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

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.

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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.

Read also: Overlooked Traits of Successful Startup CEOs

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.

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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.

Read also: When Top Performance Becomes a Hiding Place

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• 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.

Read also: How Startups Can Make the Best Use of Lawyers

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

Navigating Startup Fundraising: Insights from an Experienced COO

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.

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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:

1. 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.

2. 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.

3. 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.

4. 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.

Read also: Key Strategies for Business Growth: 10 Steps to Expand and Thrive

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.

Read also: Estimating Product Market Opportunity

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.

Read also: What I Need to Know to Make Investor Referrals

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.

Related also: 50 Top Apps, SaaS Solutions, Services, and Sites for Startups

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.

Read also: How Startups Can Make the Best Use of Lawyers

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.

Key Strategies for Business Growth: 10 Steps to Expand and Thrive

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

Photo by Lukas from Pexels.

In case you’re new to the site - 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.

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Are you looking to elevate your business to the next level? Whether you're a startup aiming to scale quickly or an established company seeking new avenues for expansion, understanding the right growth strategies is crucial. In this comprehensive guide, I will discuss 10 essential steps that can help your business. These strategies have been curated to provide actionable insights and proven methods to drive growth.

1. Market Penetration

Market penetration involves increasing your company's share of existing markets with your product or service offerings. This strategy focuses on capturing a larger portion of the market by attracting customers from your competitors, attracting people who aren’t doing anything but have a problem to solve, or convincing current customers to use more of your product.

To effectively penetrate the market, businesses employ various tactics, such as competitive pricing, enhancing their products, and marketing campaigns.

Early on, at the beginning of your startup journey, you will improve the odds of capturing a market by building a product or service that addresses an unmet or under-met customer problem. Look for people who are struggling with current solutions or frustrated with their options and doing nothing. Design and build a product or service that is better at helping people to make the progress they desire.

Later on, offering promotions, discounts, and loyalty programs are options you can look at to incentivize customers to choose your product over others. Additionally, increasing your advertising efforts to raise product or brand awareness may positively impact your market share. It's crucial to continuously analyze market trends and customer feedback to adapt and refine your specific strategies, ensuring they meet the evolving needs of your target audience.

Read also: Estimating Product Market Opportunity

2. Market Development

Market development is the strategy of entering new markets with your existing product. This approach is for businesses looking to expand their reach and tap into new customer segments. Market development can involve geographical expansion, targeting different demographic groups, or exploring new distribution channels. Startups, creating new to the world products, are by definition entering a new market.

For geographical expansion, companies might consider establishing new sales capabilities in different regions or countries, depending on the demand and cultural fit of their products. Another approach is to identify and target new customer segments that may benefit from your product but have not been previously marketed to. Utilizing online sales platforms can also aid in reaching a broader audience without the need for physical presence. Whether you are a startup or an incumbent company promoting an existing product, market development requires thorough market research to understand the new target market's preferences and potential barriers to entry.

3. Product Development

Product development focuses on creating new products or enhancing existing ones to meet customer needs better. This strategy aims to stimulate growth by offering innovative solutions that address market demands and improve customer satisfaction. 

Developing sound customer insights is essential for successful product development. Big companies developing new products might call this “research and development” (R&D). By understanding market trends and customers’ lives, businesses can identify opportunities for innovation. This might involve introducing entirely new products, improving features of existing products, or adapting products for different uses.

Collaboration with customers during the development phase can also provide valuable insights and ensure the final product aligns with their expectations. Ongoing product development will not only help retain existing customers but also attract new ones by keeping your offerings relevant and competitive in the market.

Read also: How to Learn Jobs to be Done

4. Diversification

Diversification involves expanding your business into new markets with new products. This strategy is also pursued to reduce risk by spreading it across different products or markets, ensuring that a decline in one area does not severely impact the overall business.

There are two main types of diversification: related and unrelated.

Related diversification means expanding into a new market with products that are connected to the existing problem your offerings solve for customers. For example, a company that produces high-perfomance running footwear might start offering high-performance running apparel--all connected to readying an athlete for their sport. Unrelated diversification involves entering markets where you solve a different problem for customers, such as a high-performance running footwear company beginning to offer trendy casual footwear.

It is important to consider your company’s current capabilities when making this decision. Does this entail developing a new profit formula, processes, or resources, and what’s the implication of your answer? While diversification can offer significant growth opportunities, it also comes with increased risk and requires substantial market research and strategic planning to ensure successful implementation.

