The First Step For A Startup

I was recently answering the question, “What is the best first step for a startup?”

My answer is simple. The best first step for a startup is to identify your customer’s problem. That’s it.

To do this you’ll need to talk to customers. A lot of them. You should be your own customer.

An intimate understanding of the customer’s problem is a prerequisite to actually solving it. Seems obvious but you’d be surprised how often people start elsewhere (I was one of them!).

Talking to customers provides incredible insight. You’ll understand who they are. What problems they have. How they hack a solution today. You’ll emerge from those conversations with a hypothesis on how you can solve their problem(s) and provide them value. Test that hypothesis, learn, and iterate.

If you aren’t solving the customer’s problem then you aren’t building something people value. Something they’ll love and use. Without that, you don’t have much of a business.

The concept is simple. The execution is hard.

Investor Updates

Yesterday I wrote a company update to all of our investors. This is something I send each month on the 1st. It outlines where the company is at, what we’ve accomplished, what we’re focused on, and what we need.

I’ve come to appreciate these updates more with time. They serve a number of useful purposes.

1) Reflection.

Looking back at the previous month (or year) allows me to gain perspective about all that we accomplished. It’s easy to get lost in the weeds and continually push towards the next goal. While that’s not necessarily a bad mindset, it’s important to look back and celebrate wins. Not just because it makes you and your teammates feel warm and fuzzy inside (it does), but because there’s valuable learnings in that reflection exercise.

Each month, while setting goals, our team reviews that last 30 days. What did we do well? What didn’t we do well? We take those learnings and create specific actions that reinforce the positive and embed those learnings into our company.

2) External Communication.

Keeping investors updated is a good thing. First, it can save you redundant check-ins because curious investors know they’ll be getting the email soon anyway. Second, it establishes an open line of communication. It’s an email overview of where the company is at (often with an “Ask” in it), not only providing an update, but also creating a thread that they can reply on top of — if they can help with something or have a question. It also makes investor meetings easier because nobody is in the dark about what’s happening with the company. There’s no multi-month lapse where they’re not sure what’s been going on.

Finally, if your updates are thorough and forthcoming, they can serve as an excellent sales tool with new investors. You can forward last month’s update to an investor who is interested in the company. Not only is it a great overview but you can illustrate what it’s like to work with you as a founder and how you’ll communicate once they’re on the cap table.

3) Internal Communication.

This takes form in a couple ways. When creating the email, it’s necessary to get updates from colleagues throughout the company. It’s an opportunity to dig into the numbers, learn more about projects in progress, and hear what’s working and what’s not.

Perhaps even more important is sharing context. In my job as CEO, I have a more holistic view of our company than anyone else. I’m a bit of a curator in that way. I receive inputs from everywhere (customers, sales, marketing, product, operations, investors, other founders, lawyers, research, etc.) and my output is synthesizing and prioritizing those to create a direction for the company. It’s crucial that I share my context with our team internally. Providing them not just with the “what” but also with the “why”.

This takes shape via our weekly all-hands meeting but also through these investor updates. Each employee at our company is on the distribution list so they too can see the holistic picture and understand how our progress and status is being communicated to investors.

Perhaps I’ll share the template I use for our investor updates in a future post, if people find it useful.