Business Partners and Startup Co-Founders: Please Slow Down…

By Dorene Lehavi, PhD

Of course, you are in a hurry to get your dream business up and running.  You want a partner or co-founder, and to get to market ASAP for a list of very good reasons.   Why wouldn’t you?   However, rushing into what is equivalent to getting married can lead you to the nightmare of losing it all.  There are huge mistakes that partner or co-founder seekers make by rushing into something that, in the end, could lead to disaster. So please slow down and consider this. We actually see this a lot at 1000 Angels, the private investor network that connects investors with startups. 

The technology, product and operations side of your business is only 20% of what you need to have.  Business schools tell you that the 80% is what they don’t teach…80% is about people.  Business is all about relationships with people. Investors, customers, employees, vendors, competitors, community, your families and others.  Where there are co-founders and partners who own and run the business, the relationship they have with each other is the key to its success.

The first huge mistake setting you up to be one of the 70% of failed business partnerships is, as you might have guessed, choosing the wrong partner.  

Let’s say you found someone with whom you clicked.  You spent “a lot” of time talking and discover that you have similar aspirations for a business.  Your excitement increased as you discovered how your dreams coincide and as a bonus you have complementary skills.   Your adrenaline is soaring, and you are sure that you have found your match.  You are both (all) in a hurry, so you ignore the red flags.  Your gut reaction is telling you to slow down or even walk away.  But you choose not to pay attention to that forewarning.  Instead, you prefer to move ahead because your desire to have the partnership and the business overpowers your ability to listen to your intuition.  

If long term success is the goal, having the right partner in business is as crucial as having the right partner in marriage.  We all are aware of the high divorce rate in marriage.  It is even higher in business partnerships.  In both cases, divorce can be avoided if we would take more care in choosing the right partner.  In some cases, it is not even true that the wrong partner was chosen, but rather that the partners don't maintain a healthy relationship.  

Be willing to slow down and take the time to get to know each other well by having essential conversations covering key issues.   Be transparent and use good communication skills to find out if you are compatible on core values, trustworthiness, personality, likability, work style, risk tolerance, long term vision and other crucial areas.  This should lead you to know if you have the basis to build the foundation for a successful business.  However, finding all of this out takes time.  It’s the equivalent of dating before deciding to get married.

Instead of approaching the conversations from the point of view of “what will I get from this person?” start from the point of view of “what can I give to this person?”. You should start talking first.  You can even mention having read this article.  Transparency means answering honestly to questions like why you want a partner and why someone would want you as a partner.  Since we all have our quirks and shortcomings, by sharing yours, you will be giving your potential partner permission to be open about theirs.  
 

Here are some guidelines to talk about:

  • What is the true reason you want a partner?  

  • What are your strengths and weaknesses?  

  • What do you think a partner would find most annoying about you?  

  • What in your personal life could interfere with your being present for the business? Are your spouse or parents supportive?

  • Do you have a history with other partnerships? What happened?  

  • Is this your only business?  What other interests do you have that could take your time and money?  

  • What is your financial situation?  Do you have obligations such as spousal or child support?  Are you caring for aged parents?

  • What contributions will you be making?

The point is that between partners, everything has to be out in the open. Obviously your first few conversations will not likely cover these personal topics.   It takes time to feel safe with someone new to be this forthcoming.  However, your potential partner or co-founder will be more likely to be open if you take the lead.

Surprisingly it’s not required that you have the same work style, for example, or even the same long term vision. The important point is to know it upfront and not be surprised and unprepared when one partner finds out that the other has an annoying work style…or in a year wants to sell because his long term commitment didn’t match yours.  What you must have is the willingness to talk about it early and work out these differences finding compromises and solutions that bridge the gaps.

Not everything can be worked out, but it’s better to know beforehand when you still can shake hands and walk away without having to face the pain of a downward spiral everyday until you ultimately break up to end the misery.


As you slow down in order to get to know each other and make progress in discovering that you share the important elements - mainly core values and commitment - your respect and trust for each other should be growing.  If that isn’t happening, definitely acknowledge this red flag and walk away now.

Dr. Dorene Lehavi has been coaching business partnerships for almost 20 years.  To learn more visit www.DoreneLehavi.com

5 Tips to Manage Relationships With Portfolio Companies as a Startup Investor

By Michael Whitehouse

You've found that perfect startup opportunity on 1000 Angels, the private investor network that connects startups with investors, or somewhere else, decided to invest an amount in the project, and now it's time to help that investment flourish. But just how do you move forward as an investor and maximize your impact on a startup? How can you ensure that you are having a positive effect rather than a detrimental one?

Photo credit: http://blog.topazlabs.com/

Photo credit: http://blog.topazlabs.com/

The key is to foster a positive relationship with the founders of the startup directly. This doesn't mean a personal one, but rather a relationship built on a clear understanding of what everyone brings to the table. Depending on how hands-on you intend to be as an investor, you'll need to recognize that your startup will only operate effectively if you make best use of everyone's talents. It may be that you can only contribute in a small manner, or, if you're lucky, the company runs effortlessly and doesn't require your input at all. Regardless, your relationship with the founders of the company and any management team in place, is going to be pivotal in ensuring your investment has the best possible chance of success.

With this in mind, let's take a look at some key areas where you as an investor are likely to play a role.