5. Joint Ventures and Partnerships

Joint ventures and partnerships allow businesses to collaborate with other companies to leverage each other's strengths and resources. This strategy can help businesses enter new markets, share risks, and access new customer bases more effectively than going it alone.

In a joint venture, two or more companies create a new entity to undertake a specific project or business activity, sharing profits, losses, and control. Partnerships can range from strategic alliances to long-term collaborations where companies work together while remaining independent. By combining expertise and resources, businesses can innovate faster and achieve goals that might be difficult on their own. Successful joint ventures and partnerships require clear communication, aligned objectives, and mutual trust to navigate the complexities of shared business operations.

Read also: Overlooked Traits of Successful Startup CEOs

6. Mergers and Acquisitions

Mergers and acquisitions (M&A) involve the consolidation of companies or assets. This strategy is often pursued to achieve rapid growth, gain competitive advantage, or enter new markets without the need to build new operations from the ground up.

Mergers occur when two companies combine to form a new entity, while acquisitions happen when one company takes over another. The benefits of M&A include increased market share, access to new technologies, expanded customer bases, and enhanced operational efficiencies. However, M&A can be complex and risky, involving significant financial investment and cultural integration challenges. Successful mergers and acquisitions require thorough due diligence, clear strategic alignment, and effective integration planning to realize the potential benefits fully.

7. Digital Transformation

Digital transformation involves integrating digital technology into all areas of a business, fundamentally changing how you operate and deliver value to customers. This strategy is essential in today's digital age, where technology can significantly enhance efficiency, customer experience, and competitiveness.

Startup companies have the advantage of building their business from a blank page. So they can implement digital practices and processes from the beginning, without replacing existing manual or analog approaches. 

Key aspects of digital transformation for more mature companies include automating processes, utilizing data analytics for informed decision-making, and adopting new digital tools and platforms.

For example, implementing customer relationship management (CRM) software can streamline interactions with clients, while leveraging artificial intelligence (AI) can offer personalized customer experiences and predictive analytics. Additionally, shifting to e-commerce platforms can expand market reach and provide customers with more convenient online purchasing options. Embracing digital transformation, and fostering a mindset of continuous innovation and adaptability, may require a cultural shift among some individuals within any organization.

Read also: 50 Top Apps, SaaS Solutions, Services and Sites for Startups

8. Customer-Centric Approach

A customer-centric approach places the needs and preferences of customers at the forefront of business decisions. I also think about this as keeping top of mind the specific problem the company solves for its customers. By focusing on delivering an exceptional customer experience that helps someone make the progress they seek in their life, businesses can enhance satisfaction, build loyalty, beat competitors, and drive growth.

To adopt a customer-centric approach, companies must prioritize collecting and analyzing customer feedback to understand customers better. This can be achieved through various customer discovery or design thinking techniques (from one-on-one interviews to surveys to social media engagement). Businesses must then strive to apply those insights by tailoring products and services to individual customer preferences. Implementing robust customer service practices, such as timely support and proactive communication, can further strengthen customer relationships. By consistently putting customer understanding first, businesses can differentiate themselves in the market and create a loyal customer base that supports sustained growth.

Read also my Medium blog posts on customer discovery techniques.

9. Data-Driven Decision Making

Data-driven decision-making involves using data and analytics to guide business strategies and operations. This approach enables companies to make informed decisions based on insights rather than intuition or guessing, leading to more effective and efficient outcomes.

To leverage data-driven decision-making, businesses need to collect relevant data from various sources, such as customer interactions, market trends, and internal processes. Utilizing advanced analytics tools and techniques, companies can extract valuable insights from this data to identify opportunities for improvement and growth.

For instance, analyzing sales data can reveal patterns in customer behavior, helping to optimize marketing efforts and product offerings. Additionally, data-driven decision-making can enhance operational efficiency by identifying bottlenecks and areas for cost reduction. By integrating data into the decision-making process, businesses can stay agile and responsive to changing market conditions.

10. Sustainability and Corporate Responsibility

Sustainability and corporate responsibility focus on conducting business in a way that is environmentally friendly and socially responsible. This strategy not only helps protect the planet but also enhances a company's reputation and fosters long-term success. In this same vein, companies have a responsibility to support the learning, growth, and development of their team members.

