There are two theories with raising capital for startups.

On one side you get….money is evil don’t raise it. The Basecamp founders are in that ‘camp’. They aren’t wrong in warning people about the potential issues. Their ROI math says that selling a fully owned business for a smaller value can provide a better return than selling a venture business that you own a small percentage of.

On the other side you get…raise more money than you need. Reid Hoffman champions this camp. Break out scale, especially when accomplished in under 10 years, takes a lot of capital.

Both of these sides are right. They are just two different ways to build a company. Both come with positives (and negatives) and the tradeoffs is a whole post in itself.

When it comes to raising capital the questions you get asked a lot from fellow founders is…should I raise money?

I used to think they were asking about which business path to take. Eventually I realized they didn’t actually want help with the business path. What they really wanted to know is what happens to them and their company, if they raise capital.

Here is how I think about it.

You’re Adding Gasoline

Before asking if you should raise capital, understand what it is.

Capital is gasoline.

You can raise it in single gallon containers to get an idea off the ground. Or in 737 sized allotments to fuel a startup airplane. The amount is irrelevant. Your ability to accurately use it, is what matters.

I say accurately because gasoline is an accelerant. To the positive it can enable you to learn faster, creating greater momentum in order to raise capital or become profitable. To the negative it can uncover bad strategy faster, creating negative momentum that is very hard to recover from.

The question, should I raise capital, is really a question of…do you know how to use the gasoline?

You’re Adding Expectations

Capital comes with expectations. Yeah, duh.

It’s not that simple. The level of expectation compounds over time.

In the early days the expectations are low. People who invest are generally banking on you, often assuming your initial idea won’t be the big idea in the end. It’s easy to fall into the trap assuming that low expectations from early investors are what you can expect in later rounds. It’s not.

Each coinciding round of capital brings new, higher expectations. Higher valuations assume you know what you’re doing in spending more capital to build an even larger company. Later stage investors are more risk averse and will therefore pay greater attention to how well your business is performing. Their expectations will be tied to how well you can operate and scale a company.

If additional expectations stresses you out, then capital will not help. You can’t fire your investors, but they can fire you.

If additional expectations are what you thrive on then investor capital can be good. It will force you to raise your game.

Expectations aren’t bad. Your employees have them too. Just know that expectations are part of raising capital. Wanting the money, but not the expectations doesn’t work. Therefore you need to either love the exceptions or the process of managing them.

You Need A Team

Being successful with investor capital is easier if you have a team. A team that you trust. One that you’ve been to battle with whom you know can turn capital into more capital.

Taking this back a step, when you raise capital from new investors you’re adding new relationships. These relationships increase risk because they add new dynamics to your company. If you then add a new leadership team on top of these new investor relationships you have multiplied your risk in being able to turn capital into more capital.

Therefore before I raise capital I either want a team that I trust or a methodical process by which I can successfully build a leadership team. Both can reduce my risk and increases my chances of success.

Even with a process to build a leadership team, most hires only work out 40% of the time. A 60% miss rate combined with new investor expectations can be a fast way to crash the plane. Or get you fired.

What makes new team building hard with capital is that you have move at a faster rate. In the early years you need a team that can turn an idea into a business. In the later years you need a team that can get an ROI on the capital, making it worth 2-10x the price you raised it at. The more you raise the faster you have to go in building the team. The faster you go the more stress it puts on your culture.

Your direct experience in building a leadership team matters a lot in your decision to raise capital.

You Can’t Run Out Of Money

The amount of capital you raise should be a plug value to what you need to prove to yourself. You should have a clear 1,2,3 that is tied to the current stage of the company.

For example you might take an angel round to prove you can make a product, acquire customers, and successfully reach a next customer. In order to accomplish that you need blah dollars and a set of investors who are excited about customer discovery.

Regardless of your 1,2,3, you need to map to your next safe spot. That can be a traction point that lets you raise more capital or to a profitability line so you don’t need more capital. These safe spots vary wildly by company and can totally change depending on the capital climate.

