Lessons from Two Years of Raising and Managing Firebrand Ventures

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It’s been exactly two years since I took the leap and started raising the first Firebrand Ventures fund on August 1, 2016. Recently my friend Elizabeth Yin, GP at Hustle Fund, wrote a great blog post called 11 Things I’ve learned from running a micro VC in the last year. It’s wonderfully transparent and debunks a few of the myths about starting your own small fund. After reading Elizabeth’s post I was inspired to take a crack at documenting some of my lessons from running Firebrand the past two years.

Like other emerging fund managers, I’ve greatly benefitted from the trend of increasing transparency in VC. Whether it’s blog posts by Brad Feld, Mark Suster, or Fred Wilson (who’s written a blog post every day for almost fifteen years!) or others offering up gems on awesome podcasts like The Twenty Minute VC, I’m grateful to all who share their learnings.

So I wanted to pay it forward in some small way and relay some of my experiences. In particular I wanted to share some details from my fundraising process because there doesn’t seem to be a lot of info about that.

I have way too many learnings for one blog post but hopefully some of these will be helpful.

1) Before You Raise: Get Lots of Feedback

Talk to as many VCs as you can. I found it especially helpful to chat with VCs who had an active role in raising their funds. Different VCs will have different advice on the same questions so compile everything and then filter it when you’re done. Make it easy for them to help you by asking specific questions. What should you get feedback on?

Start with the Overall Approach …
• What kind of fund do you want to be – i.e. pre-seed, seed, or both? Where do you see the compelling opportunities? Do you want to be a sole GP or have one of more partners? What’s your investment thesis?

… Then Drill Down
• Your investment strategy: The specific sectors, stage, geography, etc. you’ll focus on
• Your investment criteria: Key factors you’ll look for in a startup and its founders
• Your economic model: Targets for valuation range and round sizes you’ll invest in; your typical check size and equity stake; target fund size (see below)
• Portfolio Construction: Portfolio size + equity stakes + follow on allocations, etc.
• Check out other VC fund websites – most will list their approach and criteria. You can also learn a ton by listening to experienced VCs on podcasts or watching them give interviews on YouTube.

Your LP Deck and Pitch
• What is your compelling story? How will you differentiate from the many other seed funds out there? What makes you uniquely qualified to generate superior (3x+) returns? How will you help your companies succeed?

• In the beginning your pitch and deck may be awful, as I’m sure mine was, but it’ll keep improving as you iterate. For those VCs close to you, ask for feedback on it. Try boiling your main value props down to 2-3 short bullet points – those key advantages your fund brings to the table. Once I did that, the pitch resonated much better with LPs.

• Special thanks to my mentors David Cohen and Brad Feld. They gave their time and helped me think through nearly every aspect of the fund before I launched it, and continue to provide sage advice. I’ll always be grateful for that.

2) Taking the Leap: The Raise

Set Your MVFS (Minimum Viable Fund Size)
Okay I totally just made up MVFS, but one of the great pieces of advice I got early on was to figure out the smallest fund size that will make the economic model work and use that as your minimum target. If you raise more, great! But be prepared to only raise your minimum. For Firebrand that was $7M.

On 8/1/16 I started fundraising with a $7M target, a crappy deck, and zero contacts in my local high net worth community. Zero. I started with one intro to a well connected person in the community, and fortunately he became a great advocate for me and Firebrand. That didn’t make it easy but it was a start.

Multiple Closes
From the start I decided to raise the fund by doing multiple closes, which turned out to be about one close every three months. Raise in chunks, invest it out in chunks, rinse and repeat. I spent about 50% of my time fundraising and the other 50% on deal flow, diligence, helping our founders, organizing fund events, and admin. It was a crazy period but the strategy had several benefits:

Making investments early on showed we were for real
That first close was modest but enough to make our first three investments: FitBark, Sickweather and Dwolla, where we co-invested alongside USV and Foundry Group. People could see the fund was for real and actively investing.

We could get our investment cadence started
We make about 10 investments per year so it was important to get that going and stay on that schedule. Multiple closes made that possible.