Sustainable practices include reducing carbon footprints, minimizing waste, and using renewable resources. Companies can also engage in corporate social responsibility initiatives, such as supporting community projects, ensuring fair employment practices, and promoting diversity and inclusion. By adopting sustainable and responsible practices, businesses can attract similarly-minded consumers, meet regulatory requirements, and build a positive brand image. Additionally, sustainability efforts often lead to operational efficiencies and cost savings, contributing to overall business growth. Embracing sustainability and corporate responsibility is ethical but also strategic, positioning companies for future success in a world increasingly focused on environmental and social impact.

A Path to Sustainable Business Growth and Success

Implementing the right growth strategies is crucial for any business aiming to expand and thrive today. By thinking about market penetration, market development, product development, diversification, joint ventures, mergers and acquisitions, digital transformation, a customer-centric approach, data-driven decision-making, and sustainable practices, you can improve the odds of your business achieving substantial growth and long-term success.

These 10 strategies provide a comprehensive framework for navigating the complexities of business expansion. They will help you enhance your market presence, innovate continuously, build strong customer relationships, and operate responsibly. Remember though, the key to successful implementation lies in tailoring these strategies to your unique business context and staying adaptable to changing market conditions.

If you’re a startup CEO, founder, or entrepreneur, and you want to chat about evaluating or implementing these strategies and whether I can help, I’d love to connect. Learn about my services and please reach out.

How Startups Can Make the Best Use of Lawyers

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

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If you’re spending a ton of time and money on legal management, that’s probably too much. But little to no time or money at all is probably not enough.

In this post I’ll lay out a simple tried-and-true framework startup CEOs and founders can use to help you decide what kind of legal advice and support you need to keep your legal house in order and avoid pitfalls that will slow the company down.

The typical startup requires responsive and informed legal advice and a flexible and lean framework for getting it. I won’t dwell on the first two points. This is not the time to have your uncle who does real estate law draft and negotiate your $8 million Seed-round financing documents. And you’ll go mad waiting to hear back from a sloth-like advisor when the business is not yet breaking even and every second counts. Enough said.

Read also: Axiom: Discovering the Benefits of Fractional Talent

At my prior employer Axiom (a venture-backed innovator in the legal space), we collaborated with the General Counsel of Fortune 500 companies to restructure and reorganize the work of their legal departments. The same basic principles offer an excellent framework for startups that can evolve as the business grows, from the early days through Seed and Series A financings and beyond.

Check out the three-step approach and an example of how you might organize your legal operations.

But first, legal AI is captured in the model under “Alternative Model Providers.” This category captures any alternative to traditional law. Watch this space. There’s no doubt in my mind that legal AI specifically will be moving from the Efficiency category to the Experience category over time. It’s just a question of how fast.

Legal Services for Startups (embedded) by John Gauch

Additional factors to consider:

• Account for the complexity and costs of coordinating these legal activities. Theoretically, it might be more effective to split up projects among three tiers of providers, but if that’s going to add a ton of overhead to your operations, you might want to keep it to two.

• A single project can be split across multiple categories. For example, you need an immigration visa for a new team member. Your Chief Financial Officer or Chief Operations Officer is comfortable navigating complex regulatory schemes. One of them might prepare the visa application, and then you could have an immigration lawyer review it to make corrections and suggestions.

• There are functional and emotional elements to the decisions you make in building your framework. Let’s say you’re the CEO of a post-Series A company. You have several top-tier VCs in your cap table and have blown past the $10M revenue mark. For your bet-the-company matters, you may want to select an AmLaw 100 law firm with startup credentials not only to benefit from their expertise and infrastructure. You may also choose them to benefit from their brand and the imprimatur the firm brings with its counsel and work product.

From the beginning of your company’s life, pay particular attention to company formation, founders’ agreements and equity matters generally; intellectual property (IP); and fundamental regulatory and compliance issues. To take one specific example, having people sign confidentiality and IP assignment agreements is critical. If you neglect ongoing corporate formalities, you might be able to fix that up later, but it will be a nuisance, and it could lead to problems—if you were to issue more equity than you have authorized, for instance. Commercial agreements might fall in any tier of the framework above, depending on your business and the individual transactions, and should be treated accordingly.

Read also: Navigating Startup Fundraising: Insights from an Experienced COO

There’s always a chance a legal issue can arise that knocks your startup journey off track. Still, a proactive and reasoned approach to handling legal services can optimize the quality and cost of the advice you receive--improving the odds of long-term startup success.

