Author: Mentorphile

I’ve reviewed hundreds of pitch decks and executive summaries over the years. I just finished judging nine applications for the MIT Clean Energy Prize. One issue that is pervasive in startups coming out of academia is the tendency to list only the academic qualifications of the team members. How should they be presented?

Photos are always good and virtually everyone includes them. But more important than academic degrees and photos are roles: finance, sales, marketing, administration, operations, HR, and product or service development.  Who will do what in the new venture needs to be clearly thought out and clearly presented. It’s fine if you don’t have a full team yet, but you should show what positions you will be hiring for.

Titles in startups tend to be exaggerated – the C-suite is very crowded in startup pitch decks! Not everyone on the team is a CXX, some may be “directors” or “senior managers.” While an org chart isn’t a necessity, it would be a good backup slide, especially in ventures that are further along in their development – where organizational design becomes important as the company grows. The one title investors and others need to know is CEO. CTO and director of sales and marketing are the other important titles.

More important than titles, like CFO, are accomplishments, like “helped take NewCo public” for your director of finance.  List one singular accomplishment per team member.

The team slide often gets presented last or next to last and doesn’t get the attention it deserves. Yet team is usually the most important factor for investors (the others being the size of the market opportunity and your “secret sauce” or “magic”). You need to be able to articulate to your audience why your team has what it takes to make this venture a huge success. If members of the team have worked together, gone to school together or known each other for years, this should be noted, as studies have shown teams with members who are known to each other tend to be more successful in new ventures than teams of total strangers.

As I’ve posted previously, the entrepreneur’s major asset during the startup phase is themselves.

At a recent mentoring session we got a great question from the founder: How can I best manage my time? Time is one of the major assets of founders, so managing it correctly is a huge contributor to the venture’s success – even attempting to manage your time is beneficial, as recognizing just how valuable every minute of your waking hours is an asset to be managed.

I’m sure there are a zillion apps for time management. Here’s some general advice based on my experience as a founder of half a dozen companies (two of which died in infancy).

Let’s assume that out of a 24 hour day you need about 12 hours for activities that contribute to a healthy and successful life: sleep, exercise, good nutrition, and strong social connections to family and friends, plus those nagging life maintenance tasks, like renewing your driver’s license or preparing your tax return, that can’t be avoided.

Time should be invested, not spent

Most founders are familiar with the concept of ROI – Return on capital invested. But what about ROTI – Return on time invested? When prioritizing your tasks or even deciding if you need to do something or not, look at what your return will be – short term and long term – from that activity. When tasks compete for your attention the one that will generate the biggest return in time saved or money made or saved should win. You the founder are the venture’s key asset you should invest time or money (such as taking an Uber rather than driving yourself to a meeting where parking is virtually non-existent) in making you more productive (doing more with less, more efficient (doing things right) and effective (doing the right thing).

Delegation

My philosophy as a founder and executive was to always attempt to delegate as much of my task load as possible, leaving only those tasks that I alone could do or do better than anyone else in the firm. Delegation is the key force multiplier for founders. So review your universe of tasks with a goal of delegating as many tasks in your business and personal life as possible. For example, I’ve been using an accounting firm to prepare my taxes every years for decades. They charge a lot but as it’s something that a) I hate doing b) it takes up a lot of time and c) I’m  not good at, I’m glad to pay someone else to do. If you have a life partner you need to have a sit down talk with them about how you need them to pull more than their share of life maintenance chores until your venture matures. Without my wife’s undying support I could not have succeeded in building successful companies.

Hiring young, hungry staffers who have an appetite for getting stuff done is a far better strategy than hiring established executives who are used to having everything done for them.

Many founders are very hands-on and may have to learn to delegate. Start with small things and work your way up. Don’t start delegating until you trust those you are delegating to.

Prioritization

Founders are bombarded by demands: recruiting and on-boarding staff and raising capital are the two most important founder jobs, as they both increase labor and capital resources for the venture. The best way to handle both tasks is not to delegate either of them wholly but delegate early stage milestones. For example, in recruiting you should spend your time on organizational design and interviewing finalists. Leave the logistics of scheduling interviews, checking references, etc. to your admin staff. This will both free up your time and give others the opportunity to learn how to interview candidates. You can use MBA interns to build up a target list of qualified investors in your market for your review. Don’t spend any time with investors who aren’t a fit with your firm – have someone else perform the due diligence on firms that fit.

