Variense recently completed the Creative Destruction Lab Atlantic cohort program and I’d like to share my experience taking part in this program. One of the striking differentiator of the CDL program is their ability to bring high quality mentoring in a streamlined and meaningful way that would fit with the day-to-day ops of the startup. The mentors have a variety of backgrounds — experienced operators, serial entrepreneurs, VCs and Angel Investors etc. The level of support from our mentors was phenomenal and the strategic insights we’ve gained and benefited from CDL has helped us to grow in leaps and bounds.
As an entrepreneur, one of the most impactful and hardest to digest part of CDL was the candid and raw feedback during the G7 sessions; without reservation we received critical assessment of our business model. Although, initially, it was hard to hear and difficult to digest, after all the entire team had poured a lot of sweat equity and our own capital to get Variense to this stage. Yet this is precisely what we needed to hear.
So, I thought that I should write down and share the 6 invaluable key takeaways I learned from CDL:
1) Figure out what problem (market pain point) you’re solving before you build a product.
We had built a product and put it out in the market. Luckily, there was traction but a better method would have been to first do market research and find out if there was a problem that needed solving. How big was that problem? Was it addressing a large size? How critical was the pain point? Finding out if the market has a necessity for the solution you’re providing is of the ut-most importance.
2) Always solicit feedback from your customers.
Being a small-out fit with scarce marketing budget, we rely heavily on an e-commerce sales strategy — selling our products on our website via a shopping cart. While this approach has its advantages, like low cost and time savings. However, what it doesn’t enable for is direct communication with our customers at point of sale which was a missed opportunity for us to interact with our customers to ask them important questions like: What applications / use cases were our customers buying our products for? What problem was our products solving? Do they have a continual need for our product?
3) Having good sales numbers while important isn’t market validation.
We had traction with steady sales numbers but what we hadn’t examined was whether those sales numbers were sustainable or scalable. CDL mentors correctly pointed out that most of our sales volumes comprised of one-off-sales of our sensors and not recurring revenue. This led us to set a goal to convert the one-of-sales leads into recurring high volume sales.
4) It’s imperative to have experienced executives who’ll help support and lead the team.
We also learnt that there are 2 ways to become a fundable start-up. 1) You need strong market validation from strategic customers like a major partnership or LOI of purchase that leads to recurring revenue. 2) If your startup is too early stage for recurring revenues, the ability to sell your vision and team to an experienced CEO/executive who is willing to come on board and lead is a big confidence signal to your investors.
5) Surrounding yourself with mentors and advisers who will challenge your ideas and assumptions is the best way to progress forward.
Choosing the wrong people to advise your company can be catastrophic. Surrounding yourself with people who are nice and praise your every decision without critically questioning your ideas are doing you a disservice. You end up wasting your time advancing on ideas that haven’t been hard examined and critiqued. We had great mentors from CDL who challenged us to look at different perspectives, to think critically about our market pain points and re-evaluate our business model. This has been critical in avoiding an echo chamber. Getting insights and learning from role models who’ve gone through what you’re experiencing and have navigated the start-up ecosystem successfully is extremely valuable.
6) Everyone on the founding team needs to have skin in the game, aka actively working hands-on for the start-up.
Merely getting an idea off the ground with some traction isn’t good enough. Everyone who’s on the founding team needs to be fully entrenched in the business. You need every founding member to dive in and help drive the vision. Showing up is important.
As we move forward, I’m aiming to write another follow-up article 6 months from now which’ll track our progress and hope to show the measurable impact that the CDL program has had on Variense.