Trajectory August 2013: Always Be Recruiting
Always be closing. Always be pitching. Always be…recruiting? Yes. Always be recruiting.
If you think you can wait to recruit your team until your idea finds customers, you can’t. The most successful companies are always identifying top talent, people they’d love to have as part of the team. They’re buying coffee/beer, getting advice, and getting the right team members hooked on the idea early.
When it comes time to hire, they know five people who will jump on board. That’s an advantage when that first serious round of funding comes in.
Here’s what you need for your recruiting pitch:
The company story – Who, what, where, when, and how this idea was born
The product story - What major problem are you solving?
The job story - What major challenges to success are ahead and what major contributions will this new team member be able to make?
The final question to ask - Who do you know that you think I should meet? Or, would you be interested in joining us when the time is right?
The most important thing you are looking for in early team members is this: they care about the problem your solving as much as you do. If they don’t, no matter how skilled they are, it likely won’t last or will be painful the whole time.
Keep in mind that you cannot outsource all recruiting and hiring if you want to build a company that you still want to work at in a year. Successful founders embrace recruiting as part of their overall job. The idea of culture gets talked about frequently, yet in every company the origins of a company culture start with the founders. Stay engaged in hiring early on.
So go forward, embrace your inner recruiter, and remember: Always Be Recruiting.
Trajectory May 2013: The Three C's
Three is the magic number: real estate has three L’s (location, location, location), pilots have their three A’s (altitude, airspeed, and awareness), and entrepreneurs have the three C’s (customers, costs, and competitors.) Critical Success Factors (CSFs) are essential activities that offer succinct, measurable points of reference for a business strategy to achieve its mission.
Customers are the key to success, and every successful business has them. Network by preparing your elevator speech, printing business cards, and going to at least three networking groups per week. Social gatherings, trade shows, and professional association meetings and conferences are all opportunities.
Ask open-ended questions like “What’s your current focus” or “What’s taking most of your time?” Usually the toughest customer to snag is the first one—focus on that objective. Then, leverage initial customers as reference sells to generate leads. Work hard to maintain your customers because keeping a happy customer is easier than snagging a new one.
Costs are tough to control because there never seems to be enough money. Utilize the resources around you such as attending meetings within your building or network. Consider less expensive professional services, for example, a PA instead of a CPA for accounting or a Patent Agent instead of an attorney for IP. Recruit student interns or sweat equity partners to keep costs down.
Research your competition by examining your key competitor’s websites and revisit your SWOT analysis quarterly. Look for what you can uniquely do better, faster, and greener (but not necessarily cheaper, which can end up in a death spiral.) Create three succinct, maybe niche, competitive advantage bullets and include at least one key point in your elevator pitch. Consider turning a formidable competitor into an “arms-length ally.”
Trajectory April 2013: The Pitch
Why is so much emphasis placed on getting your pitch right for investors? After all, this isn’t performance art. Your customers don’t care how smoothly you can wind up and deliver a rehearsed, scripted 2 minute summary of your business. So, why all the effort?
Because simple business ideas, easily grasped, lodge in people’s memory.
Your job with your pitch is to make a (possibly) complex concept so simple that people immediately grasp it and understand where to peg your business in the huge universe of ideas that compete for their attention. It’s a way of staking out turf so when a business opportunity arises people will immediately think of you because they understand how you’re likely to fit in. It’s also a way of saying what you are not, so people can correctly position you against your competition.
By contrast, if you have a hard time explaining just what you do, you are leaving it to your listener to figure out just where to place you. They may get it right, or they may not. They may decide, “Oh, I’ve seen that before. That’s what Acme, Ltd. does.” Or, they may just forget about your idea, figuring it’s not worth sorting out.
Tom Keffer is an active angel investor and board member of both for-profit and not-for-profit organizations.
Trajectory March 2013: Driving Your Startup by the Numbers
Whether you’re at the reins of a plow horse, the wheel of a race car, or the throttle of a rocket ship, driving your business from day one by the numbers will be key to achieving milestones, impressing investors, and managing your most precious resource, cash. As a financially savvy entrepreneur, you should be keeping track of your finances three ways:
1. Know where you are: Adopt good accounting, invoicing and payroll systems early and stay on top of them. Make full use of the great online apps out there, available on an affordable subscription basis (ex: Freshbooks, Intuit Payroll). Create a dashboard of key financial metrics linked to your software so you can track your business real time.
2. See where you’re going: Establish a budget by all means, but in the dynamic startup environment, budgets quickly become obsolete. A rolling 12 month forecast of sources and uses of cash, updated as change dictates, is a critical tool for making sound tactical tradeoffs as new opportunities and risks emerge.
