When it comes to evaluating early stage startups probably the most important thing you want to learn about is founders’ attitude about the things they know that they don’t know: how will they tackle their known unknowns and how are they going to solve the problems that they are aware they don’t know how to solve at this moment? This is very important because this attitude comes with entrepreneurs in two flavors – one of which is extremely poisonous and leads to certain failure, and the other which can be the most powerful driving force and motivator in early stages of startup’s life.
The dark side of known unknowns in founders’ heads usually looks like this:
Think of an engineer that knows how to code, but have no idea how to “do marketing”.She will work like mad on developing the software (she calls it “product”) and will hire a marketing expert, a hustler to “do marketing” for her “product”. Or even worse – a guy that knows how to build software, but is fully aware that he cannot sell it – because he is not a slick sales guy. So again, he will hire a salesperson to do the sales of the magnificent piece of software he has made. Story also goes in the opposite direction – there are many people who are brilliant in sales, although usually in different verticals, but have no engineering knowledge required to build the MVP. So, they will just hire an engineer to code the MVP or outsource development to an agency. (Not to mention that “building and MVP” is an oxymoron.)
So, what is wrong with this approach? Isn’t it exactly the way most companies are doing it – they have the engineering teams, sales departments, customer support, marketing, and so on, and everybody is doing their piece of work. First of all, as an early stage, pre product/market fit startup, you are not a real company. Yes, you are probably incorporated and paying taxes, but you need to behave very differently than a big company. More fundamental problem with this approach is that founders with this attitude perceive the unknowns as something that can be magically solved by “experts”. A good sales guy can sell anything. A good “marketer” can build traffic on any kind of website or blog. How – have no idea – but for sure there are people out there who know how to do this, and all it takes is to hire those people and let them do their magic (and, of course, raise some money from investors to be able to do so). It never works. Been there, tried that and it never worked. And at the of the day, when it fails, you are going to think it failed simply because the expert or an agency that you hired wasn’t good enough. Theydidn’t manage to sell, not you. They didn’t know how to build a quality software, not you. After all, it was their job, not yours. They’ve fucked up, not you. So, not only that you didn’t achieve any results, you also didn’t learned anything. How are you going to do it better next time – hire more expensive agency?
Whenever I talk to a startup founder with an attitude like this, I tend to run as far away from the deal as I can. These are the people that don’t have the natural instinct for learning new things. They say it is important to stay focused on things they know best and leave other things to other people that know them better. They are talking about work-life balance. They are comfortable to trade learning for excuses. But in reality, they believe in shortcuts because they are not ready to fully commit themselves to learning new things, or are simply just lazy. And it keeps surprising me how often this happens.
On the flipside, there are many entrepreneurs who are approaching their known unknowns in a very different way. In the very early days of building a startup, they are fully aware that they need to be the Jack of all trades. Don’t know how to sell a product to a prospect? Instead of looking for a magic wand in hands of a sales wizard, they try to learn it. They try to sell it on their own. One don’t have to be Steve Jobs to find the first customer or two. If the product is any good, there are always low hanging fruits – innovators, early adopters – that will at least give it a try. Don’t know how to build an MVP? Instead of outsourcing development, they will simply try to find a way to do it themselves. You don’t have to spend five years in Google to learn how to build an MVP. There are tools out there that makes it possible to build almost any kind of MVP in a month or two. Will it be perfect? Of course not – it will probably be the worst piece of software on Earth. But it will work. It will get them to the first customer. It will enable them to learn about all other things that they don’t know. Founders with this kind of attitude understand that the only way to figure out their known unknowns is to learn about the solutions themselves. Only once that is done, they pass it on to other people to scale it up.
This story goes further – are all good founders of an early stage startups experts in legal stuff? Of course not – but they have invested some time to learn the basics and become able to understand the term sheets and fund raising agreements. Are they all expert accountants maintaining their balance sheets like pros? Of course not – but they are not afraid of firing up Excel and doing some basic bookkeeping. Building a pitch deck and presenting startup in front of an investor is natural thing for all the good founders? Again, of course not – but they are aware that there is no excuse for not looking at other people doing so – there are hundreds of them on YouTube – and trying to learn from them.
Naturally, in a more mature startups, or companies, you will have different people responsible for different parts of business. There will be someone responsible for growth (aka marketing), customer support, development, ops and so on. But not at the beginning, when you are struggling to get to first 10, or 100 customers. In these early days of your startup you are still in the learning mode. You are trying to learn who your customers are, how to find them, what to tell them in order to close the sale, and ultimately what kind of product you need to build in order to solve their problems. And you cannot outsource this learning.
Only when you reach a certain stage – call it product/market fit, or whatever you like – you can start thinking this way. Only when your focus shifts from building a product to building a company, you can (and you should) stop being Jack of all trades. Otherwise, you will be beaten by others that are hungry for learning.