Regular Communication

As an investor you'll want to know that your finances are being used effectively. This requires communication with those managing the startup. Some investors will be happy to interact with management a few times a year, while others will want to keep a handle on things and stay in the loop every week. Whichever approach you take, open, frank, and respectful communication will go a long way to avoiding any disappointments or misunderstandings regarding the direction of the project.

Communication creates trust and ensures that everyone is on the same page, pulling in the same direction. As an investor there may be times that you disagree with a management decision, and in many cases you might be unable to do much about it if you do not have a controlling stake, but even in this situation at least you can be aware of where your money is being spent and how things are proceeding. All you can do is give your input, and the only way that input can be truly effective is if it is based on an informed opinion, one completely aware of what is going on within the business itself.

Business First

Unless you own the majority of a startup – and most investors are not in this position – it is important to recognize that, while you have invested money in the project, that you are not running it. The founders who first created the company or had that amazing product or service idea which attracted your interest, generally have a good idea of how to run the business and how to steer the ship. This is where you will have to put your ego aside and put business first. You might want to be involved in every decision, but you have to be honest – if the management in place are more knowledgeable about an associated industry or the daily workings of the business, the chances are they will be better at managing it than you will. 

The above, however, is not always the case. In some circumstances a management team may be inadequate or not up to the task. If that happens, then as an investor you can raise your concerns, but even in this circumstance it will result usually in bringing in a new manager to oversee the project. Ego is one of the root causes for a business to flounder, so don't get caught in the trap. Know when to step in and get involved, and know when to get out of the way and let others do their jobs. Always put the business in its entirety before any pride or ego stops your investment from being a success. 

Set Goals

We've talked about this previously in our article about how startup founders can better manage their time, but setting goals can be something which will set your mind at ease as an investor as well. By having a schedule and a clear plan of milestones for the business to meet, you can better measure where performance is high or low. It's important to remember, however, that these goals should be decided on collectively, especially if you have little knowledge of an industry or the workings of the business. It may be that something which you believe should take a short time, actually requires more substantial allocation of resources. What's important is to come to an agreed, fair, and reasonable timetable for goals. If, one the other hand, you have the experience and knowledge required to make a judgment on timescales, then absolutely make your voice heard.

A goal could be something which could take a year, a quarter, or a day to reach. Managing this progression brings on nicely to progress updates.

Progress Updates

Tying together our previous points about communication and goal-setting, progress updates are a great way to set everyone's minds at ease. They create a sense of urgency and feeling that the business is moving forward, even when accomplishments are perhaps incremental rather than earth-shattering. If you have a business goal which will take 3 months to achieve, receiving regular updates from the business about the progress each week or month will allow you as an investor to know whether a milestone is actively being worked towards.

A set schedule for progress updates can really make a difference and facilitate great organizational communication. It can help identify where there is a problem months before it would otherwise rear its ugly head. As an investor, the real balance to strike here is between receiving so many progress updates that they become redundant or even annoying to founders and management, and not receiving enough to get an accurate idea of where the business is heading. Sensibly regular progress updates which genuinely inform are what should be aimed for.

Positive Relationships are Productive Ones

The above mentioned aspects of investor-management relationships are ones which should be looked on as critical. You, as an investor, should try to foster a positive relationship with those running any startup you are connected to, in a way which uses your talents, and theirs; allowing the business to succeed off the back of good communication, planning, and use of available skill-sets.


This site is operated by Onevest Corporation. Onevest does not give investment, legal or tax advice. All securities listed herein are offered throughNorth Capital Private Securities Corporation ("NCPS"), a registered broker-dealer, member FINRA/SIPC. Onevest has taken no steps to verify the adequacy, accuracy, or completeness of any information presented herein. By accessing this site and any pages thereof, you agree to be bound by the Terms of Use and Privacy Policy. Only Accredited Investors can invest in securities offerings posted on this website. All accredited investors using the Onevest platform must be verified as to their accredited status and must acknowledge and accept the high risks associated with investing in privately held companies and early-stage ventures. These risks include holding an investment for periods of many months or years with limited ability to resell, and the risk of losing your entire investment. You must have the ability to bear those risks. To the fullest extent permissible by law, neither Onevest nor any of its directors, officers, employees, representatives, affiliates or agents shall have any liability whatsoever arising out of any error or incompleteness of fact or opinion in the presentation or publication of the materials and communication herein

How Startup Founders Can Better Manage Their Time

By Michael Whitehouse

Photo credit:  huffpost.com

Photo credit: huffpost.com

As we tell our founders at 1000 Angels, the private investor network that connects startups with investors, time management is an important component of any business, but when it comes to launching a startup it is even more critical. Excitement and passion alone won't fuel your project – you need structure to determine how and when to achieve a goal. Without that, your startup is a rudderless ship from the outset. When time is of the essence for a new initiative to establish itself, a flawed or absent approach to time management can prove to be fatal.
 

Manage Your Time, Solve Your Problems

Time management isn't just about being “on time”; it's about directing yourself and your employees towards solving issues for your business in a systematic and organized way. If your startup is still a one-person show, your time management skills are going to be focused on what you alone can achieve, what problems need to be addressed, and how long it will take you to do so. If you have employees or are part of a team, then you will be incorporating time management techniques into delegating tasks and charting a course for your business. For some, you'll be doing both.

