Founders Don’t Know What They Don’t Know

Perhaps one of the biggest perils for founders is what they don’t know, and how they deal with that. It seems an obvious, simplistic statement but is profound in its ramifications. As founders, what you don’t know shows up in many ways, but especially in some critical ways that can turn away customers, keep you from getting investments, cause you to waste time on the wrong strategies, and eventually lead to you sinking your startup.?

We’ve met the founders who say they have the best or most unique product on the planet, yet can’t clearly explain why. OK, so show us why your product is the best, special, etc. otherwise, as investors we will just walk away because we don’t owe you anything, you’re wasting our time, and you’re not making us feel good. When a potential customer/strategic partner walks away, you’ve lost more than the opportunity for potential revenue. You’ve lost the opportunity to learn about segments of the market which could lead to revenues/partnerships/pilots, a chance to engage potential champions which starts the valuable relationship building process, and so much more.

We’ve met founders who when asked questions during a pitch or meeting, get defensive. That is a big red flag to investors that you probably will not have the flexibility and agility to succeed. If one investor feels that way, other investors definitely will. And the word will get around.

If you cannot get revenue/customers, if you cannot get investments, and you’re wasting too much time and resources, you will most likely fail, or at best, not be able to scale at the pace that venture investors these days look for.

You certainly do need to be something of an expert in the problem you are trying to solve, the solution you are offering, the market and industry you are addressing, the business model you are building, and you are the ultimate expert of your startup. When you are pitching, there is an expectation that you need to display what you know. However, if you are building anything big, and worth investing in, you cannot do it alone. You will need many people with a range of expertise, skills, and experience to really build something great that speaks to a big market and is sustainable - a transformative product, a company. As a startup, a core operational goal should be to humbly gain and display knowledge.

So, can you avoid these pitfalls if you don’t know what they are or that they’re there? We’ll discuss some concrete strategies to help you later on. Before that, the starting point is to have the right mindset. Accept that you don’t know what you don’t know. You’re not alone, that is basically the human state. Adopt a stance of naivety and curiosity which will help you see things clearly. Look at interactions with potential customers/users and investors as an opportunity to learn, a chance to engage in an interesting dialogue, even if it’s uncomfortable, especially if it’s uncomfortable, because that’s probably a sign that you are facing a situation where you don’t know something, and it’s a chance to learn.?

Then, ask the right questions, listen, and develop a system for sifting through all the range of advice that will come your way. While you are doing this, you will need to continually use all the data you’re gathering to clarify goals, priorities, and strategies, so you can just decide and execute - which is how you succeed.

Asking the Right Questions

The key to gaining knowledge then turning it into actionable wisdom is to ask the questions that will move you and your startup forward. You often hear that there is no such thing as a wrong or bad question. But when you are building a high-growth startup, you do need to be very strategic about the time you spend seeking answers, so there are wrong questions that are not the right ones for now or that take too much time to answer, and too many questions.

Asking the right questions is a founder’s greatest strength. Your biggest potential risk is making assumptions and making an ass / u / me (an ass of you and me). And your job right now as a startup is to de-risk your big risks.

Finding knowledge/info is getting easier and easier. But when we have access to so much information and data these days, we need to address more nuanced questions, and develop ways to truly turn knowledge and information into power - traction, investments. So if you focus your questions around increasing your power base and de-risking, that alone can take you a long way toward success. Start with your current goals. Then ask yourself questions such as:

What do we need to reach our goals? Better market data, critical team members/capabilities, introductions to key decision makers… The answer is rarely just money. If you can more clearly identify and create a clear pathway with the capabilities to get there, the money will come.

What are the critical first steps we need to take to move towards our goals? For example, you might ask how can we get to the right people? Expert advisors, more strategic networking, building your networks, asking for help…

Of the things we need to do, of the many options to pursue, which will yield the most results? How do we prioritize? A lot of founders go after the more easily attainable wins as first steps to get to bigger things. This makes sense if those wins significantly move you forward. Otherwise, you don’t have time for that. You need to go after the big wins with a realistic plan that will make you stand out with potential customers, strategics, and investors.

