How to talk about when it’s time to pull the plug on a startup

How to talk about when it’s time to pull the plug on a startup

Western culture, as a whole, is not great at talking about death. Sure, people happily watch armies of the undead munching on the few remaining humans in The Walking Dead every week, but when it comes to a serious, sober conversation about The End, we avoid it like it’s a zombie horde.

And with good reason. It’s not a particularly pleasant topic to consider when applied to ourselves or the ones we love. As a father of three, I see a visceral reaction when I try to talk about it with my kids. It’s as if deep in our lizard brains we fear that just by talking about it, we might make it happen.

Oddly enough, I see the same behaviour mirrored in startups. It seems like if you talk about the failure and death of a company, you risk creating a self-fulfilling prophecy. Even though I believe I approach the topic rationally enough, I find myself feeling weirdly nervous as an investor talking to CEOs in our studio about company death. When I examine these feelings, I think it comes down to worrying that my CEOs will feel like I don’t trust them to do their jobs, and that this will demotivate them at a critical moment. 

The Dangers of Customer Feedback or: How to Avoid the Dreaded Product Death Cycle

The Dangers of Customer Feedback or: How to Avoid the Dreaded Product Death Cycle

If somebody built an app that spit out a dollar every time an entrepreneur quoted Henry Ford’s alleged statement “If I had asked people what they wanted, they would have said faster horses”, they’d be rich.

Regardless of how overused this quote might be, there’s a lot to like about it. Radical breakthroughs in tech are unlikely to happen when you ask customers what they want. They happen because somebody had a vision and made it happen. 

To Outsource or Not to Outsource, That’s The Question

To Outsource or Not to Outsource, That’s The Question

Deciding whether or not to outsource work in the early stage of a startup can be a tough call. Outsourcing certain tasks — such as legal, accounting, website hosting, and even HR — obviously make sense. But what about product design, engineering, and PR? There’s no shortage of articles praising the benefits of outsourcing these core tasks and offering examples of companies that have successfully gone this route, but I believe these tasks are better kept in house. Here’s why. 

How to lower your Customer Acquisition Cost

How to lower your Customer Acquisition Cost

You can’t be an entrepreneur without a healthy streak of optimism. There’s just no way you can survive the gruelling task of trying to convince yourself and investors to believe in a dream while shrugging off a steady stream of rejection.

But while optimism might be a crucial personality trait for entrepreneurs, it’s often accompanied by self delusion lurking nearby in the bushes. This could mean convincing yourself of product/market fit when there isn’t one, or forecasting an unrealistic CAC (Customer Acquisition Cost).

I’ve seen many startups solve the product/market fit problem, only to fail when the cost of acquiring and monetizing customers turns out to be higher than expected. Previously, I’ve talked about how to balance CAC with Customer Lifetime Value (LTV), but I didn’t go into the gory details of how a crafty entrepreneur goes about keeping CAC low. 

4 Reasons Why the Bottom-Up Approach Is a Great Way to Sell SaaS

4 Reasons Why the Bottom-Up Approach Is a Great Way to Sell SaaS

Sometime late in the last decade, there was a subtle but important change in the way companies began to adopt enterprise software. Instead of new technology coming in by way of the CIO or IT department, employees began driving the adoption of new tools. I am referring to tools like Salesforce, Netsuite, and, of course, Slack.

Recently I’ve had the opportunity to mentor a fast-growing SaaS business that is using this bottom-up model. For a guy whose experience has been almost exclusively with the top-down approach that requires selling to VPs and C-level executives, this has been a great learning opportunity.

While I can’t say which has proven to be empirically better, I can say that I find a lot to admire in the bottom-up model.

How to recognize the difference between anemic versus healthy growth

How to recognize the difference between anemic versus healthy growth

One surefire way to scare off investors and make a strategic blunder that could result in an unnecessary crash and burn is to be overly ambitious (or, likewise, too conservative) when modeling your company’s growth rate.

Investors want to see a revenue model that, at scale, demonstrates you’ve covered your fixed costs with enough margin that it makes it worth their while to invest in your company. You must show that the long term value (LTV) from a customer is greater than your costs to acquire them. And even if you can demonstrate this, your growth might still be too anemic to make investment worthwhile. 

Getting Your Revenue Model Right

Getting Your Revenue Model Right

I got my start in this crazy industry in the late 90s. Straight out of college, I found myself with a CEO title, funding, a team, and a business plan that needed to be written.

Back then business plans were huge multi-page documents full of Excel spreadsheets. Today’s slick ten-slide presentations wouldn’t cut it. Writing a business plan felt more like writing a PhD thesis than a pitch deck.

Regardless of the decade in which it was written or the number of trees used to print it, a good business plan (or pitch deck) answers a range of questions about the business you want to build: 

The Root of All Business Failures: Customer Acquisition Costs

The Root of All Business Failures: Customer Acquisition Costs

I must talk about customer acquisition cost (CAC) fifty times a week with our cohort companies. They’re undoubtedly sick of me constantly going on about it, but I probably won’t be stopping any time soon. That’s because CAC is a hugely important consideration for startups, particularly for B2C operations like Pampr, Lendful, and Koho

Customer Discovery: How to Do It Right

Customer Discovery: How to Do It Right

I love customer discovery. I’m good at it. Which is good because talking to people I don’t know and soliciting valuable feedback is crucial to our philosophy of lean startups.

