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Sharing Our Experience with Entrepreneurs
18 Points of Light

How a simple “leadership test” can help make you a better entrepreneur

The hard truth is that when you are the leader, finding avenues for genuine feedback is, well, hard. Finding a way to get real feedback can lead to tremendous personal growth.

One of the hard things about being an entrepreneur -- especially if you’re a sole or primary founder -- is the echo chamber. It’s that vague place where much of the feedback is an echo of your own voice, often because there’s no one else there to counter it. The hard truth is that when you are the leader, finding avenues for genuine feedback is, well, hard. Finding a way to get real feedback, on the other hand, can lead to tremendous personal growth.

While there are any number of formal and informal approaches entrepreneurs pursue (to varying degrees) to combat this problem, an excellent one is subjecting yourself to a “leadership survey.” The one I have adopted is an anonymous survey completed by every member of the Fundamental team, once a year. (Note: If you have a small or even no team in your company, consider asking your clients and other key business partners to participate). It measures me on 18 individual and specific leadership behaviors -- and allows the respondent to rate me on how consistently they feel that I exhibit each one. (1 = Never, 2 = Sometimes, 3 = Usually, 4 = Always) The statements are designed such that 4 is the ideal score. 

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Before the B Round

Get the Right Capital at the Right Time

Congratulations–you’ve just closed a Seed or Series A venture capital round!  You’ve spent countless hours toiling late into the night to get your idea off the ground.

Congratulations – you’ve just closed a Seed or Series A venture capital round!  You’ve spent countless hours toiling late into the night to get your idea off the ground and your concept has now been validated by a respected venture capitalist.  Take a moment to enjoy it – but only a moment.  To paraphrase our friend Mo Koyfman, General Partner at Spark Capital, “raising money is not the goal line, it’s the starting line”. If you’re a first time entrepreneur you certainly learned many lessons during the fund raising process – and even if you've been through it before, you were probably reminded of them again.  One of the most important of those lessons is how hard it was to sell such a large stake in your company for so little money.  All entrepreneurs feel this way – as they should.  Now you are determined more than ever that next time – in the next round – that you will turn the tables and sell less equity for more money.

You will do this of course by building value – by working harder than you ever have before and by making the capital just raised last as long as humanly possible.

Get the Right Capital at the Right Time

Congratulations–you’ve just closed a Seed or Series A venture capital round!  You’ve spent countless hours toiling late into the night to get your idea off the ground.

Congratulations – you’ve just closed a Seed or Series A venture capital round!  You’ve spent countless hours toiling late into the night to get your idea off the ground and your concept has now been validated by a respected venture capitalist.  Take a moment to enjoy it – but only a moment.  To paraphrase our friend Mo Koyfman, General Partner at Spark Capital, “raising money is not the goal line, it’s the starting line”. If you’re a first time entrepreneur you certainly learned many lessons during the fund raising process – and even if you've been through it before, you were probably reminded of them again.  One of the most important of those lessons is how hard it was to sell such a large stake in your company for so little money.  All entrepreneurs feel this way – as they should.  Now you are determined more than ever that next time – in the next round – that you will turn the tables and sell less equity for more money.

You will do this of course by building value – by working harder than you ever have before and by making the capital just raised last as long as humanly possible.

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The Value of Growth

It's Hugely Valuable

While it is that growth adds value, it often seems less obvious to many companies just how valuable additional growth can be - and how best to think about certain trade offs...

While it is that growth adds value, it often seems less obvious to many companies just how valuable additional growth can be - and how best to think about certain trade offs when it comes to value creation. We find that a surprising number of entrepreneurs tend to revert too easily to a simple mantra for their business – something akin to more is better when it comes to revenues and less is better when it comes to expenses.  While this mantra is true enough on its face, it does little to inform the best way to think about the trade offs that inevitably need to be made when pursuing value creating growth.

 

As an example, we frequently encounter the margin objection.  It goes something like this – “Our gross margin is only 20% and we simply cannot afford to pay a capital cost that is 10% – must less 15% or 20%.”  From a shareholder value point of view this line of reasoning is simply not true by itself.  It is certainly true if there is not incremental growth – it may be true if incremental growth is low – but it is also certainly not true if growth is high. 

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