Welcome to the 2nd part of the You just got f*** (funded)
If you haven’t read the first part of the “got f*** (funded)” blog make sure to take a loot at the beginning of this must read peace by Vuk Djukic.
Relations with your Investor
Be very open with your investor(s), they can be your best friend and most trusted ally. After all, they invested money in the belief that you have what it takes to make money for them (remember the bricks). So, use their knowledge, ask for their contacts, ask for introductions or anything you can that was discussed when you first evaluated each other and found that you were a good fit.
Here is where experience comes into play. When the first problems arise, some big some small, you and your team are expected to pull through. Whether it’s a change in the market, a new player has entered, a new technology, one of the founders has quit, no one is buying your product anymore or all combined, you need to keep your cool. If you have never woken up at the beginning of the month with a cold sweat, worrying about how you are going to pay salaries this month, you are at a disadvantage. The experience you have accumulated over the years shows in crunch time situations, not when the bank account is full.
Many of my colleagues agree that the founder-investor relationship is much like marriage, everything is great on the outside but only you know the cracks. So when the honeymoon is over (reality kicks in) you are stuck together for better or worse. The investor can be patient with the investment especially if it’s been disclosed that the strategy is “first develop a product over a long period and then start selling”. But that will only go a short way. You need to execute and show results, otherwise no one will stay in the “marriage” for too long.
Expectations and KPIs
I am not a fan of this but there are companies and teams that do this and some succeed. What the investor wants and what you (the founder) should want is growth in revenues. If you are building a company it must have revenues (sales) as its top priority. If you don’t think that revenues are important, please stop reading and go open an NGO. Your sales goals must be well articulated and achievable. In fact all your goals must be S.M.A.R.T. (look it up!) but I take for granted that the readers are fluent in buzzwords, even if they are 50 years old. If they are not, several months down the road when the going gets tough, you will be scratching your head trying to figure out who to blame.
Pivoting is not a bad thing, in my opinion. Especially for a startup a.k.a. “company” that is starting its operations. If you identify a problem with your company that needs to be fixed and you see that continuing the current path is the road to illiquidity, then by all means – pivot. But make sure that your pivot is well explained and agreed upon internally. It’s like the old joke, banging you head against a wall may be viewed as admirable, because it’s tough, by all those who don’t see the glass door a few feet away.
There are some things that are universal – death and getting fired – no one has found a cure for them yet. If you, or someone from your team believes they are God’s gift to investors and are objectively at fault and continue to make costly errors, make no mistake – everyone is replaceable. There are many people that identify with their current position so much, they feel their DNA has been embedded in that position. This is not the case. In this world where everything is constantly changing and shifting, a person or group that become toxic or problematic should be and will be replaced. No one was ordained the C-level position by a deity.
If you have survived the text and reached this point, I thank you and leave you with a few takeaways:
Getting funded is just the beginning – make those who believed in you proud, not sorry.
Adapt and anticipate – survival instincts will carry you far.
No team – no future…
Vuk Djukic Principal