Dealing with interruptions

Founders are subject to a blizzard of interrupts both internally and from external sources such as lawyers, accountants, interested investors, prospective partners and on and on. Text messaging and Slack have made interrupting you far easier than it was in my day. Make sure you can understand the difference between what’s really important and what others may perceive as urgent. Shutting down your phone and/or laptop for a block of time gives you time to think – often a luxury for founders. I used to come into the office about 7 a.m., before most other people ,and before any meetings were scheduled to read my email and organize my day.

Learning to say “No”

Founders need to be rifle shot focused, not shotgun unfocused. That means saying “no” to many more things than you say “yes” to. Since the days of having a secretary screen your calls are long gone, learn to rely on voice mail and caller ID. I tend to let most calls go to voice mail, so I eliminate an interruption and can learn from the voice mail what action I need to take, including none. Of course, if you are in the middle of negotiating valuation with an investor you will want to take their call, as most investors can be very hard to reach. As I’ve written before, founders need to be strategic – active versus being opportunistic – reactive. You can learn from investors who very rarely give founders a hard no. There’s little benefit for doing so. Better a soft “no” such as “the timing isn’t right for us”, “we’d need more resources to work with you”, “it’s not a fit with current business plan.”

Keeping a to do list

There any tons of to do list apps for iOS and Android – I just use Apple’s Reminders App which works well both on my desktop and my iPhone. Make sure that your “to dos” are actionable: “Send executive summary to the VC you met yesterday” versus “follow up with the VC you met yesterday.” To do’s need time frames – when are they due? And priorities – how important are they? I used to use the quiet time of 7 am to 9 am to put together my daily to dos. But don’t let your to do list become a straight jacket – everyone needs some down time or time to just hangout – so don’t schedule yourself too tightly. Hither to unseen big opportunities can pop up. Be fast, focused, and flexible.

Share your schedule with others

Doing so will alert them to when you are available for a meeting or quick chat and when you have blocked off time for zero interruptions. And while we are on the subject of schedules, don’t let your meetings run into overtime! There is no shame in ending a meeting early if there is no further need to meet. And cut down your meeting attendance to those absolutely critical to you – get a written summary of other meetings if you need that information.

Recognize that startups are overwhelming!

There will always be more to do than you can possibly get done in your 12+ hours of your workday. Reflect each night on what you got done and ways you could have saved time. Reflect each morning on what you plan to accomplish that day that will increase the value of the venture and move you closer to achieving important milestones.

Inspire them!

The highest purpose of art is to inspire. What else can you do for anyone but inspire them? Bob Dylan.

I’m a very long-time Bob Dylan fan; I saw him at the Newport Folk Festival in 1965 and have all his albums through Blood on the Tracks, after which he lost me for a number of years. When I think of creating corporate culture in a startup I think about this Dylan quote. Business is not art. Or is it? My first stint in the software industry was at a company entitled Software Arts. The founders considered themselves artists whose medium was software.

It is very hard to push anyone to do anything. But pulling them in the direction you want them to go is the job of the founder/CEO. If you can’t inspire the troops you better find a co-founder who can. Inspiration is the strongest pull, far stronger than free lunch or stock options! Your vision in founding the company is the strongest inspiration you can offer, but you should be thinking how you can inspire everyone on the team as a constant process, not a one-time event.

I had the sad task of mentoring a team whose founder and CEO had recently died unexpectedly. That’s about all I can share with about this mentoring session as I’m bound by a blanket NDA I’ve signed with MIT Venture Mentoring Service. But what I can share with you is a brief categorized list of the major elements of your startup’s operations that you as a founder should document just in case anything dire should happen to you.

Your lawyer and/or accountant can help you flesh out this summary list.

Key Contacts List

Surviving colleagues are going to have a lot of questions and while documenting your operations should answer many of them, there is no substitute for a list of key contacts: the company lawyer, company accountant, all investors, advisors, consultants, vendors, and important customers. Keep this up to date and backed up! In fact that goes for all documents regarding the company’s founding and operations.