Use the illustration above and consult your trusted legal advisor(s) to devise a legal management strategy specific to your company and its lifecycle stage.

If you ever need referrals to startup attorneys, email me to chat. As a former lawyer and former General Manager at legal startup Axiom, I know tons of incredible lawyers across specialties and fields, including top-notch solo practitioners as well as members of AmLaw 100 firms like Morrison & Foerster and Perkins Coie, regional players and startup boutiques.

Nothing in this blog is intended to be a substitute for legal advice from an attorney knowledgeable about your unique situation.

How to Learn Jobs to be Done

Photo by Leah Kelley from Pexels.

In case this is your first time visiting - I'm John Gauch, a consultant with extensive experience in business operations and growth planning. I specialize in helping startups implement strategies effectively in both areas. In my work as a fractional COO, I work with founders and CEOs through each step of the process, tailoring solutions to fit your unique needs and objectives.

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Creating and sustaining a successful business entails doing countless things right. Knowing the Job to be Done (JTBD) of your customers and how your product helps them may not make it easier to start and grow a company, but it will make what you should be doing more obvious--and less subject to guesswork.

Co-architected by Clayton Christensen and Bob Moesta, a "Job to be Done" is the progress someone is trying to make in a struggling situation. Putting the JTBD framework to use effectively requires a commitment to understanding people's lives.

• It is less about, "How do I make people want my product?" More about, "How do I make a product people want?"

• It is less about, "How do I 'sell' more of my product?" More about, "How do I help people make the progress they are seeking?"

Applying the JTBD framework tells us why people pull your product into their lives, how to communicate with them compellingly, and how to satisfy them after they make a purchase. It can also tell us whether a brand new product idea is likely to work or not. In a May 2012 interview with Horace Dediu, Christensen contemplated: "10 years down the road, people will look back at my research, and they might say this idea of Jobs to be Done is a bigger idea than was 'disruption'," the theory that initially brought Christensen to the business world's attention.

Today, people around the globe put JTBD to use at companies of all sizes across industries.

Not only will applying JTBD and the associated mindset help you grow a business and innovate. When combined with practices and tools such as customer experience mapping and complementary metrics, leaders can articulate a clearer vision, dial in the organization's value proposition, align the team, and develop accountability among team members.

Read also: Estimating Product Market Opportunity

To learn all about JTBD, and how do do and use customer interviews, read my series of posts on the topic at Medium.

If you’re a startup CEO or founder, and you feel it would be interesting to chat, I’d love to connect. Learn about my services and please reach out.

This blog post appeared originally on LinkedIn.

Estimating Product Market Opportunity

Photo by Karolina Grabowska from Pexels.

First time here? I'm John Gauch, a consultant with extensive experience in business operations and growth planning. I specialize in helping startups implement strategies effectively in both areas. In my work as a fractional COO, I work with founders and CEOs through each step of the process, tailoring solutions to fit your unique needs and objectives.

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TAM (Total Addressable / Available Market), SAM (Serviceable Available Market) and SOM (Service Obtainable Market) are popular conventions that we all see in investor pitch decks.

TAM can loosely categorize opportunity scale (large, medium, small), for example.

I am really interested in a figure sometimes captured in the SAM or SOM, but this is case by case depending on how people calculate them.

The market opportunity number I like to see is this:

Specifically excluded from the number:

I do not view this as a static figure. We can update it if/as our customer understanding changes. We can also handicap the number to reflect the likely prospects today, versus those experiencing barriers to purchase due to access, cost, skill or time, for instance.

I am not saying this is easy math or we can do it with absolute, scientific precision, but there is a ton of value in just trying. Calculating market opportunity in this way requires understanding:

1. the specific problem a product helps customers to solve

2. the situation when that problem arises

3. the better way customers are seeking

To uncover these often-hidden customer insights, we can use lean approaches, such as interviews, which go beyond what we can learn in a survey or focus group.

Read also: How to Learn Jobs to be Done

What we discover will inform a lot more than a market opportunity number. It will likely inform our strategy, product and marketing approach, helping us to build and scale our businesses.

If you’re a startup CEO or founder, and you feel it would be interesting to chat, I’d love to connect. Learn about my services and please reach out.

This blog post appeared originally on LinkedIn.