics, and technology change at a rapid pace. What was important to a lot of people 10 years ago, is now much less important. You have to keep your user persona updated and in line with reality, so don’t get too deep into this analytical process before getting into real-life contact with real users.
That said, devote some time as early as you can to creating multiple personas, and let that process influence how you approach the market from the beginning. It’s ok to be wrong- in fact, it’s necessary to be wrong at least some of the time. If you don’t make any mistakes, it’s probably because you aren’t taking any risks, and in startups, a certain amount of risk is advisable on the path to a truly disruptive and effective new product.
Is Your Homepage really your business?
The homepage is in the DNA of startups. A lot of people think of tech companies as websites, even when they have little do with each other. That’s as it has been since the “dot com” boom of the 90s, when adding “.com” to a company name was enough to boost its stock price.
These days, a good looking homepage and landing pages are essential for establishing any company’s basic credentials. But the tools for creating such a page in only a few hours are now readily available, and very cheap. For the most part, a dedicated web designer isn’t even needed to make a smart homepage that is sufficient for most early stage startups.
Aside from that, many very successful startups rely very little on their websites to generate business, because they have to find their customers on other platforms, like social media, or through partnerships.
Sometimes though, startups get bogged down in the process of strategizing and devising their messaging, with much of the focus being on how the homepage looks, what the copy says, and how it can be optimized for maximum selling potential. Part of this comes from a phenomenon I’ve talked about before: “over-mentoring,” which is where startups get trapped in a vicious cycle of requesting more and more feedback, and stop being able to make decisions quickly.
And a lot of that over-mentoring happens with the homepage, because it is the first thing that most mentors see from the startup. The conversation often revolves around it, and the messaging it contains, instead of the core problems the startup is really facing in their business (which may or may not have to do with optimizing their homepage).
I’m even more guilty of this than most mentors, because I’m a copywriter, and I love analyzing and optimizing web pages. But the truth is that 9 times out of 10, a simple formula will work just fine: a headline, a sub-header, and a call to action. The classical “triangle” shape that millions of simple homepages use.
To fight over-thinking, I’ve been finding myself challenging teams to live with an imperfect website. I’ll ask them, “why are you focusing so much of your energy on this? Is that justified by the kind of traffic you are hoping to generate with it?” In some cases, the answer is yes. But often, it’s not clear the founders have given that much thought.
The homepage can be a vital step for onboarding customers. But that’s less and less true today, and many of our startups will never need elaborate pages at all in order to do business. They’ll need brilliant apps, or intelligent and well designed processes, but the homepage won’t create loyal customers- the product/service will do that.
A “Perfect” Homepage is a Moving Target
“A perfect homepage is a moving target. Don’t outsmart yourself.”
Lots of engineers treat their homepages as if they need to “get it right,” on the first try. But that’s putting themselves at a big disadvantage from the outset. Homepages, just like products, are pretty much never right at the beginning. Only experimenting, testing, tweaking, and retesting will yield something that you can be sure is living up to its full potential. It’s far better to be responsive to how people react, and to what kinds of visitors you attract, than to try and game out an elaborate homepage strategy from day one.
A common mistake is to mix up the “promise” of a startup with the promise of a homepage, although the short term goals of both are often not aligned, particularly at the beginning. This might mean that the messaging veers too close to the “mission statement” of the company, like “make the world a better place,” instead of the immediate goal of the page, which might be to get people interested in an upcoming release.
PRO TIP: Use tools like HotJar.com to better understand how visitors react and interact with your homepage.
It’s natural to want the homepage to look as you want the company to look, making it appear more professional and more established than the company truly is. But “fake it till you make it,” is a dicey proposition when it comes to winning the trust of customers and investors. It’s easy to fail at looking like a bigger deal than you are, and there’s little real benefit outside of ego from trying to.
And while startups are over thinking the design tactics, they’re underthinking basic strategy with a homepage. What is the promise of the homepage? If it is designed to attract leads, then it needs to offer users a very easy and seamless way of getting in contact. If it is meant to generate customers, then it needs to show them a simple and persuasive argument for buying the product, along with an easy way to do so.