Finances

I hope you are keeping track of your finances with a program like Quicken.  The most important thing your colleagues need to know is Cash On Hand, the actual amount of money in your bank account and petty cash, if any. But it’s equally important for them to know accounts payable – the money you owe to vendors and creditors and when those payments are due; accounts receivable – the money customers and others owe you and when those payments are due; the balances due on any loans or progress payments; and any incoming payments from investors.  And please make sure that you are not the only signee on the company’s bank account(s)!

Ideally you should have an up to date set of financial statements: income statement, cash flow and balance sheet, especially if the venture will continue on with the founder. Financial statements should be generated every month. If you aren’t familiar with all this stuff – and many engineers and scientists are not – hire an accountant to set up your books on Quicken or whatever your finance package is, and teach you how to use it. Someone in the organization will have to handle actually paying the bills and depositing any income, if any. For pre-revenue companies life is pretty simple; once you start generating revenue things get more complicated.

If you have investors  you should have a cap (capitalization) table showing the stock ownership of every individual with stock or stock option along with copies of their stock agreements.

More mature companies will have insurance policies, whether D & O (Director and Officers), “Keyman,” or general theft and damages policies. The payments of premiums on these policies should be part of your General Ledger – the list of operating expenses.

Legal

Surprisingly to me, many early stage companies haven’t gotten around to establishing a business entity, typically a corporation, either an LLC or C-Corp, occasionally an S-Corp. Whatever it is your lawyer should have the original paperwork and you should have a copy in your office. If you haven’t quite gotten around to this I hope you have a least a founders’ agreement, stored in an easily accessible place digitally and on paper.

Most ongoing companies have contracts, or some sort, be they the lease on your office or contracts with vendors with whom you do business. Keep a file on every company or individual you do business with or have done business along with any contracts with them.

If you are a tech company you no doubt have secrets to protect, which means signed NDA (Non-disclosure Agreements). And partners may have required you to sign NDAs as well. The best practice is to store all originals at your lawyer’s office – the paper copies and store digital copies on your server.

More mature companies will have patent applications, trademark applications, and lots of other legal documents. If you make a practice of storing a copy with your lawyer and another copy – usually a digital one – at your office, your colleagues should have no trouble following in your footsteps. And while you may think the odds of your founder dying are vanishingly low, the odds of selling the company are much higher. Keeping a very tight ship by following these documentation guidelines will make due diligence by future investors or acquirers far easier.

HR

At minimum you need contact data for all employees, contractors, and consultants along with their signed NDAs and stock agreements, as appropriate. If your company conducts performance reviews those should be stored along with any other relevant information.

The more mature the company typically the more documents and operations information that needs to be captured, stored, and made easily retrievable. But for even early stage startups the sooner you start documenting your operations the better.

The other day I did the worst possible job of leading a two-on-two – two mentors, two founders – mentoring session. I was so distracted by a personal issue that the mistakes I made in seating everyone didn’t dawn on me until after the meeting ended.

Mistake number 1: one of the mentors, who I had not met before, had a heavy Indian accent. Between her accent and my hearing deficit, letting her seat herself at the opposite end of the 12 foot table from me made it very hard for me to make out what she was saying.

Mistake number 2: I should have realized that mistake and moved closer to her or asked her to move.

Mistake number 3: As temporary session leader, I sat myself at the head of the table. There was no need to do that for such a small meeting and it set the table for my biggest mistake (pun intended!)

Mistake 4: I allowed the two founders to sit across from each other. Result? They both had to keep turning their heads to address the two mentors, seated at opposite ends of the table. I noticed this early on but, again didn’t correct it.

Lessons learned:

1. When you have two distinct groups in your meeting, as I did (mentors and founders), seat them opposite each other, each on one side of the conference table, so each team can both speak and listen without having to turn their heads.
2. Avoid round meeting tables!
3. Unless you have a good-sized, mixed group and you are the leader of the meeting, avoid sitting of the head (or the foot) of the table. Those are the “power positions” and will serve to dampen open discourse.
4. Get to the meeting early so you can take your appropriate seat and direct everyone else as to where they should sit. This avoids asking people who have seated themselves to have to pick up their stuff and move – not a good way to kick off a meeting.
5. Explain that you are setting up the seating to enable direct conversation and save everyone from having to swivel their head back and forth.,
6. If you notice a seating problem in mid-meeting don’t be afraid, as I was, to stop everything and solve the problem. Just find a good time to pause the meeting.

