John Gauch 2025-08-03 John Gauch 2025-08-03

Struggling with Growth? You Can't Create Demand—You Need to Find It

If your emails, ads, or other sales and marketing activities are falling flat, it might be that you’re trying to generate demand where none exists. In this post, I break down what’s at the root of PMF and growth by reviewing the basics: uncovering real problems felt by people actively trying to make progress.

Illustration created with the assistance of ChatGPT by OpenAI.

Hi! I'm a startup fractional COO who works hip to hip with founders as their operating partner. I amplify founder contributions by serving as a thought partner and taking on critical and delegable growth and operations responsibilities, particularly for companies in the $1 to $10 million revenue range. Over 20+ years, I have worked on dozens of startups (Synervoz, Feldspar, Axiom, Spartan, IAN), helping build one industry-transforming business to exceed $100M in revenue and a second to (so far) nearly reach that very rare milestone.

Introduction

You've noticed that your emails aren't hitting. Or it's your ads. Or it’s your trade show booth meetings. Are your prospects numb? Is it the ICP? The channel? The messaging? Maybe AI is steering you wrong, or it’s just the times.

You're not alone.

If you’re the founder of a venture-backed startup, you’re rightfully preoccupied with the idea of finding product market fit (PMF). If you’re the founder of a profitable business with similar growth ambitions, you’re also looking for an unmet or undermet problem you can solve to increase sales.

It’s hard.

So, what will it take to grow your business? First and foremost, it will take getting the basics right.

You Can’t Manufacture Demand

To start, let's get on the same page with one fundamental idea: You can't manufacture demand for your product where it doesn't exist. You can only discover prospects by identifying the people who are already feeling friction in their lives and are trying to make progress.

If people don’t have a problem to solve, or there aren’t enough of them to meet your business’s requirements, there’s never going to be scalable PMF. There’s never going to be a promising new growth channel.

I won’t get into it here, but your solution also has to outperform the alternatives—not across the board, but at solving that specific problem, for that specific person, in that specific moment. It doesn’t have to be perfect. It doesn’t even have to be great. It just has to be better than their current solution or workaround—or better than doing nothing.

Sales and marketing is about finding and connecting with people who are struggling with a problem and searching for a solution. They might not know precisely what they need at the start, but if your solution clearly helps them achieve a better future, you have a chance to be the one who helps them. Your most promising short-term prospects aren't the passive lookers either. It is the group of people actively looking and deciding how to solve their problem.

Some people may be stewing with their problem and not taking any action besides feeling unhappy. “Silently suffering” is how someone put it once. They're too early in the buying timeline to become a customer today. You want to connect with these people, too, and consider ways to nudge them along (more on that below). Initially, focus on prospects further along in the timeline.

Here's an example of what I mean: Say you build and license an audio SDK. Your potential market today consists of developers who are currently facing an audio challenge that your product solves. It's not every developer who is part of a team building audio tech.

No problem, no customer.

This framing draws on the Jobs to Be Done framework, co-developed by Bob Moesta.

Use the Four Forces

Bob also describes how four forces drive or resist the change entailed in buying something new:

Pushes (away from current pains)
Pulls (toward an exciting new solution)
Habits (comfort in what is familiar)
Anxieties (fear of what change means)

Purchases occur when the pushes and pulls are strong enough to overcome the friction of habits and anxieties.

Effective sales and marketing encourage a shift from the old way to the new way by strengthening the forces promoting change and reducing those causing drag. When you get that right, as Bob Moesta says, people pull your product into their lives.

Let's walk through two foundational and durable sales and marketing concepts that follow from these principles:

Read also: How to Learn Jobs to be Done

Provide Value

We said the purpose of a business is to help people make the progress they desire in their lives. It's not just a product obligation; that should be the mission of the organization as a whole. The entire customer experience should be designed with this end in mind, including sales and marketing.

Sales and marketing shouldn't push your product. Effective Sales and marketing helps people clarify their problems and shows them how to take the next steps to solve them. It’s a big, scary world out there, sales and marketers ought to see themselves as guides helping prospects choose a path to a solution. Engaging with customers like this also earns trust from genuinely being helpful.

That's delivering value.

Imagine how a prospective customer can move from where they are to where they want to be. This approach to sales and marketing centers on questions like:

How are people feeling now, in their struggling situation? What are people trying to do but can't? What's frustrating them?
What does better look like? How does your product help? What are its strengths and shortcomings?
To make a switch, from where someone is now, what do they need to know? What gets in their way? What are they afraid of? How do you tap into what motivates them and reduce their fears and anxieties?

Again, your go-to-market motion must make the math of the four forces work (pushes + pulls > habits + anxieties). No product bragging. No "educational content" that doesn't have a clear purpose. Foster self-motivation that helps someone move forward.

How does your sales and marketing stack up?

Show Up at Watering Holes

To apply this sales and marketing principle, you need to find people in a struggling situation. Go where they already are or find a way to bring them to you.

This isn't easy, but it's critical.

Look for the places and ways your audience has “opted in" to being a prospect. That's where you need to be, too.

Let me give you a concrete example. One particularly well-performing cold outbound campaign I worked on started by scraping public information about attendees at a niche audio industry event:

By attending that event, people raised their hands to say they were working on and cared about the kind of audio projects we care about, demonstrated by our audio SDK and related services.
We crafted an outbound email that linked to a YouTube talk on a timely, thorny audio challenge by one of our team members who also attended the event. The talk was technical and useful; it was not a sales pitch. Many event attendees may have been wrestling with or would be curious about the subject matter.

The campaign emails had a 55% open rate, a 30% click-through rate, and an 18% reply rate. It also converted a new customer immediately and opened up conversations with several others.

Why did we achieve those results?

We'd zeroed in on a much more promising audience than "every developer on a team building an audio product or feature." Still, not everyone who got our email was a potential customer. But by attending the event, they'd raised their hand to say they wanted to learn something new. Many were likely trying to connect the dots to understand or solve an audio challenge.

We distinguished ourselves by demonstrating our expertise as audio problem solvers. Even if we didn't address the exact problem someone was working on, the talk topic was curiosity-arousing, and it doesn't take a massive leap for a watcher to bet that if we could help with one audio challenge, we could help with others like it.

Are you showing up when your most likely customers come knocking?

Organic SEO is often underutilized by entrepreneurs because it requires a bit of time to yield results. It's sidelined in favor of performance marketing or cold outbounds perhaps. But organic SEO is how you get discovered by people actively searching for solutions to a problem. This is huge. These people have intent. They're already looking for you. You don't need to chase them; you just need to be easy to find.

And this is more important now than ever.

It's not just people searching. It's AI agents.

The same general principles that help you rank in Google will help you get pulled into AI-generated suggestions, too. Stick with the fundamentals: In the simplest terms, create genuinely helpful content, keep it updated, and keep at it.

Where are the watering holes your prospects are hanging out right now?

Example: From My Business

As a fractional COO, I work with founders who have already achieved considerable success with their companies, closing a Seed or Series A financing and generating $1 million to $10 million in annual revenue. Many of them are in tech, but not all. Some are venture-backed and others are profitable growth businesses.

However, not every founder meeting that fits that description is a real prospect.

My prospects are unhappy with how their business is going:

Finding scalable PMF after early traction might be proving difficult.
Growth may not be where they want it.
They may be feeling the team isn't aligned or executing well.
Business operations may be creaking, groaning, or breaking altogether.

They want to see giant leaps forward, as well, not incremental improvements.

They're likely overworked and stressed, as a result, which leaves them emotionally and physically frayed, from doing too much. Still, they’re fighters, with big ambitions. It’s not just about money either. Many aspire to transform the very nature of the industries in which they operate.

These founders we feeling a lot of pressure.

Again, I don't serve every founder fitting the high-level demographic criteria I shared (e.g., someone running a $1 to $10M business). They need to be in a struggling situation, similar to what I shared.

They’re not my prospective customer if:

They have the support they need, and it’s going well.
They lack the support they need, you don’t want to do anything about it, and they’re okay with the implications.

The people I help are unhappy (and likely aware of it) with their current situation, and they're either passively or actively exploring how to solve for it. They are on the buying timeline somewhere between their "first thought” and deciding on a purchase.

How did they get into that situation? When the company grows, founders need to grow too. They need to adapt their role. Too often, they try to do it all in the face of increasing challenges, such as:

finding PMF or a new growth lever amid growing operational demands, or
orchestrating and managing their scaleup if they've tapped into growth

The founder role needs to change, and they may require an operating partner to make that happen—someone to take on mission-critical but delegable tasks, allowing them to focus on the top two to three things that only they can do, as CEO and founder.

My prospects are dissatisfied and want to make changes. When the math of the four forces works out, they work with me or implement another solution to make progress. The role of my go-to-market activities is to help founders figure out what they need and how to choose the right solution to achieve their personal and business goals.

To illustrate, as part of my content marketing efforts, I wrote a LinkedIn post that discusses how founders can become stuck trying to do it all in their businesses, why this is an undesirable situation, and how to start getting out of it.

I've connected with founders where they are, on LinkedIn.

I've specified who I want to speak to by asking if they feel they may be a bottleneck to their business.
For those who feel this way, I hope I've helped them understand why this might be happening.
And I’ve suggested ways to get out of the situation—i.e., baby steps on the buying timeline toward making a switch from what they are doing now.

The LinkedIn post isn't about me; it's about the founder. However, it’s doing the important work of helping the founder and creating a potential future customer.

Conclusion

The take-away: Treat sales and marketing as a genuine effort to help someone solve a meaningful problem in their lives and turn that demand into a purchase.

You can't create demand. But you can spot it, understand it, and work with it. If your sales and marketing efforts help someone in a struggling situation make sense of what they're facing and take one step forward, that's a win. And that's how you grow, by putting one step in front of the other.

Want help applying these ideas to your business? Reach out or follow my contributions on LinkedIn.

John Gauch 2025-07-31 John Gauch 2025-07-31

Journey of a Founder: Series B to Series C—Scaling Challenges and Leadership Imperatives

Every startup that reaches Series B has proven something, but sustaining growth, scaling teams, and building durable systems is a whole new test. What changes at this stage, and how do founders evolve to meet it? In this founder/operator roundtable, we dive into the next phase of the journey: from Series B to Series C. We cover what shifts in mindset, systems, and leadership.

Event 1—Part 1: Hosted by John Gauch and Jimmy Malik.

Illustration showing startup event title and participants John Gauch Jimmy Malik Alice Nawfal and Justin Etkin for part 2 blog post

Hi there - I'm a startup fractional COO who works hip to hip with founders as their operating partner. I amplify founder contributions by serving as a thought partner and assuming critical and delegable growth and operations responsibilities, particularly for companies in the $1 to $10 million revenue range. Over 20+ years, I have worked on dozens of startups (Synervoz, Feldspar, Axiom, Spartan, IAN), helping build one industry-transforming business to exceed $100M in revenue and a second to (so far) nearly reach that very rare milestone.

In case you missed my first blog post on the messy middle between Series A and B, in this follow-up, we zoom in on what it takes to survive and scale between Series B and C, when expectations shift, systems strain, and leadership is under the microscope.

Jimmy Malik and I hosted this second roundtable in our Journey of a Founder series in collaboration with the Operators Guild (OG), where we're both members. Our guest co-founders (and fellow OGers) were Alice Nawful, of Notabene, and Justin Etkin, of Tropic.

I summarize the top insights for you here.

We don't cover everything, but we cover a lot. Enjoy.

Introduction

Scaling a startup from Series A to Series C is full of tough choices, shifting priorities, and relentless tests of leadership. What worked at Series A can fall apart at Series B or later in the face of increasing demands for growth, structure, and disciplined execution.

