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Entrepreneur Office Hours - Issue #84
It is possible to get VCs to make quick investment decisions...
In general, people don’t like making decisions. For proof, just think about the last time you and your significant other decided on what to have for dinner. If it’s anything like a conversation between me and my wife, it goes something like this:
Her: “What do you want for dinner?”
Me: “I don’t know. What do you want for dinner?”
Her: “I don’t know. Whatever you want.”
And the conversation pretty much goes back and forth like that for 10 minutes until we eventually settle on the same exact restaurant we always eat at.
Anyway, I bring this up because, in fundraising, slow decision making creates lots of value for venture capitalists, but it creates big problems for entrepreneurs. That’s why, in this issue, I’m sharing the strategy I learned to use in order to get quicker decisions from VCs.
I’m also sharing some practical advice about a simple math concept you can use to help create better fundraising pitches. And I answer a reader question about how dedicated non-founders should be to the startups they work for.
As always, send any questions you have about startups and entrepreneurship, and I’ll do my best to answer them in a future issue.
Thanks for reading!
If you don’t want to be strung along while fundraising, then you need to learn how to get clear, quick answers from investors.
I've always hated math (that's part of why I became an English major!). Luckily, startups don't usually require much math. But there's at least one concept you definitely need to understand if you want to successfully raise venture capital.
Office Hours Q&A
I’m similar to you in that I come from an arts background but am a self-taught coder who has gravitated toward the technical side of startups. In general, I think this is a really helpful background because it helps me to consider how the software I build will get leveraged by end users.
Where I’m running into an issue, though, is along the lines of what you wrote about in a recent article. It’s the one called “I Killed My Company By Being Good at too Many Things”. I’m not personally running a startup right now. I work at a small startup (8 people). Because I don’t think of myself as just a tech person, I tend to try to get involved in lots of other aspects of the company like the marketing and the product design and things like that. I enjoy it, and the founders seem to appreciate my help, but I feel like I might be over-committed to a company that isn’t really mine.
What are your thoughts on employees who wear too many hats in a company as opposed to founders? Am I setting myself up for failure? Am I hurting my company? Am I “giving away” too much of my skills or not properly valuing them? How should one think about being involved in lots of parts of a company when they’re non-founders?
On some level, the questions you're asking here are very personal and can only be answered for yourself. By that I mean the amount of commitment we make to our jobs is something each of us has to decide individually.
To understand what I mean, let me frame your question outside the construct of a startup.
Take me as an example. I work at a large university, which basically means it operates as a multi-billion-dollar corporation. I’m one of roughly 35,000 employees. In that context, there’s no good business reason for me to put in more than a bare minimum, right? If I work 100 hour weeks or 20 hour weeks, I’m personally not going to “move the needle” on the university’s overall success or failure. And yet, I love my job. I go to bed thinking about it. I wake up thinking about it. I do work on weekends and late into the nights. It’s part of my identity and who I am.
Is that a bad thing or a good thing? Everyone is going to have a different opinion (I can tell you my wife probably doesn’t love it.)
The same is true for you. If you enjoy your work, and you’re fulfilled by how you’re contributing, does it matter whether or not you’re the “founder”? I’d argue it doesn’t.
Conversely, from a founder’s perspective (back when I was running my own companies), I certainly preferred having employees dedicated to our collective mission. I also expected to have employees who – as you put it – wore “lots of hats.” That’s just part of startup life. When you’re running a small company, you tend to hire with a bias toward people who are going to be able to fulfill multiple roles because you’ll need it. In other words, you’re not the only early startup employee to be heavily committed to your work. In fact, you’re probably more the norm than an outlier.
As for whether or not, from a company’s perspective, it’s good for any one or two early startup employees to be critical to the company’s operations… well… it obviously has risk (which I wrote about in the article you referenced). But it’s also just a part of startup life and the inherent risks of new companies. I wouldn’t be overly concerned. It’s more about recognizing that, long term, it’s not sustainable.
The big differences between what you should be worrying about as an employee versus what a startup’s founder needs to worry about are related to the long term implications. Specifically, a startup’s founders need to be thinking about how to expand their team and have more specialized employees in order to minimize the risk of having any one employee be too valuable to the company.
Conversely, as an employee doing lots of jobs within a startup, you’ll need to be thinking about how your role might evolve in the future and whether or not having a more focused job will be equally as fulfilling to you. If so, you’ll likely be able to grow with the company as its matures. If not, that’s perfectly OK, too. It just means there’ll likely be a day in the not-too-distant future where you’re no longer as fulfilled by your job as you once were. At that point, it’ll probably be time to find a new job. Luckily, it also should mean the company is ready to be able to operate without you, so, overall, it should work out well for everyone.
Got startup questions of your own? Reply to this email with whatever you want to know, and I’ll do my best to answer!