The start-up vs your previous (big) company
Things to pay attention when joining a pre-PMF start-up
I’ve decided to interrupt the series of Disrupting yourself while still being successful saga, to comment about the last experience that has gotten my busy for the last 6 months ago.
Disclaimer: I’ve never worked at a startup pre-PFM (Product-Market fit) before. I had attempted to create one with other colleagues, but it turned out we had to shut it down after 7 months.
Contrary to what I’m seeing when attending a recent MeetUp, I’ve observed many product managers and product designers who have spent a lot of time in startups, moving into scale-ups and big corps. I was doing the opposite move. Going from a successful scale-up that was supposed to IPO in 2022, into a startup that didn’t have any customers.
You may wonder, “Why the heck on earth did you decide to make such move?” Which is a very good questions, but we can summarise it as the difficulty of the challenge, plus the things I was going to be able to work on in terms of activation and engagement, and the pace; all that sounded quite appealing to me at the time.
TL;DR: the experience didn’t go as expected.
Because of this experience, I could easily say, I’m never going to work to a startup pre-PMF again. But I was a personal choice, and I believe I haven’t considered all the necessary factors before joining.
I want to distill some of the things I should have considered before joining, so the next time you can vet the opportunity better when you face a similar situation.
When you are in a bull market and you are talking about a hot topic, as AI for instance, it might have been easier to raise money, and getting the excitement of betting on something that was revolutionary and nobody got their toes into.
Also, the idea of, I grant you the money, take your vision and make it a real tangible product and see you in a year, is something that may sound appealing, but dangerous at the same time. If you don’t have the consistency and delivery pace for testing and validating your ideas, you will be stuck and always running behind. More on this in the upcoming sections.
If you are about to join a startup always ask about the runway, burn rate, and the upcoming round. Specially about the last point, be specific when it started, how is it going, and how much money is expected to be raised? The more the time to close the round, the more difficult the market conditions, and if no customers are on the pipeline the more you have to dilute yourself.
To the amount of the upcoming round, pay attention to convertible notes. They can be a double-edged sword. While they provide immediate capital, they may later be considered part of your Series A round, even though you've already spent that money.
This is probably, if not the most, of the top two things you must pay attention to. This is the heart-beat of a startup, especially when you haven’t nailed your PMF.
The quickly you are able to show things, the quickly you get feedback. This is the ultimate prove that customers and prospects are willing to invest in your product. Doing discovery and research is ok, because that’s the main aim, reduce the uncertainty and the world of unknown unknowns. Nonetheless, that’s not enough, for the good or the bad, getting your questions answered and a lot of insights is half the job.
I love this excerpt from Jason Freid’s article:
There’s really only one real way to get as close to certain as possible. That’s to build the actual thing and make it actually available for anyone to try, use, and buy. Real usage on real things on real days during the course of real work is the only way to validate anything. And even then, it’s barely validation since there are so many other variables at play. Timing, marketing, pricing, messaging, etc
Ask the following questions:
How long (days, weeks) does it take you to learn / validate an idea?
How big is the backlog of validated ideas?
What is the ratio of the things we have learned / validated against the one implemented?
The above may be an indication that you spend too much time validating when you should be building to quickly hit the market.
GTM (Go-To-Market) Motion
Sometimes this point is overlooked and underrated, but what if I told you that a startup of 50 people has a sales-led motion similar to a company of 1500 employees.
This could sound odd, especially because depending on your strategy, you could choose a motion that is not a good fit for the company situation. Off the bat, you could think, if you have an army of BDRs (Business Development Representative) and AEs (Account Executive), it’s because you have a product to offer, not Figma mock-ups. Something similar occurs with your target customers. Selling Figma mock-ups to large, enterprise, SMB (Small and Medium Businesses), and other start-ups is the same, since don’t have a product yet, the situation is even worst, because these type of customers require different level of sophistication and requirements to adopt your product.
Having a disconnect between the GTM motion and the stage your product is at, ends up in a situation when the rubber hits the road, you won’t be ready, either because your product is not prepared (missing functionalities) or your product has half of the promising functionalities that are on the mock-ups.
Another great point is, is whether or not the founder(s) is involved? What is going to happen at the beginning is that the founder circle, will drive most of the leads. Therefore you could see traction in a specific market, that at some extent could be useful to see how customers react, but what if that was not the target you have been using for validating the idea? This is a discussion for a whole new post, but I asked myself that question many many times.
What to pay attention to:
Is the GTM motion aligned with the stage you product is at?
How easy is it to try your product for customers / prospects?
Especially in a start-up, How much is the founder involved to bring new prospects / customers?
Delivery pace (and sense of urgency)
Simple idea but quite powerful, if you don’t ship things, your customers don’t get anything to use, therefore you don’t know if you outcomes are reached, and the impact at the business level is not generated as a consequence. Period.
It’s easy to put the focus on delivery as an isolated action. This is rarely the case, since there are inputs that inform the pace you ship, such as release cadence, scope, cycle time, and more.
I could spend a whole post talking about this and the importance of deliver things, especially at the startup stage, but the most important questions you must ask are:
How often are you shipping things?
Look for a cadence and the proper steps that helps to get a team around a project to be completed.
How many features were delayed in the last 3 / 4 cycles? How quickly were you able to recover?
Pay attention to the reaction of people when they answer this questions. It could be a great indicator whether they are worried because they missed a deadline.
What do you do if a feature is not delivered on time?
On the same not as before, if you missed your deadline, what are you doing to get back in track?
How big is the backlog of features that is waiting for engineers to be picked up?
This is an indicator that the engineers could become a bottleneck and they are not meeting their deadlines or the projects are taking too long.
Often overlooked as the GTM motion. In a startup you must have the feeling that you know everything. You may be less than 40 people, and it’s likely you’re interacting with everyone most of the weekdays, even with the CEO.
If that’s not the case, it’s a reason that there is something important you should know or that could affect you, that you are not aware of.
The silver-lining at the startup level is that you will have more chances to interact with all of their members, nonetheless below some questions to ask:
How often are you interacting with people that are not in your team?
How often are you finding information by luck? and What type of information?
Although this could be a useful post for people that are part of a startup or who are about to join one, you could also ask the same questions at your company, regardless of its size, to detected whether or not you’re suffering from any of them.
The rules of thumb are:
The startup should be much more quickly when validating an idea and shipping stuff compare to you previous (big) company.
Your GTM motion at a startup shouldn’t resemble the same structure as your previous big company.
Your startup should deliver much more quickly than your previous (big) company.
You should speak much more often (or at least having a more frequent communication) with the start-up CEO that your previous big company.
Now let’s get back to the previous series.