There are many different approaches to time management, but we're going to focus on a six-step plan to get your startup on track. It could be that you are naturally well organized and that your business already runs efficiently, but there are always improvements to be made. Stagnancy and complacency are precursors to failure, especially at this early stage. Alternatively, you could be big on passion and ideas but lack appreciation of time as a valuable resource. In this case, time management is even more critical to you.

Whatever your situation, the six steps explored below are sure to increase your business’ or project's efficiency, help you meet your goals quicker, and contribute to maintaining healthy growth throughout your organization. Most importantly, they'll help you launch your product or service as quickly and effectively as possible.
 

Step 1: Be Honest

Throughout this entire process you will need to be honest. This involves being completely clear about three things:

  • What your habits are and what you are capable of.

  • What your team’s strengths are.

  • What is achievable in a given time-frame.

By knowing what your habits are you can work within them to increase your efficiency. Perhaps you work better at night, or your schedule dictates a need for getting the most important tasks out of the way in the first few hours of the morning – you can use this awareness to maximize your time, focusing on when you are most productive. There is one caveat here: if you perceive a habit as a genuinely negative trait, like being easily distracted from work, then that is something of which you must be mindful and remove from your routine. Also, be honest about your capabilities. If it will benefit the business to delegate or outsource a task to someone else, then do not be afraid to do so. Learning new skills and pushing yourself is a positive pursuit, but when time is of the essence, know where your own capabilities are best employed.

What are your team’s strengths? There is little point in delegating a task to a staff member whose talents are better suited elsewhere within your startup – in fact, it’s counterproductive. Try to assess the individual strengths of each team member, and then delegate those tasks to them. This will speed things up markedly.

The last point here is an essential one: what can be achieved in a given time-frame? Unreasonable targets for you or your staff are a sure way to undermine your startup. Miscalculating this or being overly optimistic can seriously impede your schedule when things start running substantially over. Optimism and ambition is important in driving performance and persistence, but be honest and realistic with yourself about how long a task will take and you can better prepare and schedule other goals around it.
 

Step 2: Weekly Agenda

Your startup should already have a business plan outlining major commercial objectives, but what it also needs is a weekly battle-plan to supplement it. An agenda which is revised every seven days mapping out the short term issues faced by your company, how they will be tackled, and a reasonable time-frame for doing so is valuable. A great approach is to set aside 30 minutes to an hour every Friday or weekend to go over what needs to be achieved within the next seven days.

It is important to keep in mind that these shorter, 7 day plans take you and your startup closer to the big picture – your end goal. Whether it is to establish your product in a specific market, engage with a new demographic, or just launch your product or service; your weekly agenda should always be set with the bigger picture in mind. Break this larger goal into smaller ones so it seems more manageable, and you can more effectively navigate the process. This brings us to prioritizing your agenda.
 

Step 3: Prioritize

There is no point in having a haphazard approach to your weekly agenda. This can result in slower progress from a lack of focus. Even worse, it could mean that you complete a task out of order without taking into consideration how each task might benefit the one which succeeds it. Take your agenda and rank the items from least important to most important. Then order this list in terms of which tasks would be better solved first to make way for subsequent ones. Perhaps it's more important to have a business logo designed before progressing with funding drives, for example. This should give your agenda a great balance between importance and practicality, allowing you to work through the problems in a systematic, effective way.
 

Step 4: Find Your Time Vampires

Time management isn't just about organization, it's also about identification – figuring out the elements of your business which are hindering progress. This could be something as simple as a  scheduling conflict, or something more serious like a manufacturing issue. In many instances it will be how tasks are undertaken, and how much time is given to administration.

How long do you spend answering emails or engaging on social media with potential customers and investors? Could this be streamlined? Are members of your staff unable to complete tasks quickly because of the software they are using? In some extreme circumstances you might find entire aspects of your startup's workday which need outright removal. No matter what facet of your business is taking time away from your agenda, there will always be a way to increase efficiency.

Be wary of organizational processes which are unimportant and take up too much time. In order to identify the time vampires in your routine or organizational setup, keep a log of activities for a week and see how long tasks are taking. If a task seems to be taking unreasonably long, then it probably is. You might also identify tasks or habits which take up too much time and are entirely unnecessary.
 

Step 5: Innovate

We mentioned software issues in the last step, and it's a salient point here – always innovate. This doesn't mean you need to constantly upgrade software or implement the next organizational tool like Trello if your startup doesn't need it; but you should always be on the lookout for new ways of doing things. Perhaps an upgraded software package will allow you or your staff to complete tasks faster, or implementing cloud technology into your projects could help team members work more closely. Maybe you will find a new time management technique which doubles productivity on a given task – whatever the innovation, always be aware that innovation is the lifeblood of sustainability. Furthermore, your competitors could be making use of something you have never even heard of, so it is important to try and stay ahead of the curve to remain competitive.
 

Step 6: Pomodoro Technique

The Pomodoro Technique is one of many time management approaches out there. When used it can exponentially increase productivity by keeping you and your staff alert, while allowing you to break larger tasks into smaller ones. Named after an Italian kitchen timer, the Pomodoro Technique simply involves working for a set period, usually 25 minutes, followed by a 5 minute break. Repeat 4 times then take a 20 minute break. This approach is used by freelancers and businesspeople around the world to get the most out of their working time. First of all, the Pomodoro Technique makes larger tasks seem less daunting by allowing you and your staff to tackle them one 25-minute session at a time. Secondly, you are never far away from a break, even if it is just 5 minutes, and is enough to seriously energize you while keeping the task from becoming stale.