This post breaks down what it feels like, critical areas to focus on, and lessons every operator can apply. These insights aren't just for venture-backed companies either; they're relevant if you're the founder of a growing business that needs to evolve from scrappy, founder-led leadership to making major leaps in performance.

(This is Part 2. If you missed Part 1 on Series A → B, read it here.)

What Series B to Series C Feels Like

Series B is another test, a different kind of proving ground. The scrappiness that got your startup from zero to Series A, or your high-growth business to substantial annual revenue, is no longer enough.

You're not proving the business can work anymore; you're proving it can scale and operate reliably and efficiently without running off the rails. You need to do this with rigor without sacrificing speed. The stakes rise as customer numbers and expectations increase and the number of team members swells. If you have a Board of Directors or investors, they're demanding proof you're on top of things at a whole different level.

This isn't easy, in large part because the practices, habits, and ways of working that served the company so well through Series A may be becoming liabilities at Series B, which can feel disorienting. Being creative and scrappy isn't always enough anymore. Sustainable process-building feels different.

Leadership issues and people management are more stressful than ever. Delegating significant responsibilities to new leaders is an emotional test. Unnerving. Functional leaders are popping up and (hopefully) stepping up. Trusting and supporting new leaders while holding them to high standards is a delicate balance. Meanwhile, existing and new team members may be nursing bruised egos if they were passed over for a new senior role or managed, or they don’t get the exact title they were expecting.

For the first time, company operations take center stage, and ops is in the hot seat. Can they handle increasing complexity, rising expectations, and higher volume? Operational issues can snowball into an avalanche. Some teams are entering the Series B phase with weak systems that need upgrading. Others arrive with no real systems at all, having punted on operational investments after Series A. For the latter, it can be a brutal awakening.

Unexpected challenges arise at this stage, too. It could be growth concerns, team misalignment, or broken systems. Things that can create friction or stall progress. The issues may be different from Series A, but they are just as critical to overcome.

Finally, resource management is still in sharp focus. It's not just about growth. More parts of the business demand investment. So you need to decide what to invest in and when across the company to optimize revenue and keep the business humming. You can't succeed on the growth front if the rest of the system seizes.

Top Imperatives

Series B demands a shift: from chasing growth at all costs to building repeatable, sustainable growth that can scale without breaking the business. Companies can't simply continue doing what worked before; they must evolve their DNA to meet new demands. Embrace this reality.
Be deliberate about who belongs at the decision-making table with the CEO and COO. Your operational rhythm, how your team communicates, aligns (or not), and executes, will be tested hard. Scrutinize it for fractures. Line up the functions and teams behind this group.
Understand that you're building complete functions now. Structure and build a world-class team from the existing bench and new hires, believing in people, but not overbelieving, and drawing in newcomers who help, not hurt. You may need to correct Series A missteps. Some of your early stars may struggle in this new version of the company. They haven't failed, but needs have changed.

As founder and CEO, you've been out of the weeds for a while by now. Your COO has also begun to pivot in their role, and this will continue. They need to be more focused on prioritization, alignment, and accountability. They're no longer the single source of truth or the person closest to every operational detail.

Layers of leadership and cross-functional dependencies can create bottlenecks. You need to deliberately balance speed with alignment. Too much time spent on getting alignment, and decisions stall; too little, and the organization fails to make progress on what it’s decided.

Just as you were in the prior period, be honest about who fits in, and make the tough calls when they don't (with care and consideration). Putting the wrong people into the wrong roles may not cost you the business at this point, but it will come at a cost.

Triage broken processes and then revamp, rebuild, or build. Did you invest, soon enough, after your Series A, in critical systems you need now? Series B is when cracks stop being theoretical and start costing you real time and money. Avoid crashing out completely. Remember you're building for today and tomorrow.
Lean into data-informed decisions, but don't lose your agile instincts. The new systems and processes you're implementing are generating a vast amount of data. You need that to get your arms around what's happening with a business of this size, but don't let it drag you down; remember that you still need to be moving quickly.

Finally, be prepared for Board expectations shift from a grand narrative delivered by the founder to hard metrics during this period. You can't just tell the story anymore. You have to show measurable, data-backed results. The Board will be looking more carefully than ever at those gorgeous financials prepared by your first, top-notch VP of Finance. Resource decisions are about growth and efficiency now. Can you show that you are scaling without overspending?

If you're strategizing your next phase of growth at your founder-led business, I'd love to discuss your plans.

Read Part 1: Series A Is a Reckoning: Operator Imperatives for Getting to Series B

John Gauch 2025-07-30 John Gauch 2025-07-30

Journey of a Founder: Series A Is a Reckoning—Operator Imperatives for Getting to Series B

The Journey of a Founder series continues. You’ve raised a Series A. You’ve got early traction and capital to grow. But now the real work begins. What does it feel like to lead a company through this phase, and what actually helps you reach Series B? In this founder/operator roundtable, we explore what happens after the early wins, from hiring and trust-building to evolving your founder role and avoiding the ops pitfalls that can sink momentum. This is the messy middle, what I sometimes call “the reckoning.”

Event 1—Part 1: Hosted by John Gauch and Jimmy Malik.

Illustration showing startup event title and participants John Gauch Jimmy Malik Alice Nawfal and Justin Etkin for part 1 blog post

The roundtable video recording isn't available publicly; however, I have summarized some of the top insights for you here. I also recommend checking out the OG if you're a company founder, co-founder, or operator at a high-growth business looking for a like-minded community of peers.

We don't cover everything you need to know to run a business, but we cover a lot of ground. Enjoy.

Introduction

Scaling a startup from Series A to Series C is full of tough choices, shifting priorities, and relentless tests of leadership. What worked at Series A can fall apart at Series B, or later, in the face of increasing demands for growth, structure, and disciplined execution.

(This is Part 1. If you're looking for Part 2 on Series B → C, read it here.)

What Series A to Series B Feels Like

You've shown notable progress with the business. However, it's not yet clear you're on a reliably upward trajectory. There's going to be a lot more fight before you can declare victory (or defeat). Founder-financed companies often find themselves in a similar spot after they've proven their business works when there's potential and the path forward isn't obvious.

I see this period as a reckoning.

The basics that got you here still matter: understanding customers, testing assumptions, making thoughtful decisions, hiring smartly. Capital in the bank doesn't change that; if anything, it raises the bar. What are you going to do with that money?

At the same time, the work itself shifts. The breadth of problems, the pace of decisions, and the complexity of the business all spike. One hour, you're deep in the weeds fixing a broken operational process; the next, you're selling a senior leader you want to hire on your vision. This context switching is relentless. And because the data you wish you had doesn't exist yet, you need to rely on gut feel over hard knowledge more than you like.

This stage also brings a psychological shift: Trust becomes an increasingly valuable currency. The only way you, the founder, can share the management burden with teammates is if you have trust in them and the way you work together. To reach this point, a high-performing company has likely tapped an operating partner to the CEO, allowing the CEO to promote the company vision and focus on strategy and top initiatives only they can lead. If this hasn't happened yet, and you want the business to continue to move forward in leaps and bounds, it's time.

Likely, you're gearing up to hire for other roles, too. In addition to filling staff roles to keep up with growth, you may be bringing on more experienced people who know more than you do in their area of expertise. That's the point. But it can still feel jarring when you're ready to make your first full-time finance hire, for instance, and you realize how much more they know than you do. It's humbling.

Meanwhile, your operational foundation gets stress-tested: finance, legal, HR, and other business ops. Building operations to date has been iterative, making trade-offs and putting together "good enough" processes to serve your current and near-term future needs. Systems or processes you justifiably deprioritized before might cost you time, money, and goodwill now. You may need to revamp what you had prioritized and put into place earlier, and quickly catch up on things you ignored or hacked together … or risk dragging down the business.

In this period, as well, unexpected and hairy challenges lurk. Every company has its version. The business is not entirely settled. You're confronting unknowns as well as potentially disruptive events in the external environment, like a shift in market demand. There's always something material still to figure out.

Was product‑market fit (PMF) real or a fleeting bump?

Is the market big enough to support your scale objectives, or you we about to hit a wall?
Are you ready for the larger customers and new segments you’re chasing?

One thing that's not unique to this period is the careful decision-making required around how to use your resources: Remember that cash in the bank? For a venture-backed concern, this is your latest round. For a high-growth business, it's your accumulated war chest. You'll need to make deliberate decisions between extending runway, investing in critical infrastructure, and accelerating growth.

Series A is about continuing to refine the business and building certainty while everything—your business model, your market, your product, your processes, your team, and you—is being stress‑tested. It's exciting. It's demanding. It's a trial that you need to survive to build and sustain a successful business that has a big impact on the world.

Read also: Journey of a Founder: A Startup Story

Top Imperatives

Remain customer-focused and dialed into the problem you solve for them. Stay curious. Treat PMF as a moving target. There may be a difference between the early signs of PMF (what gets you to a Series A) and the durable, scalable PMF you need to reach Series B and beyond.
Shift your time, as founder, from the early days, when you did it all. Ideally, you did that before now. Less time in the weeds, more big-picture leadership. You can't solve every problem.

As the founder, you need to reduce your information advantage by spreading what you know among the team. (It can feel scary.) The quality of your operational rhythm dictates how comfortable you may be staying out of the weeds. Bi-directional processes giving all parties the information they need will tell the founder where the team is headed. If that's the right direction, you'll be able to focus confidently on your uniue founder’s agenda. Low trust resulting from poor hires or operational deficiencies is often what leads to micromanagement. When this is all working perfectly, it can still feel stressful, since you aren't as close to the details of the business anymore.

Accept that your team is in a period of flux. You still need standout generalists, and you're also bringing on subject matter experts and possibly introducing different levels of seniority. It's going to get a bit messy. Don't let your ego get in the way of hiring people who outclass you. Be careful: It's tempting to over-title early hires or promote generalists too quickly.

The company may be transforming itself every six months. Don't let your leadership approach or the team fall behind. Pick a frequency (quarterly, for example) and conduct a holistic check-in on the current business needs and how you and your team is aligned.

What's working well?
What's not working?
What's missing?
Who can step in or step it up?
How do you fill the gaps?

Suppose someone isn’t scaling to match business needs. They may need additional support, or if the situation can’t be improved, you may need to n that case, acting sooner may feel uncomfortable than later, but it may be the right move.

Prioritize like your life depends on it. The team can't do everything that needs to be done either. Be explicit about what matters most right now. Consciously pick what you're going to knock out of the park, what's going to get midling attention, and what's less important. Be explicit about it. Decide how to sequence initiatives.
Keep ops lightweight but strong enough not to break. The startup debt that hurts the most isn't always engineering. It may be in finance, customer success, or another area. Stay alert. Invest in the key areas. Expect many of the ways you do things now will break, and you'll need to patch them up or replace them later.

Finally, avoid this misstep: Growth is the ultimate imperative, but so is avoiding an existential crisis originating from the failure of the company's operations. Ask yourself: What do we need to be working on today that might not have an immediate impact but will be critical soon? Some improvements have long lead times. Plan the rebuild before events make change a crisis or impossible.

If you're in this stretch of business building (i.e., wrestling with growth, hiring, patchingor rewiting operations), I'm always up for a conversation.

Read Part 2: Series B to Series C—Scaling Challenges and Leadership Imperatives

John Gauch 2025-03-23 John Gauch 2025-03-23

Journey of a Founder: A Startup Story

Every startup faces pivotal moments—turning an idea into a product, finding early customers, securing funding, and scaling successfully. But what challenges arise at each stage, and how do you navigate them? Check out a recording or transcript of our roundtable with two experienced founders. This is an online event where we break down the founder’s journey from Inception to Series A—exploring key milestones, common challenges, and actionable strategies to move forward.

