Topics that popular startup mentors touched on while I was at TechStars:
- Discerning whether the MVP reflects the complexity of the end user
- Highlighting different stumbling blocks that your business model will likely run into at different growth stages
- Identifying institutions that can buy into your company’s mission
- Finding multiple revenue streams to test
Anecdotally, these are the insights that founders have most appreciated when meeting with mentors. They weren’t the only things talked about, but these issues came up often.
The anecdote itself is drawn from my experience working at TechStars during their second Kaplan-sponsored EdTech accelerator class. There are a lot of voices in the venture space, so I’m sharing what I believe to be the least obvious points. I hate speaking from inexperience, so I’m just paraphrasing wiser voices.
When I was at TechStars, I had the opportunity to sit in on and facilitate “mentor meetings.” These were any one of several 15 minute-long opportunities that founders had to share their startup’s vision, traction, or goals and get feedback on their strategy, revenue model, and overall viability from venture capitalists, industry experts, and experienced entrepreneurs.
Picking a Mentor
We had about a full month of mentor meetings (“Mentor Madness” we’d call it) and the founders were overwhelmed with information by the end of the first week. They also got savvier about those with whom they would meet. Former consultants who had gone on to start their own businesses seemed to make the best mentors. These individuals (about 5 out of over 40 mentors) often connected with the founder’s vision first, before going into the problems that founders could expect to run into in the future (oddly overlooking the issues founders may have had at the moment, more on this later). Especially in EdTech, where purchasing decisions can have as much to do with aligning missions as it can with creating value, the founders seemed to have more positive experiences with mentors who created a sense of buy-in.
Investors were very popular at first, but founders soon discovered that asking a potential investor to chime in on your company’s problems is tantamount to shooting yourself in the foot.
Bad meetings didn’t mean bad mentors
These meetings always started the same way: the company pitch. Where the meetings went, and how helpful they were, would often depend on the first question out of the mentor’s mouth after the pitch. At a time when most of our companies were still developing their MVP’s, most mentors would dive into questions about traction. The founders would jumble together some way of saying that they don’t have any traction. The conversations would flounder for the remaining 10 minutes. Bad meetings didn’t mean bad mentors. These mentors were selected based upon their prior successes, after all. However, “traction” meetings would lead to forced, passionless thank you emails from founders who felt that their time was wasted. With several meetings a week at 15 minutes a clip, the wasted time added up quickly.
Point 1: The MVP and the End User
Great meetings typically led (after the pitch) with the product. Either a live demo or a simple, printed flip-through deck would escort the mentor from landing page through sign-on into different capabilities. The best mentors were able to become the user and highlight concerns beyond the common UI/UX navigability. Referring to an essay-writing product, one mentor would say, “No, my son would hate to know his parents had access to his information.” Another would share “Teachers aren’t easily overwhelmed by information so more is better,” with an Edtech platform for developers. Industry experts and angels were the most likely to bring this up during their meetings
Point 2: The Headwinds of Startups Past
“You sound a lot like littleBits when they were starting to get a little traction. Their problem was you had this massive market that flowed through these parents, and they didn’t know how to reach out to young parents of toddlers. What do they read, where are they online…that you can afford to test on (i.e. advertise)?”
Founders really loved it when the mentors pre-empted problems their companies would run into. Sure, sometimes there was pushback if the founder felt like she was misunderstood, and more than one mentor would recuse his-or-herself when involved with a direct competitor. Often however, the founder of “the Uber for X” would learn a great deal about regulatory hurdles, growth stymies, and the market-testing methods from the guy who founded, invested in, or consulted for Uber. Of the 4 pieces of advice I am highlighting, this advice was the most valuable to the founders in the accelerator.
Point 3: Kindred Spirits
One of the big goals for all of our companies was to do something, anything, with a big strategic player. Whether it was getting a contract from Staples or a social mention from Microsoft, these founders were on a quest for legitimization. Across the board, they weren’t versed in identifying substantive yet viable strategics with which they could develop partnerships aside from obvious, big name players (who wouldn’t want a tweet from Microsoft). The partnerships suggested by mentors typically fell into one of three categories free publicity, trial customer, and one-off short term projects or studies. These mentors knew how, when, and where to search for the authors of influential blogs or corporate white papers. For example, they understood that it was sometimes easier and more valuable for a data visualization startup to attempt to co-brand demos with MLB than it was to try to take them on as a customer.
Point 4: Testing Revenue Streams
If a startup is an experiment, it’s surprising that most founders fix the revenue model and make everything else a variable when it should be the other way around. Some of the quickest returns on the founders 15-minutes came when the mentors would recommend new streams of revenue or even new target customers. While anyone can tell a founder that they could sell a bridge, it often took an experienced mentor to name a buyer who was looking for one. Many of our mentors, particularly those who were also investors, had a knack for finding new revenue streams on which to test. And the word test is important. The common pushback from founders, who were having a hard enough time getting traction with their current models, was, “we have neither time nor spare energy to test this,” and not everyone was able to iterate on the mentors’ advice. For more amenable founders, the mentors would devise potential revenue streams to test based on the results of current testing batteries. For instance, if you are building a subscription community for EdTech startups and several school district administrators signup, consider selling to districts. If you hear the districts want to communicate with the startups, your B2B business is beginning to sound like a two-way marketplace. Of course, the founders were advised to size markets and take stock of the team’s bandwidth before developing a market testing plan.
While my experiences are drawn from EdTech, I feel they can apply to founders in almost any industry. For those out of accelerators who want to find mentors, that is a post for another day.