There are plenty of free pomodoro timers available for PC, MAC, iOS, and Android. This is a time management technique which has been used throughout the world since the 1980s, and it has endured for one simple reason – it works.
 

Time Management is Essential

Time management is a skill in of itself, and one which needs constant amendment and dedication. What's certain is that implementing the steps mentioned above, along with other time management approaches, can significantly increase what you, your team, and your startup can achieve in a short space of time.

Combine your passion and business acumen with time management, and your company will have a much better chance of success.


This site is operated by Onevest Corporation. Onevest does not give investment, legal or tax advice. All securities listed herein are offered through North Capital Private Securities Corporation ("NCPS"), a registered broker-dealer, member FINRA/SIPC. Onevest has taken no steps to verify the adequacy, accuracy, or completeness of any information presented herein. By accessing this site and any pages thereof, you agree to be bound by the Terms of Use and Privacy Policy. Only Accredited Investors can invest in securities offerings posted on this website. All accredited investors using the Onevest platform must be verified as to their accredited status and must acknowledge and accept the high risks associated with investing in privately held companies and early-stage ventures. These risks include holding an investment for periods of many months or years with limited ability to resell, and the risk of losing your entire investment. You must have the ability to bear those risks. To the fullest extent permissible by law, neither Onevest nor any of its directors, officers, employees, representatives, affiliates or agents shall have any liability whatsoever arising out of any error or incompleteness of fact or opinion in the presentation or publication of the materials and communication herein.

Hyperlinks to sites outside of our domain do not constitute an approval or endorsement of content on the visited site.

 

Identifying the Right Investor for Your Startup

By Michael Whitehouse

Photo credit:  http://blog.acrowire.com/

As we tell our members at 1000 Angels, the private investor network that connects startups with investors, a startup lives and dies from its funding strategy. If the correct approach is taken and the right form of investment is secured, then a startup can thrive and establish sustainability. On the other hand, if the wrong type of funding strategy is implemented, a startup may face a precarious future, resulting in stagnancy and, in some cases, even liquidation.

What's right for one company may not work for another. If your startup project requires a continual stream of financing for 1 to 3 years before becoming self-sufficient, for example, then a one-off investment might not cover what you need. Other types of investments may require connections, business and advertising know-how, etc. Investors offering finance exclusively may not be adequate for your company's needs.

It's clear that implementing a funding strategy specific to your project is essential. In order to do this, you'll need to understand the types of startup investments out there and identify which type will best serve your company.

 

Startup Funding: Know Your Options

There are a growing number of funding options out there, even hybrids of popular choices, but for simplicity’s sake we can solidify these into seven investment strategies for your startup. Once you're familiar with each, you will be better placed to choose which is best for you and your business.

Let's take a look at them below:

  1. Family & Friends: It may seem obvious, but to approach friends and family can be a great way to fund your startup; you will not have a serious creditor or investor hanging over your head and can quickly gain access to funds. There is more freedom with this option than most others. You won't need to explain all of your managerial choices in most cases, and often friends and family will be happy to support your project in any way they can as long as the investment amount is reasonable.

    One of the difficulties of approaching friends and family is the rarity and difficulty of raising over $100,000. Not to mention the personal issues which can arise from mixing business with friendship. All investments, even from family, should be documented in writing. There must be an understanding that no investment is a sure thing and that there is a chance the investment might not be returned if the project fails. Of course, if it succeeds, then your friends and family will share in the profits which might offset this concern.
     

  2. Angel Investment: An angel investor provides capital for a startup in return for either equity or convertible debt. Often, such individuals are contacted during a second round of investment after family and friends have been approached. They can provide more lucrative investments, sustaining a business before moving on to more substantial sources such as venture capital. Angel investors use their own funds and are most commonly involved either at the seed stage of a startup to help the business find its feet, or during difficult times when cash flow is an issue.
     

While this form of investment is perfectly valid, you should consider some of the implications of going down this route. Angel investors often seek an active role in the startup they are investing in. They also are unlikely to invest more than once unless they see returns in the pipeline, so if you need more than a one-time cash injection, another funding strategy might be preferential.

3. Business Plan Competitions: Often overlooked by startup entrepreneurs, applying to a business plan competition involves submitting your business plan to be judged by a panel against others, with the winning entry receiving some form of funding. Such a panel normally represents a group of investors who are willing to supply capital to those with the most attractive business plan. There are many such events like this worldwide, but the terms of submission must be explicitly followed. A business plan competition might ask for hands on involvement in the startup in return for investment; if this is not something you wish to entertain, then ensure that you are applying for those competitions without such stipulations.
 

There is usually nothing stopping you from applying for as many business plan competitions as you can. If you yourself are not best equipped to create a dazzling plan, then it might be worth hiring someone to do it for you on a one-off basis. This plan can then be submitted to any competition you wish.

4. Accelerator and Incubator Programs: These programs are designed to foster startups during the seed stage for a defined period. Good example of this could be TechStars. This usually occurs over a few months and includes office space, funding, access to B2B or B2C networks, and mentoring. Experienced businesspeople will therefore help shepherd your startup at the beginning and get it off the ground. This is typically done in return for equity in the business.