LPs could track our companies’ progress
As we repeated that pattern of doing closes and making investments, potential LPs could see what kinds of companies we were investing in and how they performed in the short term. New LPs committed and several existing LPs increased their stakes over time because they liked how our companies were progressing. The longer I fundraised, the more progress our companies made, the more attractive it became for LPs. By the time we did a final close of the fund we had already invested in 13 companies.

Be Prepared for the Fundraising Rollercoaster
Some VCs love fundraising. I don’t. I do love meeting new people, and that was the most rewarding part of fundraising for me. I learned that managing my emotions was key during the fundraising rollercoaster. I had great runs where for 3-4 weeks I only heard “yes”. I also had nerve-wracking plateaus where I raised little or nothing for 4-6 weeks. This continued for the entire fundraise.

Even as my pitch improved and the fund size grew it never got faster or easier. It was still a matter of building relationships and trust, one LP at a time. I was making solid progress raising from local LPs, so after our second close I decided to stay focused on my community. Every GP has a different situation – for me, the local focus turned out to be the right call. It helped with referrals and organically created a nice civic narrative for the fund.

As much as I enjoyed getting to know amazing people I otherwise wouldn’t have met, the exhaustion started creeping in after 6 months of fundraising and two closes of the fund. I took a short vacation to recharge and then went back at it. After 6 more months I could’ve closed the fund at a decent number – I think we had about $10M in commitments at the one year mark. But it was early September and I believed there was more local demand and folks just needed to resurface after the summer. I did another mental reset and decided to extend the raise for another six months. I’m glad I did!

Our initial $7M target grew to almost $18M when I closed the fund last March after 18 months of fundraising. Yep I was a bit worn out – I rarely get sick and I got a cold for a month after the final close. Overall I felt good about raising $17.7M for the first fund, especially since 99.5% was from local LPs. Fundraising was finally done. Right?

3) Fundraising is Never Really Done

My good friend Ari Newman wrote a great blog post a couple years ago called A.B.F. – Always Be Fundraising. It was meant for founders but it certainly applies to GPs too. I recall after about 7 months of fundraising I had reached our initial target of $7M so I asked one of my mentors, “Should I stop?” I really just wanted him to say yes because I was tired of raising and wanted to focus all my time on new investments and helping our companies. He said something to the effect of “Why stop? You’ll always be fundraising anyway, might as well keep going.” I knew he was right and that advice served Firebrand very well.

Fundraising is all about building relationships and that shouldn’t stop just because your raise is finished. I’ve continued to keep the dialogue going with those who expressed interest but didn’t invest. Trust is the most important element in the investor-founder relationship and that is earned over time and multiple touchpoints. Always be fundraising.

4) The Team is Everything

Since I don’t have any partners for Fund I, it was especially important to surround myself with several experienced advisors. Our advisors provide invaluable feedback on every company we’re seriously considering, as well as input on plenty of other questions big and small.

After I closed the fund I hired a fund Associate, Maranda Manning. She and I had worked together at Techstars so I already knew she was terrific. She hit the ground running and has been immensely helpful for deal flow management, diligence, and many other areas.
Being a sole GP can be awesome; it can also be lonely and stressful. Managing a small fund isn’t hugely profitable or glamorous and can feel like a total grind sometimes. Fundraising for 18 months in the Midwest really tested me but when I look back I’m glad it was hard. Call me old fashioned but I believe raising millions of dollars shouldn’t be easy. During the one evening I celebrated the final close, it felt like a great accomplishment. Then it was back to work!

It’s early days for Firebrand. Like any VC, I won’t know how I’m really doing for another 5-10 years. There will be many more years of learnings, wins and losses, ups and downs. It’s simultaneously the most challenging and rewarding job I’ve had. I’m incredibly grateful for my mentors and advisors as well as the many other VCs out there who continue to share their lessons. Above all, I just love working with amazing founders – that’s what gets my adrenaline flowing. After two years, I couldn’t imagine doing anything else!