Event 1: Hosted by: John Gauch and Jimmy Malik.

Welcome - I’m a hands-on startup fractional COO. I serve as an operating partner to founders supporting growth and operations. Over 20+ years, I have worked on dozens of startups (Synervoz, FreshAhead, Axiom, Spartan, IAN), helping build one high-impact business to exceed $100M in revenue and a second to (so far) nearly reach that rare milestone.

Introduction

A founder roundtable on scaling from inception through Series A

In this live discussion that I co-hosted with fellow operator Jimmy Malik alongside founders David Zamarin (Detrapel) and Zak Allen (Flyhomes, Hearth), we explore the real challenges of building a startup. We cover validating your product, raising seed capital, building early teams, achieving product market fit, and sustaining momentum into Series A, with candid founder stories, lessons learned, and tactical advice you can apply right away.

This is a lightly edited transcript from our roundtable, a live startup event.

(This is the first in a two-event series. To learn about scaling from Series A to B and from Series B to C and beyond, see this event recap.)

The timestamps in the transcript synchronize with this edited audio of the event.

John: [00:00:00] Let's get started with some intros. Beginning with myself, I'm John Gauch, a five-year startup fractional COO for companies like Feldspar, FreshAhead, and Synervoz. I'm an occasional sales coach and mentor. Over 20+ years, I've applied my growth and operation skills to help dozens of startups like Axiom in the legal space and Spartan in consumer. I started my career as a tech lawyer in New York City. I developed myself in business roles after that. So far I've been lucky enough to help build one high-impact startup to nearly a hundred million dollars in revenue and a second to exceed that mark. I love serving founders through my work and I'm excited to be here. With that, I want to turn things over to Jimmy.

Jimmy: Great. Thanks, John. Hey, everyone. Jimmy Malik. I'm an operational strategist and growth leader, so I specialize in helping founders develop and implement operational strategies to drive scalability and sustainable growth. [00:01:00] I've worked across multiple industries, government, finance, healthcare, technology. I work with startups now to streamline execution, optimize their resources, navigate the complexities that they face in scaling their organizations. One of the things that I feel drives success across startups is those early hires that help you cement the culture and create an atmosphere that entrusts your values and your mission leading to your scalable execution. I'll turn it over to our founders. Why don't we start with David?

David: Hi, everyone. My name is David Zamarin. I'm the founder and CEO of a company called Detrapel, which is the parent company of three brands, called ProofPlus, Impermea Materials, and Detrapel Solutions. It's a company that I've been running for over 11 years. I started when I was 15 years old and the company has grown quite a bit. [00:02:00] So you'll get to hear a little bit about that. We've been on things like Shark Tank in the past. All the way through scaling up the business and now being a very large industrial company.

Zak: Awesome. I'll go next. Hi everyone. I'm Zak Allen. My background is at the intersection of real estate and software. I was early at Flyhomes and, as well as Hearth, building up those companies from zero all the way through Series B, leading the tech and engineering efforts there. I also co-founded a company called Homemade, and I'm working on a new venture as well. But based in Austin and I love the intersection of the kind of physical built world with the software world as well.

Inception to Seed

Jimmy: All right. Thank you guys. So I'll kick us off here into our actual discussion. And as David mentioned, this is more of a dialogue discussion where we're not gonna—it's not death by PowerPoint or anything like that. We do have a few slides just to help narrate and summarize some of the key points that we're making as well as our founders. [00:03:00] So let's just get into it right.

So, as many of you can probably attest, the beginning of the journey of being a founder is exhilarating, right? The moment when inspiration might strike when you first sketch out your idea, when you share it with someone who gets it. You fast forward a few months, and suddenly, things are starting to fall in place. You've validated the problem, maybe even built out a prototype, and attracted some early believers. And then the big moment. You raise that first, your first round of funding. It feels like a win, which it is. But there's the, here's the thing, right? The funding just isn't the finish line. It's the starting gun. And this is where the real work begins. The shift from, "I have an idea" to "I'm building a company." And that's what you're, that's what we're going to dive into now. What it actually means, between the inception and seed, and how founders navigate the uncertainty of this phase.

So the early days are really more about the excitement of [00:04:00] funding. In this phase, what we call inception to seed is where the foundation is laid, where you start asking and answering some really critical questions, such as have we truly identified a problem worth solving? Are we building the right solution? And does the market opportunity align with the long-term vision?

So this is where you may go from "this could work" to "this is working" or "it's not working." At this stage, there are three core areas. So John and I, working with founders, have distilled this down to three core areas, which we think are really important for this phase: validating the problem and refining the solution. This means getting out there and talking to real users, stress-testing your assumptions, and making sure you're solving something people genuinely need. You're also building an early product, which might be a prototype, an MVP, in some cases, even a well [00:05:00] structured conversation or, excuse me, a well-structured pitch that gets people excited, and you're also figuring out your early business model, right? Can this actually be monetized? Even if this is a need, are people willing to pay for this? Is there real demand? Are there others, competitors, others that have figured out how to do it better?

As you might guess, none of this happens in a straight line. It goes all over the place. You take detours. You may even hit some dead ends, and then you'll have some breakthroughs. All right.

So some of the biggest hurdles that founders face in this stage I would say are validation versus reality. So how do you know you're solving a problem that people will pay for building credibility? Investors, early employees, early customers. How do you get them on board and the first hires? As I was saying, the first hire is you're building a team. There's no company culture yet. So how do you find the right people when your startup is still more, a little more or less still a vision, [00:06:00] right? You don't want to, you don't want to start hiring your friends.

And then, the bridge.

The bridge is what we call what you need to do to get from the initial stage into the next stage. Moving from inception to the actual seed, it's about building momentum, right? Founders who win here lean heavily into their customer discovery. So constantly testing, iterating, and finding a product based on real feedback.

And they show early signs of traction. Whether that's increased user growth, revenue, or just strong engagement, even if it is still scrappy. And they're able to craft a strategic narrative, right? What a compelling story that investors, hires, and customers can rally behind.

And I can't stress this enough: where I've seen founders and startups where they have an amazing idea to solve a critical problem. But they can't tell a good story. So it leaves customers and investors scratching their heads in terms of what is the actual outcome of something like [00:07:00] this.

Now rather than just talking in theory, let's bring in, let's talk to our founders and see what they think. Dave, let's start with you. How do you navigate this phase, and what are some of the biggest hurdles in validating your problem and convincing investors you're onto something here?

Founder Experiences: Building a Customer Trust System

David: So it's a lot harder said than or easier said than done. I think the biggest thing that most investors will look for, whether that's an institutional fund, a CVC or corporate venture capital arm, or an angel investor in the early stage, is primarily they're focused on your team. The second thing they're focused on is whether or not you've found product market fit, and in the earlier stages, it's pretty easy to assume that you have not just yet, and that's okay.

What they're looking for and what you as a founder need to be obsessed with is validating that you've built the right product that will address multiple needs across multiple customers. [00:08:00] And the easiest way to do that is to have an infinite feedback loop with your customers.

As you're building, you have to get rapid prototyping, rapid feedback from your customers in real time, build a product that would solve their needs, then take that to another customer, maybe simultaneously, and see if those needs are identical. And if not, that's okay. See how you can blend those two.

And as you're getting all of this feedback, you're also building a trust system with these customers, who then could also advocate for you when it comes time to do due diligence in your fundraising, and you will be asked for customer attestations.

Those are the typical early-stage things that I think are often said, and most people would say that they're doing that or they have done that.

The truth is that you never have enough because the more people you have who have used or have put feedback into the product will be those early adopters who can speak for you and speak towards the technology and how much they're willing to pay for it [00:09:00] and essentially define the market size for you and for the investors when they're doing their diligence. That's what I would recommend.

Zak: Just to expand on that, that's great foundation, I think in order to get those early adopters, you can't be afraid of launching too early. There's a saying where if you're not embarrassed by the first product that you launched, then you've launched too late.

And in theory, you could be building your lead list, trying to see what the ideal customer is and spending six months just building something. But if you're in, if you're doing that in isolation, then you're not actually proving you're doing anything. You're not actually proving that demand. You need to launch as early as possible. Get customer feedback. Odds are that the actual product that you end up getting traction on is a couple of pivots away from that first version that you go with.

So getting customer feedback and what Dave was saying around, having their, that customer trust and almost like building like an initial early adopter, like an advisory panel of customers, is super key here [00:10:00] because a lot of VCs and a lot of investors will directly speak to those customers to get their take on the product or their early versions of the product.

That's super key.

One strategy and this is coming a little bit more from the software side of things is design partnerships are is a really great asset on this front. To prove demand for something before you've actually built something.

What that entails is you pick an ideal customer that you want to work with. You approach them with this like design partnership agreement type document. And what that basically says is, hey, if we build you this in the future, will you pay for it in the future? And it's a nice kind of letter of intent to get them to solidify what types of features that they would want to be included as part of the MVP.

And there you go, there's your product roadmap. Design partnerships are a great way for you to validate your product roadmap and really show investors that you have some demand for the type of [00:11:00] product that you're going to build.

Yeah, I think iterating fast and keeping close with customers are the really big takeaways at this stage.

Q&A: The Criticality of Storytelling

Jimmy: Awesome. Thanks, guys. John, do we have any questions?

John: Yeah, we had some questions from folks when they registered. Pulling people into the organization, the right people, talented people, can be critical. Can you speak to what it took to bring someone who ended up being extremely valuable to you and your work onto your team? How did get the first couple of people who made a really big difference?

Zak: I think on this part this is a little bit where the storytelling comes into play, especially at this stage. A lot of times you can't rely on metrics or the amount of revenue that you had in the past six months because you didn't even exist six months ago. You really have to be a good storyteller.

And this is a key here, too, on the sales motion is it's you don't want to hire a salesperson too early. A lot of your [00:12:00] sales should be done by the founders, and you're basically practicing that sales motion both for your customers and for your early employees as well.

Really having a great story and a mission to align. You're not, especially if cash is limited, you're not going to be able to compete with the large tech companies in terms of salary or base comp or anything like that. So you're going to have to sell the story and sell the mission. That's something that you'll need to practice a ton in order to get right.

John: Yeah, that totally makes sense. Do you want to jump in with a thought there, David, or I have other questions too.

David: No, I think Zak hit the nail on the head.

John: Okay, so here's one that may be hard to answer. But what's something that you did, or you've seen people do, during this phase in your business's growth that like was a really bad idea. What was a mistake you made, time you spent, a decision you made, what was something that in hindsight you say, "Oh my God I hope no one ever does what I just did."

Zak: I've one that comes to mind right away. At Hearth, we hired a [00:13:00] customer success rep before we had any customers, and so unfortunately, when we had zero customers after, you know, trying to launch and get this thing running for about a month or so, that customer success rep had nothing to do. I think, basically, pre-launch or assuming that you're going to have some sort of traction with the products for your launch, you never know until you launch or put it out there.

That's what going back to my first point about just launching as early as possible. So you have at least some data. That's something when you're saying that early mistake that I hope everyone avoids. Definitely don't hire a customer success person or rep before you have customers.

John: Thanks, Zak. David, did something jump out at you?

David: Yeah. I'll talk to bringing on additional people to the team. Not necessarily employees, but more so co-founders or senior staff, who will have [00:14:00] a larger equity position than maybe others. My opinion on this comes from a few battle scars.

I'm a solo founder. I was a teenage solo founder. I've had other companies as well where I had co-founders. The truth is when you're looking for additional people to join your team, you're looking for people that can move the needle and complement your skill set. And I think, at least for me, earlier on, especially when you start digging into the VC statistics, and you're part of all these accelerators, and everyone else has a co-founder, it's very easy to start thinking about the fact that most startups that are getting funded have multiple founders and you have a whole team.

