You woke up in February with a revolutionary idea. A product people would love; a service that would fill a gap that, somehow, everyone else had missed. A proverbial light bulb went off and you thought, “my god…this could change the world!”.
Then COVID hit.
In an instant that big, beautiful, 100W idea was eclipsed by fear and uncertainty. What if I can’t get it off the ground? What if it will be worth more after COVID? What if no one will join me?
This week on Elevate Live, we welcomed three top-tier venture capitalists to answer these questions and more. And you know what? The future looks bright.
Byron Deeter of Bessemer Venture Partners, Ann Miura-Ko of Floodgate and Salim Teja of Radical Ventures have extensive experience in the industry. They are some of the most well-equipped people in the innovation ecosystem to identify emerging trends and anticipate market shifts, and our conversation with them left us with a feeling we haven’t dusted off in a while: hope.
According to our panel of pros, here are some of the top ways that you can take advantage of the current situation to get your startup off the ground. Not just in spite of the current crisis – but maybe even because of it.
Byron Deeter knows a thing or two about what it’s like to be a founder. In 2000 Byron founded Trigo Technologies, one of the first global SaaS companies, which successfully reached profitability and was eventually sold to IBM.
He offers this piece of advice not as a venture capitalist, but as a fellow founder: if you’re offered money, take it. Don’t get lost in short-term fluctuations or trying to game the system. If you’re building a business and need capital to do it, then you are subject to the market dynamics. In the current market, you’re best to take the money and move swiftly into the business building phase.
A few weeks ago when we chatted with Michele Romanow about Founder Friendly Financing, she identified inability to pitch in person as one of the greatest challenges facing founders during COVID.
Believe it or not, things have already changed dramatically.
According to our panel, founders can absolutely pitch virtually. But here’s the catch – let everyone step away from their computer while you do it. The last thing you want is to be the last pitch to a potential investor who just spent 8 hours reminding people they’re on mute.
“I actually had a Zoom call and the founder said, ‘hey, let’s just talk through the business. If you want, you can go on a walk. I’m not going to show you slides, I’m just talking through what the business looks like,’ shared Ann. “It was really nice.”
If you aren’t local to the VC firm, suggest a 30 minute walk and talk via phone with a short product demo at the end (once everyone has returned to their desks). If you are local, consider a socially distanced walk in a low density area. Trust us, they’ll thank you for the suggestion.
When’s the last time you travelled with a friend or family member? Think back to your biggest fight (you definitely had one). Was it on the beach? While you were strolling through sun soaked streets looking at architecture? Was it in the beautiful restaurant where you ate delicious local cuisine?
Of course not! It was when the hotel lost your reservation; when you missed your flight; when you were late for a train and they just wouldn’t stop taking photos of that freaking fountain!
When things are good, it can be easy to tolerate differences. But in bad times, little fractures in fundamental attitudes can turn into Grand-Canyon sized divides.
Salim believes success is all about choosing the right people to go on the journey with you. He recommends the following priorities when you’re building out a team.
COVID holds infinite catalysts for stress and uncertainty, so it’s essential to choose people that will believe in what you do no matter the circumstance. The last thing you want is for your cofounder to think you’re playing not to lose.
“Look for an opportunity where you have an alignment of passion, and we where you really do believe that you can make a difference through the innovation that you’ve identified,” explains Salim. “Building a company can be a six eight ten year process. That passion has to be very authentic. Pick people that you want to be in the trenches with.”
It’s not enough to be astute about other people’s attitudes and beliefs; you have to be brutally self-aware as well. Know what your strengths are, and know what type of people you can work well with.
“Pick people who have complementary skills to you so that you can focus on different parts of the business,” he suggests. “Bring in others around you that can help raise the bar from a talent perspective because, ultimately, any successful venture is going to be driven by the incredible talent that you’re able to develop and attract.”
Ann points out that your customers, and their behaviours, are not fixed. They always evolve, but COVID in particular has caused a massive shift in the way consumers think and act. It’s reprioritized spending, and that means that customers who were a perfect fit at the beginning of this year may not be any more.
“You might have had an incredible product market fit in January, but by July it doesn’t work out,” she explains. “The same goes for what we’re calling ‘COVID market fit’. You might have great product market fit today but six months from now the need could have passed.”
That means having a relevant assessment is critical – it should be a constant, ongoing conversation.
Ann says her firm is particularly focused right now on determining exactly how much cash their portfolio businesses need to get them to the point of being cash flow positive following COVID. Here’s how they see it:
In ‘these unprecedented times’ (are there T-shirts with this on it yet, or what?), it’s impossible to predict the future (unless you’re Scott Galloway). The closest we can hope to come is looking at everything that’s come before and drawing reasonable presumptions.
In order to do that well, you need a killer data set and, according to Byron, that means taking advantage of your Board. Ask them about their experience, run scenarios, and be as collaborative as possible.
“One of the benefits of having Board members right now is that their experience is likely broader but shallower than yours. So pull in the breadth of what you’re seeing from other companies and other experiences to roll out in your data set,” explains Byron.
That may include out of cycle calls, team discussions or C-Suite forums – whatever format you prefer, data and diverse experience are your best friends right now.
According to Salim, consumer behaviour has changed from favouring nice-to-have products to must have products. In order to be successful, any new business needs to have a firm handle on what their must-have angle is in the current market.
As humans we seek out passion. It motivates us; energizes us; enamours us. We root for it. We don’t want to see Rocky make it because he has time on his hands and the money for a trainer. We want to see him win because he wants it more than anyone else.
The people who disrupt are the ones who do it against all odds because they had the courage to see it through when it didn’t make sense.
“A lot of people will be fleeing into grad school,” says Ann. “They’ll go to business school to survive the next three years, or or they’ll go work at a larger company because it’s just a little bit more safe. So if you feel the pull to found something in this moment, it means that you’re doing it for the love of it; for a fundamental belief that something has to be born. And I think that’s the best reason to start a startup.”
If there’s a voice telling you to start a business right now, you’d better listen to it. The fact that you can hear it over the constant hum of COVID means it has something important to say.
“If the passion is pure,” echoes Byron, “you’ll be able to, through force of will and conviction of vision, attract the investors you need to go out and conquer the world.”
What are you waiting for?
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