MAP Accelerator Program — Week 4
This week started off with a little bit of reflection amongst us founders with regards to the topic of working from the office. Obviously, having other people around you can be distracting, but many also found it motivating to see everyone around them being busy. The ability to solve micro-problems that otherwise remain unsolved or take much longer to get a response was also a commonly recognised benefit. In an office, it’s just so easy to quickly tap someone on the shoulder and get some quick feedback and immediately be able to continue working. Slack or email communication just doesn’t allow for that.
We’ve been also asked to create monthly updates for the mentors of the program. The exercise was a good one and besides the intended goal of keeping the mentors in the loop and allowing them to spot possibilities to help, it was also useful for us. It forced us to think about the good and the bad of the past month, which allows us to see the progress we’ve made and also captures a snapshot of what we’ve got to do in the upcoming month. As a regular exercise, I feel this should allow us to stay focused, goal-driven and learn better from mistakes.
Mentor Meetup
The main event of this week was a mentor meetup event. There were like 20+ mentors available for us to chat to. We had some organised sessions with them and some informal networking. This was super useful and we had chats with a lot of interesting and knowledgeable people.
The most amazing thing to me was that I’ve realised that a lot of people just want to help. They know people and know stuff and are happy to provide their advice and connections. In a world, where my thoughts are mostly focused around our customers, it was good to recognise that there’s another group of people who are happy — and almost eager — to help and we don’t have to do it all alone.
Before the event started, something got pointed out that we have also started to realise over the past couple of weeks: not all advice applies or is correct. You have to use your own judgement. With that in mind, I take mentors advice as what it is: their opinion. And with anyone’s opinion, adopting it just because you don’t know any better yourself might lead to wrong opinions. But taking advice into account when forming our own opinions can be super useful.
Governance
We also had a session on governance this week — essentially processes and documentation that avoid misconduct and ensure auditability. The motivation for good governance is to avoid mistakes that can get quite costly. We’ve all heard of companies that got fined or settled for millions, because they did something nefarious, violated people’s trust or were outright negligent. While it is important to start with a light governance framework to avoid a massive administrative overhead in the beginning, as the company grows governance will become more important, especially since company directors can be personally liable for mistakes made by the company — Trevor Milton and Elizabeth Holmes send their regards from prison.
Starting this process early, will ensure that decisions are well documented and basic processes are in place for critical operations. As the company grows these can be extended as required. Apart from protecting us founders from potential harmful actions or lawsuits, this also shows to potential investors, that we’ve got our business in order and are a well-oiled machine. If you can’t find the meeting minutes from your last couple of board meetings, you know you’re in trouble and so do your potential investors.
Investment
It seems like every week we have some session about investment. But then, I guess, this is one of the least formal thing in business and having more opinions gives us a better holistic understanding of the process.
This week’s session focused a lot on the overall structure. It is perfectly acceptable that in each subsequent investment round you may have to give up 10–20% equity — pretty much up to roughly 50% after a series A, which comes about 18 months after the seed round. This is a realisation I’ve got a lot earlier. Especially if you need external investment, it’s better to have 50% of something than 100% of nothing.
The topic of an ESOP pool was explained as well, which is a scheme to give stock options to employees. This can help reducing the cash burn rate as employees get partially paid in stock options and retains and motivates employees for longer as they are now directly benefiting from the business’ success.
An interesting takeaway was how to structure investment documentation — i.e. the documents you hand out to investors. The recommendation was to put required documents in a Google drive folder and share that folder with potential investors. Structure it well and allow the investor(s) to do their due-diligence. In essence, you want to allow them to understand (1) what you do, (2) where you are at and (3) where you’re planning to go. Include sufficient details for them to estimate your chance of success and their potential ROI with as much certainty as possible.
This was yet another interesting week and our workload pipeline keeps growing. Things are getting busier and busier, I can feel it. But I guess that’s a good sign that things are going in the right direction, I hope.