As usual with Scott Adams, there’s a kernel of real business savvy embedded in his humor. While the Mentorphile blog focuses on mentoring entrepreneurs, not on the far more common career mentoring lampooned on today’s Dilbert strip, the pointy-haired boss’s request that “Maybe you could give me a scenario and then I’ll tell you what to do.” after whining that “It’s hard to think of advice while you are pressuring me.” are far from unreasonable. Of course, no mentor should make statements like “I’m full of useful advice”! There are two lessons here are worth noting for mentors and those founders who are being mentored:

1. Mentors can not be expected to be vending machines for advice. Advice can’t be given in a vacuum; it needs context. It is the responsibility of the mentee to provide that context. In other words, mentoring is largely reactive. Our role is to response with helpful advice, feedback, and guidance to the founder’s current problem or situation. The exception is when mentoring raw startups who haven’t even created a business entity, in that case there is plenty of standard advice we can give about creating the right legal foundation, but even that advice needs context: is the founder trying to create a lifestyle business, a slow-growing boutique business or a shoot for the moon hyper-growth company?
2. Scenarios are one of the best ways to educate, as proven by the case method used at Harvard Business School and at other professional schools at Harvard. Having worked with HBS on one of the first interactive case studies Managing Across Borders by Professor Christopher Bartlett –  I learned a fair amount about the case method and have become an advocate for adopting a version of it for both recruiting (in my past) and mentoring (today). While there’s a lot of abstract concepts tossed around in the startup world – like “product/market fit” – founders operate in the real world of concrete actions and results. One definition of scenario is a a postulated sequence or development of events. In other words, a hypothesis about how things will play out in the future given a certain initial state. In oThe founder can posit an “if/then hypothesis” such as “if I provide stock options to my senior management team then should I also offer options to outstanding individual contributors or even to my entire staff?” The mentor can then rely on his own experience, his experience mentoring other founders, and his general knowledge about compensation issues to help the founder explore different answers to this question.

Perhaps eventually Scott Adams will lampoon us mentors to company founders, in the meantime we now have two career mentoring strips to enjoy and learn from!

Technology Adoption Curve

Flipboard, which I use to keep up with business and tech news, is infested with listicles. Since their business model is advertising you can’t blame them; research proves people will click on listicles. I tend to ignore most of them, but I noticed this article was from Entrepreneur India ,which I find is a provides a different and valuable perspective on the startup world.

Five Blunders that Could Doom Your Start-up Even before it Takes off by Dr. Pavan Soni, Founder of Inflexion Point, is based on Dr. Soni’s experience as a strategy and innovation coach and I’m in general agreement with him.  Here are those blunders with my comments based on my own experience as an entrepreneur and mentor:

Not knowing or communicating the ‘purpose’ with clarity

This blunder is rightly listed as number one. Simon Sinek observes that customers buy your ‘why’ and not ‘what.” Unfortunately, product oriented founders like myself get too hung up on the “what” – the product we are so proud of and have worked so hard to build. But what gets lost in the fervor to build – and founders are builders, as our most MIT students and alumni, they are engineers after all – is why anyone would not only want to use your product, but why they would actually pay for it. And there are layers below that, including why would they stop using their current product to adopt yours? Why would they attempt to convince other members of their team or company to adopt the product? If you don’t know the “why” a customer would adopt your product it doesn’t matter how many features you add, you won’t be adding any customers. But founders aren’t just building products, they are building companies – at the same time. And the same warning applies: what is the purpose of your company? And no, it’s not just to make money! The original purpose of Google was to to organize the world’s information and make it universally accessible and useful.”  Note how the “why” is embodied in the last phrase: make it universally accessible and useful. Simply organizing the world’s information is necessary, but not sufficient, it’s part of the what not the why. I suggest you start with the purpose of your company and the purpose of your products and why customers will buy them should follow.