Working with the right businesspeople can be a valuable opportunity for your project, but it requires careful consideration. While you gain access to the experience and capital of someone who knows how to make a startup a success, this is given in exchange for a permanent stake in the business which many mentors may sell to other parties outside of your control, as soon as a profit presents itself. The emphasis here is often on the quickest turnaround time possible. If you are looking for a co-founder and investment of time then check CoFoundersLab.

5. Bank Loan: Most banks offer loans to small businesses. All that is needed to acquire a loan is a good credit history, a business plan clearly defining costs and how profits will be made, and a well researched overview of the marketplace for your specific product and/or service. If the business already has capital of its own this can hugely help in persuading a bank to approve funds.

As with any loan, there are dangers which should not be overlooked. If a loan is not paid on time then it can put a startup into a precarious position. Any creditor will expect to be repaid the amount owed; if they are not they will consider legal proceedings which could destroy your business. High interest rates can also be an issue, so it’s critical that you try to secure the best deal available before agreeing to take a loan. A credit union may be a better option, as they will provide capital to members for a much lower annual interest.

6. Crowdfunding: There is no doubt that crowdfunding has changed the way fundraising works. By showcasing the concept behind your startup and offering perks in return for money, rewards-based crowdfunding can provide substantial amounts of capital. The greatest advantage here is that it isn't really investment; at least not in the traditional sense. You receive money from those wanting to support your project, but contributors do not hold a stake in the business. They expect to see the project come to fruition, but there is no legal obligation for this to occur. Crowdfunding can attract hundreds of thousands, and in some cases millions, of dollars worth of capital without giving away one single share in the business. Equity-based crowdfunding platforms like 1000 Angels provide a chance to reach a slightly wider pool of investors, but still raise a good chunk of capital in exchange for equity.

There are downsides to crowdfunding, most pertinently in terms of reputation. If you do not bring the startup to a position where it can produce its goods or service, or you do not honor perks/commitments which were traded in return for investment, then your brand and you personally will acquire a toxic reputation. This can negatively affect future ventures and can all but destroy any faith the consumer might have had in your startup. For this reason, crowdfunding should not be entered into lightly.

7. Venture Capital: One of the most desirable forms of investment for a startup is to attract the interest of a venture capital firm. Most VCs represent a pool of investors who are willing to commit substantial amounts of capital to the right project. With a huge amount of available funds and access to expert consultants who will help your business, venture capital groups provide an enticing option to startup entrepreneurs looking for a large round of funding.

Unfortunately, venture capital firms tend to require a big return on their investment. This can be a large portion of profit as well as a substantial stake in the business. Caution must be taken here; if too much equity is given away, you might find yourself out of the decision making process for the startup that you created. Furthermore, venture capital firms stick to rigid guidelines when it comes to due diligence. It can take them months to decide whether or not a startup is worth investing in, so they are not the ideal choice if you are seeking a quick injection of finances.

Which is the Right Investor for Your Startup?

Unless you have access to a high level of personal wealth, securing investment for your startup is a must just like we outlined on our piece discussing thoughts on hustling stating the differences of why some founders win and other loose. Even after a certain period of bootstrapping, there's no other way to get to the next level. Deciding on which type of investor to approach is entirely up to you. They must be the best possible option for your business and your financial situation. Get that decision right and your startup could grow exponentially, from a small project to an internationally renowned brand.


This site is operated by Onevest Corporation. Onevest does not give investment, legal or tax advice. All securities listed herein are offered through North Capital Private Securities Corporation ("NCPS"), a registered broker-dealer, member FINRA/SIPC. Onevest has taken no steps to verify the adequacy, accuracy, or completeness of any information presented herein. By accessing this site and any pages thereof, you agree to be bound by the Terms of Use and Privacy Policy. Only Accredited Investors can invest in securities offerings posted on this website. All accredited investors using the Onevest platform must be verified as to their accredited status and must acknowledge and accept the high risks associated with investing in privately held companies and early-stage ventures. These risks include holding an investment for periods of many months or years with limited ability to resell, and the risk of losing your entire investment. You must have the ability to bear those risks. To the fullest extent permissible by law, neither Onevest nor any of its directors, officers, employees, representatives, affiliates or agents shall have any liability whatsoever arising out of any error or incompleteness of fact or opinion in the presentation or publication of the materials and communication herein.


6 Things That All Entrepreneurs Should Stop Worrying About

By Philip Acuna

Photo credit:  robbasso.com

Photo credit: robbasso.com

Something that we see at 1000 Angels, the private investor network that connects startups with investors, are entrepreneurs dealing with what it is well considered a stressful endeavor. Being the entrepreneur behind a newly launched startup is even more stressful, since it means constantly having to balance on the fine line between failure and success. Many of the concerns that one has during this time period are warranted, particularly when it comes to budget, client retention, and simply surviving the competitive startup ecosystem. Other concerns, however, are irrational and can take away from the precious energy needed to successfully run a business.

We spoke with six startup founders at different stages in their careers, and asked them what one thing was that all entrepreneurs should stop worrying about.
 

1. Competitors

"Keep an eye on them for sure, but don't let what they do dictate what you do too much. Focus on doing what you do best and innovate. If you're watching your competitors too closely, you'll be playing a constant game of catch up that won't do you much good."

