Hi y’all! We at LSE Generate have just returned from the other side of the pond after a three-day, fully-immersive startup ‘trek’ with a group of entrepreneurially-minded LSE students and recent alumni. The visit to Silicon Valley and the Bay area included some fascinating meetings with LSE alumni startups, incubators, venture capitalists, and entrepreneurial corporates. One of the trekkies, Fannie Delavelle (MSc International Political Economy 2014), shares some of her favourite insights gained from the trek. We hope to run another trek next year so follow us on Twitter to keep abreast of what’s coming up!
“How do you eat an elephant? One bite at a time” said Jessie Mooberry, Entrepreneur-in-Residence at Stanford University’s Peace Innovation Lab.
These insights from numerous meetings with Silicon Valley entrepreneurs will help you find the right fork to begin eating that elephant:
- Keep informed.
- Keep up to date on the types of projects that are being funded, and why. This will enable you to put forward persuasive arguments when it’s your turn to pitch to investors.
- Expand your network every week, and make sure that you are useful to them: ‘What can I do to help?” is one of the most used questions in Silicon Valley.
One bite at a time: when patience is rewarded
- Getting a sponsor can be a career-booster for everyone. Sponsors are more than mentors: they’ll advise you but will also advocate for you when you’re not in the room. Excellent sponsors are typically confident in themselves (and therefore don’t feel threatened), competent, and generous.
- The most successful startups are typically founded by 30-40 years old. It can be useful to take your time, join another startup you believe in learning on the job whilst preparing to launch your own business. Don’t let this restrain you however if you are in your 20s and feel ready to ‘eat that elephant’ already – every situation is different.
Shout it from the rooftops
- Testing your idea informally with your peers, your network, and subsequently with the target customer (through interviews, surveys etc.) will help you find your segment. It will also increase public awareness for your project from the start, which can help you once you launch it for good.
Finding your other half
- When looking for a founding partner, you should team up with individuals who will complement you (ie. have skills/knowledge you don’t have). You should absolutely love to work with and be around them, because let’s face it, you’re likely to spend seven days a week with them for the foreseeable future.
- Once you’ve found your other half, don’t shy away from the difficult conversations. You should take time to discuss equity repartition (at least an hour) – investors will look favourably on teams that have had this conversation already, as it shows an ability to teamwork and negotiate efficiently. Resolution Co advises to create a vesting schedule with pre-formulated, precise targets, to ensure long-term commitment from everyone in the team.
Know your customer
- Understanding your target audience and their needs is key to finding the specific segment you should focus on. Your focus needs to be on the customer first and foremost, before the product. You typically want a product or service that people will adopt organically from the start, and to achieve this you must thoroughly know your customers and their needs/preferences. Shoaib Makani, the founder of KeepTruckin, for instance spent days talking to drivers, hanging out at road sides, meeting with carriers, to gain a deep understanding of the topic. However, as Jessie Moobery highlights, while listening to experts is key, you do need to preserve your ability to think differently if you want to disrupt the market.
- Finding an innovative product or service that self-distributes is the secret recipe to hyper-growth. Self-distribution can be achieved through different channels: word of mouth between customers, customer bringing product to their company (bottom up penetration), company encouraging employees to use product (top down) etc…
Money, money, money (must be funny, in the rich man’s world)
- Most venture capitalists (VCs) will expect you to have already invested financially in your startup – either through personal savings, or contributions from family and friends. They also will look more favourably on your project if you are devoted to it full-time (rather than on the side of another full-time job).
- Investors typically want to de-risk their investments, and they will be looking for three main risks:
- Marketing: what is the market and its potential?
- Operation: does the team have the right skill set and industry experience?
- Technology: does your technology work?
To convince VCs to invest, focus on:
- Building a story to guide your pitch: why you, why now, what precise problem, why is no one else addressing the issue, and why your solution is going to work?
- Highlighting the market’s potential and having a clear strategy on how to enter and expand in that market. Be as data-driven as possible and, again, show that you know your customer.
- Showing commitment/purpose: you can for instance come with a prototype to prove you are serious about your project – even if the prototype is not even nearly what you envision the end product/service to look like.
- Depending on the type of investor and your product/service, deciding whether you want to pitch returns (if you have a small number of potential customers) or impact (if large scale).
- Showing you have grit, charisma, and industry knowledge: beyond your product/service idea, a large number of investors base their decision on the founder’s personality.
Once you get an investor on board, you’ll likely have to choose between wealth and control: you can give more power to VCs (seats on the board of directors…) to get extra funds or choose to retain more control.
Additionally, remember than not all money is not equal: smart money will bring you additional benefits, such as contacts, whereas dumb money is just cash.
Becoming the next Google
- Most successful businesses start with a focused, relatively small entry-point, and a proposal to solve the identified problem in a very specific, efficient way. While many distractions will come up during the first few years (could we make more profits if we go in that direction instead? Could we focus on this other problem as well as our original one?), it’s important to maintain your initial focus, and to avoid deviating from your objective. You’ll be able to expand your operations once your startup is more established.
- As Tim Brown, founder of Allbirds, has said: ‘You are defined much more by the things you say no to than by what you do.’ This focus should be applied to every decision you make: sticking ruthlessly to a decision is the surest way to ensure you properly implement it.
- Set up a feedback loop to stay connected to your customers, and make sure you integrate relevant feedback in your product/services.
How do you ensure you stay ahead once your business is well established? Ruth Porat, CFO of Alphabet (Google’s holding company) has a few tips:
- Create a culture of innovation, an environment where ideas are rewarded – whether they prove successful or not.
- Build consensus on potential responses to crises before they happen, so you can react quickly if the worst occurs.
- Identify your sources of vulnerability early and ‘de-risk’ as much as you can.
Insights collected from meetings with the following entities, organised by LSE Generate:–
If you need any support with your entrepreneurial endeavours, contact LSE Generate to get started or to keep going!