Why I Don’t Say “Pass” to Founders

I make a point to avoid using the word “pass” when telling founders their startup isn’t a fit for Firebrand. Maybe it’s because I was a founder – I can’t help but feel empathy for them. It’s a key part of our approach. And that word just feels cold and impersonal to me. I don’t even like using it when talking with other investors.

I meet with so many entrepreneurs who pour their blood, sweat and tears into their startup. Though many loathe fundraising they put in the work and try to prepare for rejection while hoping for a Yes. These days there are more investors than ever but the balance of power is still firmly in the hands of VCs. This means for every 100 startups that pitch an investor, they may invest in one. That’s a lot of of No’s.

I totally get that rejection is a big part of fundraising and a thick skin makes it easier, but that doesn’t mean it’s easy for founders to hear “no” over and over again. Especially first-time founders. From some investor responses it can be hard to distinguish “not a fit for us” from “your startup sucks and therefore so do you!”

A few years ago a founder I know showed me a response from a VC he had pitched via email. The founder had gone through all the right steps – researched the investor to ensure he invested in his space and stage, got a warm intro, emailed a concise description of what they did and why he thought it was a fit, and asked if he’d like to meet for coffee or chat on the phone.  The investor’s email reply had one word: Pass.

It’s an extreme example but that stuck in my head and when I started Firebrand I swore I’d never be that kind of VC. I never forget these are human beings I’m dealing with, not deal flow metrics for my LPs. Don’t get me wrong: I’m very clear when we choose not to invest in a startup and strive to give the answer as quickly as possible. And I always provide the reasons when it’s not a fit.

I’m sure plenty of founders and VCs don’t have a problem with the word “pass”. And I certainly don’t judge other investors for using it. My personal experience with it just created a negative association. Founders are the whole reason I have a job and this business process of fundraising happens to be a very personal one. I tell lots of founders their startup isn’t a fit for us, and why, but I don’t use the word “pass”.

I’d love to hear from the founders out there: How does it hit you when an investor says they’re going to “pass” on your startup?

 

 

3 Ways to Make Investor Updates Transparent & Effective

You’re about to hit Send on your latest monthly update to your existing investors. And you’re feeling pretty great about it. It includes all of your company’s latest achievements – you even highlighted a few of them with little thumbs-up emojis. With any luck you’ll get several of those “keep up the awesome work” replies – instant dopamine rush!

But wait – before you click Send ask yourself: are you giving your investors the whole story? What about your company’s struggles?

Some founders tend to withhold bad news from their investors because they’re afraid of the reaction: the investors may be mad or disappointed, think less of the team or even pass on investing in the next round. Here’s the thing: existing investors want *all* the updates – the good, the bad and the ugly. As shareholders they deserve that transparency. Also, hiding or sugar coating bad news often prevents investors from helping the company with its biggest needs until it’s too late.

Including these three sections make your investor updates honest and actionable:

Lowlights

A complement to Highlights, Lowlights tell investors what the company is struggling with. Don’t sugarcoat or be dramatic – just tell it like it is. These could include things like falling short of the revenue plan, losing a key team member, or longer than expected sales cycles. Include enough detail so investors are 100% clear what the struggles are. And they’re a great segue to …

Asks

As CEO it’s your job to tell your investors what you really need help with. Include at least 2-3 well defined Asks in every update. These could be connections to potential customers or partners, advice on sales strategy, or referrals to key hires. Make them as specific and actionable as possible. Welcome the assistance with open arms!

Financial Snapshot

No matter what the update is, the context is very different if you have thirteen months of runway vs. three. Keep it simple by listing Cash on Hand, Current Burn Rate, and Runway. Runway should be bold and highlighted in red if it’s 6 months or less. If you’re afraid investors will be mad there’s only 5 months of runway left, imagine how they’ll feel when they find out at the last minute it’s almost zero!

Full transparency trumps optimism when it comes to communicating with your stakeholders. If your updates are all sunshine and rainbows your investors will be skeptical anyway. Including Lowlights, Asks, and the Financial Snapshot in every investor update tells the whole story. And being honest about your struggles usually makes your investors want to help you even more.