Mark Volkmann, Massagebook

 

2. Success

"Worrying about success is the best way to not succeed. Too much focus on outcomes rather than on getting the job done well is very detrimental. It’s easy to get impatient if you're thinking about results all the time. Even failed experiments teach you so much."

Niraj Rout, Mailflo

 

3. Micro-Managing

"Stop sticking your nose into every company project. Delegation is a pathway for entrepreneurial success and personal sanity maintenance. Once you get to a certain size you have to trust that your team will execute and implement tasks, ideas and strategies successfully. If not, you will only slow the company’s progress, overall success and productivity."

Tim Nichols, ExactDrive

 

4. The Perfect Product

"Stop worrying about getting your product out there as quickly as possible. There are a lot of teachings encouraging new entrepreneurs to fail and fail quickly. But that doesn't mean that you should rush to bring something to market. There is something to be said about taking your time to build a good product. Develop your product in stages and design KPI's (key performance indicators) around each chunk to measure your success. Validating your ideas before you bring your product to the mass market is the best thing you can do if you want to build a sustainable business."

Zoey McKenzie, OMNI

 

5. Criticism

"Every entrepreneur should stop worrying about haters. I see a lot of business owners who are getting hung up on negative reviews and are totally convinced that this is a sign of them doing something wrong. Yes, it might be, and it makes perfect sense to analyse those reviews and make improvements based on any feedback. But entrepreneurs should also keep in mind that no matter how careful they are, there will be haters anyway. Invest in quality product, put emphasis on customer support and positive reviews will outbid the negative ones."

Ksenia Rostova, inSelly

 

6. Time

"I would suggest that the time is one area where entrepreneurs worry there is never enough! However, with correct task priority and scheduling, time is something which we should all stop worrying about. At the end of the day, there is only a certain amount of hours - efficient use is the only way to meet time constraints head on."

Robert Sturt, MPLS Network Specialist
 


Securities offered through WealthForge, LLC. Member FINRA/SIPC Onevest Corporation ("Onevest") is not a registered broker-dealer and does not give investment advice with respect to any securities. All the startup offerings listed are offered by the applicable Issuer. Onevest has not taken any steps to verify the accuracy of the information provided on the offerings that are listed. Onevest takes no part in the negotiation of the transaction and no securities are executed through Onevest's platform. Onevest receives no compensation in connection with the purchase or sale of securities.

Hyperlinks to sites outside of our domain do not constitute an approval or endorsement of content on the visited site.

Why the Startup Ecosystem Needs a Shift Towards Gender Diversity

By Ehsan Khademi

For us at 1000 Angels, the private investor network that connects startups with investors, this is a very important topic. The sex-bias trial against Venture Capital pioneer Kleiner, Perkins, Caufield and Byers is just opening up a controversial discussion on whether the startup ecosystem encourages gender diversity.

While the VC and startup scenes have been subjects to wide criticism regarding the gender inequality, this case will be the first gathering such public attention due to the fact that it’s held in court.

In this particular case, a former female employee of KPCB alleges that she was discriminated and harassed while working for the company. According to her, the company failed to promote her, paid her less than to her male colleagues and excluded her from certain client events.

Stanford University’s professor on gender equality, Deborah Rhode, labelled the case to be a wake-up call and commented, “The case has sparked a much-needed debate about gender inequality regardless of its merit.”

Even though the trial has still to show if the allegations have merit or is purely a revenge of a disgruntled employee, the more important question, as pointed out by Rhode, is why addressing gender equality is still a big issue on an industry-wide level.
 

Gender (In-)Equality at the Big Players

Looking back, several other companies had to deal with similar issues in the past. Silicon Valley especially tends to show a huge gender imbalance. Facebook Inc. earned much criticism and managed only to appoint a woman to its Board of Directors after its IPO. This took place only after some negative buzz shattered through social media.

When Twitter went public in 2013, the same problem attracted wider attention. The absence of women in c-suite positions was one of the first things CEO Dick Costolo was asked about during the IPO day while standing on the trading floor of the NYSE. He responded that Twitter is aware of that and just promoted a woman as a general counsel.

Well, he failed to mention that the promotion took place 5 weeks before the IPO, which seems more like a publicity stunt than active promotions of women to management positions. It seems that Silicon Valley took a page from Wall Street with regard to its male-dominated culture.

Another revelation came when major tech companies released their payroll details for the first time last year. Only 30% of all employees were females, while the majority of technical jobs were occupied by male employees.
 

Gender Bias - A Disturbing Trend

It can be assumed that Big Players don’t exactly serve as role models. If, on one hand, established former startups like Google, Facebook or Twitter and, on the other hand, elite VCs fail to address this problem in an adequate manner, it’s no wonder that there is a lack of awareness of this particular issue on a large scale. In today’s competitive marketplace, it’s not a question of gender preferences but rather a strong case for corporate mismanagement. It wouldn’t be in the best interest of a company to employ women just to fulfill a certain quota, instead of looking for the most deserving person to fulfill the position.

Nevertheless, there seems to be a certain trend emphasizing a bias against women when it comes to startup entrepreneurship. A quick look at startups seeking funds reveals a devastating image of the industry. As a matter of fact, most female-led startups are less likely to get funding by a VC in comparison to their male counterparts, indicating a strong case for gender bias.

A research study by Professor Candida Brush from the Babson College gives further evidence to these disturbing developments. According to the study, 97% of venture-backed companies in the U.S. have male CEOs. In addition to that, less than 10% of all VC firms analyzed in the study had at least one female partner.