And there are a lot of positives to having a co-founder, but one of the mistakes that I lived through was trying to constantly bring on additional people to help me. And I still do this to this day, obviously, and we have a team in place, but I was very desperate early on to [00:15:00] find team members that had as much passion as I did, were willing to put in the amount of work and time and effort that I was.

And that's just not really realistic.

In the beginning. It's very easy to just throw away equity. It's very easy to just say, okay, I'm not taking the salary. I've got a hundred percent of this company, or I have a co-founder, I want to give them 30 something percent of the company or 25 percent or 50 percent. And that really comes back to bite you. Now, I never added a co-founder, but there were multiple instances where I was about to add a co-founder or about to add an advisor or a C-suite and gave them some sort of equity or was about to give them equity. And there are a number of ways you can curb your risk, but the thing that I found out that was probably one of the biggest things that I was, for lack of better terms, insecure about was the fact that I was a solo founder. And I knew as a teenage founder to this day, right, I don't believe I'm [00:16:00] the smartest person in the room. In fact, I don't want to be the smartest person in the room. And so in that constant seek for someone who could help me run the business, who had the gray hairs, who had the experience, I was constantly eager to bring people on.

There are a number of things that you can mention about what not to do and what to look for in those types of people that you're bringing on. But before you even get there, my biggest advice when it comes to this is don't rush to try to add on team members. It's okay to be a one-man show or maybe a two-person team or a three-person team. And it's okay to have interns or associates or junior people that can help lift some of the weight off of your back.

In no way, shape or form, you should be finding a co-founder or looking for a co-founder just for the sake of having a co-founder.

Seed to Series A

John: Awesome. Yeah. Thank you, David. So we're gonna jump on to the next phase of business [00:17:00] growth.

As a quick summary, stay close to the customer, get your story down, be really mindful about hiring or bringing on partners that could actually set you back, not push you forward.

What happens between Seed and Series A?

In this period, to eventually reach your series A, you need to deliver on some of the promises from the earlier phase. This means achieving product market fit and showing a clear shift in your growth curve.

So what's product market fit? One cheeky answer would be, if you're asking, you don't have it. When I've seen it happen, I've observed that growth is driven by one or two sales marketing motions, one or two primary motions. And, it's systematic. It's becoming systematic and repeatable. Growth is becoming more systematic and repeatable. It's almost mathematical. If you do X, Y, and [00:18:00] Z, then you reliably get output: more sales output.

The iterative learning continues in this phase, but I'd say the stakes are even higher. You need to figure out how to sell and market your product at scale while refining it.

A powerful technique for smart testing, this is getting a little tactical, is explicitly writing down the assumptions you're making. For example, one company I work with is testing outbound messaging right now, and they're assuming their customers are prioritizing coding speed. Getting through their coding faster. If correct, the response rates to the outbound messaging will beat a previous campaign that focused on their product quality over speed. So what I'm suggesting with this quick tactic is literally like going to the trouble of writing down your assumptions and then revisiting them when you're looking at your results.

At [00:19:00] this stage, you must confirm with sales evidence that you've found a large number of prospective customers struggling to make progress in a situation, in a specific situation, and that your product is the solution.

Unless you just luck out, this is going to take quantitative and qualitative customer data, things like interviews. The customer focus from the prior phase absolutely continues in this one.

And if I had to boil down business success to one thing, it might be understanding your customer's lives. That's true of every phase.

When you're increasingly successful with your sales and marketing and product experiments, don't lift your head up to see that every other part of your world is falling apart.

I take to heart David's comment that you don't want to be bringing on people too early but don't bring them on too late, either. Try to find the sweet spot. [00:20:00] You may need to grow your team at some point. And hiring the wrong person in this phase also, either the wrong person because of role, which Zak spoke to not needing someone in a certain role at all, or cultural fit or fit with you can really set you back many months.

Be intentional about what you stand for and what qualities matter in hires. And remember, not everyone needs to be full-time. There are a lot of flexible models for bringing on support these days. So this caution about raising your head to find things have gone awry applies to things like HR, legal, financial management, other ops, a complete lack of attention to these areas can cost you more time and money than doing the basics right to start.

And I'm not talking about perfection.

I'm just talking about good enough. Just make sure you're paying some attention to these [00:21:00] operational matters. Things like payroll-related snafus or neglecting confidentiality agreements and IP assignments: these can be huge nuisances, later when your business is growing.

By the end of this phase, there's still room for business model tweaks. However, it should be clear what problem you solve, what resources you need to deliver your solution and whether that's financially viable at the scale you're looking for. Showing hockey stick revenue isn't going to be enough if you're lucky enough to have gotten that far. Investors want proof that you can scale profitably with reliable customer acquisition and sustainable economics, even if you're still burning cash at the present moment.

So to raise your series A in the next phase, you're going to need to demonstrate you've figured all this out and that, and on top of that, that you can systematically grow the business up to a hundred times from where you are at the [00:22:00] end of this phase of your business growth.

With that, as we did for the last phase, Zak, why don't we start with you? Could you share some of your personal personal experiences or insights? Applicable to the Seed to Series A stage.

Founder Experiences: Tracking and Testing Your Assumptions

Zak: Yeah, for sure. I think there are a couple of different points I want to hit on. John, you were mentioning a bit about starting to capture data and write down assumptions and learn from different tests. I think. At this stage, it's crucial now that data is starting to pull in about usage, customers, things like that, that a constant testing and data-driven culture is built up within the organization, whether it's right, running A/B tests on a particular landing page as part of a sales motion, or running different tweaks or tests within the product itself to make tweaks there.

And you're going to start off with small numbers. You're not going to have statistical significance on these tests at [00:23:00] first, but you're basically building that muscle and then keeping track. And going back to the writing things down, so you never forget them, write down what tests you're running, what assumptions you have prior to the test and the results of that test.

You're basically building up this directory of all the past tests that have been run. You'd be surprised, if you keep that record over the course of three years, how many times a previous idea that you tested will come up as a new idea in some meeting.

You go back to it, you might have different numbers of users that you have 10 times the amount of users. So maybe you'll try it again, but at least that'll be the new assumption for that next test.

Transitioning this into the types of people you want to bring into the company, you want that hungry kind of culture fit type people that are data-driven. When it's chalked up between a kind of hungry person versus a so-called industry expert at this stage, you might be drawn towards the industry expert. But you're trying to disrupt the industry that [00:24:00] expert is an expert in. You might want to bring them on as an advisor and take a little bit of their expertise, but you don't want to rely and go with, "Oh, this is the way it's always been done. So let's just do it this way." I think if you're trying to disrupt an industry, you want to take the best parts of advice from those experts, but don't look at them as the source of truth as to how things should be done.

One kind of anecdote on this slight pivot and testing data-driven culture: our first kind of customer that we were marketing to was homeowners for home improvement loans. We basically were trying to match up homeowners with different home improvement loans and projects and things like that. We made one slight tweak, not to the product, but to the actual end customer that we were doing the initial marketing to. We ended up switching gears towards and trying out this as a test: "Hey, why don't we market this product to home improvement contractors because when they're in the house of a homeowner giving a bid that homeowner is a very high [00:25:00] intent to potentially take out a loan for a home improvement project."

That's just a slight tweak. We didn't change the product. We just pivoted slightly who the end customer is That allowed us to get more of a pull for our product market fit as opposed to a push in terms of all the campaigns that we were running. You still want that testing culture. When you start to feel like a pull from your customers, that's, for me, my sign of product-market fit that's starting to appear there.

John: David, did you wanna jump in?

David: The only thing I would add, because Zak once again gave a pretty comprehensive overview, the only thing I would add in or double down on is simply the fact that at any stage, really, and in my opinion, at least as a Series B company and prior, your main goal is to hire A-plus players.

We still do this today.

I was talking about it this morning. We'll, for the foreseeable future, continue to hire this way. There's something to be said about hiring people who [00:26:00] have industry weight, but the truth is, you want to hire for attitude, not aptitude because you can teach the aptitude portion of it, fairly straightforward.

And the attitude is something that you can't teach. So if you have the choice between someone who has little to no experience in the industry versus someone who has a ton of experience in the industry, but the difference is the person who has a ton of experience is a C-suite, or wants to be like a C-suite, and does not want to really do work and wants to build a team and have his team do the work and he just plays chess master. In a small startup and even in a midsize startup, it's very unlikely that is going to be beneficial to your company because, as you're trying to build, your main priority should be to execute and make mistakes as quickly as possible and then reiterate and make those same actions again.

And hopefully, this time, the second time around, you're not making mistakes.

So in order to do that, you need less time thinking, strategizing and sitting there and pondering about what [00:27:00] you could or should do, but rather, you should take the person who's just willing to put the pedal to the metal. And, honestly, just try to get as many, wins as possible. Whether or not they're 100 percent accurate and doing the right thing, I think, is secondary.

Let your team make mistakes, let them go ahead and learn on their own. My opinion is that is a much better approach. Someone who's obsessed with what they're doing and not necessarily knowledgeable about it is far more dangerous than someone who is incredibly knowledgeable but does not want to actually put in the effort to make the needle move.

And that, believe it or not, is a much more common occurrence than you would think.

John: I know one of the things we talked about back in the day a little bit, David, was just like, yeah, hiring a salesperson. This wouldn't be true in every case, but there could be a case where that industry expert in the incumbent culture and the incumbent model is actually really a bad fit, for someone who's trying to change everything.

David: [00:28:00] Yeah, Zak said it, right? You're trying to disrupt the industry. So why would you hire a person from the industry? There are benefits to doing that, and in certain positions, it makes sense to do that, but in the grand scheme of things, you will oftentimes, more often than not, find that the person who's in the industry, who's been there for 10, 20, 30, 40 years, is likely going to come in with the same ideas that have been done for the last 10, 20, 30, and 40 years. And that's not what you're doing. If you're trying to be different, And building a team that way and building a company that's revolutionary, you will need revolutionary approaches.

Q&A: Making Critical Hires

Jimmy: Awesome. One question that we received from our attendees was what are the most critical roles to hire and when during this phase, and is a technical founder critical, or can you rely on an outside dev?

Zak: I think it really depends on the type of company you're building. I guess the answer is a bit nuanced in that sense. Maybe one distinction that could be helpful is there are, [00:29:00] within kind of the tech or kind of software ecosystem, there are tech companies, and then there are tech-enabled companies. And so if you are a technical company you definitely need a technical co-founder.

But if it's a tech-enabled type services business that you're layering tech on top of or something of that nature, then you don't maybe fully need that technical co-founder. It really depends on the business.

But I guess my more general advice is to try within your best ability to do any and all roles and wear as many hats as possible. And you should be at least getting a first stab at the role that you're trying to hire for yourself. So you should be trying your best. Obviously, it's a little bit harder if you don't know how to code, but definitely, at least for other types of roles, marketing and sales, you got to wear those hats and try it out yourself. Then only when you're completely booked time capacity-wise do you then outsource to a [00:30:00] person?

Jimmy: David, any additional thoughts on that question from you?

David: No, I think you have to have some knowledge about almost every function as a founding team. And the truth is under 10 people, even under 15, every person in the company is going to have to wear multiple hats.

As a founder, especially if you're earlier stage, your goal should be to be dangerous enough to understand what anyone else tells you. You don't have to be an expert. For example, you don't have to be an expert software developer. I have a physical goods, industrial enterprise company in the advanced material space.