Now instead of your investors replying with “keep up the awesome work”, they can provide real suggestions to help your business. Less dopamine rush, more chance for long term success!

The Arrogance Fallacy

Words matter. Which is why I mentally cringe when some VCs say they want their founders to be arrogant. Let’s look at two definitions of arrogant:

Merriam-Webster: exaggerating or disposed to exaggerate one’s own worth or importance often by an overbearing manner; showing an offensive attitude of superiority.

Dictionary.com: making claims or pretensions to superior importance or rights; a sense of superiority, self-importance, or entitlement.

Exaggerating. Overbearing. Offensive. Self-important. Entitled. Some VCs probably saw a few of these founders generate huge returns and concluded that’s the CEO blueprint for success. 

Except it’s not.

Arrogance can look like strength and confidence but it’s typically the opposite: a psychological defense mechanism that projects a facade of superiority to hide some serious insecurities. Loud, arrogant people are often the most insecure and fearful people in the room. They are terrified others will think they’re dumb and incompetent. So they overcompensate. The more fame and fortune they attract, the more fearful they become, the more superior and entitled they act. Often with disastrous results. 

We’ve all seen it: one well-funded, arrogant CEO after another, doing offensive and illegal things, falling from grace and sometimes taking their companies with them. 

As a group, VCs themselves aren’t exactly poster children for humility. Worse, arrogance has no doubt played a role in the disgusting culture of sexism and harassment in Silicon Valley. The initial denials and subsequent pseudo-apologies of some offenders were almost too arrogant to believe. 

Arrogance is also related to the shameful lack of diversity among founders that get funded. VCs need to look beyond the arrogant white dudes to fund more women and people of color who don’t fit their preconceived founder image. This is starting to change but there’s much work to be done, by all of us.

Some of the smartest, most confident and successful people I know are actually humble. But don’t confuse humble with meek. They’re outspoken at the right times, stubborn even. But they’re not the loudest – they listen more than talk. They realize there’s a ton they don’t know and they’re honest about it. They operate from a place of relentless learning. They’re smart enough to know it’s not about proving they’re the smartest in the room. 

We shouldn’t be encouraging arrogance in anyone, especially our future business leaders. Let’s be vocal about supporting entrepreneurs who are coachable. Honest. Audacious. Respectful. Persistent. Emotionally intelligent. 

Because those are the qualities of great leaders and human beings. And because words matter. 

Startup Community Spotlight: Cincinnati

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The Cincinnati startup community may not be mentioned in the breath as Boulder or Austin – yet – but it’s a well rounded and underrated ecosystem. I recently traveled there to lead a “Group Therapy” event at Union Hall. My friends at Cintrifuse brought 15 founders together with myself and Brad Zapp, Managing Partner at local fund Connetic Ventures. The founders were super engaged and asked great questions about raising capital in the Midwest, bringing on co-founders, and scaling.

After the group therapy session and catching up with awesome Cintrifuse CEO Wendy Lea, I attended a startup happy hour at Connetic’s office where I reconnected with local founders from companies including CompleteSet and FamilyTech. Afterwards Brad and his business partner Kyle took me out for a great dinner at Jeff Ruby’s Steakhouse which turned turned into a long night of eating, drinking and talking – not just with them but also a steady procession of their friends who stopped by to chat.

It was my third visit and like my previous trips I was impressed with the quality of startups I met, the buzz of energy inside Union Hall, and everyone’s hospitality. They’ve been deliberate in building out their ecosystem with some very enviable resources:

Union Hall – It’s been called the “center of gravity for entrepreneurs” and it’s easy to see why. It’s home to Cintrifuse, nationally ranked accelerator The Brandery, one of the Midwest’s most active funds CincyTech, as well as co-working and events.

Cintrifuse – A vital resource for both startups and big corporations, Cintrifuse is many things: education, coworking, connector, fund of funds. Wendy Lea was the driving force in bringing the Techstars FounderCon conference to Cincinnati last year, marking the first time it was held in a city without a Techstars program.

Investors – CincyTech, Connetic, Vine Street Ventures, Queen City Angels, and others I’m sure I’m forgetting. For a community their size they have an enviable array of experienced investors.