I became good at customer discovery because I had to. My first work experiences were all in new industries using new technologies, so I couldn’t go to school or the library to learn how the content management market or the web acceleration market worked. Instead, I had to ask people. I found that if I played myself as a sales guy, nobody would talk to me. But if I played young, smart, inquisitive entrepreneur who needed advice, almost everyone would give me at least 15 minutes of their time. 

Centralizing a Startup Studio’s Resources: The Pros and Cons

Centralizing a Startup Studio’s Resources: The Pros and Cons

One of the benefits of the startup studio model is the ability to share infrastructure across the companies in your pipeline. Today I’m going to talk about how resource-sharing can work in different scenarios, and what kind of uptake we’ve experienced with our own entrepreneurs here at Stanley Park Ventures. 

Salary vs. Equity: How to Calculate Founder Compensation (Part 2)

Salary vs. Equity: How to Calculate Founder Compensation (Part 2)

In a previous post, we shared our approach to handling the salary variable in the salary vs. equity equation for compensating the entrepreneurs we select to be our co-founders. This week, let’s talk about the equity side.

Salary vs. Equity: How to Calculate Founder Compensation (Part 1)

Salary vs. Equity: How to Calculate Founder Compensation (Part 1)

Figuring out how to fairly compensate the founders we work with has proven to be a complicated question. We’re trying to strike a balance between providing a salary that makes it possible to live in Vancouver during early-stage development, and equity, which could someday represent considerable wealth, but won’t put food on the table in the short term. We’ll deal with equity in a later post, but for now I’d like to talk about figuring out the salary part of the equation.

How Much Influence Should a Startup Studio Have on the Companies It Creates?

How Much Influence Should a Startup Studio Have on the Companies It Creates?

We care a lot about culture. We think it’s one of the cornerstones of a successful startup. When we were operating Strangeloop, we made culture a top priority. We did all the usual things you see in tech — parties, breakfasts, ping pong — but it was our effort to operate with a relatively flat organizational structure that ensured we had a happy, productive team. We must have been doing something right, because we won BC Business’s “best company to work for” award five years in a row.

Moving forward, we want to make sure that culture is a priority in any company we create. 

Candidates Shine In Our First Entrepreneur Cohort

Candidates Shine In Our First Entrepreneur Cohort

This past weekend, we held our first Cohort at Launch Academy’s co-working space in the heart of Vancouver’s startup district. As this was new territory for us, we weren’t entirely sure what to expect, but we are happy to report that not only was it *not* a gong show, it went incredibly well! 

Is a Cohort The Best Way to Vet Potential Entrepreneurs? We’re About to Find Out.

Is a Cohort The Best Way to Vet Potential Entrepreneurs? We’re About to Find Out.

Since launching Stanley Park Ventures we’ve been taking entrepreneurs into our program on a one by one basis, and then a few months ago Jon suggested we experiment with a cohort – a group that would work together on the same problem over the course of an intensive one-day session.

This would give us the opportunity to get to know the candidates all at the same time, giving both us and them a chance to see if there was a fit. So we invited Blair Simonite who teaches entrepreneurship and innovation at UBC’s Sauder School of Business to join us and began mapping out the day. 

7 Traits We Look for in an Entrepreneur

7 Traits We Look for in an Entrepreneur

Vetting an idea is one thing. Vetting a human being is something else entirely.

The vetting process for ideas is relatively simple. Come up with a series of questions. If the answers are unsatisfactory, you can safely assume an idea probably won’t be profitable.

But how do you vet a person? We think there are certain traits, which, if present in sufficient quantities, are indicators of great entrepreneurial potential. Here’s a rough list of the qualities we think are important:

6 Criteria for Starting a New Business

6 Criteria for Starting a New Business

When we first decided to launch a startup studio, we were excited at the prospect of being able to jump right in and start coming up with ideas. But we quickly realized that we lacked an investment thesis, the guiding vision we should use to vet ideas. Coming up with one overarching and compelling thesis statement proved to be very difficult. In fact, we found that aiming for this type of clarity so early in the process was detrimental and too restrictive for our purposes.

So we took a step back and got to work developing a set of criteria that we could use as a lens to examine an idea’s merit and determine whether it is in alignment with our goals and values. Here’s what we’ve come up with so far: 

Why a Startup Studio?

Why a Startup Studio?

Early in 2013, my brother Josh and I, along with our business partner Mike Benna, exited Strangeloop Networks after its sale to Radware, a Tel Aviv-based application delivery and security company. Stressed and exhausted, we were all ready for a much-needed break. The plan was to take a year off, but sometime around the six-month mark, I started to feel a nagging urge to get back to work.

So, once or twice a week, Josh, Mike, and I would meet up at the Vancouver Convention Centre and take a 90-minute walk around Stanley Park to talk about the things we loved about our last business, what we hated, and what we should do next.