What I Learned at Founders Academy
Recently I attended a 3-day seminar offered by a local venture capital firm called “Founder’s Academy,” hosted by Gordon Dougherty. I enjoyed my time in the lectures, and learned quite a bit, which I wanted to document here.
I’m grateful to Mr. Dougherty for offering this free series of lectures, and was glad to have had the chance to attend. I’m also grateful to my managers at Allma, who gave me ample time off from work in the middle of the day to attend, and for being very encouraging of me when I was honest with them about what I was attending and why.
I’m the sort of learner who obsessively watches YouTube videos for weeks on end about a given topic until I absorb just enough details via osmosis to appear outwardly competent. I have taught myself this way:
- how to drive a stick shift
- how to regularly win Dark Souls encounters
- how to write code
So naturally, I’ve been watching a ton of Startup School / This Week in Startups / miscellaneous other channels content on various things about pitching, product development, timing of fundraising, etc. I want to emphasize that this is not me bragging, merely taking inventory of the little nest of artifacts I’ve assembled in the corner of my brain labelled “business.”
Observation: much of early startup advice is geared towards B2B SaaS companies⌗
Every company idea I’ve ever had has been intended to serve normal, working-class folks. If what I build ends up serving folks who simply rentier capitalism their way to an identity, then that’s fine too, but only if it happens to serve them well because it primarily serves normal people well.
There were large portions of the Founder’s Academy curriculum (and anecdotally, most startup economy curriculum) that simply do not apply to B2C businesses. There was a large portion of the lecture that talked about strategic partnerships that involved two software vendors with symbiotic functions collaborating to make large money sales to big enterprise businesses. It was hard for me to extrapolate how that might apply to a B2C, but I wouldn’t rule out that I’m merely not creative a thinker enough.
I’d go as far as to say much of the prevailing wisdom about how to start a tech company tacitly expects you to be building a B2B SaaS of some kind. I have a couple theories as to why, but I would still very much describe myself as “not knowing anything” about business, so I’ll keep them to myself. :)
Validating Product Assumptions⌗
Let’s compare a tech product to a cheeseburger. If I were to endeavor to develop a burger preparation process to produce a burger worth paying for, my personal approach would be to arrive at and end result where I make everything on the burger. That means I’m deciding what the recipe for our buns are, what the meat to fat ratio is in the patty, what temperature it’s cooked at, what time of day I need to make sure the mustard is prepared by, how much salt is going into my pickling brine, etc.
The conventional startup entrepreneurial wisdom seems instead to be: pick one small part of the overall problem, and get your attempt at solving it out the door as fast as possible. Figure out how to make buns OR a patty OR some condiments, and buy the rest from other, established providers, and get feedback on the end result.
That’s all well and good, but what if my thesis is that the whole burger is awful and needs change? If I make just the patty, and then customer feedback amounts to “well, I mean…it’s a burger,” is it because my thesis (that replacing the whole burger is what the customer wants) is wrong, or because I haven’t done it yet?
This seems to be the essential risk of entrepreneurship, and the very first risk that most investors seek to avoid. You just sort of silently acknowledge before getting real customers that you could be wasting a lot of your own time (and possibly your friends and family’s money, more on that later) until you have some objective data that convinces you otherwise.
Before this event, all my research around starting a company had this weird undertone of privilege. It’s not uncommon to hear founders talking about raising six-figure friends & family rounds.
I’m happy for those folks, that their loved ones can facilitate their endeavors like that, but I simply do not have friends or family capable of doing something like that. In the event they were, it would probably be only barely so, and would consequently have so much guilt associated with any potential loss that I wouldn’t be able to, in good conscience, ask them for that much money in the first place.
I’ve deleted two fairly personal paragraphs attempting to detail my situation, but suffice it to say: if I aim to build a company, there’s no nest egg somewhere for my family to rely upon while I build it. I’m simply going to have to work a day job, and build it in my (increasingly rare) spare time. This is a reality I’ve been aware of the entire time I’ve had entrepreneurial aspirations, but I assumed I’d have to keep it a dirty little secret, like, I have a company, and I play as a full-time CEO while still going to my day job’s standup at 9:30AM or something.
I was surprised to see my kind of situation was not only explicitly acknowledged, but apparently common. One major question I had going into this was “is it okay to pay myself enough to make ends meet, even if that amount is actually quite large because I’ve been bad with money for most of my life?” Apparently the answer is “yes, but, y’know, talk to your investors about it ahead of time.” I came away feeling much more comfortable about ever having to approach a VC to ask for funding.
You can screw over your company’s future and not realize it⌗
The lecturer detailed a situation where a company had agreed to a pair of early contracts with very large customers that had wholly untenable contract positions. That is to say, whoever attempted to acquire the company would have a very sincere interest in not servicing those parts of the contracts, and there’s basically no way to guarantee that the contracted party would agree to amending it.
So even though these contracts had been in place for multiple years, and were set to continue for years to come, and the company had been operating normally prior to seeking acquisition, it was nevertheless operating comfortably from the dressed-up confines of a death trap. I would have assumed something like that would at least have some level of obviousness.
Investor management is a crucial aspect of running a growing company⌗
My prior understanding of the relationship between investor and entrepreneur was akin to client and contractor. I know investors meet with company leadership at some regular interval to see how things are going, and obviously more of that happens during fundraising periods.
What I learned at Founder’s Academy is that actually investors lose focus and interest in your company, and will simply forget you exist if you don’t keep them excited with updates. Say one of your investors is an expert in a particular niche, and you’ve just had a decent win in that arm of the company, that’s a situation I would have imagined simply writing down to bring up in those routine meetings, but the prevailing wisdom is to go out of your way to email that investor. “Look, we just had
I guess I imagined it went more like “hey, it’s your money, if you want to check in on what we’re doing with it, the onus is on you to reach out”, but it somehow makes much more sense that the person who provides the capital not only doesn’t feel obligated to check up on it, but in fact feels entitled to updates from those who received it.
Founder Compositions vary and matter⌗
When I think of all the companies I’ve worked for that were started by people I could talk to, there are one or maybe two total early founders who actually put work into a product that ends up playing a role in the company’s formation. I once worked for a company that had 4 founders, but it definitely felt like the odd one out.
At Founder’s Academy, they taught us that even when you have just two founders, it’s a very very good idea to just give 1% of your company away to a trusted advisor for the sake of splitting tie votes. Apparently two founders with 50/50 equity is a warning sign to some investors.
Additionally, “cofounder” is really more of a vibe than an artifact of equity distribution. The lecturer said what investors really want out of a founder relationship is a “partner-in-crime” aspect. That is to say, you are both, without needing to acknowledge it, working towards the same goal as a natural consequence of your day-to-day impulses.
You can have any number of “founders”, but some may be founders only in the sense that they’ve been involved in the company during its inception, not because they own any significant portion of equity.