Early Stage Operator Insights.wav

Speaker: Zach Posner (Co-Founder & Managing Partner at The LegalTech Fund)

Key Points

• When you hire your first employee, everything will break, the same as when you hire your 10th, 100th, or 1000th employee. As founders, you need to be evolving with your business consistently. When you grow, you have to take on responsibilities even if they are uncomfortable to you.
• As a founder, you have a secret that no one else knows. You believe the world is broken in a certain way, and you have set out to fix it. Your friends and family probably think you are crazy for taking risks but honestly, the risk is the opposite. You have less risk because you have this unique insight.
• It is imperative to build an operating model even at the earliest stage. This allows you to think through the underlying assumptions that will drive revenue and expenses. It can go even deeper to thinking how am I going to sell x product and what is the sales cycle. Once you build out the model everything will come together in terms of hiring, fundraising, and sales expectations. Another exercise is building a bridge, which unpacks all the steps into going from x revenue today to x revenue in the future.
• There is more alignment between you and investors than you can ever imagine, because when you have a problem they have a $1M problem.
• Don’t hide your weaknesses. Figure out how to get ahead of them. Put them in your deck and show you will fix them over the next few quarters.
• Send a weekly update to investors and others involved to keep yourself & teammates accountable. You want to fail fast and fix it. Make mistakes, be proud of them, and fix them. Half the battle with your business is internal. Founders fight and it’s healthy to an extent because everyone is pissed off about the direction.
• Don’t over emphasize the valuation. This can lead to overselling your expectations and this creates problems a year latter. Do not be too wrapped up about valuation. Rule #1 is don’t run out of money.
• Remember that if a VC has $100 they have to maximize that money. You shouldn’t necessarily be worried about how you are doing but how the company before and after you is doing. They are looking at 100s of companies every quarter and have decisions to make.
• Don’t hire a head of sales right away. As a founder you need to make the first sales. You are not as bad at sales as you think you are. Start by hiring a junior sales person and let the shadow you. Build out a CRM and sales motion that you can hand over to a head of sales and say this is what we have been doing and has been working. Then let them give feedback on your process.
• Your pitch decks should be constantly changing as you gain more insights. You start with a pencil and are trading up for a Ferrari.