Founder Feedback Year #3: Go Big or Go Home
In Year 1, I talked about the mental and emotional challenges that founders face and some practical ways to overcome them. In Year 2, I discussed how founders must look outside themselves to make it to the next level by investing and trusting in their team instead of trying to do it all themselves.
Year 3 is typically the “make it or break it” year for most seed stage startups. As an example, we were incubated at Amplify in LA and of our class of 11 startups — 1 has been acquired, 5 are in the deadpool, 4 have raised additional funding, and only 1 is still operating without raising more funding (that would be us).
By this time, you’ve busted your butt to create a “real business”, you have lots of customers, you’re generating some revenue, and you’ve hired a phenomenal and loyal team. But….either your cash is running dry, your competition is catching up with you, new startups are challenging you with innovative offerings, or likely all three. So, like the title of the post reads….Year 3 is time to Go Big or Go Home.
Over the last year, we hit some MAJOR milestones, so I have to do a little #notsohumblebragging on behalf of my team! We…
- Doubled the size of our team from 16 to 32 people.
- Transformed a 4000 sqft warehouse on the beach into our new HQ.
- Grew our user community to over 1 million members strong.
- Launched our native iOS app from scratch.
- Reached our first seven-figure month of sales w/ native commerce.
- Launched StackCommerce with over 500 publisher partners, 1000 vendors, and a network reach of over 75 million visitors per month.
- Built upon and solidified a world-class company culture bar none.
Of all the bullets above, I am most proud of the last one. The friendships, camaraderie, and bonds we’ve built over these past three years are priceless and I believe they are what keeps us continually striving and innovating to build an amazing product experience for our customers.
We did all this while profitably bootstrapping ourselves without the need to raise additional capital. I wouldn’t recommend that strategy to everyone, but for us, it’s given us the right amount of control and “smart growth” to learn without diluting ourselves and our shareholders.
Lastly, I want to provide four lessons I learned over the last year that might help you along your journey:
1. Lesson #1: Revisit Your Mission + Vision
As any founder will tell you, over the course of 2+ years, your company’s core product will take a few tumbles and turns, so it’s highly likely that your original mission and vision are now out of sync with your original thesis. However, if you don’t take the time to go back and reevaluate that original thesis and either update it or reconfirm it, your team will become splintered, confused, and potentially, worst-case scenario, disenchanted with its core value proposition.
My team helped to wake me up to how big of an issue this was for us … it paralyzed employees from making important decisions and robbed them from a deeper sense of purpose. After a lot of soul searching and two team off sites, we concluded that our mission had in fact changed from the initial one created long ago, and ultimately decided to launch a new B2B brand and to update the company name to ensure both internally and externally people knew who we were and what we were set out to do.
2. Lesson #2: Product-Market Fit….Do You Have It?
If you’ve made it through two years and have either raised follow-on funding or are profitable, you’ve certainly done something right. But, that doesn’t mean you’ve necessarily found product-market fit. Product-market fit probably means different things to different people, but to me it’s about a startup’s ability to acquire customers with a lifetime value that is more than what it cost to acquire them AND the ability to retain those customers over time.
Most startups focus on acquisition, but no matter how many users you bring into the top of the funnel, if they go out of the bottom of the funnel at the same rate….you will never scale. There are many, many examples from mobile (Viddy) to subscription commerce (ShoeDazzle). Now contrast those examples with two more from the same industries: Instagram and Birchbox … all of these startups found product-market fit because their customers keep coming back organically again, and again, and again at no additional acquisition cost.
For StackCommerce, we found that once we onboard a publisher to our white-label “Shops” product, that publisher stays active and their revenue grows quarter over quarter approximately 90% of the time. We felt that was strong product-market fit and chose to double down on that part of our business.
3. Lesson #3: Innovate or Die Slowly
A major dilemma for every founder is focus. Most founders I know have what I call “Focus ADD”. We see an ocean of opportunity and if we juuuust … streeeetch … a … liiiittttllle … mooooore … we could grasp that additional opportunity — a new revenue stream, an incremental user acquisition channel, or a shiny new market … and admittedly the majority of the time those ideas need to be reigned in and shelved for a better time, but they are also vital to keep the lifeblood of innovation flowing through your company.
This advice is counterintuitive to what most will tell you, but to me, the minute you stop ideating, and stop asking yourself how something can be done better or faster … you die. I’m not saying launch a new product every quarter, but evaluating market trends and what’s happening on the bleeding-edge will help you stay one-step ahead of your competition. In order to help us stay focused, yet continue to ideate and innovate, we hire freelancers or outside consulting firms to build MVP’s of one-off features or products to validate them prior to burdening our core product and engineering teams.
Everyone has a best guess as to what will work, but until you actually test it in the market, you never really know what will resonate.
4. Lesson #4: Automate & Scale
In the early days, if it could be done by an intern, virtual assistant, or junior employee — we didn’t add it into our product roadmap. Things like documenting site metrics, onboarding partners, or paying out vendors — the time it would have taken early on didn’t justify the time it took someone to do it manually.
As you grow, however, these seemingly small, repetitive tasks can cripple your growth if you don’t find a way to automate them. You don’t want to do it too early, but there will come a point where instead of making five to ten partner payments per day, you are making dozens, eating into your team’s valuable time. That’s when you know it’s time to integrate a full-blown payments feature to automate and scale the process for the future. Tracking metrics is another manual process that is seemingly innocuous, but starts to eat up valuable time and annoy your engineers when you ask them to constantly build new types of dashboards. We leveraged RJ Metrics which pulls data directly from our back-end and its been astounding at how much faster we’ve been able to uncover and report on key metrics that help us focus on the right initiatives.
The best way to prepare to scale is to find the processes that are slowing your team down and will cause issues at scale: dashboards, payments, metrics, email management, etc…
Now, go #CRUSH it….