Trying to be everything for everybody

This is one of the most common mistakes I try – sometimes with little success – to help founders correct. Many founders fear that by giving up some function in the Swiss army knife they are creating they will cede market share to a competitor and leave money on the table as well. They prefer to be a mile wide and half an inch deep. Unfortunately this is the converse of the success formula for startups: to be ruthlessly focused on a target market and clearly differentiated from competitors. I often use Microsoft as a great example of a startup that began focused on tools for programmers, namely programming languages. They built upon that success to become the colossus they are today by carefully expanding into adjacent markets, working their way up the customer food chain to the CEO suite, where the biggest deals are approved. One way I attack this problem is to ask, “Ok if everyone is your customer, who are your early adopters?” This generally gets the founder to pause for a minute to stop and think – the goal of a mentor! Working with Geoff Moore’s adoption cycle is the best way I know to kill off founders trying to be everything for everybody. As I tell my mentees, if you try to be everything for everybody you will end up being nothing for anyone.

Chasing the investors, and not the customers 

If you follow this blog you know that this mistake is extremely common and very frustrating to me. So many founders outrun their headlights and start looking for investors before they have a significant number of customers. I try to teach them that customer acquisition is the path to acquiring investors. In fact many of the most successful startups end up with investors chasing them because their rate of customer acquisition is so astounding. As Jeff Bezos said: “We’ve had three big ideas at Amazon that we’ve stuck with for 18 years, and they’re the reason we’re successful: Put the customer first. Invent. And be patient.” As Dr. Soni writes:  “Often, identifying the right market segment remains a thorny issue, and no amount of money can help you discover one.” That is painfully true! And keep in mind that customer revenue is the best and non-dilutive way to finance a company! Investors invest in growth potential, until you can demonstrate that by customer acquisition traction it will be very hard to garner VC capital. (The biggest exception to this dictum are successful serial entrepreneurs with very big and unique ideas.)

Settling for B-talent, initially

The number one operational responsibility of the CEO  is to supply the needed resources to build, market, sell and support their product. The two main resources are capital and people. Unfortunately I often see founders being opportunistic rather than strategic; hiring B players because they know them rather than holding out for finding A players. Hiring the best talent takes a lot of time and effort.  But if you cut corners and hire B players they will hire C players, as they are fearful of anyone as talented or more talented than they are taking their job. Here’s a great Steve Jobs quote from the article: “It doesn’t make sense to hire smart people and tell them what to do; we hire smart people so they can tell us what to do”.

Trying to do it all by yourself

Trying to find a co-founder if you don’t have one organically – a friend or colleague – is very, very hard. And founders tend to be fearful of “giving up equity to a co-founder.” But the reality is that unless you are an inventor who plans to license their invention you must build a company at the same time you are building your product. Therefore before you even start you should be thinking of who in your network has world class talent and would fit into your company. The other source of help I’m very familiar with from experience with is strategic partners. It is safe to say that Course Technology, Inc. would never have grown to become a $100 million/year company withou the help of Lotus Development Corporation. Just as you should always be keeping an eye out for talent keep an eye out for strategic partners. And consider what is in it for them to work with you – the why again! (We helped Lotus to dominate the higher education marketplace which created thousands of graduates who demanded 1-2-3 in their new jobs.)

There are many, many more ways to screw up a startup! But if you can clearly define your purpose and your target market; focus on customers, not investors; hold out for A level talent; and successfully build out your company and forge strategic partnerships you will be far ahead of most founders.

One of my pet peeves as a mentor is seeing teams composed of a CEO, COO, and CTO – that’s the “company”! Where oh where is marketing and sales, I ask these founders? (They usually assume marketing and sales are like frosting, something you apply after you bake the cake to make it a bit more appetizing.)

But CEOs of high growth companies may actually need to hire themselves a COO. How do they know when? The article 5 Signs You’re Ready to Hire a COO by Todd Klein, sub-titled Bringing on a COO is a decision that can transform your business on Inc. is unfortunately not an article I can agree with.

Here are Todd Klein’s five signs, with my comments appended:

1. Instead of spending time growing revenues, transforming operations, or pushing product boundaries further, you’re resolving disputes among your functional direct reports.

In my experience it’s not that as CEO you are spending time resolving disputes among your functional direct reports that drives the decision to bring on a COO. In fact if you are spending time resolving disputes amongst your senior management team that is a sign of a dysfunctional senior management team and adding a COO will only exacerbate the problem. Rather, the time to bring on a COO is when the CEO is does not have the reach to play Mr./Ms. Outside AND Mr./Ms. Inside at the same time. This typically happens when the company is on a high growth path and the CEO has to spend the bulk of their time outside the company: talking to investors, analysts, key customers, and the media and thus doesn’t have enough time to manage internal functions like finance and administration, customer support, and manufacturing.

