š Hey everyone and welcome to Explore, your weekly Startups and VC podcast.
Iām Hugo Rauch, the writer of this newsletter and my goal is to help founders accelerate their growth, successfully fundraise and find inspirations from investors and startup stories. I love talking with my audience, feel free to reply to this email! š¬
Today Iād like to introduce a new concept. I want to share my key takeaways from my discussion with founders and investors. Please use this poll to let me know your thoughts. š
This week, weāre starting with Guillermo Flor (link to the full episode) a former entrepreneur that became a VC. Letās get started!
Summary
šThere is no such thing as failing a startup
š°You must have this 4 things to raise money
š§ Become the best in your field
ā³Just start - the best way to learn is doing
šThere is no such thing as failing a startup
Guillermo has been an open book with me.
He was brave enough to talk about Tueri, his first startup that he had to shut down.
However, as painful as the experience was, when I asked him:
- Hugo: āWould you do it again?ā
- Guillermo: ā100%.ā
That caught my attention.
Why would you want to go through failure again?
Thatās where the growth mindset comes into play.
Guillermo took it as a growth opportunity.
What are his lessons learned?
1ļøā£Donāt build a "nice to have" ā build a "must have".
Tueri was a legal doc management platform.
The problem is: they were not a priority for companies.
Therefore, in a cost constraint environment, customers would churn.
What you want to create instead is a company like Stripe. Why? Because every startup has to get paid by customers. Stripe allows them to get paid easily. Itās a must-have.
However, some startups are building product that are not crucial and unfortunately donāt perform well.
2ļøā£Be patient and think long term.
A startup is a 10-year plan, not a 5-year exit. Guillermo and his team rushed into selling the product because they thought this meant growth.
But their product wasnāt ready yet.
They were able to sell, but customers were churning.
In his own words: donāt rush it. Play the long game.
3ļøā£Hiring is the number one role of the founder.
In hindsight, the team was probably not the best for this product.
The number one question founder should ask themselves is: do we have founder-market fit and founder-idea fit?
As we all know, an idea is worth nothing without execution. Having the right people for the job is a life or death situation for the company.
š°4 must have to raise money
Because Guillermo is now a VC at GoHub Ventures, I had to ask him about how he evaluates startups. 4 things came out:
1ļøā£The team is the most important factor
Yes, again, the team!
You might wonder what a good team looks like:
prior entrepreneurial experience and/or a favorable exit
direct relevant expertise in the industry they are building
a strong personal pitch thatās relevant to the solution.
2ļøā£You need to show some metrics and traction
Showing promising growth metrics and signs of potential PMF is a must. VCs make emotional decisions but they justify it with numbers and facts. Showing strong metrics will get you to the finish line
3ļøā£You need a large and growing market
This is not a deal maker but is a deal breaker.
If your market is too small, you wonāt be able to create the returns for VC economics to work. Make sure the market you build in is big enough.
4ļøā£Make the VCs job easy
Founders who make the VC's job easy by providing clear, well-structured materials will win. Youāre only pitching to an associate, who will then pitch in front of a committee.
The easier you make it for the associate to convey all the information required, the more chances you have of landing the deal. VCs have lots of deals on the table.
Be the one that they can present quickly and clearly to the board.
š§ Become the best in your field
Winners in the VC-backed startups world are the best in their field. This is the VC model. Invest in a lot of startups, and hopefully one of them explodes and becomes the next big thing.
In sports words: who didnāt want MJ when he was at his prime?
But how do you become the best?
To be the best at something, Guillermo has observed some behaviors from founders:
you should start educating, and studying prior to launching
you should have enough patience to see the results
you should build something niche for a specific group of people.
In summary, don't try to target everything - focus on a specialized niche and work to deeply understand it. Airbnb was a bed and breakfast for designers conference in San Francisco after all, can you go more specific?
ā³Just start - the best way to learn is doing
"If you want to start tomorrow, start today."
Thatās how we ended the episode. Because as explained earlier, there's no better way to learn than by doing. Don't wait for the perfect time or until you have it all figured out - just start taking action!
If this was useful donāt hesitate to share this newsletter with a friend.
Listen to the entire conversation here:
š Substack
š¢Spotify
š£Apple Podcast.
Hugo š