These elements cannot be perfected in the lab- they have to be worked on over time, meaning that the work is never really finished. What’s more, these goals will shift over time as the product, customer set, and offering changes. It’s easy to get burned out on the first version of a homepage, and then leave it that way for far too long. For some startups, a homepage becomes like a bad marriage that they’re unwilling to end because of all the work that went into it.
Don’t Outsmart Yourself
I’ll keep demanding that startups build practical, usable, clean, and attractive homepages. It’s really important to devise and employ strong emotional use cases, and communicate them. But don’t make your homepage a blocker for you getting down to the real business, which isn’t just selling to your customers, but serving them something they really want.
If you’re struggling with your messaging, then take yourself off the hook. Create a minimal homepage, and focus on interacting with your customers. Over time, you can optimize to make sure you aren’t scaring anyone away, or missing any big opportunities. But don’t try and use your homepage to define your whole business- your customers shouldn’t be interested in that, and neither should you.
Building real partnerships with the right companies is something we emphasize in the StartupYard program. But what is a “real partnership” are all about? Many startups aren’t too sure.
Partnerships and “Partnerships”
A startup in our 2016 cohort approached me this week, with a simple-sounding problem. Could they prioritize a meeting over StartupYard mentoring sessions, if the person couldn’t meet at a time when mentors weren’t here?
Yes, they could if it is was really important. But what was the meeting about?
The meeting was about a potential “partnership,” with the CEO of a company that provided a key piece of technology that this startup was going to need. This was not a huge company, which is why the founders got a meeting with the CEO. But it wasn’t a startup either.
What did they want to get out of the meeting?
“Well, we’re hoping that he will be willing to let us use it for free or for a discount.”
And why would he do that?
“Because we’re a startup.”
Partnerships in Name Only
In a way, startups have become trained to expect this kind of thing from bigger companies. They assume that companies are willing to sponsor them just because they’re a startup, and they’re not always wrong. Many of StartupYard’s partners do give an amazing value in services to startups for free.
But those are our partners. While we have real, and thriving partnerships with some of these companies, this is not because we get free stuff. It’s because our organizations share complementary goals. In this case, it’s getting early access to the best startups in Central Europe, and helping them grow (us as investors, our partners as future providers of a paid service).
But this level of partnership, which looks more like sponsorship than a real relationship between equals, is probably not what many smaller corporates and other startups have in mind when they agree to meet a startup.
Based in Mutual Interest
It’s very easy to agree to partnerships that don’t require a lot of work or follow through. So it’s tempting to do this whenever possible. Many partnerships boil down to two companies putting their logos on each other’s websites.
This happens because in the course of exploring a partnership, one or both of these companies comes to realize that they don’t share a real mutual interest.
This is why it’s so important to pursue partnerships in the same way you pursue your sales goals. Partnerships are a part of your sales strategy.
Partners should have the same sorts of customers you have, but not be directly competing with your offering. Ideally, your partnerships should make the offering of both companies stronger, so that a customer who uses one, gets even more value from using the other.
At the core, a business partnership is about both sides developing their indirect sales channels, sharing, and better serving your mutual clients. It is a force multiplier for sales, because in a true partnership, much of the sales activities that the two companies undertake support the sales funnels of both companies.
This finds its most pure form in online affiliate partnerships, which is essentially an “automated partnership.” But that is only one form of partnership. You can base your partnership on sharing know-how and technology, but ultimately a partnership that lasts is one that makes the two companies interdependent, and stronger as a result, and that means both companies having a stake in the same pool of clients.
What A Company Needs to Be a Good Partner
Again, agreeing to a partnership is relatively easy in theory. It doesn’t take all that much. But in order to be a good partner, a company needs to have a team (or at least one person), dedicated to building and maintaining partnerships.
SendGrid, a StartupYard partner, is a great example of this. Instead of sponsoring accelerators and events directly, they have a dedicated innovation team that travels around the world, meeting with and advising startups and accelerators on issues involving transactional and marketing email infrastructure.
