Project Description
Master Classes are deep dives into venture creation by MIT ecosystem thought leaders. Browse all Master Classes Here.
Following are aggregated insights and pro-tips from talks titled “What I wish I knew…” by MIT delta v alumni teams.
Typically, delta v teams come into the program with 2-5 people on the team. While some may have traction and early revenue, others may be early stage and pre-revenue. Some teams pivot 1 or 2 months into the program – and then come out stronger on the other side, get into Y Combinator, raise a Series Seed round and are off to the races 5 or 6 months after their pivot.
Many thanks to our amazing alumni community for helping future teams succeed!
Pro-tips for early stage startups
Build something people want – don’t fool yourself into thinking people what what you are building
Entrepreneurs often make the mistake of building something and then trying to rationalize their product choices. That is not effective. With B2C the far better way is to get 100 people to love your product to get validation that you are on the right path. The only way to do this is to launch your product, which starts the feedback loop.
With B2B, it can feel daunting but it is possible to do the same type of validation – you can validate your product and venture by selling without launching. For example you can put out a pre-order offer, and acquire customers without having launched. This gives you a quick way to know if the market has an appetite for what you are doing.
Stop the busywork
Entrepreneurs can get caught in the busywork and fooling themselves into thinking they are making progress. They find themselves polishing the website, chasing after small journalists who are posting about them in their blog, joining small conferences and getting the word out – when none of it serves the primary purpose of helping them build and validate their venture and move the ball forward.
Stop doing these things and refocus your attention on your business. On the busy work: Do the minimum necessary and move on – making sure you are moving as fast as you can.
When to fundraise
Do NOT fundraise too early – it distracts you from building your business. VCs will reach out and you need a response. Tell them that you are “heads down, building product” right now – but that you will be happy to meet in three months. When that time comes, you can always continue to postpone when you (not the VC) is ready. You control the timing for this interaction, not the VC.
It is important to know that you should not share information with them at this point. Don’t give them data points, because then they are measuring you already when you are very early in your progress.
When to grow your team – and how
If you are working on an interesting venture, people will offer to work for free. While this sounds great, in reality it is not always a good idea. Think about whether it is easy to train them to do a task. For example, if you need people to stand in a stall and sell product, you can “hire” them.
Otherwise you do not want to hire free, part-time labor. Two reasons:
- You do not need these extra people right now. You need to keep your small group tight and coles knit
- You do not need to waste time training them and getting them up to speed. They are part time and temporary – you cannot justify this investment.
At this early stage you really should only bring on full-time members who are planning on being with the company for the long term. Even for a technical / coding type of person, try to find a full-time, committed engineer.
For a full time hire, it is worth interviewing and spending time hiring them. Go for best talent and great culture fit and alignment with your values and mission. Don’t compromise – a mediocre team member could slow you down. This will be a little tough since you are a startup, and the candidates have other opportunities out there. That said – if the fit is great, you can start building a strong team from the get-go.
On board meetings and survival
Michael Seibel, cofounder of Twitch and a parter at YCombinator, famously said: “Remember, most startups die”. The first thing you need to do is to make sure your company survive.
This is especially important as you approach board meetings. If you pivot, you need to work with the board and get them on board – tell them why and walk them through. Then they can be your champions. Don’t try to impress them, build your company and they will be impressed.
(For additional information on board management, see the Masterclass on Board Management by Jim Baum).
Q&A
Q: How do you know when to pivot and that you’ve tested long enough?
There are a few questions to ask yourselves when you are building a growth-style venture:
- Is the market size, TAM, etc high growth?
- The competitive landscape has to be favorable. Is what you are doing novel enough?
- Are you adding value, and are you building something people want? Ask them more general questions to see if they are talking about the pain points you are trying to solve.
- Are you able to monetize your offering? If you have some people who like the idea but will never pay – time to pivot.
Q: What metrics are important for an early stage startup?
It depends on the startup itself. Every startup has a ke metric that becomes important. Number of users, life time value of users. Revenue, users for B2C. Monthly Recurring Revenue is the metric for B2B.
Q: Say more about when we should fundraise?
Don’t do it too early – and know that the most expensive type of loan is VC funding. They are taking equity away from you. Equity is gold. Remember this: “Every time you fundraise, it should be the last time you fundraise”. You are trying to make revenue – once you have that, then you do not need funding any longer. Revenue is the best source of funding.
Q: How do you ensure that the co-founder relationship stays strong?
This depends on the team and the dynamics and working style. For some teams they do very well with an informal framework for decision making among the cofounders. One person might say: “I am brainstorming this idea. What do you think?” And then the cofounders can explore this idea without having to have critical feedback.
The other important thing to do is to build a personal relationship with your cofounders on a 1×1 basis. For example: One could imagine grabbing ice cream every Tuesday and having a 1×1 conversation on how things are going, whether anyone is frustrated by anything, and whether there is anything that they can do better as a group.
Lastly, get to know each other outside of work. For example one team’s cofounders have traveled together. They have met each other’s families. Having the personal connection builds trust and confidence which is the basis for a good cofounding team.
Q: What are the most difficult problems early stage startups run into?
There are many. You could have launched with a partner and found out they were actually your competition. The launch could be a disaster and you acquire no users. The product was broken and does not work. That’s ok – if that happens you just take stock of what you have learned, put that aside and move to a new strategy informed by your learnings.
The most important thing as an entrepreneur is to be able to fail quickly and overcome these failures by being positive on the big picture, and critical on taking small steps. Have a bunch of hypotheses ready to test – then test them quickly and iteratively to find a way forward.
Q: How might entrepreneurs become efficient from day 1?
Cut out the busy work. Set a focus for each week. Be efficient with time – but give time to people. Be really good planners with concrete goals, tasks, milestones and deliverables.