There is a German saying that goes something like this:
“Als Tiger gesprungen und als Bettvorleger gelandet.”
A rough English translation is “leaped like a tiger, landed as a bedside rug” – it basically means someone came roaring in to say a negotiation / argument / situation but essentially was overselling and or bluffing from the start in an over the top way – eventually the bluff is called and all credibility is lost. The outcome for the former tiger, now turned bedside rug, is never a good one.
Every now and then I’ll see this failed stunt in startup fundraising and it ends in tears a lot of the time. Actually I am seeing it more and more so I thought I’d write about it. It’s important because it can ruin your entire raise and risk your company – without any need.
The movie goes like this. “Hey you need to know we have XX term sheets at XX valuation and funds X, Y and Z are really keen. You have until XX to decide.” Sometimes the founders will say that, sometimes the existing investors will put in a call to us.
Per se that is OK -
Your job is hard enough as a CEO to be dealing with a board / investors that only roughly understand what is actually going on. This happens more than it should.
So one of the things you can do to make sure your investors / board are really up to speed from day 1 is to run them through a structured onboarding process. Here are some ideas on how to do that:
We all know that folks increasingly prefer to use their favourite app from a specific developer / publisher for a specific use case vs. say using a wide range of apps from a single developer / publisher that is trying to cover all the bases. You can’t be great at everything and user experience on mobile matters so much more than on desktop – so that’s why highly vertical applications are winning.
Most of these vertical apps are freemium services and you can do a lot with them without paying. But once you want to go premium say with a whole bunch of these apps – that can get a little pricey on a per month basis and folks aren’t yet used to that (vs the old world where you paid hundreds up front to have MS Office etc. as part of your new PC).
So Evernote, Lastpass, Pocket and Wunderlist (a portfolio company of ours) teamed up to offer a pretty cost attractive bundle of their premium services for a limited amount of time.
Now these folks can do that because they have
I saw this a while a go on Michael Moritz’ bio and it has stuck with me since:
I have no problems with Cabernet grapes, I quite like garlic, I do have hay-fever (not sure about Wildgrasses though) but what stuck with me is the allergy to low gross margins.
I have a severe allergy against low gross margins too.
Why? I am going to over-simplify a lot and there are a ton of exceptions and caveats – but here it goes:
If you are building something difficult, that creates real value to users / customers / companies, something that is hard to replicate and unique with a great distribution model – well then you generally get to charge a lot more for your product than it cost you to produce it. This can apply to anything from a unique consumer app to a niche SaaS company. There are a million ways to get there.
If you are doing something relatively straight forward (e.g. buying and selling on for a margin), something that is not so hard to replicate, something where customers will think twice about the price – well then you
Note: Scroll all the way down if you are interested in methodology and some caveats around how to interpret the data.
I built a map this morning showing twitter mentions of 4 portfolio companies during last week:
That’s pretty noisy so I looked at each individually.
Here’s CartoDB’s week on twitter:
CartoDB is platform and community for map builders (and folks building data apps on top of maps), so you would not necessarily expect a lot of folks talking about them on twitter. Except that when the community builds something and shares it. You can see activity increasing a lot towards end of the week when Simon Rogers built his #JeSuisCharlie map.
My guess was that of course most tweets would be out of France, so I toggled a switch to look at that:
Here’s EyeEm’s week on twitter:
EyeEm is a community and market place for mobile photography. It’s pretty popular everywhere and there are no obvious useage patterns. Well, except I figured Japan must be especially active as they are positively crazy about photography . So I toggled a switch to look
I have been thinking a lot recently about how as an individual my choices shape the world we live in for good and for bad. It is very easy to talk yourself in to the mindset that really your choices do not matter in the wider scope of things.
This is simply not true and nothing short of a comforting cop-out. The psychology behind it is clear: only by forgetting, living in denial, etc can you afford to continue with the lifestyle you hold so dear. I am going to elaborate on this in a longer blog post when I have finished collecting some more data and crunching some numbers on the impact an individual can have.
But today I am going to keep it short and just recommend one of the best books I have ever read on the topic of making conscious choices as an individual that can have a huge impact. I think this is a book everyone should read; it should be required reading at schools in my view:
It’s Eating Animals by Jonathan Safran Foer. You may know him from “Extremely Loud and Incredibly Close”
Something doesn’t go according to plan. Something goes horribly wrong. A strategy doesn’t play out as hoped.
Business as usual in many startup situations. What happens next is decisive.
Ideally the team and the board are interested in getting to the depth of what really happened, what the real problem is and how as a team we can fix the issue.
Sometimes what happens next though is – as a pure knee-jerk reaction – the blame game, “She / he really blew it”, etc. Firing, demoting, etc. come up as options quickly.
This is easy to do – it requires hardly any thinking and effort to analyse what really happened; and therefore is so tempting. Also blaming, firing someone (say a head of sales due to revenues not growing as expected) is a lot easier than to fundamentally question the value proposition of a product (and therefore often the entire company), etc.
Don’t get me wrong – often issues can be tied to a role or a person and changes must be made. That is always an option and must be considered.
But when you are foaming at the mouth in anger, looking for someone to blame, you may be missing an opportunity to find out what is really going on.
Early traction and a passionate user base is usually a very good thing. It can also kill you if you look at it the wrong way.
Here’s what happens a lot. You launch something, get some good early traction and a still relatively small but passionate user base. Folks love your product. They are confirming your view of the world.
All of a sudden, product decisions are not only made in terms of “how do we grow” / “address a big market” but also “let’s not break this” / “let’s not piss off our users”, etc.
However you may have just hit an early adopter base that exhibits entirely different behaviours than the much bigger mass market you actually want to address. That user base may not be very valuable at all. You may have to really piss them off to address a much larger user base. Facebook pissed off a lot of early adopters. Twitter pissed off a lot of early adopters. I could go on.
Pissing off early adopters can be a very good and necessary thing.
By protecting them too much, you are just protecting a supposed value you don’t actually have.
A company has product issues. A new senior VP of product is hired. A company is struggling with its sales team’s efficiency. A new senior VP of sales is hired. Happens every day in our world and in many cases makes a lot of sense.
What does not make sense is to treat these new senior hires as if the (product / sales / etc) messiah personally has arrived at your company. This is easy to do. You are hurting. Nearly every change will appear as “ah good finally things are improving”. Appear.
To treat new senior hires this way is bad mainly for two reasons:
- Even the best person is going to take many weeks, months to have an impact at a company. By putting them on a pedestal too quickly (I have seen boards do this a lot), by all of a sudden contributing any / all changes to this person – you are really demotivating the current team. It is highly likely that any changes / progress you see (esp on product) briefly after this new person has arrived is due to stuff the existing team had been working on.
- It is also unfair to
I saw this on twitter a while ago and I loved it:
Not only does this apply to products, but also to features within products. Every day, every week our companies are building new features and releasing them in to a small beta group to see if they latch on. Quite often the feature implementation will just be pretty rough / bad and folks won’t engage with that feature. It is then tempting to conclude that the feature is not desired when the answer is that even for a quick beta release it needs to be a minimal viable feature.