Entrepreneur Office Hours - Issue #40
Who wants fundraising lessons from a 5-year-old?
If you’ve been following me for a while, you know I’m often surprised by the entrepreneurial insights I uncover with the help of my children. Maybe it’s because children see the world with fresh eyes, and it allows them to look beyond the artificial rules and boundaries society creates for itself. Or maybe it’s because I tend to over-intellectualize everything.
Either way, in this issue, you’ll find a great insight about how to ask VCs for money that I picked up from my daughter.
You’ll also find out what the fear of flying can teach us about customer acquisition. And you’ll learn why having a company like Google trying to steal your startup is a great thing.
Asking someone to give you millions of dollars is big request. If you don’t want to keep getting rejected, you need to learn how to ask properly.
The Entrepreneur Who Turned Blogging Into a Business
Since Monday was a semi-holiday in the US, we didn’t publish out a new episode of Web Masters. Instead, I’m pulling an old episode we launched before EOH started. It’s also one of my favorite episodes with a great friend and startup mentor, Henry Copeland. Henry created BlogAds, which was a pioneer in the online advertising industry and paved the way for a lot of the social media advertising strategies currently in use (for better and for worse).
Listen to his story on:
…or search “Web Masters” wherever you listen to your favorite podcasts.
Is the thing that makes people afraid of airplanes also preventing them from buying your product?
Entrepreneurs always ask me how to stop big companies from stealing their startup ideas, and I always have to explain why that's actually a good thing.
Office Hours Q&A
I know you usually focus on earlier stage startup questions, but I’ve got more of a later stage question for you.
I’ve been running my startup for about seven years now. We’ve raised three rounds of venture financing on solid growth numbers, but lately our growth has plateaued and I feel like my investors are getting antsy.
What are your thoughts on a founding CEO getting fired by his BoD? Is it better to gracefully exit before they push you out, or is it better to keep scraping and clawing until they tell you it’s time to go?
-Randall (Not his real name)
You’re right that the specific question is more appropriate for later stage companies, but you’re bringing up a general issue here that’s important for every startup founder to understand. Specifically, the work of being a startup founder is very different from the work of operating an established business. Not every founder is cut out to also be the CEO of the more mature version of their company. In fact, very few founders make good CEOs of larger companies, though a lot of them can learn to be if they’re willing to put in the time/effort.
One interesting outcome of all the interviews I’ve done for Web Masters, my podcast, is the number of founding CEOs I’ve met who didn’t stick with their successful companies long term either because they were forced out or simply didn’t want to be there anymore.
Off the top of my head, Jonathan Abrams of Friendster, Lex Sisney of Commission Junction, and Mark Organ of Eloqua (episode coming soon) all shared stories of getting forced out of their respective companies by their investors. In the case of the latter two companies, both went on to have very successful exits.
Similarly, a bunch of entrepreneurs I’ve spoken with reached a certain point with their ventures and decided running companies wasn’t what they wanted to do… they preferred building companies (i.e. the earlier, scrappier startup phase).
The reason this happens is because companies go through different growth stages. As the company progresses through its different stages, the responsibility of its leadership changes. In the earliest days, the founder is likely to be coding or doing sales or answering customer support emails. Eventually, the founder has to start hiring, which leads to managing. And then, the people the founder hired have to start hiring for themselves, which leads to an entirely different type of managing.
Soon, the founder has no involvement in the product or marketing or sales or customer service. The founder’s job is operational… setting goals, meeting with the board, doing press/media, leading the charge on company culture, and those kinds of things. They’re not necessarily better or worse responsibilities, but they’re very different than whatever the founder was doing in the earliest days, and they might not be enjoyable for everyone.
In other words, don’t get too hung up in the fact that you’re the founder of a startup. Being the founder of a startup doesn’t mean being with the company forever. Heck, ideally, it won’t mean you’re with the company forever because you will have built something so long lasting and impactful that it will survive well beyond you. After all, Jeff Bezos just stepped down as CEO of Amazon, didn’t he?
Part of building something that will last beyond you is knowing when it’s time to walk away. Mind you, I’m not suggesting you should definitely leave. Nor would I tell you to stay. Instead, I want you to think very carefully about what your company needs right now and whether or not you believe you’re the best person to be doing it. If you’re certain you are, then keep hacking away until your BoD drags you out of your office. If you’re not so sure, then maybe have an honest conversation with some of the other stakeholders in your company, see what they think, and then go from there.
Got startup questions of your own? Reply to this email with whatever you want to know, and I’ll do my best to answer!