We can learn a lot about success and growth just by looking at the history of entrepreneurship. In his book, “Venture Deals,” Brad Feld wrote about the many elements of starting and scaling companies that remained similar from 1970 to 2010, but there have been significant changes, too. This is what he and Matt Blumberg discussed in a deep dive episode on Season 1 of The Daily Bolster.
Insights on managing investor relations
Investment structures have evolved, but the pool of people investing in startups has changed significantly, too. The diversity and magnitude of successful founders investing as angels have increased. Brad says he learned the value of early stage entrepreneurship through his own angel investment experiences.
As companies grow, they accumulate a diverse set of investors with different levels of investment success and varying perspectives on the business's end goals. However, this variety of interests can lead to a lack of alignment among investors. Open communication is key to navigating this situation; CEOs should engage in open conversations about the business's reality at all levels and involve all stakeholders in the decision-making process.
Brad stresses the importance of discussing the capital structure's impact on the company's actions, especially in situations where the business is neither failing nor flourishing. Anxiety can arise from behind-the-scenes conversations, highlighting instances where investor expectations can lead to unrealistic demands. For example, a late-stage investor's insistence on a specific return threshold might complicate a potential deal. Honest conversations that address conflicting perspectives are crucial to a company’s success. Instead of avoiding discussions due to apprehension, it's better to openly air out concerns and engage in constructive dialogue to find the best path forward.
Building successful relationships and sustaining a vision
In this episode, Brad touches on the significance of building strong relationships with your co-founders. There are many ways to foster successful relationships, but it’s important to discuss each others’ motivations, fears, constraints, and goals. Understanding personal dynamics and risk tolerances can create better alignment and prevent potential conflicts.
Companies succeed when their CEOs are driven by their product and by solving the problems at hand. This drive, which Brad says is fueled by a sense of being put on Earth to tackle that issue, is crucial for maintaining focus and intensity, especially in challenging times. This focus distinguishes successful founders from those who lose their way, getting sidetracked when difficulties arise or chasing new ideas instead of persisting with their original vision.
Business plans, global democratization, and shifting dynamics in modern entrepreneurship
Business plans have evolved from lengthy documents to more concise formats over the years, and along with them, the dynamics around entrepreneurship have shifted considerably.
The characteristics of founders, the importance of founding teams, and investment activities have all transformed with a new wealth of information available to today’s entrepreneurs. This wealth of information has reshaped the way businesses are operated and has brought about a shift in the way startups are funded and grown.
The concept of company creation has become more globally democratized over the years, as well. Unlike in the past, where resources were limited, modern entrepreneurs can access numerous blogs, boot camps, accelerators, and more to guide their startup endeavors. Learning from others’ success is a fantastic opportunity available to startup leaders today.
Understanding pivoting strategies and board dynamics
Many founders and their boards face decisions about when and if their company should pivot. Brad suggests viewing a pivot as something other than a complete restart, but rather a shift in direction while maintaining some core aspects of the company’s mission.
It’s vital for the CEO to view the board as a team and foster connections among members. Successful boards balance VCs, founders, and independent directors, engage in constructive communication, and treat all members as peers. Mixed signals, controlling behavior, and lack of engagement can lead to board dysfunction within companies and startups. It’s crucial to maintain intellectual honesty in discussions, and treat disagreements as data rather than personal attacks. Whether the founder and the board are discussing a major pivot or a smaller change in direction, managing board dynamics and working as a team is crucial to the success of the company.
There are infinite lessons to be learned from the evolution of entrepreneurship over the years. The wisdom Brad shares in this episode not only reflects the journey of a successful investor, but also offers valuable guidance to entrepreneurs, founders, and investors navigating the dynamic landscape of entrepreneurship. Listen to the full episode.