So it has nothing to do with coding. But because in the early stages, we were going through so many iterations of websites, and we want it to be that new age startupy company, and we want to have a better than usual website, I learned how to code just enough so that I could make modifications, basic things, on my WordPress site.

That isn't always necessary, [00:31:00] but I think, the more that you can do that, it does two things. One, it makes it a lot more scrappy and resourceful as a company for you as a founder and for all your team. Two, it also makes sure and gives you some schmuck insurance to make sure that you're not being told one thing that isn't, and you can really validate.

David: It's like for anyone who's worked on their home before and made home improvements. If you've done a replacement of the floor, and you know what effort goes into, let's say, resanding hardwood floor and an expert comes in, a flooring expert comes in and tells you that it's going to cost 25,000 to redo your floors, you can weigh the options and understand, okay, is that really worth it?

Because I, if I do this myself, I have to do X, Y, and Z and sure I might save 25,000, but is it really worth it?

It's the same concept. If you know what it takes to do sales. As hard as that is, especially if you're not an extroverted person who enjoys doing cold calls or meeting people or whatever the case may be for your [00:32:00] specific sales process. If you don't enjoy that particularly, you'll value it more when you find the right salesperson.

It also will mean that when you find someone else who doesn't really scream that perfect fit, who's a great salesperson, that you're not going to rush to hire them as one of your first few hires, just because it was one of the first few people that you interviewed and you could find, right?

It gives you that callousness that allows you to then say, "Okay, I know what it takes. I know what kind of personality you need, I know what type of metrics I need to hit, is this person the right fit, and is what they're telling me actually going to work."

Series A and Beyond

Jimmy: I get you that makes perfect sense. We'll continue to move, and then we'll leave a few minutes more for any additional questions that anyone has. I'll just give an overview here, and then we'll again hear from Zak and David on more specific examples.

By the time you reach a Series A, things start to look different. You've proven that your customers want what you're building. [00:33:00] You've secured funding, you built a team that believes in the mission. Perhaps things start to shift here in terms of scaling, right? And so scaling isn't just doing more, it's doing it better, faster and at scale.

So the scrappy founder-led execution that got you here won't get you there.

At this point, you're no longer building a product. You're really building a company. And the focus is now more on repeatable growth. So instead of testing the waters, you're now turning early traction into a scalable operational engine.

Three shifts here that I'll outline. So going from a founder-led hustle to scalable execution, right? You need systems processes and a leadership team that can operate without you having to make every call.

And then earlier going from early product market fit, now, you're going to more sustainable growth, finding repeatable go-to-market strategies, refining your sales process, [00:34:00] ensuring customers don't just convert, but they stay.

Also, going from a small, nimble team to a structured organization. So teams expand, roles specialize, and cross-functional collaboration becomes a necessity.

Some of the challenges right here are more about operational growing pains, so more teams, more customers, more evolving parts. Suddenly something that was messy has gotten just messier and misaligned. The founder role evolves, and so up to now you may have been involved in everything in the weeds, leading sales, making product calls. Now you're letting go of some of that and starting to build a leadership team that can execute without you being involved in everything.

And then expanding without losing focus. Do you go deeper into your existing markets? Or do you expand into new verticals? That's a question that startups really start to think about at this phase. So growing too fast can kill your momentum. Moving too slow can [00:35:00] stall you, and competitors can sweep in and get that other part of the market.

Here, the bridge really is about building those strong cross-functional teams. Sales and marketing and product have to be aligned, they have to be on the same page. Sales can't be telling customers one thing. Product is off, building, building something completely different.

Those silos really start to stunt your growth as an organization. You have to operationalize your culture. That really means that the values and the mission that you had your early employees and customers behind, now, you have to do that at scale.

So, really codifying your culture into your hiring, into your onboarding and leadership training, so then the culture doesn't just become a billboard.

And then prioritizing the product roadmap, right? What got you early traction may not be what carries you forward. So your product strategy has to evolve with the company.

Let's again open it up to David and Zak. [00:36:00] And maybe, David, I know you had chuckled. We can start with you and get your thoughts on, this phase.

Founder Experiences: Don’t Ignore Culture

David: Yeah, I think the first thing, based on my experience, is everything that you think you're going to do, everything that you put in your business plan or your conceptual ideation phases in the very beginning, is all wrong.

That's the only thing that you can be 100 percent sure of is that you're going to be wrong. That's okay. In fact, that's a good thing. Your company needs to evolve, and your culture will evolve over time.

I think it's super important that when you're hiring, culture has to be super aligned. That's not that simple to do. I think when you get bigger, when your company starts to grow, when you start bringing on people, you'll start to realize that culture is a lot more complicated than [00:37:00] here are my mission, vision and core value statements, and everyone should adhere to these.

It's far more complex than that, and it's also far more important than just that because when things get really tough, that's when culture really matters. That's not something that most people talk about. The culture isn't important because it's all kumbayas sit in a circle. We're all going to have fun and build this great thing. That's not why it matters.

It matters when you've got a customer who's calling you at three in the morning because you have a major blow-up in their system, whether that's software or physical goods. Especially if you're in enterprise sales, you're talking seven, eight-figure deals at a time that take years to build and just one screw-up to lose forever.

Even for small businesses, it's the same. It's the truth. Like we're going through a CRM shift right now, and it's all because one mistake that our CRM made. It's the case across the board when anyone is dissatisfied. They're far quicker making decisions to eliminate that solution that they're currently [00:38:00] using for something else.

That's when culture matters the most. When these times that are incredibly difficult, and they will happen, no matter what company you are running, there will be certain disagreements. There will be issues that come up, and culture matters then the most because that's when people will step up, provide solutions, and really act like they're owners of the company and care for the company like it's their own. That's the biggest thing that you want out of a good culture.

It's not the fact that you want to enjoy coming to work every day. That's important too. Don't get me wrong. But the truth is, when everything's gloomy and not fantastic, that's when times get really difficult as a founder, especially if you're a solo founder because you've got no one else to go to. That's when you need people to step up and bring a whole new approach.

But if they're not interested, if they're just in this for a paycheck, and they're used to the status quo, and it's just a company that they're at. And sure, they [00:39:00] align with your mission and vision, and they think it's cool, but it's not the forefront of their mind. They're going to waiver. And you're not going to get the level of output and dedication that you might be looking for out of an employee.

Zak: Just to double down on how important culture is.

I think the big competitive advantage that you'll have at this stage is that you're still lean, you're still coming after the A and the Seed, facing incumbents in the industry that are bogged down with processes. They're bogged down with meetings. And so trying to keep that lean mentality for as long as you can is super important here.

I liken culture to this concept where a good culture replaces like a few different processes here and there. For example, if you just have a strict 9 to 5 policy, and that's in someone's mind when they receive a phone call at 6 p.m., there's an "if statement" in their head, computer science person nerds thinking, "If statements" here. But if there's a [00:40:00] process that says employees only work from 9 to 5, then that person's not going to pick up the phone. Whereas if the culture is if customers are important, you pick up that call, you don't need a process or a rule there that it's nine to five. You just trust that people are going to do the best thing for the company.

One great book on this front is the Netflix one, No Rules Rules, where it's takes it to the extreme, where if you're just so bought in on this culture, you actually don't need to approve spends for employees who are going to travel. They know they're not going to take first-class tickets because that's going to negatively affect the company.

I think the more you emphasize culture here you can prolong the time at which you need to grow up as a company. You maintain that startup culture and really are able to continue to have that trust in your other teammates.

One other kind of quick anecdote here that I emphasized as our team grew is make sure every single employee, as you start to create different layers and the org structure starts to [00:41:00] grow, make sure for every task, every single person knows the why behind why they're doing that task. They're not just a robot picking up this task because it's in Asana or Jira or whatnot. They need to answer, Why are you working on this? Why is this important to the company? That just reinforces that culture that they're all moving towards the same collective vision there. Yeah, just another double-down on how important culture is at this stage.

Q&A: Is any Investor a Good Investor?

John: So one of the questions was, What should you work hard to protect that may get lost in transition from Seed to later stages, and I think part of the answer is culture. If you get it wrong earlier, it's going to come back to bite you now, and you probably need to work hard, I'm inferring from what you both shared, you need to work hard to keep it so it doesn't get lost as you grow.

Another question is, and this may be applicable to any stage, the final question [00:42:00] from the chat and the pre-questions, is is any investor a good investor or do the investors matter?

Zak: Anyone want to take it?

David: Yeah, of course, investors matter.

That's a tough question for any founder to answer because, on one hand, in most cases, you want, in an ideal world, you don't have investors, and you bootstrap it. You build a nice medium sized business, you exit or hire. That's not super realistic for most companies. That's okay.

As a result, investors matter in any event, because even towards the end of let's say a middle-sized business, most of the companies that you're going to be working with in an M&A transaction, whether those are M&A brokers, whether those are private equity groups, whatever the case may be, all of them will speak the same language as the investors do.

So, [00:43:00] even if you don't plan on raising venture capital or angel money, what's important about investors is how they think. Because most of them are just the same Patagonia vest-wearing bros from college that have a lot of merit and a lot of financial backing.

But the best part about it all is that it's copy and paste with most of them. You can pretty much, 50 percent hit or miss, take one group of investors and apply that same level of logic to the other group. Or if they're polar opposite, then they're going to find their own groups. They all flock together. Like it's the biggest conundrum in investing in the startup world, where FOMO is the biggest thing that you can create as a startup when you're raising capital.

The main reason is just simply because they all act and think the same. Or if there are some that are leading the charge and are opposingly different, that's great. They have their own clique as well that's just like them too. So the reason why all that matters is simply that they're a great resource, and [00:44:00] they're phenomenal, even if you don't want the capital from them, in helping you navigate what a transaction might look like if you're looking for acquisition. Now, if you're not looking for an acquisition, if this is like a mom-and-pop business that you want to run, a family business, that you pass, that you plan on passing down, then yeah, of course, then do whatever you think your small business needs. That's the way to do it.

But if you're in any other case where you are raising capital, or you're even considering potentially bootstrapping, the investors are important, and they're not important because they're just writing the check for you. They're important because they'll have governance and control. And you don't want to, you want to play a fine line, right? You want to make sure that your investors are on your team, but you still have the autonomy to run the business how you want to run it. Just be aware that if you make enough mistakes, you're replaceable.

That's all.

Zak: One thing, one thing I'll add to that is Investors also come with their own Rolodexes. And so [00:45:00] that's one thing to optimize for as well. So for instance, if you're starting a company in a niche space where there's only kind of four major VCs that operate in that space, well, talk to them because not only could they give you funding, but they could also introduce you to their portfolio companies that end up being your first 10 customers.

That's just something to keep in mind as well. You might have two offers from two different VCs, but there's a lot more that's behind that money that could be of an advantage to you. So one, one quick note to add there.

Conclusion

John: Yeah. Hey, Jimmy, do you have anything to add? And then we can, we do have a takeaway and a few things to share before the end of the call here.

Jimmy: Yeah, just want to say that thanks to everyone who was able to make it, and we'll definitely send out the summary of this chat to everyone who registered. So, if you join late, you'll be able to get some of the earlier key points.

John: Zak, you came off mute there.

Zak: Yeah, I came off mute. [00:46:00] One final thought is people are a lot more willing to help, so long as you ask. If you need advice on something or whatnot, you gotta ask first, but you'd be surprised how much people are willing to help, even if it's just their own two cents on something.

It's better than nothing.

David: That was my exact, that's exactly why I came off mute as well.

John: Awesome. David, Zak, thank you so much. We really appreciate you sharing.

And Jimmy, it's been a pleasure. I think we're good. Thanks.

Jimmy: Thanks. We'll send out a note on part two of this series in a couple of weeks.

Please reach out with feedback about the event.