What are our biggest risks? Founders are often so focused on the prize, they can’t clearly see the potholes. Look ahead realistically to what your weaknesses are, what your competitors are doing, where trends are going, larger market forces you can’t control…

What can we control, shift, influence? How do we strategically leverage these things to our advantage?

How do we take this knowledge and incorporate this into our plans? How do we integrate this questioning and learning process continually into our culture so we can be as competitive as possible? Don’t try to do this on your own. Formulating questions and brainstorming with your key stakeholders as a mindswarm can exponentially help you move forward.

One way to do this is to consistently start by asking what don’t we know?

The Importance of Listening?

We’ve all seen those lists covering Why Startups Fail. The top reasons are usually ran out of cash/failed to raise money; no market need/were outcompeted; wrong team; flawed business model. Any list will include at least 10-12 reasons, and what’s always overlooked?

The founders didn’t listen. To their advisors, their potential customers/early adopters, early investors, even to members of their own team or even friends or panelists they’ve heard tell their stories of starting their companies, whether they exited or not. And listen not just to the advice, but also to the questions being asked. It’s always good to listen and learn where the potential landmines are – especially when they’re being pointed out by people who’ve been there, done that.

It's also important to keep in mind that not all advice is good advice or advice that would be good for you. People speak from their own viewpoints, histories and preconceptions. And how often have you heard or been told to listen and learn? Part of that is learning to discern the good advice from the not-so-good – at least how it applies in your case.

Listening is one of the most powerful tools in your arsenal – and one of the most overlooked ones. When founding a company, you’re going to be faced with a lot of situations that are outside of your comfort zone.

With that in mind, here are some bad habits that we’ve seen founders exhibit when placed in uncomfortable positions. We’ve also seen founders exhibit them regardless of whether they are uncomfortable or not.

Cutting people off, be they potential investors, customers or clients. You might have said something that you felt had been misunderstood. Instead of getting defensive and interrupting the person with whom you were speaking, listen: learn how what you said or how you phrased something led to your being misunderstood. Clarify your point after the other person has finished speaking.

If you’re engaged in a more casual conversation and feel the need to interject as a statement you made might have been misunderstood or misconstrued, that’s different. In this case, it’s fine to politely interrupt and ask if you can better clarify your point or statement, as what you said appeared to be unclear. But your focus should be on the conversation and listening to see what you might learn instead of focusing on answering the question. If you don’t have an answer to a particular question, it’s all right to say, “let me get back to you on that.” And do make sure to follow up.?

But many founders do interrupt, particularly when they’re formally presenting to investors. They get defensive about their deck/startup/talking points. It’s important to keep in mind that investors aren’t necessarily investing in the technology: they’re investing in people. Your being defensive is not going to instill a lot of confidence in potential investors, clients or customers, all of whom will feel more confident about getting behind you and what you’re doing if they feel a sense of confidence coming from you. Confidence comes not purely from being right, but the from ability to learn and adapt, to pivot - and to feel that you’re moving in the right direction.?

Another reason to allow the other person to finish his or her statement is that you don’t know what they were about to say, and their completed statement might have changed your response. But you won’t know unless you listen – and learn.

You also want to listen and pay attention to how a potential investor, customer or client responds to you and your pitch. It’ll give you some insights on how you might need to improve it, what may not be readily apparent or clear, and specifically led to that a-ha! moment when they recognized the value in what you’re doing.

It seems to have been instilled in tech founders at some point that they always need to move fast or move on and that may not work to your benefit. Au contraire, it may be detrimental in the long run. Slow down. Listen. Take in the information or feedback that’s being imparted. Then respond, if you need to or if you can. If you can’t at that given moment, it’s perfectly all right to say, “let me get back to you on that.” And do.

Listening is an art - and a necessary tool worth your mastering. It’s part of the learning experience and very much part of your startup journey.? Not that you have to hang on every word. Listen, decide and always keep in mind that as important as what’s being said is who’s speaking.

And thanks for listening.