Every company they meet with gets at least a year’s worth of service with SendGrid for free, which is an enormous value for startups. And for StartupYard, it’s of great value to have a skilled and knowledgeable mentor team visit and do a workshop with our startups too. That builds the value of the accelerator and gives our startups a greater chance of success down the road. Meanwhile, SendGrid gets access to potential clients who could be worth thousands of Euros a month in a few short years. Win, Win, WIn.
Companies that have strong partnership programs also know what to look for from startups, which isn’t always just another client. They may be interested in sharing data, or even investing in certain kinds of companies.
A good partnership manager bridges a gap between sales and marketing, and has the pull necessary to bring your company to the attention of executives, even as a prelude to an acquisition, or sharing clients. They aren’t incentivized the way a salesperson is, so they’re more flexible about what they’re willing to bring to the table- it’s not about the bottom line for that person, which frees them up to explore other ways of seeking mutual benefit.
Preparing For a Partnership
One of the key mistakes that startups make when they approach partners, aside from the “gimme gimme” attitude described above, is by trying to “sell” them. A partner isn’t necessarily a customer, and you can’t approach them in the same way. You have to sell them on the mutual benefit of working together, and on your ability to do that; not on your ability to sell your product to their clients.
A good partner in indirect sales offers a few things. One is added value for shared clients, and another is defense against competitors. If you can make a partner’s offering to its clients stronger than its competitors, and if your partners (and competitors) know this, they will be willing to work hard to keep you as a partner, rather than see you support someone else’s sales pipeline.
So when you meet with partners, you need to ask questions. What do your customers need that you can’t provide? Why do customers choose competitors over you? What would make more of your clients stay with you? These can all open up opportunities for you to partner with that company, and those opportunities will be based on what that company needs, not only on what you need from them.
As we welcome our 2016 startups this week, I get to do one of the scarier and more rewarding parts of my job at StartupYard, and that’s helping these companies define themselves, their products, and their customers.
When startups are getting ready to launch, they tend to be very focused on “what type of company” they want to be. That’s normal, and healthy. And it feeds into their ideas about what their “brand” should be, and how they should express that.
And here is where many startups stumble at the beginning. They don’t fully appreciate who their messaging is really for (clue: it isn’t for them), and what it’s really supposed to accomplish.
Where Brands Come From
The word “brand,” comes from the 19th century American practice of burning a rancher’s insignia in the hide of a cow, or other livestock, before moving the livestock to a marketplace. This was done to discourage theft from the ranch, or during the drive season. The word comes from the Norse brandr, which means “to burn.”
The practice of maker’s marks and watermarks goes back thousands of years, all the way to at least the invention of currency in ancient Sumer. In all cases, the practice originated from a need to protect against fraud. A maker, manufacturer, or publisher had to find ways of making sure that customers knew the difference between their products, and fakes.
As the industrial revolution peaked at the end of the 19th century, it became common for manufacturers to “brand” all their products, usually on the packaging, to distinguish them from forgers or look-alike products, which were increasingly common, and threatened profits. It was then that the concept of a “trademark,” and the exclusive right to use a specific brand were introduced into the legal system.
In essence then, brands proliferated as a means of consumer protection. And in fact, that has not fundamentally changed. Brands are still, at the core, about helping people to make safe, fair buying decisions, and protecting them from fraud and danger.
Brands Are About Trust
It wasn’t long of course, before entrepreneurs realized that consumers recognized quality products by brand. And so they began to focus on the way their brands looked, and felt, to customers.
Manufacturers also rightly recognized that a trusted brand could convince people to buy new things from the same manufacturer. If you trust a company to make your radio, you’ll probably trust them to make your television as well. Sprawling conglomerations like General Electric and Samsung were compiled, based largely on this new realization.
Brands have become synonymous with design, with philosophy and politics, and with class, race and economic status. Today, people make statements with their brand choices. This can lead startups to forget that the chief aim of having a brand is not just building recognition, or fitting into a particular culture. It is about maintaining a level of trust with customers, that will follow them from one product to the next, or one year to the next.