Read Part 1 of the second event in the series: Series A Is a Reckoning: Operator Imperatives for Getting to Series B

John Gauch 2024-12-12 John Gauch 2024-12-12

When Top Performance Becomes a Hiding Place

Top performers may be the most underutilized people on a startup team. It’s not because they lack drive, but because they’re succeeding enough to avoid change. This post explores how success can quietly become a plateau. For founders and “A Players” alike, it’s a call to rethink performance, question assumptions, and create space for growth — even when no one’s demanding it.

Hey there - I'm a hands-on startup fractional COO. I serve as an operating partner to founders supporting growth and operations. Over 20+ years, I have worked on dozens of startups (Synervoz, FreshAhead, Axiom, Spartan, IAN), helping build one high-impact business to exceed $100M in revenue and a second to nearly reach that rare milestone (so far!).

Introduction

We all know people who execute quality work blindingly fast. They're reliable. Smart. They anticipate problems and solve them, just like that. They're the people you'd clone if you could.

Savvy startup founders, obviously, want to hire people like this, and many founders fall into this category themselves. I'm not a huge fan of the phrase "A Player" (for reasons I'll perhaps explain in a future blog post), but that's who we are talking about. What's less obvious is that these people may be the most underutilized assets in the company.

It's not because they aren't working hard or delivering value. It's because they're performing so well that no one's asking them to grow — including themselves. Or when someone does challenge them, they brush it off.

When Success Becomes a Ceiling

Here's the dynamic: A Players get stuck. They've figured out how to succeed at their job. Knock it out of the park even. Teammates agree. Because they are delivering, they don't feel any pressure to change.

These high performers plateau — quietly.

We see this in professional sports, too. A top athlete is performing among the best in their pack. They could be better — their mechanics are excellent but could be tweaked, their mindset becomes fragile in certain situations, their recovery is only passable for their level — but they don't see or want to see the areas where they could improve.

In business (and sports), plateauing doesn't just cost the individual. It limits the evolution of the entire team. These top performers are not failing, but they're not stretching either. Over time, this will slow the business down compared to what’s possible.

One Example: Stress Equals Effectiveness

I often see one specific problem among startup founders. They believe they're underperforming if they're not maxed out — doing it all. They think they're doing it wrong if they're not feeling overwhelming stress. “This is what it's supposed to be like for a founder,” they say to themselves.

It's a seductive idea, but a myth.

They are correct about one thing: being a founder is challenging and taxing. There will be periods when founders need to max themselves out, for sure. They're incorrect that this is the best way to operate all of the time if building a successful startup is the objective.

The psychological model known as the Yerkes-Dodson Curve suggests we perform at our peak when there is an optimal level of arousal. Too little and you're bored. Too much and you lose focus. In the middle, you're challenged and most effective. Research into "flow" states supports this idea, showing that people achieve peak cognitive function not under excessive stress, but in moments of deep, focused engagement.

Excessive stress narrows attention, impairs working memory, and reduces cognitive flexibility — critical skills in complex, fast-changing environments like startups. Chronic stress also makes it harder to shift perspectives, which means founders under pressure may miss opportunities, resist feedback, or stick with decisions longer than they should. (Sources: McEwen & Sapolsky (1995); Arnsten (2009); Crafting Calm in Chaos – Softhouse.)

Many startup founders operate past the point of peak performance, but like other high performers, they're effective enough not to question it. They would be more productive if they dialed the stress level down. They fail to make this leap and are less effective as a result.

What does better look like?

Fewer fire drills.
Fewer dropped balls.
More delegation.
More automation.
More white space.
More reflection.

However, getting to this point requires a mindset shift — especially if you’re holding onto the myth that only frazzled founders succeed.

Help "A Players" Grow Again

There's often a big unlock possible for top performers.

A Players tend to be insulated by their results. They assume they're fine. They get praise, not coaching. They're rewarded for consistency, not trying something new and being imperfect.

Ongoing personal development and leadership development are critical for every organization. If you're a startup founder, ask about your top contributors:

Who is crushing it but hasn't leveled up in the last 6 to 12 months?
What friction points do I see on the team in their wake?
How do they react and do if you give them feedback?

Founders, it’s also worth asking those questions about yourself. Consider where you’ve stopped being curious, and examine those areas. They’ll give you clues about where you can grow as a leader, contributor, and colleague. Some of the things you’re sure you “know” may be precisely the places where you’re stuck.

Conclusion

The risk isn't that top performers fail. It's that they succeed enough to avoid change. The world's best teams don't just reward consistency. They demand growth, especially from the people already doing well.

World-class teams are made up of individuals willing to learn even when no one asks them to. Those are true superstars. Scaling a startup to $100M revenue or more is incredibly difficult. Give yourself every possible advantage.

It's always great to meet other startup operators. Read more about me here, and please reach out for a chat anytime!

John Gauch 2024-10-14 John Gauch 2024-10-14

Deadlocked? Use “Forced Empathy” to Resolve Conflicts and Strengthen Your Startup Team

Startup environments are high-stakes. Team deadlocks can undermine progress and morale. Make the wrong decision, and that could be the end of it all. This post discusses “forced empathy,” an active perspective-taking technique to break deadlocks by encouraging team members to advocate for each other’s viewpoints, fostering trust and collaboration, and guiding teams toward sounder decisionmaking.

Image of two frustrated people talking tied to the blog topic of startup conflicts — Photo by Timur Weber from Pexels.

Welcome - I’m a hands-on fractional COO (Feldspar, Synervoz), sales coach (Microsoft), and mentor (Alumni Ventures, High Alpha). Over 20+ years, I have applied my growth and operations experience to help dozens of startups (Axiom, IAN, Spartan). I’m always excited to discuss thoughts and ideas to help founders grow and build their businesses.

Introduction

In the high-pressure startup environment, decision-making is often a team sport. But what happens when team members are at an impasse? Finding common ground can feel impossible when emotions run high and positions become entrenched. This type of deadlock doesn’t just slow progress—it can increase tension and erode trust, undermining the psychological safety needed for an organization to perform at its best.

Fortunately, there’s a simple and powerful tool from the world of mediation to help teams break through these roadblocks: perspective-taking. By asking each party in a dispute to advocate for the position of the other party, startup teams can reduce emotional strain, foster empathy, and make better decisions. By building this organizational muscle, you’ll increase the odds of building and sustaining a successful startup.

Key Takeaways

Psychological biases, such as confirmation bias and blindspot bias, can entrench team members in their positions, leading to deadlock.
Perspective-taking, or “forced empathy,” helps break deadlocks by encouraging team members to engage with and appreciate opposing viewpoints.
Anyone can follow a step-by-step process to bring perspective-taking to team conflicts, setting the stage for open dialogue to co-create a better path forward.
We can overcome issues that keep perspective-taking from being effective by watching out for and acting on these challenges.

Why Deadlocks Occur: Understanding Psychological Biases

In fast-paced startup environments, the pressure to deliver is intense. I’ve written elsewhere about understanding and keeping the business’s customer-driven purpose in mind.

That is always the company’s true North.

When team members put the customer first, organizations avoid many issues (inter-departmental competition, for example). Suppose team members are taking positions that are clearly inconsistent with this goal. That’s an easy case: Leaders can flag and correct the misalignment. There are going to be other cases, however, where there are multiple competing ideas aligned with providing customer value. So an easy fix may not be available when a conflict or impasse surfaces.

People might feel that they’re right and lose sight of the possibility that might not be true. They might be absolutely correct or flat-out wrong. There could be multiple equally good approaches. Or they may be partially correct. Maybe their ideas could be additive to a different approach. Whatever the case, developing a hardened view that there’s one clear best way, theirs, will be a problem if someone holds onto a conflicting viewpoint just as tightly.

One problem with this is that the best problem-solving entails evaluating several options before committing to a path forward. Someone trying to steamroll others with one idea undermines that process.

It may help to be aware of the biases--psychological phenomena--that get us into these binds. Take confirmation bias. This is when individuals seek information supporting their beliefs while dismissing evidence contradicting them. Cognitive dissonance is the discomfort we feel when holding conflicting ideas. It’s a challenge for human beings to be open to competing possibilities. Another significant barrier is blindspot bias—the tendency to recognize biases in others but not oneself. Blindspot bias also leads individuals to view their perspective as more rational or objective than others, making it harder to resolve a deadlock.

So what happens if we can’t disrupt these tendencies and open the door to a constructive dialogue that begins with considering and thoughtfully evaluating different alternatives before deciding on a course of action?

The Power of Perspective-Taking in Breaking Deadlocks

When biases and strong convictions lead to deadlock, perspective-taking can be a powerful strategy to get unstuck. Unlike passive empathy, perspective-taking is an active process where one team member is asked to “step into the shoes” of another—to fully engage in their viewpoint by attempting to solve the problem or argue the case from the other’s perspective. This method, also called “forced empathy,” encourages team members to temporarily set aside their positions and genuinely explore the opposing side.

This approach is effective for several reasons.

First, the participant gains an understanding of where the other person is coming from and may gain a greater appreciation for why the other person is feeling the way they are. Second, perspective-taking may reveal overlapping interests. Third, they may discover value in aspects of the other’s position independent of their perspective.

With this recognition, an adversarial relationship may soften up. When each person gains a deeper understanding of the other person’s motivation, and they deepen their connection through the dialog, it becomes easier to appreciate and discuss their respective ideas.

Beyond resolving an immediate issue, perspective-taking builds trust and open-mindedness within the team. The process becomes a habit, making future deadlocks less frequent and fostering a team culture that embraces diverse viewpoints as a source of strength rather than conflict. One strong characteristic of someone who frequently operates in this way is curiosity. When they learn about a position that differs from theirs, they don’t get defensive; they get curious and want to learn more about the other person and how that person arrived at their position.

How to Implement Active Perspective-Taking in Team Conflicts

A forced empathy exercise will be beneficial in a deadlock situation where two people are really dug into their positions. Tapping into perspective-taking to resolve the impasse isn’t rocket science, but there are a few key steps. Here’s a four-step guide startup leaders can apply to shift to a more creative, constructive conversation.

Set the Stage for Dialogue

This is a big one. If there’s strong trust and rapport on the team, remind the participants of this. Emphasize that we’re all in this together and here to challenge and support one another in the pursuit of shared business goals.

If it isn’t a high-trust environment, remind everyone of what they have in common. Set a positive, collaborative tone. Remind team members that the goal is not to “win” the discussion but to explore perspectives and potential paths forward. Encourage all to be genuinely curious and open.

Have Each Party Actively Advocate for the Other’s Viewpoint

The exercise is straightforward. Ask Participant Number One (“Kelsey”) to represent and advance Participant Number Two’s (“Rafael’s”) case. Kelsey needs to engage actively with Rafael to be sure she understands him, his ideas, and his arguments. If the impasse were about allocating budget to Rafael’s department, for example, Kelsey needs to try to solve the problem Rafael feels he is facing. Kelsey must fully present Rafael’s case. Another way to think about this is that Rafael is Kelsey’s “client.”

After you do one round of this, switch roles and repeat.

Identify Overlaps and New Insights

The exercise will help to build rapport between the two participants, and it may be enough to break the logjam and get the conversation flowing. A forced empathy exercise often leads to the realization that the other person’s view isn’t just “opposition” but has value. The intervention may lead to brand new insights or a greater appreciation for concepts on the table.

If the team struggles to move forward after the intervention, you can add more structure to the follow-up. Once each side has actively advocated for the other’s viewpoint, ask both parties to identify areas of overlap or alignment. This could include shared goals, customer-centric objectives, or underlying motivations that both support. Ask team members to highlight elements of the other perspective they hadn’t considered. Then, encourage team members to discuss these insights, gained from the exercise.