Sifting through the advice

As founders, you’re going to get a lot of advice from a lot of people including investors, advisors, customers, strategic partners, colleagues, friends, relatives, neighbors, the random guy on the street that asks you what you do. Everyone. Everyone has an opinion. The positive is that some of that advice is going to be eye-opening and influential in your path forward. So, even though it’s tempting to tune everyone out, we suggest you actively but selectively listen. And, there’s the rub. Active listening can feel like you’re drinking from a fire hose. Especially, when it comes to the advice others will give you about your startup, So, how do you weed out the great advice from the not-so-great. Here’s our advice on how to be selective.

Who matters?

This is a loaded question because in life, everyone matters to someone. But in business, the pool of who matters is narrower. And it all comes down to your team, investors/advisors and customers, companies and partners that pay the bills. Anyone outside of the three core groups can create a lot of noise for companies that directly impacts productivity, success, and even morale. However, advice that comes from the core group can still feel like a lot. So, where do we go from here?

Bag it up

Bagging up advice is not the typical way people think of sorting through advice. We often think to compartmentalize it or put it on a grid, which admittedly can be helpful in later stages of the sorting process but for us bagging to start is the way to go. The reason is that women in particular, tend to hold on and process advice more critically and longer than men. And if you're drinking from a fire hose and compartmentalizing all of that advice, those compartments are going to get full quick. Bagging is a tool you can use to quickly sort the bad advice into a bag, tie it up as tight as possible, and throw it away. The act of tying it up in your mind can be useful for those moments when doubt or insecurity seeps in and your mind starts to wander to all of that toxic advice you’ve heard. When you’ve metaphorically tied a bag tight and thrown it away, it’s much harder to retrieve it and get back in than not. In addition, being disciplined enough to think about the effort it would take to do so can give you a moment to reset and move on.

The number of bags you need is up to you, but we find it helpful to create five key bags.

1. ? ? ??? Advice you like and you can take action on

2. ? ? ??? Advice that makes you question a business decision you’ve made or are considering

3. ? ? ??? Advice that’s hard to hear but you know is on point

4. ? ? ??? Advice that just makes you feel bad about yourself or your company, you don’t like and you have no intention of taking action on

Advice that falls into bag number one, two and three is the advice to consider further. Advice that falls into bag number four - toss. That may be easier said than done, especially when you think maybe there’s some personal development to consider from bag number four, but take it from us, just toss it. You don’t want to work with people that make you feel bad about yourself/your company or that you don’t like. Why would you? There are just too many great people out there who are more than willing to help you in a productive way. Why waste your time with those who don’t respect you enough to do that?

The gut check

Once you’ve got bags one, two and three, it’s important to do a gut check on that advice. Consider the following:

? ? ? ? ??? Who is giving you the advice?

? ? ? ? ??? What value is that person bringing to the company? Are they an investor, teammate?

? ? ? ? ??? Is that person biased in some way or working from group think or a specific perspective that may not be in sync with yours?

? ? ? ? ??? Are you biased in some way against the person or the advice that’s been given?

If the answer is you and your team like and admire the person giving the advice, then the logical step would be to move forward. The difficulty comes when you or one of your team members don’t like the person giving the advice, but that person could bring great value to the company. In those situations, it’s often best to experiment with the advice that’s been given.

Experiment

Experimenting means taking action, albeit small steps, to implement the advice that you’ve vetted, in a way that doesn’t drastically change or in some cases even impact your business model, but gives you a chance to understand whether the advice that’s been given will positively influence it. This could include customer or user discovery meetings to discern whether the customer would positively receive the new service, product or pricing. It could be as simple as just testing a new pricing model or an upgraded service offering with a select group of beta testers. You get where we’re going with this. As long as the experiment doesn’t significantly pose a burden to your team, your company, or your wallet then it makes sense to experiment. It’s also a good way to keep relationships that could be beneficial to your company now or in the future. And in the startup world, relationships are half the battle.?

In the end, it may seem like a tedious process to take a step back from the excitement of building your startup to do some self-reflection on what you don’t know and how you can close that gap. And it’s tiring to consistently exercise your listening skills, productively seek advice, and then sift through the piles of advice that you receive in an effort to do so. However, we guarantee, whether you partially or fully close that gap, you, your team and your startup will benefit immensely. You will build stronger and stay on the path toward success.?