Accelerators & Incubators – The Brandery, UpTech, Ocean, and others including Aviatra (formerly Bad Girl Ventures) and HCDC.

Universities – Innovative and engaged universities are essential for any startup ecosystem. Theirs include the University of Cincinnati, Xavier, Miami U., and NKU.

Corporate Engagement – Other communities can learn from how they’ve successfully engaged large companies such as P&G, Kroger, American Financial Group, Cincinnati Bell, and many others.

Identity – Cincinnati is known for CPG, marketing, and branding companies. The startup community itself has built their own brand, StartupCincy, complete with its own website, Twitter and Facebook accounts, and swag. The #StartupCincy hashtag is prevalent on Twitter.

Midwest Benefits – Like other Midwest communities, Cincinnati has that wonderful combination of low cost of living, friendly, welcoming people, and excellent support organizations. The interactions are genuine and not transactional – I feel like the relationships I’ve built there are real and lasting.

Cincinnati has become a special startup community for Firebrand and me. Brad Feld‘s book Startup Communities describes the “leaders” and “feeders” that participate in successful ecosystems – Cincinnati has many already in place. Even better, the people making it all happen are doing it for the right reasons and use the “Give First” approach. I’m very excited to continue supporting them as their ecosystem flourishes in the Midwest.

Just Build It!

I recently got a question from an aspiring entrepreneur trying to figure out the right steps for starting his tech company. He seemed very deliberate about taking the correct approach. He’d been thinking about his idea for two years, staying updated on his market and getting feedback from various sources including two top accelerators.

He said he was moving towards building their MVP but first wanted to know what’s most important to investors about a go-to-market strategy. For example, should he target a niche market first or go after a larger market right away?

Here’s my response to him, with some minor changes from my original text:

  • Don’t build your business for investors
  • Build your business to enable maximum growth in the next 1, 5, 10 years
  • You said you’ve had the idea for two years and watched the market evolve. Markets will continue to evolve. Have a thesis for what direction your market will go but START NOW. If you really want to build a startup you need to just start BUILDING. Perform small experiments along the way, make mistakes, learn from them, and adjust accordingly.
  • I’m not necessarily telling you to quit your job and just go for it with no funding or market proof. Build it in your spare time if you need to. Plenty of successful companies start that way.
  • Starting out in a niche market is fine as long as you have a plan to dominate that niche and then expand into larger markets or additional segments
  • You’ve already gotten feedback from two legit orgs I know – take what feedback makes sense and make it part of your initial strategy
  • A startup isn’t a linear line from beginning to success. It’s a messed up, twisty, jumbled path that’s filled with mostly frustrating, humbling experiences interspersed with a win or two if you’re both good and lucky.
  • Make sure you’re solving a massive pain point. Not a mild headache, a huge migraine. Get some feedback from potential customers to validate this. If the feedback doesn’t validate it, maybe you need to change your idea.
  • Strive to be 10x better than any other solution to the migraine you’re solving
  • Feedback is critical but investors shouldn’t determine your go to market strategy. Think about investors when you’re putting your investor materials together (pitch deck and exec summary). Have a super compelling story, exceptional team, and hopefully some early revenue traction or at least an awesome MVP. These days it can be hard to raise capital for ideas unless you have a stellar track record.

The main point is: Just Build It! Yes you need to research your market, competition, and customers. Do it quickly. And once that feedback validates your thesis, build it! Then get feedback on what you’ve built, iterate and keep building. That’s what entrepreneurs do!

Firebrand Kicks Off 2017 with a Bang!

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We’ve had a busy 2017 at Firebrand Ventures and the year is only 24 days old!

First we announced tech pioneer Brian McClendon joined the Firebrand team as advisor. Brian grew up in Lawrence, KS, went to KU, and eventually founded Keyhole whose main product became Google Earth after Google acquired them in 2004. As their VP of Engineering Brian went on to lead the development of Google Maps, Street View, and Earth for almost 11 years before joining Uber in 2015 as their VP of Maps. Although he’s based in SF he frequently visits Lawrence. Brian is an awesome addition to the world class team we’re building.