Co-Create a Solution

With biases softened and common ground identified, the team is primed to work together on a solution for moving forward. The solution could take any form. It might be one of the original points of view, a modified version of one of them, or an entirely new, third approach. Encourage team members to engage in this step creatively. This step builds toward an actionable solution by considering alternatives through a cohesive team dynamic.

Common Challenges in Active Perspective-Taking—and How to Overcome Them

While active perspective-taking can be a powerful tool for breaking deadlocks, it isn’t always easy, especially in high-stakes startup environments where strong opinions and emotions can run high. Here are three common challenges in applying perspective-taking and strategies to overcome them.

Challenge 1: Resistance to Considering the Other Viewpoint

Sometimes, team members may feel reluctant to fully engage with the other’s viewpoint. Tap into the reluctant teammates’ competitive spirit and intellectual drive. Define “winning” as vigorously representing their counterpart. Challenge the unwilling participant to see if they can find the gold in their colleague’s position and get it across to the team.

Challenge 2: High Emotions and Tension

When emotions run high, productive dialogue might feel impossible. If tensions have escalated to a boiling point, consider a “cooling-off” period. Don’t even try this exercise when the heat is too high. Revisit the issue once emotions have subsided and folks have had time to reflect. I’ve seen people come around during a timeout, avoiding the need for an intervention. People sometimes re-engage more productively when they’ve had the chance to reset.

Challenge 3: When Deadlock Persists

Even when team members engage in good faith, entrenched positions may not shift. People may tell themselves, “This is all fine, but I’m certain I’m correct.” Pausing to do some homework may help. It’s okay to theorize what approach might be best, but if there’s tangible data you can get to help evaluate proposed approaches, go get it. What does what you learned mean, and how does it help you pick your path?

If there isn’t tangible data you can easily access, all is not lost. Consider additional ways to acquire tangible information to help determine the superior approach. For example, can you design and run small experiments to gather data informing what option might be better?

One founder I worked with had a very stressful Board meeting the other day. Two groups had formed with different theories for the company strategy about what market to target first. This had implications for product development and the company’s fundraising approach.

After a lot of talk about a future nobody could predict or know with certainty, it became clear that there might be small tests that the company could run to get some data offering a glimpse of the potential future. They would arrange five prospective customer meetings and test different assumptions tied to the two competing strategies to see if what they learned tipped the scales to one side or the other.

That might provide enough information to choose a route, or they could follow it up with another test.

Conclusion

Implementing active perspective-taking as a standard approach to resolving conflicts can have lasting, positive effects on your startup. When team members regularly engage in “forced empathy” exercises, they’re better equipped to approach future disagreements as opportunities for growth rather than battles to be won. Beyond resolving the immediate issue at hand, perspective-taking builds empathy, curiosity, and openness.

Encourage your team to try perspective-taking the next time they face a deadlock, especially in high-stakes conversations. By consistently applying this approach, you’ll build a team that embraces diverse perspectives and prioritizes creative solutions that align with your startup’s mission. Ultimately, a team that practices active perspective-taking will be more adaptable, resilient, and effective in navigating the inevitable challenges every startup faces.

I love to meet like-minded startup leaders. Read more about me here, and please reach out for a chat.

John Gauch 2024-09-18 John Gauch 2024-09-18

Why Startup Founders Need Thinker-Doers for Their Teams

Startup founders need thinker-doers—individuals who can balance analysis, idea generation and implementation. These are the talented people who thrive in fast-paced, resource-limited environments. Hiring and nurturing thinker-doers will accelerate your progress and improve the odds of your startup succeeding.

Graphic featuring the thinker-doer term with imagery representing thinking and doing — Image created using DALL-E by OpenAI.

By way of introduction - I'm a hands-on, seasoned fractional COO (Feldspar, Synervoz), sales coach (Microsoft), and mentor (Alumni Ventures, High Alpha). Over 20+ years, I have applied my growth and operations skills to help dozens of startups (IAN, Axiom, Spartan). I'm excited to share my ideas and thoughts here. I hope you find them useful on your startup path.

Introduction

Fellow IBMer Fred Brooks, a leader in software engineering and computer science, once said, "Thinkers are rare; doers are rarer; and thinker-doers are rarest." This idea isn't just relevant to building leading tech—it's useful for anyone trying to build an agile, proactive, fast-moving team, especially startup founders.

Key Takeaways

Thinker-doers balance strategy and execution.
Thinkers and doers have value, but over-reliance on either will create issues, especially at startups.
Hire thinker-doers by seeking real-world examples of execution.
Lead thinker-doers with clear goals and consistent feedback by providing them with plenty of autonomy.

Why Thinker-Doers Are Essential in Startups

Brooks introduced the concept of thinker-doers—individuals who can strategize and execute their strategies—in The Mythical Man-Month. Thinker-doers thrive in environments where they can analyze and assess information, design solutions and implement their ideas. This makes them not just valuable, but essential to the success of startups.

In startup world, resources are limited, and frequent decision-making and follow-up are required. Thinker-doers can develop ideas and bring them to life without relying on someone else to execute them. This self-sufficiency avoids failed handoffs and speeds up activity while tightly aligning vision with execution.

Startups that lean too heavily on either thinkers or doers face inevitable roadblocks. Thinkers can get lost in analysis or ideation, slowing progress without clear action steps. On the other hand, doers may focus solely on completing tasks, sometimes missing the bigger picture or long-term goals. Balancing these tendencies is where thinker-doers shine; they combine both mindsets to keep a startup moving forward with the practical application of a vision.

Overweighting the team with thinker-doers is particularly critical for post-Seed to Series A startups and bootstrapped firms looking to tap into the same growth curve as those startups. Too many thinkers will stall execution, while too many doers may result in committing too many resources to the wrong paths forward. Getting this right requires careful people recruitment and management.

The Role of Pure Thinkers or Doers

While thinker-doers are the ideal startup profile, thinkers and doers can still play roles in specific situations. Thinkers often excel in advisory roles, offering strategic input without taking responsibility for execution. They can be especially valuable as external advisors or mentors, for example. However, you need to test whether thinkers have past experience executing their ideas. Be wary of contributions from thinkers who share theories or pass on recommendations based on others' lived experiences or lacking any history at all. Evaluate all of their suggestions carefully and cautiously. Many people are happy to offer opinions, so I'd be concerned about having too many "idea" people kicking around, offering too many perhaps conflicting recommendations.

Doers' potential contributions are more limited at startups. Even for a simple or repetitive task, mindful execution matters. There aren’t going to be many, if any, workstreams or processes that work perfectly at a startup. If they operate smoothly, they will still be subject to change as the business evolves. For even the most routine work, I'd prefer doers who consider how their work contributes to the company's customer-driven purposes. So, they are doers who bring a reflective and thoughtful approach to their work.

Be on the lookout for this one doer, gotcha, from the person who comes up with a single option to a problem or opportunity and acts on it immediately without surfacing alternatives. Maybe they get lucky, but more often, we’ll find out it wasn't a great idea at all. Lack of reflection and option-building by doers can waste a lot of time, which is always in short supply for startups.

If you find that you've employed or engaged a thinker or a doer, determine as quickly as possible if this is an ingrained trait or a behavior subject to quick change. All human beings are capable of personal development and growth. But for some people, this can happen at a glacial rate. You don't have that kind of time. Suppose a challenging teammate can't adapt quickly. In that case, move that person toward the exit sooner rather than later. That's the most respectful way to handle the situation for all parties.

How to Spot a Thinker-Doer When Hiring

Identifying thinker-doers during the hiring process can be hard, but there are practical ways to spot them. Start by asking candidates to share specific examples of when they took an idea from conception through execution. Look for clear instances of both creative thinking and follow-through.

During interviews, present scenarios where a candidate must balance strategy and action. For example, ask them how they would handle a sudden pivot in company direction or how they'd prioritize competing goals in a resource-constrained environment. Do they gravitate toward doing a ton of analysis and hours of desk research? Or do they emphasize learning by doing? Look for a bias to action in their replies.

I'm not advocating for “firing” without “aiming,” by the way. I am promoting people developing informed hypotheses and testing them out in real-life experiments to get answers quickly that aren't mere guesswork.

Finally, ask for stories demonstrating real-world problem-solving and follow-up. In the case studies they share and prior work experience they describe, consider whether they naturally cover both angles. A candidate leaning heavily toward thinking or doing may struggle with speaking to the other aspect convincingly. A candidate's past success in managing uncertainty by identifying options and taking action steps to discover the best path will contribute mightily in a startup environment.

How to Lead and Support Thinker-Doers

Once you've hired thinker-doers, be sure to support them. Regarding people's performance, I keep in mind an acronym from Dan Pink: AMP-R. I added the "R."

"M" stands for mastery.
"P" stands for purpose.
"R" stands for relationship.
"A" stands for autonomy.

Thinker-doers thrive when given autonomy, and they'll reach peak performance when this is combined with the other acronym qualities, all in alignment with company goals. They will flourish if you allow these teammates to be creative and proactive when you have set clear expectations for outcomes. Do not micromanage a thinker-doer. That is certain to backfire.

Thinker-doers appreciate ownership of their work and will benefit from timely feedback that helps them improve. You might also establish a regular check-in, emphasizing your teammate’s personal development and broader career goals. Coach and help them to reach high levels of performance. Don’t take autonomy to an extreme. Accountability is critical; thinker-doers perform best when trusted and held responsible for the outcomes they drive.

Spartan vs Tough Mudder

It is interesting to see how organizational cultures end up reflecting the styles of their team members. During my time at sports indusry innovator Spartan, the CEO, Joe DeSena, was known for his fast-paced, action-oriented style. He leaned heavily on a "fire-aim-ready" mentality, leading to rapid iteration and learning. In contrast, arch-rival Tough Mudder had a slow, deliberate approach—focusing on analysis and planning over doing.

While Tough Mudder’s impressive cohort of business school graduates and former management consultants developed top-notch PowerPoint decks, they were slow to test ideas in the real world, limiting their pace of learning. They didn't develop conviction around a path forward. They lacked a competitive strategy supporting a clear customer-driven purpose. In the end, Spartan acquired Tough Mudder, achieving Spartan’s objective of becoming the Iron Man of obstacle racing.

Conclusion

The “first product" of a startup must be the team. If a team implodes (which definitely happens), it's game over. Creating a startup team of thinker-doers will improve your odds of startup success. While thinker-doers are ideal for most situations, thinkers may bring value when used strategically and sparingly. Over-indexing on pure thinkers or doers or relying on smooth handoffs between the two types of people will be a costly approach.

Building a successful early-stage startup is about turning unknowns into knowns by taking action—mindfully and methodically testing ideas and learning from those actions. Thinker-doers are your best bet for developing great ideas and putting them into action.

By hiring and nurturing thinker-doers, founders can shorten the time it takes to find product-market fit and then scale up. Fostering an environment that encourages creativity, action, and accountability will help every one of these team members reach their fullest potential. Your smartly staffed, well-coached team will keep your startup in action, focused on its long-term vision, while staying agile to handle daily challenges.

I love to connect with other like-minded startup leaders. Read more about me here, and please reach out.

John Gauch 2024-07-23 John Gauch 2024-07-23

Navigating Startup Fundraising: Insights from an Experienced COO

If you're new to startup investing, or developing a fundraising plan and want to make sure you're not missing anything important, this blog post is for you. Read about essential startup fundraising strategies: crafting pitches, building investor relationships, exploring funding options, and more.

Listen to the podcast version of this blog post, an AI experiment.

Photo by Karolina Kaboompics from Pexels.