This leads to the question of whether there’s a reasonable economic explanation for this kind of imbalance or if it’s based purely on personal preferences. Sadly, it appears that, most likely, the later is true.
 

Is Gender Diversity Beneficial? Yes, It Is.

In matters of business, it is better to put emotions aside and judge based on facts and figures. In 2010, female entrepreneur Cindy Padnos published a research paper called “High-Performance Entrepreneurs: Women in High Tech”. Among the findings are several interesting clues that suggest a strong case for the positive influence of female employees and entrepreneurs on startup companies. High-tech companies founded by women are more capital-efficient, and venture-backed firms with women on the board have had more successful exits.

Furthermore, women-owned firms are the fastest growing sector of new venture creation in the U.S. Finally, companies that are the most inclusive of women in top management achieve 35% higher ROE and 34% better total return to shareholders versus their peers. (Source: http://www.illuminate.com/whitepaper/)

In a 2011 interview with Inc Magazine, Padnos stated that there are actually three ways startups benefit from gender diversity:

 

Padnos's research points to three statistics that suggest that a mixed-gender company is better-positioned for success. They are: 

Women are better at bootstrapping: Research from the Kauffman Institute shows that women-led tech start-ups launch with about half as much capital. Why? "I think part of it is that it's perceived by women that it's harder to raise large amounts of capital, so they frequently start with less capital, because it's an easier thing to do," says Padnos. In other words, women seem to be capable of doing more with less.

Women fail less often: According to the 2005 Report on Women and Entrepreneurship, the percentages of entrepreneurs who expect growth for their businesses "is somewhat higher for female entrepreneurs than male entrepreneurs." According to a separate study by Babson College and the London School of Economics, women-led start-ups experienced "fewer failures in moving from early to growth-stage companies than men."

Gender diversity improves long-term returns: Research from the University of Michigan and Cornell University found that companies with more gender diversity delivered better results from IPOs, by as much as 30 percent on average.

(Source: http://www.inc.com/articles/201109/how-to-combat-the-all-male-startup.html)

These findings not only suggest that it’s highly beneficial to have women on board of a startup company, they also imply that it is an economic disadvantage to neglect to either employ female employees or invest in companies led or founded by female entrepreneurs.
 

Why It Is Necessary To Change The Status Quo

At the moment, it looks like most of the established startup companies, as well as the major VCs, are comfortable with the current situation and hesitate to put change in motion. Going forward, this will turn out to be a mistake, considering the ever-increasing battle for talent and innovation. The main goal should be getting the best minds (to add to the value, innovation, progress and success) regardless of the gender.  

Whats more important is that upcoming startups feel the need to initiate a change of paradigm. Innovation and progress are certainly the characteristics of the startup culture and this attitude shouldn’t stop at the corporate level when speaking of gender diversity.

On a final thought, everybody can imagine what would happen if your female customer base chooses to pass on the services or products you offer because of certain hiring practices. And why shouldn’t they? Let’s hope that this kind of customer behavior isn’t necessary in order to raise awareness of a much needed shift in the corporate startup culture.


Securities offered through WealthForge, LLC. Member FINRA/SIPC Onevest Corporation ("Onevest") is not a registered broker-dealer and does not give investment advice with respect to any securities. All the startup offerings listed are offered by the applicable Issuer. Onevest has not taken any steps to verify the accuracy of the information provided on the offerings that are listed. Onevest takes no part in the negotiation of the transaction and no securities are executed through Onevest's platform. Onevest receives no compensation in connection with the purchase or sale of securities.

Hyperlinks to sites outside of our domain do not constitute an approval or endorsement of content on the visited site.

 

Co-Founders of Pomello Practice What They Preach in Building Their Team

No platform in the world, including CoFoundersLab, offers a perfect solution to building a company; we only try to make it easier. Serious effort is still required to ensure you have the right team, strategy, and vision. For two co-founders of YCombinator-backed Pomello, that meant using CoFoundersLab to not only find a potential technical co-founder, but also rigorously test their fit as a team. It is no coincidence that their company focuses on helping companies hire based on cultural fit.

We got to speak with Catherine Spence and Xian Ke, two of the three co-founders, about how they matched up to execute on Pomello’s mission.

Oliver Staehelin,   Catherine Spence   and Xian Ke, co-founders of Pomello

Oliver Staehelin, Catherine Spence and Xian Ke, co-founders of Pomello

How did you find your co-founders through CoFoundersLab?

Catherine: Oliver and I had been looking for a technical co-founder for a long time. We had been reaching out to people through our networks, and finding other folks through various meet-up events. We are, as you can imagine, pretty picky about fit, and we really wanted to find someone who felt passionately about the problem we are working on. We had almost given up on finding someone, when I got a note from Xian on CoFoundersLab. I was immediately interested in meeting her, because it was clear she had read up on what we were working on and was interested in the idea. I also noticed that she had been slowly working her way from very large corporations to start-ups over the course the past few years, so I felt like she was more ready to join a scrappy, lean (very limited funding), founding team. As for fit, with a co-founder there really is no way to 'interview' someone in the traditional sense. So we decided to ask her to work with us a couple days a week. This gives everyone a chance to see how the team dynamics develop. I look for someone that wants to get stuff done, cares about her/his work, and who can laugh in tough situations. Xian has all of these qualities, so after a month or so I knew we should make her an offer to come on full-time.