Then we finalized a partnership with the University of Missouri-Kansas City. Universities should be the primary feeder of talent and tech into any great startup ecosystem. I’ve gotten to know the great folks at UMKC and they want nothing more than to help their entrepreneurs succeed. We can’t wait to invest in exceptional student entrepreneurs right here in KC!

Finally we announced our investment in Des Moines-based Dwolla. Every investment we make is special. Right off the bat this one was special because I’ve known Ben for about 5 years. Dwolla was also the first Midwest startup I engaged with after reconnecting with the regional startup community in 2012. I’ve always respected the culture of building he created there and the scope of their mission. The fact we got to co-invest alongside top tier VCs such as Foundry Group and Union Square Ventures made it even more appealing. To top it off, Brad Feld has been a valued mentor for me so doing a deal together was fantastic.

As for the rest of 2017, I don’t know what other news we’ll have to share but I promise to continue doing everything I can to help founders all over the greater Midwest!

Why I’m So Excited about the Firebrand Ventures-Plexpod Partnership

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My new venture fund Firebrand Ventures and KC-based coworking company Plexpod recently announced a partnership. The Plexpod Westport Commons (PWC) space will be the biggest coworking facility in the world! It’s also adjacent to Westport, a vibrant KC entertainment district. Here are some of the reasons why I’m so excited about this partnership:

Providing Key Programming and Access

It’s often hard for entrepreneurs to find high quality, in-person content that can directly help their startup. I’m going to take the best content I’ve curated from my experiences as an entrepreneur and investor and provide it to the companies at PWC. These will include talks, workshops, and panels. I’ll deliver some of it, and will also bring in other experienced folks. Programming will be delivered to additional Plexpod locations too.

Mentorship

During my 25+ year career I’ve learned how valuable mentorship is. Most successful entrepreneurs have had mentors and advisors to help guide them. I’m gotten to know many fantastic mentors through programs like Techstars and look forward to connecting them with Plexpod companies.

Being a Visible and Accessible Investor

I’ll be based at PWC so it’ll be home base for Firebrand Ventures. One of the values that makes Firebrand different is our pledge to be accessible and visible to founders. What better way to demonstrate this than work from the world’s largest coworking space? Plus as a former founder myself I really enjoy being around entrepreneurs!

And Yes, Investments

A natural result of building relationships with founders is I’ll want to invest in the ones that meet our criteria in a very compelling way. I’ve talked and written about how critical it is for entrepreneurs and investors to build real relationships, and I’m really excited to get to know plenty of founders at PWC.

An Ecosystem within an Ecosystem

Anyone who’s read Brad Feld’s Startup Communities knows it takes several types of participants working together to create a well functioning startup ecosystem: entrepreneurs, universities, government, investors, mentors, service providers, and corporations. Just as the greater KC startup community is making progress engaging these different participants, the sheer number of companies working from PWC makes it an ideal place to bring all these parties together. It’s a mutually beneficial dynamic so all participants will get something great out of it, especially when using the “give first” approach.

Startup Density!

Startup density is critical to building a great startup ecosystem. In this case startup density is defined as having a large concentration of startups in a physical area. A central coworking space or neighborhood is key – just look at Boulder (downtown/Pearl St.), Chicago (1871), and Austin (Capitol Factory). The KC startup community has been fairly spread out with pockets of activity in the Crossroads, Startup Village and even Overland Park. PWC will quickly become that central hub our community needs to take it to the next level.

The Bubble of Support

When you get a group of hustling founders working in close proximity they often start helping each other in meaningful and unexpected ways. I’ve seen this first hand while running Techstars programs. Just as community is key to the Firebrand Ventures platform, this spirit of collaboration and “give first” will be hallmarks of PWC.

A Big Milestone

I’ve visited many startup communities across the U.S. and Plexpod Westport Commons is a very big deal for Kansas City and the Midwest. David Brain (SDP) and Gerald Smith (Plexpod) made it happen. As I got to know David and Gerald it became clear we all share a passion for building our community through action and collaboration.

