Newsflash: Your Startup Is Not In The Playbook
A former investor of mine, Fabrice Grinda, recently wrote a blog post enumerating the reasons why businesses that are started with two co-founders are more likely to exit big than are those with a single founder at the helm. That line of thinking seems to be the common sentiment at least in the venture world, and one which having seen more than a thousand founder/cofounder setups while on the venture side, I think I would tend to agree with. When I started thinking about leaving General Catalyst to start my first business, I mapped out a progression of events necessary to take the plunge and build a company. The planned progression of events went something like: 1) idea, 2) diligence, 3) cofounder, 4) quit job, 5)raise capital, 6) build product, 7) achieve seed stage milestones, 8 ) raise more capital and scale.
This play book is sort of a standard one that I had heard many entrepreneurs and investors tout, and not having been through it before, I largely executed according to plan (minus 7 & 8 that is). What I’ve learned, however, is that someone else’s play book is only a guide, and to execute against it without flexibility and recognition of your own context/data is a mistake. Nothing in startup world happens exactly as you expect it to. Sometimes a recognition that you need to write your own play book can prevent what I’ll call “inorganic progress.”
“Organic progress”, to me, is when the events in an operating plan occur as the result of successful completion of tasks/goals/learning on which that new event is dependent. In other words, progress that occurs naturally or without force. An example of organic progress would be when a management team builds a product, puts it out to consumers, people buy this product, and THEN they design a customer service program to support their newfound customers.
“Inorganic progress”, then, would be occurrence of an event ahead of completion of the tasks/goals/learning on which that event is dependent. Or, forced progress. The company builds a product, puts it out to consumers, and then designs a customer service program in anticipation of its first customers…although it may seem that management is getting ahead (or making progress) by finishing their customer service design quickly, they are doing so without the data/learning of customer feedback, and thus an event (the customer service design) occurs before it’s antecedent (inorganically).
It has been my experience that when progress is forced, although potentially forward moving from an aesthetic sense, this is progress in a wrong direction. The customer service design, when created through inorganic progress, will not address the needs of the company’s customers, thereby creating an operational inefficiency that would not have arisen had management allowed this piece of progress to develop organically.
As it turned out in our last company, steps 1-4 were in line with the concept of organic progress. My immediate instinct when starting JumpPost was to replicate a known play book: 1) idea, 2) diligence, 3) co-founder, 4) give up job opportunity in venture capital (replaced quit job), 5) raise capital. What I realized when I began executing on this play book, however, was that I had a previously non-existent understanding of the difference between organic and inorganic progress. Steps 1 & 2 were the same, but as I began to work on 3, I realized that recruiting A level talent, and especially a cofounder, could be a 6 month cycle. A number of people I am close with expressed an interest in cofounding the company, and had I been executing to “plan,” I would have taken one of them on before moving forward to step 4, but this didn’t seem “natural.” Why? Because I was missing two antecedents to this decision. The antecedents, in this case, being 1) an understanding of what domain expertise would become most important to our company, and 2) an understanding of what caliber of talent I could expect to bring on board pre vs. post venture financing.
So…I sort of tabled the old play book, continued to meet with interesting people, but began executing the subsequent steps before completing step 3 (cofounder)…As soon as I moved past step 3, another deviation from the play book arose. The play book would have said I needed to raise capital in order to develop the JumpPost product (especially without a technical cofounder), but again it didn’t seem natural…what I realized was that I wasn’t ready to commit to investors a single vision for the Company without the data of product/market fit behind us. So I read a lot about a new play book, rooted in the philosophy of customer development, and then began recruiting a team to build something ahead of financing. Now, we will begin to acquire the data needed to complete step 5 (fundraising) organically.
I ran into Chris Dixon on the street in our neighborhood a few weeks ago, and after chatting for a bit about this blog, he asked about JumpPost. His first question was “how are things going? still searching for a technical cofounder?” From an investor’s perspective (and Dixon is another example of a guy who has seen a thousand startup teams, and subscribes to the “cofounder law” for many of the reasons Fabrice articulated), acquisition of a cofounder (step 3) was a data point that would indicate where I was in the progress of a conventional startup play book. Although my answer to his question was, “yea, I guess so,” the reality was I was well beyond this step in the play book, but only because I decided a while ago that I would design a new play book, drawing on conventional wisdom for sure, but not without a few of my own creative plays mixed in.
So all this talk of organic and inorganic progress is just to say that while I recognize Fabrice’s points about the benefits of a cofounder, I will not take on a “cofounder” until it organically presents itself. As JumpPost progresses, I view every early hire, part time contributor, and even advisor as a founding member of our company and I rely on them all as a sort of “aggregate cofounder.” The interesting part is we are going to hit step 6 (product) and have a real good shot of hitting step 7 (achieve seed stage milestones) of the old play book, before executing on steps 3 (cofounder) and 5 (raise seed round). It just happens that this was the most organic and natural path of progress given all the events/goals/learning that we have experienced to date.
So, I guess my advice to entrepreneur’s considering Fabrice’s (and common wisdom’s) suggestion that “2 [founders] > 1” would be, “yes, a cofounder does represent a huge amount of value when starting a business…BUT there are many ways to skin a cat, just make sure you don’t do it inorganically.”
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