Startups – Page 22 – Julie Fredrickson

Startup land can feel exclusionary and clique driven. Looking in from the outside it can seem as if all the power and money is concentrated into a few groups that only fund and hire their friends. Less charitably it looks like a circle jerk.

While this isn’t an incorrect perception, I believe why we think it is exclusionary is very different from the reality of why it is exclusionary.

Startups are tight knit because successful companies have high psychological safety. We all tend to work together again and again and back each other’s plays because we have built up a high trust environment in order to survive. Even if we don’t exactly see the vision someone else has we trust that they will find a way to make it into a reality.

We don’t trust that this is true for everyone. Ideas are like assholes in that everyone has got one. It’s the ability to turn a formless expanse of ideas and hopes into a company that makes a product it’s customers like. It’s extremely hard to make something new. Harder than you can ever imagine if you haven’t tried it. So people who make a living out of making something from nothing have developed a set of heuristics that let us determine if someone outside our circle is capable of making “a thing” to prove their ideas can become reality.

We tend to overweight people that build tangible things. Even though many of the most crucial skills in business are the less quantifiable ones. We tend to overweight people that have demonstrated any kind of success in zero-to-one work even if what they want to build isn’t remotely related to what was done in the past. This is how despite most of my experience being in advertising tech and e-commerce I was backed to make cosmetics. People had faith that I could flip the bit from off to on.

While this may make it seem hopeless if you are currently not inside the system that’s not what I hope you take away. Startup people love watching newbies make the leap. I cannot overstate the fondness we have for someone gathering up the courage to spring into the unknown. I used to hate the phrase “I’m rooting for you” till I realized everyone actually did want me to succeed. They just rightly realized I needed to learn the hard lessons in my own time. They could give me all the advice in the world (and believe me they did) and sometimes I just needed to make the mistake in order to learn the lesson. The mistakes allowed me to succeed.

Of course, we always hope people will learn from our advice and not require the pain of a fucked up cap table or a growth plan that missed target because we burned our cash position down to three months runway. But most people that are genuinely good at startup work appreciate that only the person actually “doing it” can make the choices that lead to success.

So startup folks will always be excited to give back and encourage those that want to try “doing it” too. If I have a clear ask I find I get an answer from even the most successful and prestigious. Literally CEOs and world famous developers of entire languages will just email you back. It’s honestly miraculous. I have invested in cold emails. Championed them to my nearest and dearest. Because we believe that the process of making something from thing doesn’t exclude anyone. You just have to show someone that you will try to make your vision a reality.

I’ve been shifting my working attention towards angel investing. As I talk with more founders, particularly those sent to me by my venture capitalist friends, I’m noticing how much bad advice is circulating in the discourse.

There has been a consistent trend of thought pieces and generalist advice in startup land that gets published by those that find attention helpful to their careers but don’t actually want the risk of sharing the unvarnished truth. Think TechCrunch thesis pieces and founder medium pieces. I’m guilty of engaging in it to a significant degree.

But it’s getting to the point where I feel bad that I’m not doing more to correct some of the bad advice or “true but not in your case” advice. It’s persistent and chronic and doing significant harm to certain communities of founders particularly those that are underrepresented. If you are a founder please DM me on Twitter or email me Julie dot Fredrickson at Gmail for further dish.

Founders regularly get terrible advice on fundraising metrics. Lower your CAC with blending channels (don’t please be honest about cost), you need to show faster growth so increase spend (growth is good but can kill you dead), organic growth is more appealing than marketing spend (it depends organic is hard to replicate and scales unevenly) and my personal favorite stack your MoM growth charts it looks sexier (so does a push-up bra but eventually you get seen naked).

Another area that gets weird is how much bad advice there is in fundraising process. You get told to drive FOMO and excitement but no one tells you just how much investors talk. Founders inadvertently tell white lies that are so transparent it’s the source of constant back channeling. There are so many cliques and power structures you don’t appreciate till you are more entrenched. Startup land lives for it’s petty feuds and rivalries. Be careful trying to play funds off each other as it’s rare for anyone to be fully blacklisted (though it happens) and you don’t know how close to partners may be or if they hate each other’s guts. Some folks look nicey-nice on Twitter but fucking loathe each other in reality. We’ve got cliques for female founders, gay founders, Christian founders, libertarians, fitness freaks, data geeks, retail hounds, SaaS sluts, and yes some of these are just fun to say. Be careful with back channels. You never know who may actually be crucial to your deal or a significant power player. Or who vouching for you can turn an entire deal around. Many of the most respected startup folks don’t maintain social media presence at all. So don’t be rude if you can’t judge how important someone is from their bio. They might tank your deal or get you tracked to a partner who writes a term sheet.

Be carful about optimizing your raise for specific outcomes like valuation or time. I know fundraising sucks but it’s also your job. You will have to do it again and it gets harder each round. You go with a higher valuation and you have to grow into that number. Are you sure you raised enough to hit the metrics? If not you get recapped next round. That only hurts your ownership and the VCs don’t really care. Are you trying to get it done fast so you can move on with your life? Lol guess what now you are stuck with that board member for a decade or till your startup dies. And a bad board can kill you dead. Or make you wish you were. The chances of you slowly sinking because your board has a toxic relationship with you is much bigger than the chance that you will grow so fast you always hit your metrics.

A big part of startup life is accepting that your ego does you more harm than good. This life will humble you. And generally everyone just wants founders to succeed. We want to help you avoid the mistakes we made. But not everything will apply to you. So don’t take every bit of advice or you will constantly be at the mercy of others. Context matters a lot.

But you must learn to listen and adjust your course or you may end up chasing metrics that don’t matter with a board you hate and a valuation that you can’t life grow into.