Here’s the shitty part, your existing investors aren’t really going to help you in making sure you make it. They will try to assist but it’s on you to make it to that next point and then raise the next round of capital you need. They don’t have the time or appetite to constantly keep you afloat.

Going back to the original question, should I raise capital, it depends on how confident you are in using the capital to reach your next safe spot.

You Have To Grow

Your growth rate is all that matters. It doesn’t have to be blistering but it has to be consistent.

Just look at public companies and which ones have the highest valuation. They are all tied to the company’s growth rate. The ones with higher multiples have higher growth expectations. This is true in the private markets.

With growth comes pressure. Pressure can raise everyone’s game, see professional sports. But it has its downsides if you don’t know how to manage it.

Playing with more pressure it’s a bad thing, it’s just a choice. If you make that choice then you have to really internalize that choice. There is no going back until you are out of the company or out of cash.

You Have To F*$%ing Love It

The biggest knock to raising money comes from people who don’t like it. They don’t like everything that comes with the capital and that’s ok.

But it’s also ok to realize that you love trying to build companies that scale faster with more capital. It’s ok to be obsessed about it and to spend your waking hours trying to make your company successful. You shouldn’t feel bad for enjoying this path.

The Reid Hoffman Blitzscaling playbook can work to build massive, category winning companies. See Netflix, Uber, Zoom, Spotify, LinkedIn, and Fitbit. They all raised large amount of capital to win a category.

It’s also true that for every success story comes hundreds of failures where large amounts of capital didn’t work. That doesn’t mean you shouldn’t do it.

Don’t Become An Asshole

My closing remark is don’t raise money and become an asshole. Raising capital is about adding more gasoline, it doesn’t mean you’ve been successful. A startup car with a HUGE gas tank doesn’t mean you’re better off.

It does take confidence to raise capital. But it also takes humility in becoming successful with it (or at least I think it should).

DM me @marcbarros if you have any questions.

We don’t hire marketers. We do marketing, just not with marketers.

Why don’t you hire marketers?

Because at the end of the day they can’t make anything. In order to do their job they have to hire someone. So instead of hiring someone to hire someone else, we just hire the creators, analysts, and developers who can do the work that the marketer was going to hire anyways.

But I don’t know anything about marketing, don’t I need marketing people to advise on marketing?

No. The reality is that everything you do is marketing. Whether you are servicing a customer, making a product, or running an ad…it’s all marketing.

Yes there are different tactics that can bring in more new customers, but at the end of the day every dollar you spend is going towards ideas that bring in new customers. That’s marketing.

At Moment we’ve grown from zero to over 1M followers and hundreds of thousands of customers. We didn’t advertise our way there and we didn’t hire any marketers.

Here is how I think about marketing without marketers.

Start With One Person

Marketing begins the minute you start your company. It looks like a product, but in reality it’s about to become marketing as soon as you tell anyone about it.

Therefore from the beginning I like to take one person, often a founder, and give them the sole purpose of figuring out our marketing plan. I call that plan Delivery. It’s actually deeper than a marketing plan because you have to figure out the paradigm you’re going to compete on.

We started Moment with four people. Three of them worked on the product and I worked on Delivery. We used friends as contractors to fill in the minimum functions we needed to launch our first product on Kickstarter. From there I started testing a variety of tactics to figure out what worked. And what didn’t work.

This process took about 24 months. Over that time we hired, arranged teams, re-arranged teams, and repeated this cycle until we figured out that our Delivery would be Content to Commerce. Now we have a complete Content team and a separate Commerce team. Each are focused on how they compete against other content and commerce offerings in the market.

Find People Who Live Your Market

Figuring out your delivery isn’t about hiring function specific people. Early on you don’t know what’s going to work so hiring specialists can get you into trouble if you later realize that their specialty isn’t working for your business.

Instead you want to build a team of people who can do multiple skills well. Such as designers who can shoot photos. Or writers who can create community. Or engineers who can handle SEO. You want combos that give you the most amount of flexibility in these early years.

But of everything you do in building this initial team it is critical that they live your market. You can’t teach an early employee who the customer is. Therefore you need people who are the customer and/or have spent a lot of time serving your customer. When hiring, this experience isn’t on the "nice to have" list. It is #1 on the list.