The past four years have seen great advances for Kansas City including Google Fiber, the Startup Village, Techstars, and the Smart City initiative. Plexpod Westport Commons is the next big milestone and I’m proud to be a part of it!

The Right Kind of Coachable

You often hear about the importance of founders being “coachable”, but what does that mean? Does it mean they should follow advice from anyone who seems more knowledgable? Bryce Roberts blogged about being coachable not malleable. A CEO needs to view feedback like any data that’s relevant to their startup: it should be quickly analyzed, filtered, and acted upon only if warranted. CEOs please always remember: it’s your business. If you try to follow everyone’s advice, your business won’t exist very long. At the same time, you should be open to quality advice. So what’s the right kind of “coachable”?

1) First: Be Open to Direct Feedback

Sounds easy, right? Turns out it can be difficult to hear someone call your baby ugly. The trick is to listen, ask relevant follow up questions, and avoid debating. And listen some more. If you’ve met with 25 potential mentors and dismissed every piece of feedback, you probably weren’t open to it in the first place. Keep an open mind and don’t take it personally.

2) Filter the Feedback

Expect conflicting advice from different mentors. At Techstars we call this “mentor whiplash”. You shouldn’t try to follow all of the advice – that would be a mess – but nor should you dismiss it all. Filter it, and hopefully what’s left is actionable advice that sets your startup on the right path. Sometimes you’ll have data and objective advisors to guide you; other times you’ll have to trust your gut. Analyze it, take control and set a definitive direction.

3) Nurture a Continuous Feedback Loop

Great mentors are magic, and once you engage them the best thing to do is keep them engaged. The mentor-mentee relationship is like any other: it needs to be nurtured and it’s up to the mentee to do that. Meet regularly and continue to ask for feedback. I love it when I talk to CEOs who went through Techstars five years ago and still meet with their lead mentors every month. Again, it doesn’t mean you should act on every bit of advice – they’re all data points – just listen and be judicious.

Being coachable isn’t enough – it’s important to be the right kind of coachable. You can be strong and confident while soliciting advice, it just takes practice. Your startup will thank you.


Those 3 Little Words I Love to Hear: “I don’t know.”

Hey startup founders, let me save you the suspense: you don’t know everything. You never will. And no reasonable person expects you to. Even when you’re talking to investors, customers, or partners. 

Yes you should be as knowledgable about your business as humanly possible. You should research the hell out of every scrap of study, article, blog post, speech, interview and tweetstorm relating to your technology, market and competition. But invariably there will be questions you don’t know the answers to. What should you say if someone asks you?

“I don’t know.” That’s what you should say. Be honest. It’s okay. 

Of course, it’s always good to follow it up with a qualifier. If it’s a question about a fact, it’s usually good to say something like “… but I’m going to find out and I’ll let you know as soon as I do.” (Note the “I” in the qualifier vs. delegating it to someone else.) If it’s a question about one of the million future scenarios that may or may not occur in your market, then maybe “… but thanks for bringing that up. I hadn’t considered that but will give it some thought and get back to you.” Then do that. 

Now you’re thinking: “I can’t say that! It’ll make me sound weak, stupid, like I’m a bad founder!”

No it won’t. It’ll make you sound honest and interested in figuring out the answer. 

If instead of saying “I don’t know” you try to wing it with an answer on the spot, how do you think you’ll sound? Probably somewhere between bad and barely mediocre. 

In this age of false-confident, self-promoting “experts”, it’s the honest, humbly confident, and curious that stand out as quality leaders. Investors, customers, and partners want to have faith in you. Be as informed as you possibly can all the time – don’t ever cut corners on that. But admitting you don’t know something shows integrity and also real confidence. Saying you’re interested in figuring it out shows curiosity. Those are a hell of a lot better than bluster and bullshit. 

(For more on the relationship between confidence and competence, see an awesome Brad Feld post here.)

I’d much rather invest in a founder that is confident enough to say “I don’t know” once in a while. Because admitting you don’t know everything really shows you know something.