When you found a startup, you learn that you need to develop the skill of getting inside people’s heads.
The best founders, in general, have a great deal of empathy. That might seem like a strange thing to say – the cliche of the ruthless startup CEO hiring and firing, and making tough decisions, is very strong in popular culture.
I accept that there are well-known exceptions that prove the rule. In my personal experience, understanding how people work, what their needs are, and what motivates them, is far more useful in the long run.
It has often been said that running a startup is like playing poker. You can do everything right, and still lose. You can do everything wrong, and still win. That doesn’t mean you should be reckless. Your best shot at success is still to make the right decisions.
In fact, success often comes down to simply surviving long enough. That means not making the wrong decisions. Make a few wrong decisions playing poker, and you quickly end up bust.
The same goes for a startup.
With this mental model in mind, you can see how deciding to use empathy is a good long-term strategy, in that it helps you avoid alienating people that you need onside. You need to get inside the heads of your customers, your staff and your investors.
One of the best ways to do this is to be transparent and open to feedback. You can’t get good advice if you don’t give your advisors all the information you have. You won’t keep getting good advice if you keep rejecting it – don’t kill the messenger!
When I say advisors, I don’t just mean experienced investors and successful founders. I also mean everybody who interacts with your company. You need to listen to all the advice, assimilate it, put in the right context, understand hidden motivations, and try to create a coherent whole that can help your decision making. I’m not saying this is easy. But you definitely do not know what you are doing.
In a previous article (see Independent.ie) I introduced the idea of the regular investor update. This is one way to get excellent, relevant, and direct advice from your investors.
Some founders shy away from revealing too much. They play a game with their investors. That makes today easy, but tomorrow much harder.
If you’ve done any reading on game theory or behavioural economics (and as a startup founder, you really should – there are loads of great concepts that you can put to work) you might have come across the term “meta-game”. Most people just play the game in front of them. They keep optimising for immediate wins. But these can easily turn into pyrrhic victories if you lose the real, underlying game – the big picture.
You want your investors to keep investing in you, to support your fund-raising with bigger investors, to invest in you again when this startup fails, and maybe even to help you drown your sorrows.
That is the meta-game – to think beyond just this startup, and put things in the context of your entire career as a founder.
That is why it is so important to keep your investors in the loop and to share your current status with them regularly. You want to avoid surprises, but you also want to show your respect for their support as investors.
The way to do this is to send a monthly investor update email.
Let’s recap what data that should contain. There are seven sections: the basics, the numbers, the team, the news, the problems, the money and the ask.
In the ‘basics’, you remind your investors of who you are and your basic business model and value proposition. Investors tend to be very busy people, and absolutely will find this valuable. Help them to think better and faster by providing the foundations in a neat package.
In the ‘numbers’, you provide the relevant metrics for your business. How many new users, how many users are you retaining, how much does a user cost to acquire, and how much money do you make per user. There are set of standard metrics for this data, which I’ll cover in a future article.
In the ‘team’, you outline the size and capabilities of the team, and future hiring plans. Good investors bring more than money to the table – they can often help you find great people.
In the ‘news’, you bring investors up to date on any recent news such as product launches, competitor activity, or anything relevant that will make their advice stronger.
In the ‘problems’ you need to expose and highlight the things that are going wrong. You can call them “challenges” if you like, but everybody knows that more colourful language is usually appropriate. Confess your mistakes and move on to solutions. Good investors are well aware of the mental model of “sunk costs”, even if they have an initial emotional reaction to your screw-ups. Money spent is money spent, and you’ll never get it back.
In the ‘ask’, you need to ask for help. Investors are, literally, invested in your business. They should be helping. They have deep networks and lots of business experience. You need to make use of it.
What do these seven sections look like for voxgig at the moment?
Here’s our little investor report: voxgig is an online community for conference speakers and event organisers that makes it easy to find and collaborate with other event professionals. Our value lies in focusing on collaboration tools, where most of the manual labour and inefficiencies exist. In particular, we think conference speakers are a forgotten tribe and need a little more love.
We are still in soft-launch mode. We’ve focused our minimum viable product (MVP) on solving the discovery problem: how do you find great speakers and events. We’re now expanding that MVP by running private trials with five industry partners to really understand their needs.
We also continue to produce and publish a weekly newsletter for conference speakers. Monthly growth since the start last September is as follows: 2, 79, 144, 192, 431, 668, 913, 1,332, 1,621, 2,224. This readership represents a high-qualified potential user base.
The introduction of the General Data Protection Regulation (GDPR) has had an interesting consequence for us – we can’t use Google Analytics as our system deals with quite a lot of personal data, especially for speakers. So we’ve had to go back to the 1990s and deploy our own internal website statistics. There’s nothing useful out of that yet, as we’re still ironing out the kinks.
The team is now seven employees, our most recent based in London and focused on sales. We have a great level of gender diversity at over 50pc female and we’ve signed to the techtalentcharter.co.uk to support an on-going initiative for more diversity in the technology industry. This is an important part of our company culture, and frankly, given how slovenly some of our peers are in this department, a pretty big competitive advantage in recruiting.
Our news is that we’ve just launched a new meetup: EventProfsDublin (you can find it on meetup.com). This is part of our marketing strategy to help build and support the community of event organisers in Dublin. The first event was last week and went very well. We’ll hold the meetup every month, and look to grow the numbers over time. Once we have a couple of months’ worth of data, I’ll be sharing that here.
We’re also joining the cool kids and launching a podcast. Everybody has one these days. Every week one of the voxgig team will interview a professional conference speaker to find out how they got into the game. This is very much a traditional inbound marketing tactic, and it’s going to be very interesting to see how it plays out.
Since we don’t have the audio skills to do this ourselves we used an outside expert (who I can highly recommend – get in touch if you want an introduction). The podcast will be published in the next week or two – watch this space (and yes, I’ll do an article on all the nuts and bolts).
Our troubles: We decided to launch a training course for public speaking. Selling tickets has proved more difficult than we thought. We’re refocusing our efforts here on specific market niches rather than the general marketing we’ve used up to now. When a strategy isn’t working, iterate!
Money: As a basic strategy, we’re sticking to a two-year runway. That means we always try to match expenditure and revenue projections so that the company can survive for two years. A fellow entrepreneur has recently advised that this is a little conservative, and we should move to an 18-month runway. It’s worth considering, but we haven’t even come up with a framework for making that decision yet. The two-year thing is just me following my gut.
Can you help us? As I noted in the previous article on this topic, just by reading this series of articles you are already an “investor”.
You have invested your time, for which I’m very grateful. If you’d like to take the next step, consider subscribing to the newsletter or coming to one of our events. I’m also happy to help you – if you’d like my thoughts on your startup, I never say no to coffee!
Richard Rodger is the founder of voxgig. He is a former co-founder of Nearform, a technology consultancy firm based in Waterford.