At Moment this was easier because we could tell if someone was into photography or not. All we had to do was look at their Instagram.

You need to find your own version of "look at their Instagram."

Build One Team Per Delivery

Another way to think about Delivery is uncovering the 1-3 strategies that work to differentiate and grow your business. And as you figure out each strategy you then build a team around it.

Early on we thought community was working, so we built a team around it. Only to find six months later that strategy really wasn’t working to profitably reach new customers. This mistake forced us to go back and re-look at our own Delivery, to then realize that within community it was the content that was working.

Therefore we re-arranged the team from Community to Content. We even swapped team leaders upon this realization. Thankfully the community team we hired were all creatives, therefore the switch to content was easier. If we had hired a community marketing team and then needed to become a content marketing team, we would have been in trouble.

It’s important to realize that you will arrange and re-arrange the team based on what you learn. You need to build your culture around this realization so you don’t lose anyone as you pivot your way through finding your Delivery.

Be Amazing At Campaigns

New is what drives startups. Whether it’s a new offering, service, or form of delivery, something new is the engine that drives everything else. Therefore your team has to get exceptional at launching the new. I refer to each new introduction as a Campaign.

You want to see your team improving with each campaign they ship. This doesn’t mean each campaign has to get larger, just better. Your team should get faster at the process, the details should get tighter, and their analysis of the results more insightful. Marketer or not, this process will take time.

Important to remember, your process to create and launch a campaign should become the same over time. The contents will change but the internal process shouldn’t. The process we use is A Brief and it took us several years to be great at it.

Develop Team Leads

Once you get delivery teams working your biggest challenge will be team leaders, especially if your teams are cross functional. Traditionally marketing is considered one organization and functional leaders work with in that, such as community, advertising, or events. These functional leaders get great at running a team that executes a single tactic.

But in order to win at Delivery you end up building teams around strategies versus tactics. This means you need team leaders who can lead functions they previously only collaborated with.

For example, lets say one of your Delivery strategies is to win on service. This means you are trying to be the best in the world at service and therefore your examples will be anyone else who wins on this paradigm. Think Les Schwab Tires employees running out to your car. Or Nordstrom taking back products they don’t sell or having people on the floor to help you pick the right shoe. This is winning on service and it’s much bigger than the marketing tactic of service.

You would need a team leader who can win at service across every company touch point. That could be service through social, or stores, or email, etc. You will even market why your service is so amazing. The end result will be a cross functional team of creatives, developers, operations, etc to deliver the best service on the planet.

How to develop your team leads is an entire post in itself, just know that in order to win at Delivery you need to find and develop these cross functional leaders.

If you have questions dm me @marcbarros.

This is a three part series on how to win your startup market. Part 1 is delivery (tactics to win), Part 2 is finding your quadrant (how to differentiate), this is Part 3.

In the first company I built I didn’t understand markets. I assumed like everyone else, it was a business class exercise to add up the most amount of people and argue why you could capture x% of them. That was the wrong way to think about it.

A better way to think about a market is…what is the tidal wave you are going to ride?

What makes this hard is that your tidal wave may not even exist yet. Which means you are looking for converging trends that may create a new tidal wave.

When we started Contour there was no tidal wave for action cameras. That changed when YouTube started.

YouTube became a tidal wave for self recognition. People wanted more video views, which means they bought better tools to make better videos to get more views to receive more recognition to further satisfy their ego. The end result was a business model that was much stickier than people realized. Customers were not one time buyers, but instead life time buyers willing to purchase accessories and additional cameras to get a better shot.

GoPro was smart enough to recognize this was a tidal wave and winning it is all that mattered. They won, we lost.

Why this matters is because in order to build a big business you need market momentum. That momentum translates into easier growth, which drives everything else.

Here is how I think about finding a your market tidal wave.

Why Market Wins

Before the how, it’s important to understand why market is the most important ingredient in startup success. Marc Andreesen outlines this better than anyone. You should read his post, "The only thing that matters."