Your COO needs to put away their ego, as they will be Mr./Ms. Inside, focusing on the internal operations of the company – making the trains run on time, as the saying goes. If your COO is getting media attention then something is probably not right with the allocation of responsibilities between the COO and CEO.

2. You start noticing the flow of actionable, transformative ideas from your team is slowing down.

No doubt this is a problem. Is hiring a COO the answer? Again, I’d say no. A highly functional senior management team should be able to evaluate, compare, and prioritize initiatives and make sure there’s follow through on the right ones.    As I’ve written elsewhere, if this is a problem make sure each task has a DRI – Directly Responsible Individual, and enforce this principle throughout your organization, especially in the senior management team. Hiring a COO to be traffic manager is not the answer to this problem.

3. Your business is expanding faster than the forecasting discipline required to optimize it, preventing you from accessing a more demanding tear [sic] of financiers, suppliers, and customers.

What you need is not a COO but a stronger CFO/VP of Finance and Administration to handle forecasting and the interface with suppliers, and a strong customer support organization to handle the interface with customers. It’s the job of the CEO to handle financiers, be they bankers or venture capitalists, or large shareholders.

4. You continue to produce a multitude of great ideas, but neither you nor your team has the bandwidth to follow up on them.

This is a good problem to have! But again I’m going to refer to the management principle of Steve Jobs, who took inordinate pride in the number of ideas he said “no” to. Focus and execution is the name of the game. If you actually have a new idea that can get through the gauntlet of the senior management team then it should be allocated resources accordingly. The money you would be spending on a COO should go to the functional area that needs resources to incubate a great new idea.

5. Increased business complexity and a faster pace exacerbates communication asymmetries.

I believe that the majority of problems a company faces internally can get traced to communication problems. But adding a COO only increases the nodes in the communication network, increasing the odds of message distortion or failure to transmit.

If you do indeed need a COO because the company is outgrowing the CEO’s ability to handle both internal and external responsibilities make sure you have your communication channels and rules of the road firmly established. otherwise you may see more, not less “communication asymmetries.”

In summary, COO’s are expensive. They add management overhead to the organization and without very clear responsibilities they may step on the toes of both the CEO and their direct reports. COO’s are not the answer to problems in the senior management team. They are only needed when the company is growing quickly across multiple metrics: headcount, markets, products, sales, and revenues. CEOs should resist the idea of bringing on a CEO until and unless they have very clear duties and objectives for this person and have buy-in from both their Board and their senior management team that the time for hiring a COO is now.

In one sentence the job of the COO is to free up time for the CEO, primarily by management of internal functions like finance and administration, manufacturing, and customer support and to add expertise and experience to strengthen the senior management team.

Don’t believe everything your read, even if it’s in Inc., or for that matter, in this blog!

Virtually all investors, mentors, and advisors counsel startups to launch an MVP – Minimal Viable Product. There are several good reasons for this advice: startups by definition lack resources, thus they need to put “all their wood behind one arrowhead;” getting a product out quickly enables the founders to learn, priority one for founders; and an MVP minimizes the cost of failure, enabling a startup to try again.

But where is the advice for companies that have successfully launched their product? They have customers, they have revenue – how do they deploy their product or service development resources now? There are a number of options: keep adding features to build out that “minimal” product; bring their product to a new, adjacent market; create another, related product to build a “product line.”

But it pays to go back to the customer – what are they now looking for?  The article Vacation rental platform Vacasa raises huge $319M round — here’s how it differs from Airbnb on Geekwire by  TAYLOR SOPER & NAT LEVY  presents another option: the full stack solution. Vacasa is a great example of a bootstrapped company – it didn’t take any outside investment for six years, but has raised $500 million since 2016 and just closed a $319 million round of new funding. What are they doing with this new round? Two very different things: one, extending their reach in the vacation rental industry and fueling the growth of a new real estate offering.

Vacasa is one of many perhaps better known companies using technology to disrupt the hospitality industry like Airbnd, and HomeAway. But how is Vacasa different from these online marketplaces:

But it’s not just a marketplace — it is a “full-service property management company,” helping homeowners manage the entire booking process from start-to-finish. Vacasa employs thousands of people across its markets for on-the-ground “field-based roles” — housekeepers, reservations agents, local managers, etc.