The “We” Problem
Today, of course, we’re all very well aware of the effect that brands have on our thinking and behavior. We’re probably too aware of it. We’re told now that everything is a brand, and that every person can be a brand. This can get us off-track when it comes to communicating clearly with customers.
I recently worked with a startup that wanted to launch a new product, under a completely new brand. They needed help putting together their messaging, and writing copy for their homepage and other marketing materials.
At this point, when a company has a good product, knows its customers well, and wants to dive into the business of growth, is often where they stumble on what I began calling the “‘we’ problem.”
Simply, most of the copy they had written, and most of the messaging they were focusing on, was about them. To them, they were expressing the qualities of their brand. They were smart, they were hard working, they were trustworthy, they were friendly. So why shouldn’t customers want to buy from them?
Well, because customers buy solutions to their own problems. They don’t buy the work of your team, or the relationship you have with the product. Those things can be a plus, but they’re secondary to a buying decision.
The central questions you have to answer are these: Does the product do what I need? Am I the target audience for this?
People make their initial decisions based on that criteria, not on whether you communicate your attitude or your culture clearly.
Whenever I’m looking at copy for a homepage, I do a little experiment: I do a word search for the words “we,” and “us.” Then I compare that to words like “you,” and “our customers.” If you say “we” more than you say “you,” then you may have a messaging problem.
Startupyard.com, for example, contains 9 mentions of “we,” but 40 mentions of “you.” Also, several of the “we” mentions are directly followed by “you.” In addition, none of the “we” mentions are descriptive. They are active: “we’re looking for,” and “we try to.”
Most of the copy is concerned with either what kind of startup should join the accelerator, or what a startup will get by joining. These are the only two core criteria that matter in a decision to apply. “Does it do what I want?” And, “is it for me?”
Although it isn’t a rule that you can’t talk about yourself, you have to remain aware that to a prospect customer, how you see yourself is not that important. How you see them, how you value them, and what problems you will help them solve, are important.
Solve Problems, Make Emotional Use Cases
This is why we spend the first several weeks at StartupYard closely focused on one thing: the problem that the startup is solving for customers.
We work on positioning statements, which lead with who the customer is, and the problem being solved, and that is what initial conversations with mentors are all about. This helps the teams to stop talking about themselves, and start talking about their customers.
This also helps our startups to focus on emotional use cases. What frustrates customers? What aggravates them? What scares them? What brings them happiness? Saying “we have state of the art encryption,” is an unemotional argument. But saying: “Our state of the art encryption will protect you against hackers,” is a powerful motivator.
When Apple released the first edition of the iPod, it was famously “1000 songs in your pocket,” not “the next generation MP3 player, that can hold up to 4 GB.” This focus on the emotional use case: the feeling a customer gets from the promise of the product, is what makes Apple a powerhouse brand. It’s never about how smart they are, it’s about the experience you will get.
If you think your brand is about you, then you’re likely to focus on use cases that aren’t emotional for users, like efficiency, or price, or sophistication. In effect, you’re likely to make a feature argument, instead of a real value proposition.
It’s important to keep in mind what we talked about in the beginning. The primary purpose of a brand is to serve customers; to protect them from fraud and danger, by establishing a clear sign of quality. Only then can you leverage a brand to be something symbolic.
And that sign of quality can’t be forged. It has to be earned by solving customer’s problems- by offering them something they can clearly understand and want, and by delivering exactly what you’re offering.
If you follow us on Twitter, you probably know that StartupYard is constantly sharing great content with our followers. Internally, we also keep a “reading list” of items we think our startups should read before, during, or after the program. This is the StartupYard Startup Reading List.
With a new acceleration round beginning next week, we thought we’d share the list we’ve compiled. It’s organized into Collections, Launch, Sales and Conversions, Retention, Growth, Marketing, and Free Stuff.
Under each item is a short extract from the link. If an extract wasn’t available, we added a short summary. Enjoy!
-The StartupYard Team
40 categories of curated tools and tips for Startups. A must have.