The key argument is halfway down the post when he quotes former VC Andy Rachleff…

• When a great team meets a lousy market, market wins.
• When a lousy team meets a great market, market wins.
• When a great team meets a great market, something special happens.

The end summary is that a great market is more important than a great team or a great product.

Why A Narrative

Everyone looks at a market differently. Personally I prefer the Chris Dixon method in saying market size is about narratives, not numbers.

This makes it easier to say if X is true then we believe Y is inevitably true. If Y is true then we believe Z will also happen. Following your logic is much easier than saying the market A is X million people and market B is Y million and together they will make a new market called C that is Z billions of people large.

By talking people through a line vs a series of dots you also shift the discussion away from arguing about the size of each dot and your probability of capturing it. Instead the discussion becomes about the line and what has to happen for the line to become a huge wave.

Ultimately the key to the right narrative is finding investors who already have their own narrative that matches yours. It’s very hard to convince someone about a new narrative for a market they aren’t already thinking about. Most investors have already formed their own narratives and therefore their investment in you is just a self validation of what they already believed.

This is a complicated way to say that a narrative is how investors talk so it’s easier to sell them in a way they are already thinking.

How To Make A Narrative

Start with the person who will be buying your solution and look at the trends happening around them. Whether a B2B or B2C business you want to understand the broader customer, purchasing, psychological and use trends that are happening.

A few ways to do this…

1. Purchasing behaviors.
One path is to look at how purchasing is changing. In the case of Box, Aaron recognized first a technology shift would happen from mainframe to pc, pc to cloud, and cloud to mobile. These shifts only occur every 10 to 15 years therefore IT departments were about to buy a whole new suite of tools. This was going to be the tidal wave that Box needed to ride

2. Psychological needs.
Human needs have never really changed. But what can change is the interest in one of these needs. Take the Wellness Wave, it’s been a tidal wave that Fitbit, Nike, Apple, and Peloton have taken advantage of. Each has a variant wave they are riding but the general narrative is that people are looking to be healthier, to use data to help them make better decisions, and therefore are looking for companies that help them lead healthier lives. A word of caution is that by the time the press are writing about your wave, you already missed it.

3. Use behaviors.
How people accomplish basic behaviors, change over time. Take work for example. It has changed radically in the last 100 years from heavy labor all the way to remote computer work. You can look at how everything has evolved from where to when to how people work. Each new behavior trend is replace by the next so looking at how the world is shifting form 9-5 to remote is a massive tidal wave that some companies are already riding. Slack is currently the most famous, riding the trend in work communication from stagnant email to a constant stream of discussion.

4. Same behavior in alternative markets.
This post is a bit technical but Reid Hoffman talks through the Linked In Series B pitch. Here he uses search analogies in other markets to demonstrate why there is a tidal wave towards a 2.0 version of people search. It’s a market wave built around networks vs individual nodes. Notice how he eventually gets to a [quadrant they can win], but first paints a picture around the people search trend.

I’m sure there are more ways to look for tidal waves, these are the four I prefer to use.

Writing Your Narrative

You can write your narrative with words or learn communicate through power point slides.

Personally I prefer a written narrative, which means that I don’t have a pitch deck. This isn’t for everyone but it helps me to think through the market and the tidal wave we’re trying to ride.

If you plan to communicate your narrative through a slide deck look at Mary Meeker and her Internet Trends Report. It’s a series of different narratives but she knows how to explain trends in a format that investors understand.

If you have questions email me or dm @marcbarros.

This is a three part series on how to win your startup market. Part 1 is delivery (tactics to win), Part 2 is this post, and Part 3 is finding your tidal wave

There are two startup theories about winning a market. One theory is you need a product that is 10x better than anything else. The other theory is to identify a hole in the market where you can be the segment leader from the beginning.

Making a 10x better product is really hard. It requires a technical or production advantage to create something that is significantly better. Peter talks about this in Zero to One.

The latter requires you to understand how the market competes today to then identify a new segment you can begin leading immediately. This doesn’t mean you can have a crappy product or service. But it does mean that you can identify a new space, enter it quickly, and then improve over time. Rule #1 in 22 Immutable Laws of Marketing calls this The Law of Leadership.