“Unlike Vrbo, Airbnb, and others, our field staff fully manage every home on our site,” Breon said. “This is a massive difference for both owners and guests. Owners can rent their homes without worrying about the day-to-day complexity of short term rentals, and guests have the assurance that we’re there to help should the need arise.”

Vacasa started out as a point service: solving one problem in the entire booking process, making a reservation. But it realized that its customers wanted more, not necessarily more listings, but more related services: a full stack solution to all the problems both owners and guests have. This is a good example of one way to expand your company once your product or service becomes established in its market.

But in 2018 Vacasa expanded beyond its service of vacation rental management to offer a new network called Vacasa Real Estate to help people through the process of buying and selling second homes. Note that this new offering is not a point service but another full stack solution: helping people through the entire process of buying and selling homes, not just providing listings, as many of their competitors do.

“With our data and expertise, we can help people find the perfect home — be it a pure investment, or a blend of personal use and profit,” Vacasa CEO Eric Breon said. “And with our local teams, we can make the process of buying, furnishing, and renting a home incredibly simple.” said Vacasa CEO Eric Breon

There’s much more to the Vacassa story; I encourage you to read the entire article for more detail, including how they use their proprietary technology to serve property owners.

So, congratulations! You shipped your MVP, attained product/market fit and have serious customer traction. Now what? There are a lot of options, don’t just automatically assume you simply need to add more features. Look at the entire customer process flow to see where else in that process you can provide value. Let the customers’ needs, not a product roadmap you may have developed pre-FCS (First Customer Ship) determine the answer to the “where do we go from here” question. And one final comment: note that the way Vacassa expanded its business also strengthened its differentiation from its competitors – a very good thing!

Mark Cuban is one of the most well-known investors in the U.S., thanks to making investments in dozens of companies and his starring role on Shark Tank. Here’s a great quote from him: “Once you raise money, that’s not an accomplishment. That’s an obligation. Now you’re reporting to whomever you borrowed or raised money from.” Too many founders I mentor view raising money as a major milestone on the way to success; bootstrappers are the exception, not the rule.

The Inc. article Mark Cuban: 1 Costly Mistake That’ll Kill Any Brilliant Business Idea (He Sees Entrepreneurs Do It All the Time) makes this point in its sub-title: Too many entrepreneurs think this is a required step to make their business successful. It’s not.

Author Betsy Mikel focuses on the issue of control: once you bring on investors you run the risk of them disagreeing with the vision and direction of your company.

Cuban expands on his advice on bootstrapping: “The secret ingredient to be successful though, Cuban says, is that you have to be really good at what you’re doing. Whether it’s hair products or tacos, being the best at what you do will make you stand apart. Those are the best business that grow the biggest. And anybody can start them.”

There’s another reason to bootstrap: you increase the value of your company by focusing on gaining customers and the revenue you need to support your venture.  That means that if and when you do decide to bring on investors your venture will have a higher valuation; you can sell fewer share to raise an equal amount of capital.

We just had an entrepreneur come in for mentoring who was trying to decide between focusing on a single market and pursuing what looked like hot opportunities in a wholly different market. One of the mentors made the point that if his strategy was to bootstrap then “cash is king” – meaning he probably should grab business and revenue wherever he can get it. But on the other hand, if he plans to bring in outside capital he needs to be more strategic and focus on growing his share of a single market. Chasing other markets can be a distraction for the founder.

At the end of the day the single overriding reason to bring in outside capital and give up some ownership and control is to accelerate the growth of the company. As another mentor commented, this may be necessary in a tech-driven market, where as soon as you have some success – and with it visibility – the competition will be after you. To stay ahead you must grow rapidly. However, this entrepreneur’s venture was more of a services business and the need to fund growth to outrun prospective competitors is far less pressing.

One last important point from the article: referrals provide more value than investors. I advise every founder I mentor that their last question for every customer or prospect should be “who else do you recommend I talk with?” But another mentor made a complementary point: ask your existing customers for referrals to their peers. And this shows off one advantage of focusing on a single market: your customers should know, or know of, many of their peers, and thus be in a good position to refer you to them. Assuming they are satisfied customers! So bring your prospect list to the next meeting with your customers and ask for referrals. The worst they can say is “no, I can’t help you.”