Xian: I was browsing on CoFoundersLab for projects that could be interesting and could make a positive impact on the world. It helped that Catherine and Oliver are fun, honest, and thoughtful people who can get stuff done. Ultimately, I wanted to see what would happen if we worked together, and didn’t want to regret passing on the opportunity.


What is Pomello?

Pomello helps companies hire employees based on culture fit. This online service is based on 30 years of research. It quantifies company culture and uses data to help teams hire more successful people. Employees matched for culture perform better, are more engaged in their work, and quit less often.

Why

Companies admired for their culture like Google know that evaluating potential new hires needs to include a rigorous assessment of fit. But Google found out a long time ago that evaluating fit is difficult, and people don’t often get it right. In fact, even at Google it was a “random mess” according to Laszlo Bock, head of People Ops [1]. Not surprisingly, an entire field of science is dedicated to studying person-organization fit. Fit has a profound impact on job satisfaction, engagement, performance, and turnover. Pomello is based on more than 30 years of careful study. It enables companies of any size to access the best research in organizational behavior.

A demo of the Pomello landing page displaying candidates' suitability compared to your company's culture. 

A demo of the Pomello landing page displaying candidates' suitability compared to your company's culture. 

Insights

People often confuse culture with perks like free lunches and ping pong tables in the office. Unlike perks, which come and go with market swings, a strong culture will make your people more productive even when you are facing challenges.

Many managers assume that their employees are more motivated by pay than purpose, when in fact the opposite is true. Values and culture are what give employees a sense of purpose, will drive productivity whether you are able to offer employees a rich paycheck or not.

Who is it for

Any company or team that is hiring. Pomello is particularly well-suited for companies that have customer-facing employees (e.g. sales teams, retail associates, etc.). Pomello saves companies money, especially when performance is highly variable and turnover is a significant cost.

Any advice for founders on CoFoundersLab about finding the right cofounder?

Catherine: Being without a co-founder is better than having the wrong co-founder, so taking your time is important. Once you've established mutual interest you have to try working on something together. Pay attention to how you disagree with someone, is it functional or dysfunctional? Functional disagreement means you are able to act in spite of disagreement, and you trust and respect your co-founder even if you are vehemently disagreeing.

Xian: Go with what you’re interested in spending time on. Life is uncertain, so don’t expect 100% clarity. Be grateful to encounter first-world problems!

 

You can follow Pomello’s progress by visiting their web site here, checking out their recent coverage on TechCrunch, or following them on Facebook or Twitter.


Securities offered through WealthForge, LLC. Member FINRA/SIPC Onevest Corporation ("Onevest") is not a registered broker-dealer and does not give investment advice with respect to any securities. All the startup offerings listed are offered by the applicable Issuer. Onevest has not taken any steps to verify the accuracy of the information provided on the offerings that are listed. Onevest takes no part in the negotiation of the transaction and no securities are executed through Onevest's platform. Onevest receives no compensation in connection with the purchase or sale of securities.

Hyperlinks to sites outside of our domain do not constitute an approval or endorsement of content on the visited site

Onevest at Collaborate: Helping Fosterly Stimulate the Entrepreneurial Ecosystem

This post was originally published on the Collaborate blog as a Onevest guest post.

The value of a vibrant community, particularly as related to entrepreneurship, is widely recognized and appreciated. Community resources, mentors, and peer collaborations are just some of the intangible pieces every entrepreneur needs, and that only come with a strong network. When it comes to building a company, most first-time founders lean heavily on peer expertise and mentorship to guide them. The same is true for more experienced entrepreneurs. Whether moving from one startup to the next, or growing your company from 2 to 40 people, engaging with a deep personal and professional network is pivotal. Ask any successful entrepreneur, and you would be hard-pressed to find one who got to where they are now without the help of others. The “all by myself” mentality is not only unhealthy, but also completely unsustainable in entrepreneurship. By identifying leaders in the community, you can utilize their influence and experience to help move your company forward. The same is true for peer collaboration. 

Collaborate by Fosterly brings this community to your doorstep. At events like Collaborate, you have the opportunity to meet with like-minded people who not only are as driven and dedicated as you are, but also share a common goal of moving a startup forward. Those personal interactions, from a simple handshake, to receiving valuable advice, to even closing a business deal, are immensely valuable. In addition, most of these people come to an event like Collaborate with a community-oriented mindset, open to sharing their knowledge. Fosterly beautifully integrates this principle into their own community of thousands of entrepreneurs. They offer tons of great resources, events, workshops, and more to help entrepreneurs grow their own business and help others grow theirs.

Onevest wants to take that unique experience of collaboration and mentorship online. We imagine a world in which an entrepreneur can attain the same valuable knowledge and relationships through a digital portal. This was our inspiration for creating Learn.Onevest. Learn.Onevest is a peer-to-peer learning platform that offers massive amounts of content (think “Reddit” for entrepreneurship) on topics ranging from team-building, to fundraising, to investing. Readers have the ability to see who else is viewing an article/video, converse with that person, comment on a specific section, and up/downvote. Our mission is to bring that community feeling into the digital space. 

One key feature involves a curated curriculum of content that brings valuable content to a central place. We’ve created the first curriculum to help get you started. Click the link below to gain access.

STARTUP FUNDRAISING CURRICULUM