Welcome - I'm John Gauch, a consultant with extensive experience in business operations and growth. I specialize in helping startups implement strategies effectively in both areas. As a hands-on fractional COO, I work with founders and CEOs through each step of the process, tailoring solutions to fit your unique needs and objectives.

Fundraising is a pivotal moment in the startup journey, often determining the trajectory of its growth and success. In today's competitive landscape, securing the right investment at the right time can be the difference between scaling or stagnating. Strategic fundraising is not just about acquiring capital; it's about aligning your funding strategy with your long-term vision and ensuring you attract investors who share your values and can provide more than just financial support.

This guide will cover all the basics. I will share insights and strategies that have proven effective in navigating the startup fundraising landscape.

Understanding the Fundraising Landscape

Navigating fundraising can be daunting, especially for first-time founders. The first step is understanding the various types of funding available, each with advantages and challenges.

Angel Investing: Angel investors are typically high-net-worth individuals who provide early-stage funding in exchange for equity. They often bring valuable mentorship and connections.

Venture Capital: Venture capital (VC) firms invest sums in exchange for equity, often at later stages of development. They may provide extensive resources and support and come with high expectations for growth, and VCs may demand considerable control over the company.

Crowdfunding: Platforms like Kickstarter and Indiegogo allow startups to raise small amounts of money from a large number of people. This method can generate buzz and validate market demand but can be time-consuming to manage and may not provide substantial funds.

Initial Public Offerings (IPOs): Going public is a way to raise significant capital by selling shares to the public. This is an option for more mature companies with a proven track record. It provides a large influx of cash but comes with regulatory scrutiny and the pressure to meet quarterly earnings expectations.

Crafting a Fundraising Strategy

A well-crafted fundraising strategy is essential to attract the right investors and secure the necessary funds. Here are key components to consider:

Set Clear Goals: Define what you aim to achieve with the funds. Whether scaling operations, developing new product features, or expanding into new markets, having clear objectives will inform your strategy and appeal to investors.
Identify Potential Investors: Research and target investors who have a track record of investing in your industry and stage of development. Platforms like Crunchbase and AngelList can help identify potential investors.
Create a Timeline: Fundraising is a time-consuming process. Develop a timeline that includes preparing materials, pitching to investors, and closing. Starting early with networking conversations allows you to build relationships and refine your pitch.
Prepare Your Team: Ensure you have the resources you need and that your team is aligned with your fundraising goals and ready to support the process. This includes preparing critical financial and operational documents, anticipating potential investor questions, and determining how you will execute the investment transaction.

By setting goals, identifying the right investors, creating a detailed timeline, and preparing your team, you can develop a robust fundraising strategy that increases your chances of success.

Developing a Compelling Pitch

Your pitch is your opportunity to convince investors of your startup's potential. A compelling pitch combines clear communication with a strong narrative highlighting your vision and value proposition.

Key Elements of a Pitch Deck:

Clearly articulate the problem your startup solves for people in a particular struggling situation, how your product or service addresses it, and how your solution compares to existing alternatives.
Provide data on the size and growth potential of your market
Explain how your startup makes money and your strategy for scaling.
Showcase any milestones, customer growth, or partnerships that show traction or validate the business.
Present your financial projections and funding requirements.
Highlight the expertise and experience of your team members.

Use storytelling to make your pitch more accessible and memorable. Investors are more likely to invest in a compelling narrative that resonates with them emotionally.

Rehearse your pitch multiple times until you can deliver it confidently and answer likely questions your audience may ask.

A well-structured pitch that clearly communicates your vision and potential can significantly increase your chances of securing funding. Don’t make the fundraising journey harder on yourself by shortchanging this step.

Building Investor Relationships

Building strong relationships with investors is critical to successful fundraising. I encourage you to invest in and nurture these relationships long before you need to raise funds. Networking is vital—attend industry events, join startup communities, and leverage platforms like LinkedIn to connect with potential investors. Building relationships through mutual connections can lead to warm introductions, which are more effective than cold outreach.

Ongoing communication is equally important. Keep potential investors updated on your progress with regular updates on milestones and achievements. Your updates will show that you are making progress and are committed. Transparency is crucial—be honest about your challenges and how you plan to overcome them. Investors appreciate honesty and are more likely to support a founder who is upfront about their business.

Value addition is another critical aspect. Look for investors who can provide more than just capital. Investors with industry expertise, a strong network, and a history of supporting startups can bring value to your business. By focusing on these aspects, you can build strong relationships that support your fundraising efforts.

Preparing for Due Diligence

Due diligence is a thorough examination of your business by potential investors. Being well-prepared can make this process smoother. Start with financial documentation; ensure all financial documents are up-to-date and accurate, including profit and loss statements, balance sheets, and cash flow statements. Legal compliance is also essential. Ensure you’ve protected your intellectual property and the cap table is in good order.

Operational data should be readily available. Be prepared to provide detailed information about your business operations, including customer acquisition costs, lifetime value of customers, and other key performance indicators. Investors will also want to understand your team dynamics and company culture, so be ready to discuss your team structure, roles, and any key hires you plan to make.

Anticipate common questions investors may ask during due diligence, such as questions about your market, competition, business model, and risk factors. One of the most interesting and challenging questions to answer is often, “Why now?” Why could your startup only exist today? By combining thorough preparation with clear communication, you can successfully answer this question and navigate the due diligence process, increasing your chances of securing the funding you seek.

Negotiating and Closing the Deal

Negotiating with investors is a critical step in the fundraising process. This phase determines the terms of the investment and sets the foundation for your future relationship with investors. It's important to approach negotiations with a clear understanding of your goals and limits.

Start by knowing your worth. Be prepared with solid data and a straightforward narrative about your startup's value and potential. Understanding key terms such as equity, valuation, and dilution is essential. Negotiations should aim for a fair balance between securing necessary funds and maintaining control over your company.

Effective negotiation also involves transparency and flexibility. Be open about your startup's needs and be willing to compromise where appropriate. However, ensure that any agreements align with your long-term vision. Once terms are agreed upon, ensure all details are documented beginning with a term sheet. This will help prevent future misunderstandings and lay the groundwork for a strong partnership.

Exploring Alternative Funding Options

While traditional funding methods like venture capital and angel investing are well-known, alternative funding options can also provide valuable resources for your startup. These include crowdfunding, grants, and accelerator programs.

Grants:

Provide funds that do not need to be repaid.
Attractive due to no equity dilution.
Often come with strict eligibility requirements and specific usage guidelines.

This would include government-sponsored research and development grants tied to technology innovation.

Accelerators and Incubators:

Offer funding, mentorship, and resources in exchange for equity.
Frequently beneficial for early-stage startups.
Provide support and networking opportunities that can accelerate growth.

I have been a mentor for MassChallenge and Techstars to mention just two programs.

Exploring these alternative funding sources can diversify your funding strategy and provide additional resources to fuel your startup's growth.

Legal Considerations in Fundraising

You will need to navigate the legal landscape when raising funds for your startup. Ensuring compliance with relevant laws and regulations protects your business and builds investor confidence.

Start by creating a solid legal structure for your business. This includes properly incorporating your company and establishing clear agreements among founders. Protect your intellectual property through patents, trademarks, and copyright, as well as confidentiality and IP assignment agreements.

Understand regulations governing the issuance of your equity or other securities to investors. Working with legal professionals specializing in startups can help you navigate these complexities and avoid potential pitfalls. Addressing these legal considerations early ensures a smooth fundraising process and builds a strong foundation for your startup's future.

Post-Investment Relationship Management

Securing investment is challenging, and it is just the beginning. Nobody has ever said that building a successful startup is easy. Managing relationships with your investors effectively is crucial for the continued success of your business.

Maintain Regular Communication

Provide updates on progress, challenges, and milestones.
Transparency builds trust and keeps investors engaged.

Leverage Investor Expertise

Utilize their industry knowledge and connections.
Seek their advice on strategic decisions and growth opportunities.

Manage Expectations

Ensure alignment on goals and timelines.
Regularly review the terms of the investment documents.

Effective post-investment management strengthens investor relationships and provides the support needed for long-term success.

Staying Focused on Long-Term Goals

Amidst the complexities of fundraising, staying focused on your long-term goals is crucial. Fundraising should align with your overall vision and strategy for the company.

Set Clear Milestones

Define achievable goals and regularly review progress.
Maintain momentum and alignment within the team.

Avoid Common Pitfalls

Don't overextend resources or lose sight of your core mission.
Balance short-term needs with long-term objectives.

Celebrate Achievements

Recognize and celebrate wins—even the “small” ones.
Learn from setbacks to improve future strategies.

Maintaining a long-term perspective ensures that fundraising activities support sustainable growth and move your startup closer to its objectives.

Importantly, too, as CEO or founder, you will likely be dedicating a significant amount of time to the fundraising effort. Ensure you have the right team backing you up to keep the business humming. No matter how important the fundraising effort may be, you can’t afford to neglect the business's short-term needs.

Conclusion: A Path to Successful Fundraising

Embarking on the fundraising journey is challenging and rewarding. By understanding funding options, crafting a well-defined strategy, and developing a compelling pitch, you set the foundation for attracting the right investors. Building strong relationships and preparing meticulously for due diligence ensures you are ready to engage with potential backers.

As you navigate the complexities of startup fundraising, remember that each step you take brings you closer to realizing your vision. With strategic planning, transparent communication, and a focus on short-term needs and long-term success, you can improve the odds of securing the investment you need. Use these insights to guide the effort.

If you’re a startup CEO, founder, or entrepreneur and want to chat about fundraising or what you are building, I’d love to connect. Learn about my services and please reach out.

Introduction

You Can’t Manufacture Demand

Use the Four Forces

Provide Value

Show Up at Watering Holes

Example: From My Business

Conclusion

Introduction

What Series B to Series C Feels Like

Top Imperatives

Introduction

What Series A to Series B Feels Like

Top Imperatives

Introduction

A founder roundtable on scaling from inception through Series A

Inception to Seed

Founder Experiences: Building a Customer Trust System

Q&A: The Criticality of Storytelling

Seed to Series A

Founder Experiences: Tracking and Testing Your Assumptions

Q&A: Making Critical Hires

Series A and Beyond

Founder Experiences: Don’t Ignore Culture

Q&A: Is any Investor a Good Investor?

Conclusion

Introduction

When Success Becomes a Ceiling

One Example: Stress Equals Effectiveness

Help "A Players" Grow Again

Conclusion

Introduction

Key Takeaways

Why Deadlocks Occur: Understanding Psychological Biases

The Power of Perspective-Taking in Breaking Deadlocks

How to Implement Active Perspective-Taking in Team Conflicts

Set the Stage for Dialogue

Have Each Party Actively Advocate for the Other’s Viewpoint

Identify Overlaps and New Insights

Co-Create a Solution

Common Challenges in Active Perspective-Taking—and How to Overcome Them

Challenge 1: Resistance to Considering the Other Viewpoint

Challenge 2: High Emotions and Tension

Challenge 3: When Deadlock Persists

Conclusion

Introduction

Key Takeaways

Why Thinker-Doers Are Essential in Startups

The Role of Pure Thinkers or Doers

How to Spot a Thinker-Doer When Hiring

How to Lead and Support Thinker-Doers

Spartan vs Tough Mudder

Conclusion

Understanding the Fundraising Landscape

Crafting a Fundraising Strategy

Developing a Compelling Pitch

Building Investor Relationships

Preparing for Due Diligence

Negotiating and Closing the Deal

Exploring Alternative Funding Options

Legal Considerations in Fundraising

Post-Investment Relationship Management

Staying Focused on Long-Term Goals

Conclusion: A Path to Successful Fundraising

John Gauch