28 categories of curated Marketing advice and tips. A must have.
There are plenty of blogs out there that talk about paid advertising, social media, offline distribution, content marketing, SEO, SEM, e-mail marketing and so on. But I will be focusing on actionable items you can do to get your first 1,000 users in a weekend’s time and with less than $500 of investment.
We have the privilege of meeting with thousands of entrepreneurs every year, and in the course of those discussions are presented with all kinds of numbers, measures, and metrics that illustrate the promise and health of a particular company. Sometimes, however, the metrics may not be the best gauge of what’s actually happening in the business, or people may use different definitions of the same metric in a way that makes it hard to understand the health of the business.
Wouldn’t it be nice to have a business idea today, and have that business up and running tomorrow? With today’s apps it’s totally doable.
Sales And Conversions
Getting new customers is good. Keeping a customer and getting them to continue paying is better.
Why are contrasting buttons effective? Why should you use 1st person CTA wording?Why (and when) are trust symbols effective?
Some call it – *cough* – growth hacking. Others call it optimization. But what we’re all talking about, really, is crazy smart, innovative, results-driven, product-focused marketing that has an outsized impact on your company’s growth and bottom line.
How GrowthHackers(.com) Uses “The Hook Model” to Foster Incredibly High Member Retention
You need to dig deeper into your app using a method called cohort analysis. That’s how you’ll identify how well your users are being retained and the primary factors that will drive growth for your app. Here’s how the most experienced and analytical product people like Siqi go beyond your standard cohort analysis to do it.
A video from 500 Startups on Retention, and why it is eventually more important than growth.
30,000 words of modern-day growth hacking strategies for the discerning SaaS growth hacker.
This article is a comprehensive and detailed look at the key metrics that are needed to understand and optimize a SaaS business. It is a completely updated rewrite of an older post.
Growth Hacking: VIDEO, Neil Patel
When thinking about Growth, most people think about CRO (Conversion Rate Optimization) on the ToFu (Top of the Funnel). They don’t really understand what is the power of Growth.
Frameworks help us organize and understand the world, and data helps us stay focused and monitor progress. So, it’s no surprise we use them both to help us project future growth and figure out how to hit our lofty goals.
Andy Johns has had the good sense to ride not one, but FOUR rocket ships. He has been a key member of the growth team at…
Growth hacking is the idea that an entrepreneur can take a clever non-traditional approach to increase the growth rate and adoption of his or her product by ‘hacking’ something together specifically for growth purposes. Most startups find themselves facing the same problem: they build a product that no one ends up using. Say you have…
Sean’s talk at the DEMO Traction Conference.
Today I’d like to share with you one of the biggest marketing struggles we experienced at Ivalua, the previous company I worked for and where I handled Marketing for over 2 years: content creation – and how we overcame it leveraging freelance writers.
Why You Need to Create a Content Marketing Strategy
The most popular digital marketing mantra in recent years has been “Content is King”, and while the mantra itself may be a touch overused, it is by no means inaccurate. Now more than ever it’s incredibly important to create a content marketing strategy and make it your your own unique content marketing strategy if you hope to drive traffic and boost brand awareness from online channels.
Persuasive Writing Techniques
Design, SEO, and advertising can only get you so far. If you want to accelerate sales online, you need persuasive copy. According to Harvard Business professor Gerald Zaltman, 95% of our purchase decision occurs in the subconscious mind. Most marketers ignore how our brains work and fight against human psychology.
153 succint reviews of SEO tools, by Brian Dean
Paddle’s guide to app marketing explores the techniques developers can adopt to drive more downloads and grow their apps.
A great list of the essential elements of a landing page, and why certain types of things work for conversion.
A fascinating, if amoral, view of online marketing and networking building
With content marketing, you can educate and engage potential clients while differentiating your company and positioning it as an industry leader.
In marketing, lead generation is the generation of consumer interest or inquiry into products or services of a business. For the purpose of this article, lead generation refers to the generation of consumer interest. A list of qualified leads is a priceless asset for your company. It’s cheap to build and works great for every kind of business, including “boring” B2B companies.
