At one of our recent investor breakfasts, Howard Morgan, founding partner of First Round Capital and Chairman of B Capital, offered up the six P’s he looks at when evaluating a company: people, product, plans, profits, passion, and persistence, with ‘product’ including knowing your market, and ‘plans’ meaning financial planning. We’re going to add a seventh P, since Howard also believes that one of the most frequent startup mistakes is coming up with the wrong Pricing, whether it’s too high or too low.
Then there are the much more basics mistakes that startups make/common misconceptions that founders or the team have, which we feel contribute greatly to the fact that nine out of 10 startups fail. Remember: Anyone can start a company. Not everyone can build a business. These might be a few of the contributing factors that can make all the difference:
1. You don’t need to hire a writer. Anyone can write. Not really, but we’ll play. It’s not simply about writing – it’s about communicating. Effectively. Because founders believe that anyone can write, that skill is devalued. The concept needs to be rethought. Try this: you pay your tech developers, right? The writer is developing the concepts that will effectively get your message to your prospective audience/customers. Think of it as a front-end coding skill. Anyone can learn to code. Not everyone can code well. Content writers are front-end developers who use a specialized coding language. Words instead of zeros and ones and symbols, etc. And remember: the first thing your customers see are the words, not the code. And glad we’ve finally clarified that one! Pay your writers!
2. Your marketing director should be old enough to vote. We’ve seen many startups with a young marketing person who is adept at social media. Meaning, they post across all platforms, and may have something of a following. In their circles. Note to self (and founders): Instagram/Snap/Facebook/Twitter accounts/followings do not make a marketing person. A true marketer is someone who has developed and executed a complete marketing plan. We know that marketers are red-line hires, or so you’d think. Without a go to market strategy, much harder for your company to get into the black. Impossible to launch a company without a go to market strategy.
3. A growth hacker is not a marketer, nor is it a new term for a marketer. It was Sean Ellis who created the category, and FYI, “A growth hacker is not a replacement for a marketer. A growth hacker is not better than marketer. A growth hacker is just different than a marketer. To use the most succinct definition from Sean’s post, “A growth hacker is a person whose true north is growth.” Second note to self: one is not a replacement for the other.
4. Sales and Marketing are not the same skill sets. Nice to believe that you can bring on someone who does sales and marketing. Truth is, that person will be good at one of the disciplines or the other. It’s like asking your developer to write the copy for the website. Yes, you need to stop doing that, too.
5. A developer is not a designer. Don’t expect the developer to have front-end design skills. It’s not in their wheelhouse. Trust us. We know that startup employees/acolytes tend to wear several hats, and that’s fine, to a point, but there’s someone who looks a hell of a lot better in that fedora than you do. Stick with the baseball cap.
6. Contrary to popular industry misconception, you do need a business model. One that has a pathway to revenue and profitability. Eyeballs as Online Currency are not what it used to be – and never should have been the model in the first place. Case in point: Facebook harvesting user data and putting your privacy up for sale. It did make Mark Zuckerberg one of the most powerful men in the world, especially when you consider, as Scott Galloway pointed out at the DLD Conference in NY this past week, that Zuckerberg holds sway over almost as large a population as Russia, the US, the EU and China, combined. Facebook is also one of the companies that sucked the oxygen out of innovation. If you’re focus is on, say, Social and you are equating mere eyeballs/traction with success without having a revenue-generating model, you may well be doing product development for Facebook. See above: Howard Morgan’s seventh ‘P,’ for the people in the nosebleed seats who may have missed it the first time.
7. Eliminate the term ‘success fee’ from your vocabulary. You’re asking professionals for their expertise. Compensate them accordingly. The real problem: founders tend to have little respect for boundaries. If you work for zero/hour, guess who’s going to have no respect for you time? For the record, many states require that companies pay interns. Why would you ask a professional to work for free?
Many founders believe that unless there is a graduate school designation – JD, MBA, etc – a consultant whose skills they desperately need, be it marketing, sales, writer/content developer – is something less than a professional. Third note to self: Neither Bill Gates nor Mark Zuckerberg are college graduates.
We find the focus on those graduate school designations odd, especially in light of the fact that founders will designate themselves as CEOs, even if there’s only one other people in the company. Fourth note to self: many skill sets are necessary to the success of a company. May be time to pay a bit less attention to those letters in order to get to better numbers. Onward and forward.