3. Explore how best to get there: Every business has its key levers: important strategic variables which steer your path to growth and direct your focus (ex: customer reach, pricing, production capacity). Create a custom excel spreadsheet which uniquely models your business long term and allows for lots of “what if” exploration.
Laura Finney provides financial services and advice to early stage companies as a “Contract CFO” in the Portland area.
Trajectory December 2012: 5 Tips for SBIR Grant Applications
Great grant applications are going unfunded in today’s climate, but the ones not submitted have an even worse success rate. Ready to submit? Consider these five “must haves.”
1. A Great Story – One that is innovative, built on strength, and heading toward a product or process of keen interest to the granting agency.
2. Terrific Results – Demonstrate that you are several steps down the path to the product you plan to develop. An intriguing observation is more appropriate for a research grant. Have proof of concept.
3. The Right Stuff – Show that you know what you will need to succeed in the proposed project, and have access to the necessary facilities and equipment. You don’t necessarily have to own it or be leasing it now, but show you will have access when the project is funded.
4. A Winning Team - The reviewers need to believe the grant funds will be spent effectively. Gather the right team to succeed in the proposed work, and to guide you through to the market. Remember that for your Phase II grant you will need a detailed commercial plan, and you need to have the main steps in mind when you develop the Phase I grant application. Your team needs people (employees, advisors, consultants, subcontractors) who have successfully brought a similar product to market. Have strong letters of support from outside team members and future partners to show that you know what you’ll need after you receive the grant. It also shows that you have started conversations that are necessary to move product development and attract partners and investors.
5. Luck – Panel members to review SBIR grants vary frequently, so you cannot really know the audience, but learn what you can about the review process and the types of folks on the review panels to help guide your application. And good luck!
Sandra Shotwell leads and advises early stage companies developing innovative life science technologies. She helped to found DesignMedix and Elex Biotech, and consults through Alta Biomedical Group.
Trajectory October 2012: Investor Readiness
There are a lot of opinions today on what it means to be “investor ready.” Some think it is a slide deck and a set of financial projections. Others believe it is a one-page summary or a written business plan. While this “old school” investor believes that all of these tools are part of the readiness process, it’s really less about the volume of written material and more about being prepared to do a good job educating the investor about the opportunity.
Like most angel investors, I look for entrepreneurs that understand their “problem/solution” set and can clearly communicate all aspects of the opportunity. While this seems obvious, I am continually surprised at how entrepreneurs often fall short of this expectation.
I believe that this readiness “gap” is not due to any lack of willingness to work hard. It is more likely a case of passion and impatience for things to happen. This is certainly understandable given the nature of the fast pace of startups today.
Going through the process of trying to write a business plan using conventional templates forces one to think about all aspects of the business in the same way that angel investors think about investment. Whether a written plan is made available or not, it is less important as making sure you are well prepared. Doing so makes for a precise/complete executive summary, better financial analysis and the basis for a great presentation. It also prepares you to address most any question that an investor may ask.
The last step in preparing for investors is about testing your delivery with trusted advisors and lots of practice.
Dennis Powers is an experienced angel investor and startup consultant. He is currently a Managing Partner at VectorPoint Ventures, a Northwest private equity firm.
Trajectory September 2012: The Infamous First Date with a VC
Be yourself: the VC is investing in you and will size you up in the first 2 minutes, so be genuine.
Present the opportunity directly: by the time you get to your first institutional round, you better be able to net out the opportunity: the market, the business or technology disruption, and your go to market strategy. Yes, it will change, but you need to have the initial plan ready to present.
Engage the conversation - or try: every entrepreneur has the VC story from hell at some time in their career. Either the VC didn’t open their mouth or the VC didn’t shut up – either way, open discussion on the first meeting is usually a good thing.
Listen: you may not like what you are told, but listen closely and you will learn a lot. In that first meeting you are usually given the most valuable insight into turning your opportunity into a fundable company just by carefully listening. I can promise you, it will be valuable.
Diane Fraiman is Venture Partner at Voyager Capital, a leading Venture Capital firm focusing on investing in early stage high technology opportunities on the West Coast.
Trajectory August 2012: The Acquisition Mindset
What is the acquisition mindset? It is a mindset that says, “Whether or not I ever sell my company, I will run it as if it is going to be acquired tomorrow.” The acquisition mindset enforces a discipline, structure and rigor in your company that ensures you are running a professional organization that minimizes structural risk, maximizes work satisfaction and ensures the highest levels of income today and wealth tomorrow if you do sell. The acquisition mindset is a tool that helps you in all areas of your company, whether you are running a lifestyle company, a venture-backed company, a high growth company, or running a company on the side while you perform another day job.
Nitin Khanna is CEO at MergerTech, an investment bank by tech entrepreneurs for tech entrepreneurs.