Startup Lessons

One of the interesting things about being a VC is that you often see companies in transition. If you’re an early investor like I am that often means writing the first $2-3 million check into a business that previously had either survived on fumes or on a $500,000 angel round.

I also see companies as they move from having taken $1-5 million from me to their next round where they raise $8-15 million from Series B investors and sometimes I lead at this round (we’re stage agnostic but 80% of our deals are seed & A).

Moving from a company that had less resources (and presumably by the time they’re raising depleted resources) to a company with newfound resources can be telling.

I have seen many companies raise their first $3 million and still act like a company that has no resources at all. And while this might sound to the inexperienced person like a sensible idea – it is not. In a VC business when you raise additional capital you need to “level up” and act the round you are.

Of course I’m not preaching crazy, irrational spend or having Kid Rock at your next company party. But you do need to find a way to do activities that are more scalable. The founders are (or should be) the most valuable resources in the company and scaling implies that you bring in others to help accomplish tasks that allow the founders to get more leverage.

In some cases this is about getting routine tasks off of the founders plates. It’s why I wrote this post that the controversial first hire after an A round out to be an office manager / assistant / HR person who handles everything from stocking supplies to booking travel to scheduling group meetings. All of those things that you do yourself as a badge of honor in the early days are simply not your best use of time.

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Reference calls. We all have to make them. Whether you’re considering hiring a new employee or as an investor whether you’re looking to do a background check on the founders of a company.

My friend Jason Hirschhorn Tweeted about this today

References on hires are often useless.

— Jason Hirschhorn (@JasonHirschhorn) April 6, 2014

1. Ask for at least 5 references
As your candidate for at least 5 references. You specifically want to ask for people who have directly worked with the person before. I like to get a mix of people who have reported to the candidate, whom the candidate has reported to (2x) and peers.

Don’t worry about the fact that these are the references that the candidate has hand-picked – that’s part of the process. I would start by asking the candidate, “How did you decide on these five people” as part of your review process.

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There’s an old joke in software development, “How much time does it take to design software?” Answer: As long as you have scheduled for the design phase.

I know. Not funny, “ha, ha” but pretty apropos.

If you’ve been involved with a number of software projects you already have an intuitive sense for this. We’ve all been involved with projects that seem to drift and drift and make progress. There’s a healthy balance between allowing a design team to dream up functional requirements, talk with customers, analyze competitors and for technical projects – research the latest cool-kid tools to play with.

Design with no constraints becomes a research project.

You see there is a creative tension along the spectrum of  time and scope. If you pull too hard at the scope end of the chain your time drifts. If you pull hard at the time end of the spectrum you end up shipping inferior product.

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One of the hardest things for most entrepreneurs to know is how hard to push in situations where people tell you “no.”

But then again most entrepreneurs fail. There is that rare breed that doesn’t accept “no” for an answer. It is impossible advice to give because there is such a fine line between being persistent and being annoying and it’s something you probably can’t teach. I often describe “chutzpah” as being able to skate right up to the line of acceptability without crossing over it.

And being persistent I believe is the most important attribute for success in an entrepreneur (assuming of course that you have all the other requisite skills).

Years ago I started using the term “politely persistent” to remind people that you still need to be likable even if you have gumption.

I’d say less than 20% of of entrepreneurs fit into that bucket.

Of course at one end of the bucket are entrepreneurs who are persistent but just aren’t polite.

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We all intuitively know how important human connections are in business but for many people it’s like exercise or eating well – one of those things you keep meaning to get around to.

It reminds me of a line my wife and I often jokingly say to each other after seeing the awesome film “Notorious” about the life of Biggie Smalls

“I know mothafuckas who know mothafuckas.”

Please just take 8 seconds to listen to this clip on YouTube – it’s priceless. It always struck a chord with me. The critical skill is not just your immediate network but the network beyond that you can tap into if you’ve earned the right through nurturing your 1-degree relationships.


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This article originally appeared on TechCrunch. There is an old saying in poker that if you don’t know who the sucker at the table is – it’s you.

The same can be said of critical decisions in a board meeting or frankly any other meeting where major decisions are ratified. If you’re turning up to important meetings hoping to persuade the critical people who attend of a decision you’re trying to make and having already “counted your votes” you are sub-optimizing results.

This is a classic mistake many entrepreneurs make so I’d like to offer some constructive advice on how the savvy hand would be played.

1. Why You Should Pre-Meet Board Members
It is healthy to allocate 30 minutes per board member for a call at least a week in advance of your board meeting.

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