In the startup world, one record announcement chases the next. In the first quarter of this year, global venture funding exceeded US$100 billion for the first time in history, according to Crunchbase.
This massive increase in funding led to two new unicorn startups– per working day, on average. This is well above anything we have seen in previous years– for comparison: roughly one new unicorn was announced every two working days in the whole of 2020.
These announcements fuel the media with exciting stories and raise public awareness for this unique opportunity as an entrepreneur. It shouldn’t come as a surprise that an increasing number of people across various professional and educational backgrounds is considering starting their own business– regardless of whether they are driven by the desire to build something from scratch, to achieve financial independence, to turn a life-long passion into a commercial product, or to become their own boss.
Having already gone through the journey of being a first-time founder and learned valuable lessons, serial founders are one of the most sought after groups of individuals for investors.
After partnering with several fascinating serial founders through our work at Picus Capital, we are now excited to share lessons from founders about starting and building ventures from scratch, what keeps them motivated, what they learned throughout their careers as founders and early employees at different ventures, and what advice they have for future entrepreneurs.
We spoke to Sebastian Schuon, who founded Stylight and Alasco; Carsten Lebtig, who founded Sanubi and Workmotion; and Guilherme Pinho Bonifacio and Diego Libanio, who founded Mercê Do Bairro together after having founded ifood.com and Zé Delivery, respectively.
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As founders, focus on finding the right hires instead of compromising
“I learned that it is easier to find people with the right culture and vision that can learn the necessary technical skills than the other way around” – Diego, Co-Founder of Mercê do Bairro
Once you finalise the ideation process and officially found your company, you will most likely want to expand your team in order to accelerate your venture’s development and traction. Your early key hires have a crucial impact on the long-term culture and success of your company, so you should not just hire anybody.
You should keep in mind, for instance, how they can influence your ability to attract more employees and grow the organisation. Also, these first employees will be key factors in determining the company’s culture and values.
So, take the time you need to look for the right people and find individuals who are fully aligned with your long-term vision.
And be aware: As a founder, you then automatically become responsible for these individuals who put their trust, time, and effort into your vision and your ability to convince them that their ambitions and vision are achievable as well.
Partnering with the wrong people – especially in the early days – might jeopardise your progress. But even if you pay a lot of attention to your hiring process, every now and then you will realise that certain colleagues you hoped would take your company to the next level, might end up failing to meet your expectations.
In this case, don’t waste too much time and find a solution, even if the conversation is not very comfortable for either of you. Because more often than not, managing the performance of your employees can be crucial to securing the long-term success of your organisation.
Validate your idea with experts and customers and accept that they know it better
“Don’t spend too much time writing business plans or creating Excel models. Instead, go to the front and talk to potential customers very early on. Young founders do that far too late.” – Carsten Lebtig, Co-Founder of Workmotion
We have repeatedly spoken to founders who have spent weeks and months behind closed doors trying to build a product they considered a perfect solution for a potential problem.
More often than not, this approach leads to teams spending valuable time developing a solution that looks great on paper but misses a client’s true pain points.
Having invested in more than 70 companies across different stages and industries, we have seen that the most successful entrepreneurs are, above all, pragmatic, somewhat opportunistic, and customer-centric.
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Based on our discussions with founders who have been through various business model ideations and product validations, we want to emphasise that you as a founder should push yourself out of your comfort zone and into direct interactions with customers, competitors, and industry experts – starting on day one of the venture building journeys.
This is the most efficient and insightful feedback that venture teams can leverage to build a product or service that meets real customer demands and gets early adopters excited about what is to come. Taking advantage of other people’s input in your own product development journey also involves admitting to your own misjudgment; however, making mistakes is part of any venture journey.
What really matters is your ability to derive the respective consequences from these mistakes and to turn them into action. Put your emotions aside. Eventually, this will allow you to save both time and money – two of your most valuable resources as a founder in the early stages of your venture journey.
This is not only true for product development but also applies to defining and shaping the entire business model. In fact, the founders that we spoke to looked at a variety of different business models, before eventually settling on the most promising opportunity.
Personal development is essential to becoming great founders
“Leadership skills are not innate– they are developed over time” – Sebastian Schuon, Co-Founder of Alasco.
When you are running your own business, you have to be willing to invest in your own development. As an entrepreneur, you are, above all else, a leader.
No matter how passionate you are about your product vision or your ability to connect with potential customers, as a founder, you will soon realise that entrepreneurship is about managing, guiding, leading, and mentoring others.
Based on our interactions with individuals and teams that have built various successful and large organisations throughout their careers, we learned that a company’s long-term growth potential is largely limited by one’s own ability to learn and develop as a person and adapt as a leader.
As your company matures, your customer relationships become more complex and your product evolves, and so do the expectations towards you as the founder and the responsibilities you face.
Regardless of whether you are stuck in validating your idea, transforming your business model, or scaling your company– your team, customers, and investors put their trust in you to steer the company through a variety of challenges. Being able to adapt to these different circumstances is crucial.
Establishing and leveraging a network of advisors, angels, and investors
“Network and reputation are priceless. I always try to connect people in my network with one another. I enjoy observing how this creates value for others and more often than not, something comes back in return eventually – even if you don’t expect it.” – Guilherme, Co-Founder of Mercê do Bairro.
As an entrepreneur, you are constantly required to evaluate options and make decisions that will not only impact your own success and fortune but also that of others who are willing to commit to the company’s journey. More often than not, these decisions are unique and the right answers are rarely easy to find.
Building and maintaining a strong personal and venture network is therefore enormously helpful, especially for first-time founders. Building up a peer group of like-minded individuals allows entrepreneurs to exchange ideas.
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Ideally, such a peer group consists of founders who are in a similar phase of the company as well as those who have already successfully overcome certain challenges and are willing to share their experiences.
In addition, partnering and seeking support from relevant and experienced business angels, as well as early-stage investors who want to contribute strategic and operational advice, can significantly accelerate a venture’s success.
Nevertheless, it’s important to keep in mind that successful networking is a long-term game and comes about through give and take. Don’t forget about the people who helped you out at some point in your journey when they ask for a favour.
Being a founder is neither easy nor predictable. The decision to become a founder has implications on your whole life and can be challenging but also rewarding, both in terms of personal development and professional success. Or, as Sebastian Schuon put it: “The literal meaning of “entrepreneur” is someone who undertakes something. True entrepreneurs are restless and want to create something. If it’s all about the money, you’re better off going into investment banking.”
This article was co-written by Daniel Niklas, Vice President at Picus Capital.
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