- Which words do you choose?
- How do you frame the offer?
- How can you sell without appearing sleazy?
Creative ways to use retargeting ads to improve lead generation. Learn how B2B marketers target site visitors based on funnel stage, industry and email contact information.
If your website isn’t trusted by Google, you’re basically consigned to the lowly, deep dark depths of search results pages ten and onwards.
Is SEO really a harder game to play as KunoCreative’s Dan Stasiewski put it in this excellent SEO guide infographic?
Amy Guttman: Don’t write business plans: Advice for startups from one of silicon valley’s top seed investors
1. Don’t write business plans; instead build prototypes & test them with customers.
2. Don’t create five-year revenue projections; create 12-month expense projections.
3. Do create marketing plans, but focus on unit economics and metrics/analytics of:
a. what customers cost to acquire,
b. what products cost to build/deliver,
c. how much customers generate in revenue and when
4. Test and iterate on your assumptions — turn your business plan into a business metrics dashboard of KPIs, and continue to measure and improve every week.
5. Don’t run out of cash. Check your monthly burn rate, cash in the bank; figure out your remaining runway and try not to get below six months of cash.
This guide is indispensable for all wanna-be Business Angels and those entrepreneurs seeking Angel Investment! It contains best practices and practical tips culled from Busi- ness Angels around the world. It is a must-ready, easy-to-read, and great-read for all those private investors interested in playing a major role in the early-stage investment eco- system and those entrepreneurs interested in attracting Business Angel Investment.”
– Candace Johnson, President, EBAN (Europe)
A cautionary tale about keeping your priorities in order as a startup founder. Great read!
Our best list of social media templates for scheduling, organizing, analyzing, and sharing better and faster than ever before.
Twitter is chaos, but in the midst of this beautiful mess is a ton of data that if you can understand
Marketers create a lot of content. Yes, content is king, but a king is powerless without followers. So, what’s the first thing that comes to mind when you want to reach a broader audience with your awesome new post?
The Facebook pages that are doing wonderfully well with likes, shares, and comments on their posts have so much to teach about new tactics and worthwhile strategies. Our friends at BuzzSumo analyzed 500 million (!) of these Facebook posts, and we’ve learned some amazing takeaways that you can implement on your page today.
A collection of sites that offer with-attribution, or free to use images for your startup. Always check the terms on individual sites before using an image!
Meta-Search for GNU Public and Free Stock Images
This week, StartupYard will welcome about 20 finalists for up to 10 positions in our 2016 cohort. They’ll spend a full day meeting with the StartupYard team, and a select group of mentors and investors from the StartupYard community.
This isn’t a competition, and it isn’t a job interview. We aren’t typical investors, and we aren’t employers either. We have a special relationship with all of our startups, and we have to make decisions quickly, but carefully.
So what are we looking for in our final finalists? Ultimately, we are looking for the smartest investments for StartupYard. That means teams that not only impress us with their vision and ambition, but that also offer us an opportunity to make as big as an impact as possible, so that their successes will be our successes too.
Today, we’ll share a few pieces of advice that we’ve come up with over the last few years, on how to navigate this process for the best result:
1. It’s Okay to Say “I Don’t Know.”
As we wrote about yesterday, being a credible leader doesn’t mean you have to have all the answers. If you do have all the answers, there’s a fair chance that some of your answers may not be the best ones possible.
Better that you should be able to say “I don’t know,” when faced with something you haven’t had the time or resources to address yet. Part of being a high growth company is not being able to predict every little thing you’ll have to do along the way. You can show you’re prepared, but you will never be able to convincingly show that you’ve figured out every step. If you had, you wouldn’t be talking to us anyway.
2. Acknowledge Challenges You Face
On a few occasions (thankfully never at StartupYard), I have had the displeasure of witnessing really poor mentoring and feedback on startup pitches.
The worst, and most useless kind of feedback goes like this:
“Well, I worked with a company that tried that, and it didn’t work. So, I don’t know. You’ve got a lot of challenges ahead.”
