January 22, 2018
TABLE OF CONTENTS
Okay, you’ve decided to break out on your own in spite of not living in Silicon Valley or even Austin or Boulder, and a friend connects you with your first “community networking event”. You’re anxiously awaiting this meeting and all of the great connections you’ll make. I’ve spent a few years in your shoes, and I’ve put together a list of things to expect to hopefully save you some time.
First off, let’s talk about you and why you’re doing this. If you either have a customer that you can serve better on your own than in your old job, or you see an opportunity that you could not convince your bosses to address, you’re possibly on the right track. There are other great reasons to start a company, but these are the two that most often lead to successful companies—although they are by no means a guarantee of success.
Questionable reasons for starting one’s own company include hating the corporate environment, wanting to set flexible hours, not liking “working for other people”, preferring to focus more purely on the product or tech, or just exploring something you’re passionate about. You will probably pick up some skills that serve you well when you either return to corporate America or join a well-funded but still entrepreneurial early-stage company—because none of these is the right reason to break out on your own.
You will be working with and for others, whether it’s your team, customers, or partners. Also, doing your own thing will require you to wear every hat in the company until you can afford to hire other people, so you may not spend as much time on your passion play as you had dreamed about.
Without further ado, here’s a non-comprehensive list of some folks you can expect to meet.
Although these folks are typically awesome, they usually haven’t built a successful company from scratch and may not appreciate how much of your time should be being spent getting your product in front of customers or your pitch in front of real investors. But do thank them every time they organize an event because good connections often do occur here.
They may tempt you with speaking engagements and other exposure to the community. No good deed goes unpunished, and you should be very careful how much time you invest here. Some events will lead to good connections, but more often than not, you meet the next three type of people in the community.
These are folks who have found a relatively happy work-life balance in corporate jobs but are scratching an itch by attending “community” events. They ask questions, offer encouragement, and sometimes will recommend connections that might be helpful. You’ll probably sort through more of these than you’re willing to to find the one that can actually help you make the connection you need, so tread lightly and limit the time you spend here.
This is someone who has decided to leverage their corporate background—typically in finance, accounting, or law—to assist promising young entrepreneurs. The problem is, much of what they know is much more relevant to your clients or partners than to your scrappy startup. But you do need to meet these folks, and hopefully, at some point, you will need their help to scale the business. Just don’t spend too much time here in the early going.
This is an interesting one. There are often many successful individuals in this group, but an awe-inspiring groupthink can happen when these folks get together. Strike a relationship with the leader(s) but don’t spend too much time here, possibly ever. If you do need to go this route for funding, try to avoid any fund that is organized as a pledge fund—in fact, run the other way. If it’s not a pledge fund, you will get real feedback and practice on your pitch, and you may get a small-but-helpful dose of funding before bigger VCs will look at you.
Just be aware it’s rare and typically not the kind of check that will let you make those 10 hires you think you need to make. And if diligence drags on, it’s probably a good idea to cut bait and look elsewhere. Also, be ready for some pretty inexperienced investors who will ask questions that are probably not as relevant as they think. My experience is mixed, with a small number of very smart investors and a large number who are looking for VC returns on Private Equity or Commercial Real Estate risks.
Fear not—there are some people that you definitely do want to and typically will meet at these events:
This is often a person who has worked for a company that went from startup to success. They get associated with the success of that company and often contributed a lot to it. They have a lot to offer in terms of things they’ve seen others do, but they might not have the fire in their belly to do the dirty work it took to get their company to where it was when they joined. If the fire is there and you need a technical co-founder or CTO, these can be a no-brainer. But otherwise, like the corporate mentor, it is probably best to keep connected with them for when the time is right.
If the fire is there and you need a technical co-founder or CTO, these can be a no-brainer.
This person can be extremely helpful in getting the word out locally, so cultivation of this relationship is a must. Once you get that great piece of press, be prepared for the rush of the following people cold calling you without understanding a thing about your business:
They know very little about your business, so don’t be surprised when they don’t understand why you don’t need to sign a five-year lease, with no credit,no AR, and no cash, mind you, on an office for a team that you have no idea how big will be next year, let alone in five years. When you do have a handle on the space you need and the means to secure the lease, they will be very helpful.
$500 per hour, rounded to the nearest six-minute phone call. If this doesn’t tell you how to handle these folks before you have revenue or outside funding, you probably won’t be on this journey for long. You will need an attorney at some point, but probably not with the 2,000 person firm. It’s better to build a network of folks who know the attorney to call when you have the need.
You will need an attorney at some point, but probably not with the 2,000 person firm.
Sure, these are keys to scaling your business at some point, but like the real estate agents, you can almost certainly spend time on something better in the early years.
The first two or three of these you get are tempting. You have visions of signing a big term sheet with that investor who can open all the doors. But be warned, low-level associates are paid to call all day long and collect intelligence. You are welcome to provide that data if you wish, but these folks need you way more than you need them. If an MD or Partner calls you directly, that’s a different story altogether.
You’re also likely to meet these folks, all legitimately claiming to be an entrepreneur to some extent:
This is often someone with five or six company titles on LinkedIn or a similar number of business cards. Maybe they don’t even have companies, but a collection of ideas or possibly even pitch decks. Don’t be fooled, they are rarely as good at multitasking as they think—they just haven’t found something they can commit to. Don’t get roped into co-founding a company with them or exploring too many ideas too deeply.
You’ll know this person when you see 12 six-month stints as “head of biz dev” on LinkedIn. Beware, truly great salespeople stay in single places for a long time; once they build a massive snowball, why would they leave? They aren’t going to want to work for your startup until they see the opportunity, so if you do happen to find a biz dev guru looking for the next big thing, be ready to bet the farm. Just don’t bet the farm on that 13th sales gig being the one where they find success.
The biggest warning sign that you’re dealing with the career startup salesperson: stronger interest in base salary than in variable comp. Truly great sales reps will care only about variable comp, whether it be cash or equity (or preferably both).
These can often be confused with successful entrepreneurs because they tend to know a lot, be very good at what they do, and run in similar crowds. You do need to seek these folks out; they can become great advisors or, better yet, financial backers. Just be aware that their talents may be useful later in your journey, and advice should be taken with a grain of salt given the stage of development where your company is and what they’ve been exposed to.
You probably won’t get much of their time, unless they’re close to hanging it up. Talented people can get off track for a variety of reasons, but their hustle and or intelligence and work ethic are obvious. Spend time with these folks when you can; they may become great partners, employees, employers, or even investors once they strike the right balance and become successful.
If you hang out enough in the scene and balance your time wisely, you’ll finally hit the biggest paydirt of them all:
They undoubtedly have good advice, even if their success was not in your industry. But the value they provide can be deeper and more meaningful than just that. You need moral support, and only someone who has been in your shoes can offer the kind you really need. But keep in mind, these folks are approached all the time by people who don’t respect the value of their time. You are likely to hear a lot of vague platitudes and bumper sticker slogans at first.
Respect their time, be patient and persistent, and always have an ask, even if it is “I just want to get to know you. I think in the long run we could both help each other, and I would just like to learn more about what you’ve done”, the first time you meet. Once they open up and you form a genuine relationship, you will be rewarded with great advice, support, and a wealth of useful introductions. Remember, success is extremely hard, and people who have truly achieved it have a respect for others who do the same.
CEO and Board Advisor, Lobby CRE
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