Tuesday, December 18, 2012

Three spheres of engagement for early-stage founders

When you have just started your new company with your co-founders, many entrepreneurs are at "peak happiness". They have a great idea. They have just founded a company and nobody has yet to tell them that their idea/product is lacking or the team they have assembled may not be optimal to execute whatever grand vision they hope to bless the world with.

To stay at peak happiness (after all, it is a great place), some entrepreneurs make mistake #1. 

They decide that they can not tell anyone outside the bubble about what their plan is, and must instead focus on building this divine product and polishing it to perfection before it is ready to receive the standing ovation from an enchanted market of customers they have never met.

If they get that far, in 99.9999% of the cases, that is the end of peak happiness.

To avoid the problems that go along with this way of starting a business, read and learn about the Lean Startup model. It is one tool to improve your odds and a framework for how to work in startup mode.

However, I will here briefly talk about what you as a founder should be doing on a networking and engagement level in the early days of your startup and how it ties into future success.

1. Customers.

As is discussed at length in the Lean Startup, you need to meet your future/potential customers often and early. Yes, that means even you who have that idea that is so brilliant that no customer would ever be able to tell you that they wanted your product before you bestowed it upon them. Why, you ask? Look at it this way, if you do not interface with your future customers you are missing out on two (at least) major opportunities.

First of all, your potential customers can help you improve on your offering. Suggest things you haven't thought about or didn't expect to be that important.

Second, they may tell you that they want to buy whatever you are going to ship in three months, NOW! Which is great. Or at the very least, you are slowly building a network of potential customers who have known you and your product from the beginning. How great isn't that to have at launch instead of radio silence?

The absolute worst case is that they tell you that your idea and product is crap, but wouldn't you rather know that early on instead of at launch after spending all that effort and time to get there?

2. Advisors.

Being an entrepreneur and founder can be challenging, and especially if you are a first-time entrepreneur, chances are that your network is not packed with other people with experience of what you are facing. Even at an early stage you need to spend time assembling a group of advisors to you as a founder or to the startup. This is important for your future success for several reasons.

First of all, advisors with entrepreneurial background and expertise can give you advice on any number of issues, such as strategy options, hiring, ownership structure as well as many other issues facing a founder.

Second, they are the people who once you have proven yourself, are ready to help you reach the next level. At least some of them should be able to make introductions to angels, VCs or strategic partners/customers. It can sometimes be very hard to get facetime with investors. A few connected advisors can go a long way to mitigate that problem.

By the way, a good advisor will not automatically think less of you if you do not to do what they say, they will however (like investors, co-founders and customers) worry if you do not do what YOU say you will do.

3. Employees.

At a very early stage you may not need to spend too much time thinking about who to recruit to your venture because you may not yet have any money to pay employees and you are bootstrapping your startup. Fine. But you should even at a very early stage think about what kind of people you want to bring onboard. In many cases this is separate from what is actually on a resumé. 

Remember that hiring for an early stage startup is not the same as hiring for a large company. First of all, you can not afford to make the wrong hire if that person initially will end up being the fourth person in the company including the co-founders versus employee number 300,000. Second, chances are that you will not have access to the same talent pool as a larger company that often can offer a higher salary and more comprehensive benefits.

This means that while many new startups are eager to bring on big-shots to lend credibility to their venture, that might be impossible and for many reasons, a bad idea. First of all, you don't get credibility as a startup from much else but revenue and user engagement growth, cool hires may have a marginal impact but not more. Second, in the early stages of a startup, you are still trying to find your way and the team is still small. This means that it is much more important to bring on people who deal well with change, risk and are OK with doing whatever it takes to make the company successful no matter what the task of the day is or if it is technically on a job description or not.

In conclusion, interfacing with future customers will help you nail down WHAT to do, getting advisors on board will help you with HOW to do it and the right employees will help you EXECUTE.

Just do it!

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