Duh. This can hardly be called feedback. But sadly, as a startuper, you’re going to hear it a lot.
There are going to be inherent challenges in your near and long term future. That’s a given. But it’s important to recognize, especially when talking to an investor or a mentor, the difference between useless feedback like that, and more serious questions:
“What are you going to do about x competitor?” Or, “Why would people would pay for this?”
A lot of founders get so used to being bludgeoned by stupid feedback, that they start to ignore legitimate concerns instead of acknowledging them. They’ll give bogus answers like “we are smarter than the competition,” rather than talking specifically about how they’re going to challenge a competitor. Or they’ll say: “we are going to work really hard to sell this,” instead of really answering the question, which is not about how hard they’ll work, but about what strategy they will use, and what opportunity they see in the market.
The fact that you have challenges ahead shouldn’t be news to anyone. But how you face those challenges says everything about how you’ll fare against them. You won’t overcome these challenges because of who you are, or how much you want to. You’ll overcome them by thinking about them, so start doing that first.
If you can show you understand what the challenges are, you will have a much easier time convincing us you can solve them.
3. Demonstrate Ambition
Arrogance is certainly a problem for many entrepreneurs, but it can be just as easy to make humility into a vice.
What we’ve found over the years, particularly with startups in Central Europe, is that they can be surprisingly shy about sharing their long-term, “big vision” ideas, because they are afraid that they will appear either stupid, or foolishly ambitious.
It’s not fun to listen to someone who can’t stop talking about their big vision and focus on the details, but it’s important that we do understand what your ambitions really are. What kind of company do you ultimately want to have? What position do you want to be in, in 5 years? It’s really ok for these ambitions to seem somewhat unrealistic. Again, if they were realistic at this moment, you wouldn’t need our help at all.
So don’t think we’ll laugh at you for wanting to be a worldwide leader- if that’s what you really want.
4 Talk Yourself Up
We just got done saying that you shouldn’t be shy about your ambition. You also shouldn’t be shy about your accomplishments.
Last year, as we were working on the Demo Day pitch for one of our startups, the founder was having trouble with what he wanted to say about the team. He couldn’t come up with a convincing argument for why they were the right people to solve a complicated problem on the market.
As it turned out, and as the founder had never shared with us previously, he just happened to have previously worked for companies who needed to calculate orbits and fuel usage for satellites in Earth orbit- he helped those satellites in the sky.
So, in other words, he was a rocket scientist.
And he was someone who was having trouble articulating why it was that he was qualified to take on complicated problems.
I don’t think many reasonable people would think he was being arrogant for mentioning that qualification to investors. But I’ve been consistently surprised by startup founders who do fail to mention important details about themselves and their qualifications.
That’s admirable, that these people choose let their work speak for itself, but if you’ve earned a little bit of respect for what you’ve done in the past, by all means, use it!
5. Ask Questions
This process is not just about us picking favorites. It’s also about you deciding what’s best for your company, and your own future. We don’t know what you don’t know, and since we assume we’re dealing with pretty smart people , we don’t always tell you everything you might want to know.
So ask us. And judge us on our answers. That’s only fair. Our reputation has to be built on our transparency and honesty with startups. If we don’t have that, we don’t have much.
6. Don’t Sell: We Aren’t your Customers
This advice goes back what we said yesterday about “trying too hard.” You have to acknowledge challenges, and talk yourself up, but if you aren’t careful, doing all those things at once can put you right into “salesman mode.”
Pretty soon you’re “acknowledging challenges,” before they’re even brought up, and talking yourself up when you don’t really need to. Your ability to sell is important, but we aren’t your customers.
The unvarnished truth, or at least something closer to the unvarnished truth, is important to investors in making the right decisions- not just for them, but also for you. As I often tell startups: you can sell anybody something they don’t need or want, but only once. After that, you’ll never be able to sell to them again. But if you find the right “customer,” or the right investor, you can develop a lasting relationship.
So don’t treat us like a customer. We aren’t buying anything.