5 Key Lessons from Techstars Mentor Week

Lessons Learned as a Fractional GTM Leader

In this new section, we aim to bring you real-life lessons each week, either from us or one of the founders we work with.

To ensure the privacy and confidentiality of others, all names in this text have been changed...

5 CRITICAL LESSONS FOR STARTUP SUCCESS: MENTORING TECHSTARS FOUNDERS

Being surrounded by the ambitious founders at Techstars energized me while emphasizing the importance of grounding our pursuits in reality. The experience was both eye-opening and thought-provoking. I was reminded firsthand of the challenges and opportunities facing early-stage founders today, illuminated by the harsh spotlight of reality: the pivotal tipping points that make or break early-stage ventures. I distilled five pivotal lessons from the raw authenticity and unfiltered conversations with these awesome founders.

Lesson #1: Don't Just Build—Sell!

An epidemic has been identified—the "build it and they will come" fantasy. Many overly invest in crafting their product masterpiece only to find the gallery empty upon the unveiling.

During a session with a team of founders, I learned they had been working with an iconic retail clothing brand as a design partner for over a year. The CEO was proud of having collaborated with a prestigious academic research institution to refine their AI models. Sounds like a dream come true, right? Here's what nearly made me choke on my water—in over a year, not once had he asked this iconic brand if they were ready to buy and what they would be willing to pay. The founder, Jeremy, and his team assumed their "champion" would inform them when they were ready to purchase. WHY WOULD THEY? They've had the product for free for almost a year!

Kevin Costner's not coming to the rescue. Don't get caught up painting the Sistine Chapel of products for enterprise design partners who are never incentivized to swipe a dime your way.

To balance the scales between development and sales, consider:

Hit the streets and validate your product with real-world feedback to find out what it will take for your ICP to buy. Don't wait for perfection. Enroll customer feedback as the catalyst for your iterative design process
Prioritize founder-led sales, fostering a direct pipeline of meaningful customer relationships. Continue this way until you achieve a sustainable flow of Monthly Recurring Revenue (MRR)
Close deals with at least five paying clients before investing in your first sales hire. Value isn't value until the customer says so. Don't kid yourself that it's time to scale if you can't repeat your own success

Lesson #2: Gain Clarity around Your Ideal Customer Profile (ICP)

Almost every conversation was a reminder of how easy it can be to mistake a user for a buyer. Many founders were confused by conflating the two, resulting in scattering their efforts and diluting the impact of their messaging.

Startups often get lost in persona-landia, a place where buyer personas and user personas are blended into a marketing smoothie that appeals to no one's taste. If you can't clearly identify your buyers from your users, you'll waste a lot of time chasing users who don't have the authority or budget to make a decision or fumbling to persuade decision-makers with a message that fails to resonate with any urgency.

Aligning your product with the right buyer is key. Understand how to:

Recognize and speak directly to decision-makers
Avoid the pitfalls of being seduced by shiny market segments
Tailor pricing strategies to your true market segment

Lesson #3: Don't Be in a Rush to Sell to Enterprise

One founder's "Aha" moment was realizing that selling to the enterprise would distract her from achieving her top three business priorities for the year. I absolutely loved it when Emily said, "It sounds so obvious now that I've thought through it out loud with you." It's important to have great mentors in your life. Sometimes, a thought-provoking conversation is all you need.

Selling to large enterprises can be tempting, but tread carefully. The enterprise market is complex and can present taxing challenges for the unprepared. Overzealous revenue goals, sales motions driven by fear-led funding efforts, and a skewed focus can derail your market fit. It is important to prioritize your current wins and maintain a focus on product market fit.

Before hunting whales, establish your ground by:

Establish your strategic growth priorities for your startup and keep focused on outcomes
Select market segments primed for fast and sustainable growth
Be wary of enterprise clients in the early stages who may lead you down rabbit holes of data security requirements and consume your roadmap and development cycles
Formulate a bottom-up revenue model reflecting the realities of your sales cycle in your target segment

Lesson #4: Focus on Net Revenue Retention and Gross Revenue Retention

"We have a goal to close 45 new customers over the next 90 days! Investors have told us that we have to show more traction in order to close our seed round." one founder, Olivia, said to me 😳 "That's 15 deals per month," I said! I asked her how many paying customers she had. She had two... When I asked about her current pipeline coverage, she revealed that it was not even 1x her ambitious goal.

Okay, let's forget about the impossible pipeline math for a second and discuss how this overextension of topline sales growth leaves no room for onboarding and servicing her customers. Your customers' success is the lifeblood of your startup. If you're focused on growth at all costs, that will also come at the painful cost of customer churn and contraction.

Forget vanity metrics. Your sights should be set on Net Revenue Retention (NRR) and Gross Revenue Retention (GRR), which are the real indicators of sustainability and growth—ignore them at your peril.

Maintain NRR and GRR at the helm of your performance metrics
Anchor customer success early and deeply within your organizational ethos
Identify early indicators of customer adoption during the first 6-9 months after implementation that signal a high propensity to renew and expand. Once identified, prioritize incentivizing and driving these behaviors with your customers

Lesson #5: Partner with Investors Who Align with Your Mission

Too many founders are easily thrown off focus and balance in pursuit of unrealistic expectations set by investors. When raising capital, keep in mind that it’s not just the funds but the hearts and minds behind them that matter.

On my last night, I caught up with my friend and former investor, Jay Po, over some boba! I was reminded how partnering with Jay Po and Mark Roberge at Stage 2 Capital wasn’t just a highlight of my career—it was a valuable lesson that not all investors are in it for their selfish cause.

My message to founders when raising:

Seek out VC partners who invest in you, not just your startup
Aim for VC collaborators who are dedicated to your victory as much as their own
Stand firmly by your mission, letting it guide your investment choices

The Path Forward

As you navigate the challenges of bringing your product to market, remember to stay grounded in your vision and remain open to feedback from your target customers. Embrace the power of founder-led sales, focus on the metrics that matter, and seek out investors who share your values and can help you grow. The path to success is rarely straightforward, but with clarity, conviction, and a commitment to solving real problems, you can forge your path with conviction.

The 3 🅿️'s of Success: Perspective, Positivity, and Perseverance

A positive mindset combined with a persevering mentality forms the foundation of success. When someone approaches challenges with optimism, they cultivate resilience, allowing them to overcome obstacles more effectively.

In our latest episode of the Revenue Reimagined podcast, we feature Larry Long Jr., the inspiring CEO of LLJR Enterprises. With infectious energy and passion, Larry specializes in delivering transformative speaking, emceeing, coaching, and training programs. He's also the host of the popular "Cold Calling Podcast" and author of the book "JOLT!"

In this episode, Larry gets motivational on the topics: