Takeaways #2
Highlights from 3-5 of the best podcasts in the startup ecosystem every week; from the Blume Ventures Podcast Club.
First employees should always be looking at ways to maximize non-equity, non-cash compensation - your primary motivation should be learning, growth, networks, building something great. Similarly, founders must make sure first employees are joining for the right reasons - there is nothing worse than having a first employee who secretly wants to be a founder. It causes a lot of trouble + suboptimal results.
There is tremendous value in having diversity (of all forms) in your team. Aston focused on this very hard during the early days at DropBox. The lesson he learned was that culture needs to be built very intentionally by putting strong processes in place right from the start.
To bring a strong early employee onboard, selling the vision is important but it is equally important to show how the person will help create that vision i.e. what will they be uniquely responsible for, what are their opportunities to grow within and outside the organization. 'Nerd-sniping' is a great way to test for curiosity, hunger, problem-solving and helps get best candidates onboard. It involves casually mentioning a problem / bug you are facing to a candidate and seeing if they work off-hours to help solve the problem. These are the best candidates.
Founder-idea fit is critical. While trying to come up with startup ideas, founders must think of who they are and what drives them. People are typically driven by some combination of competition, power and fame. And the ideas they choose to work on must align with this driver e.g. Travis was very successful with Uber because he is an extremely competitive person in a very competitive industry. Elon is extremely successful at building purpose-driven companies because he is driven by power.
While Finding a co-founder / evaluating a co-founding team, look for folks who complement each other both professionally and personally. An investor needs to believe the founding team can conquer anything thrown at it (since some co-founder in the team has the skills go deal with that problem)
Good framework on how to think about an idea — According to Aditya, the key in brainstorming an idea is to know "what NOT to do & have one core feature" that is sticky in the product. In the context of Kaapi, Aditya says that they decided to not build a fast growing VC fundable business and focus on building a slow sustainable business.
How to move from an idea to a product - Aditya mentions that the key from idea to product is to find a core set of beta users and then use them to build out your core MVP. Ideally your first customers should also come from these beta customers.
Possible to escape the fundraise cycles - Media around us these days is only talking about large fundraises, which often makes us glorify raising more money as the end goal. Aditya presents a very refreshing take of breaking away from this mould of how he got tired of this. He proposes the idea of growing to $1000/mo and building a Company of One which is very fascinating.
Ask and you shall receive. Reach out to strangers who can help you, put your story out, and ask for what you wish. Sometimes you end up getting a gift. But if you don’t ask you will never get it. This is illustrated by how Trae Vasallo walked up to John Doerr of Kleiner Perkins (KPCB), who connected her to Good Technologies where she wound up as the 3rd cofounder.
The lines between consumer and enterprise investing and startups are blurring. Viral loops which are key to consumer startup success matters as much in B2B and build strong backend infra as B2B companies do applies equally to consumer startups. There are no hard lines any more.
Two ways in which founders can improve their pitches, especially in this age of Zoom pitches.
Include a why you / why now slide - what led you to this point that is causing you to build this company and why do you think your team is going to win? And the even more important why now? She feels this is an easy way to get an emotional connect by putting in this slide, and ideally before all of the usual slides on metrics etc.
Include a demo or mock up or anything which can help VCs visualise the product well, and help them understand the value you provide the end user. VCs are jumping from one pitch to another, and it is sometimes hard for them to recall a product. Help them visualise it better through a product demo, mockup or even a video. ("A demo is worth a million words")
The best investors are those who help their CEOs realise their potential. To achieve this she is trying to be a better listener, get better at asking the right questions, as well as knowing when to apply pressure and where to apply encouragement.
Mindshare vs. Money: Acting responsibly or acting with integrity takes up MINDSHARE NOT MONEY. You don't need a sign off from your board of Advisors or investors to create a better culture, you need patience and commitment.
Generic vs. Customized: Workplaces can no longer run on the fine print of a generic code of conduct or posters on the wall. The old way of looking at ethics has changed and alignment of value systems, actions, and effort is what matters when trying to make systemic changes in corporate culture.
Culture vs. Compliance: When leaders or CEOs don't know how to approach the idea of acting with integrity, things get sent to the HR department, and rather than taking a step towards creating a culture, it becomes compliance.
Negative vs. Positive: What most companies get wrong is that by removing a negative behavior, you are not automatically replacing it with a positive one. For instance, suspending an employee which is a traditional response to inappropriate behavior will not solve to create a safer or more inclusive workplace. The problem will keep recurring.
Static vs. Dynamic: The pandemic has changed the nature of the typical workday. Rather than living static lives where we explore a new place for 3 weeks of the year during vacation days, people can now explore 52 weeks in a year. With a laptop and internet, people can choose where and how they want to live, bringing into question the role of the traditional lease, especially in high-density areas.
Never burn a bridge / maintain your relationships. During Wise Apple, he pitched to 1000 investors of which 900 said a straight no. Instead of cutting them out, he stayed in touch with each of them and focused on building relationships with them - those have been useful to him in his VC career now. Also remember, it only takes one yes, so ignore the other 99 nos.
Culture is who you are when others aren't looking. Similar approach to relationship building as a VC. It's easy to get caught up in work and forget to reply to emails / let them get lost. But always reply. Never just say no - give a reason. Be honest and transparent. The world is small, getting even smaller.
Investing during COVID: Product > Founder. Since we can't meet founders, it's even more imperative to fall in love with the product and have 100% conviction. For CPG, both brand and product are key. Brand needs to grab attention and product needs to maintain attention.
Best founders have a strong human element. Our best portfolio founders have strong family ties, hobbies, life outside the startup. Need to be a well rounded person. Zoom is giving new opportunities to understand founders - observe how they react when a family member walks into the room / something goes wrong on a call. I have a 6 week old baby I have been holding while on calls, and how founders react to her is interesting.
High valuations for early stage companies. Founders get excited when they get needlessly high valuations in early rounds. Heard of some founders who got a $50m post money for a pre-revenue company. That's just setting yourself up for failure. Chances are you can't grow fast enough to justify that valuation and you will either have a down round or a poor bump up. Investors expect 100x bump ups.