I’ve been working in startups most of my career and gained a lot of experience to draw from, both positives and negatives. These experiences include being on “both sides of the table” — founding a company, then founding a seed stage venture fund, and now founding a startup once again. This time I’m able to approach the role from a very different perspective than I had the first time around.
I thought I’d share a few of the things I know now that I wish someone had told me. They may not be the obvious tips you’d expect, but hopefully, some of the entrepreneurs out there can benefit from them.
#1 Everyone wants to whack the piñata.
Once when I was on a panel, somebody asked me what the transition was like going from company founder to fund founder and back to company founder. I thought for a second and replied: “That’s easy. In truth, everyone’s a piñata getting whacked to produce candy.”
Here’s what I mean. Investors in a venture fund whack the fund managers like a piñata to produce returns/liquidity candy. The fund in turn whacks the piñata founders of portfolio companies to produce results and liquidity candy. The founders whack their piñata employees to produce results candy. Each layer is a constituent in the piñata line, demanding results in a chain of expectations — and on that note…
#2 Investors love good news, and they can handle bad news, but they will not tolerate surprises.
Actually someone told me that: my father. So I was very lucky. Still, I didn’t fully appreciate it until I went through the process. The mechanics of finance matter far less than the ability to communicate effectively. We’ve all had the experience of watching someone dig a deeper hole and not share the problems or ask for help. I even saw a CEO of a troubled company suddenly announce a massive deal he must have been working on for several quarters, and while good news, no one knew and their decisions and evaluation of situations along the way were impaired. So, it’s critical to communicate early and with transparency on what is expected, especially if it is bad news. The follow-up line here is that on their best day, any group of investors is a step away from a lynch mob — and that’s on their best day.
#3 Empower your team.
By nature, founders tend to have a head start on the vision and direction. And they often make a fatal mistake: they don’t entrust the people they hire to essentially be a CEO of what the hire oversees. Hiring strong leaders who can deliver on that is a prerequisite. If the hire is the right one, you can trust them to tell you what they need to execute against your vision, scale, and manage the resources required, and so on. Not every hire can fit the role, but doing so as much as possible reaps big rewards. Our current venture has 7 out of 11 of our leadership team (C-Suite and VP/GMs) that have been a founder/CEO/COO/CFO/President of venture-backed and public companies. That creates a fantastic amount of leverage, especially with the management experience to adapt while scaling.
#4 Don’t be too eager to discard the old for the new.
This could have been a particularly humbling lesson if I hadn’t learned it from such a classy guy. One of the co-founders in my first venture, Victor Kramer, was constantly pumping the brakes on our enthusiasm for the bold new world of digital advertising. I found this frustrating, since digital advertising was the foundation for our entire business model. But Victor, whose résumé included senior management positions at international financial organizations as well as years of experience in direct marketing, was resolute in his convictions. “Online ads really don’t work on a performance/ROI basis,” he’d say. Victor thought direct mail was a much better option. “It’s not really sexy,” he’d say, “but it actually works.” I would just roll my eyes. Then one day at a board meeting someone suggested that we could simply increase our web traffic by spending more on digital ads. “Are you kidding me?” I blurted. “They don’t friggin’ work for that!” As soon as I realized what I’d said, I glanced at a grinning Victor. And now we invented Programmatic Direct Mail® out of our learnings.
#5 A degree in child psychology is more relevant than an MBA.
That’s not meant to be condescending in calling someone childish. It’s as much an acknowledgement that I’ve had to coach myself into being more measured. And that’s meant parking many things from my life — and most of those things are subject to a child-psychology-type moment. Long story short, people react differently and for their own reasons, understanding how to read it and help yourself and your colleagues to succeed is an incredibly valuable skill. Most of an MBA’s value is only helpful in the early years of your career, whereas the ability to understand and help guide a room full of people — many times alpha people — is something hard to learn without training.
There’s plenty more where that came from, but we’ll limit the tips and tricks to five for today. Hopefully, you’ve found the sharing of these experiences useful.