I’m not a technical founder, therefore I live by figuring out open spots in markets. Those open spots enable me to start, find customers, learn from them, and make the offering better over time. I call this method…the fastest path to cash.

Learning to identify a quadrant is an exercise I use before entering a market and then constantly revisit to make sure the world hasn’t changed on us. I will do this at both a product and market level to ensure our fist offering can win, which lets us then figure out how we can stay #1 over the long term.

This is bigger than identifying a problem to solve. This quadrant exercise is about saying…if I solve that problem how am I going to compete at a business level?

This is my process.

1. How Do People Compete Today?

Look at your market and ask yourself, how do the existing companies compete today?

Remember, this isn’t a product feature question. It’s a business question to ask what strategies are the existing companies using to win?

It goes something like this…

• List all the companies in the market who serve your customer’s needs either directly or indirectly.

• Look at each company you list and note what their core differentiators are. What are they trying to win on? Is it product, price, distribution, service, etc.

You want to look below the tactics of the existing players to understand the DNA of the company. This list will be their core super powers.

2. What Is Your DNA?

Now you do the same exercise for yourself and the founding team.

What is your personal DNA? What is the DNA of the founding team? What is our superpower and therefore what can we be the best in the world at?

Be honest with yourself. You are amazing at one, maybe two things and that’s it.

For example I’m not a technical founder, therefore building a company that wins on technical prowess would be difficult for me without finding a technical savant. Even then it’s not in my DNA and therefore my instincts for how to build this culture would be an uphill climb for me.

By the end of this exercise you should have one, maybe two super powers you will build your company around.

3. Start Drawing Quadrants

Now go back to your list of companies that exist in the market and start drawing two by two quadrants to look at how the market competes today. On each axis should be a single paradigm.

Let’s look at shoes and Allbirds. I don’t personally know the company so this is me looking in from the outside. But if I were originally making a shoe company I’d be looking at how the market competes today….

• distribution vs none
• niche customers vs broad
• expensive vs cheap
• general vs activity based
• community vs none
• service vs none
• single brand vs multiple brands
• celebrities vs non

I would keep redrawing these quadrants until I understood how each of the companies were competing. Through this exercise, you will start to notice that the winners of each market have a large, clear quadrant they are winning on.

Nike – distribution and athletes. They have more distribution than anyone else in the world and more athletes using their gear. This ties back to the founding DNA of the company with Phill Knight and Bill Bowerman. Allbirds can never win here.

Adidas – distribution and expression. Adidas has struggled to differentiate from Nike. Yes they have the stripes but until recently didn’t have a clear quadrant to win. They have nearly the same distribution scale but have pivoted to focus on creatives, ie a new tribe of people. So instead of shoes being about performance they are about expression. This requires them to have distribution and community at their core to understand the fashion, street, and lifestyle markets.

I would continue this process until I understood the top competitors I listed. I might even do this for the initial product I plan to enter the market with, to make sure it was differentiated from existing solutions.

4. Create Your Quadrant

Once you draw a few of these quadrants you want to go back to your DNA and ask…ok how can we rotate these quadrants to compete on a paradigm that I can win?

Competing straight up on product features is going to be very difficult. You may start with a differentiated product but you’re going to have to figure out how you win at a business level.

Going back to the Allbirds reference, they started by competing on comfort and material. It gave them a clear product space to own with wool shoes that were more comfortable than anything else. It let them compete on comfort versus performance.

Post a successful initial product it appears that Allbirds is now trying to win the market on comfort and direct distribution.

On the comfort side they are going deeper with materials, fit, and activities. It’s enabling them to expand their offering to men, women, and kids as well as their styles with runners, loungers, and skippers.

On the direct distribution they are going one geographic market at a time, building the know-how around selling, marketing, and supporting customers. They get faster with each new market, building a DNA that the legacy shoe brands can’t compete against.

By having legacy, the existing companies can’t easily change their DNA. In the case of Nike, once you build your entire culture around distribution you can’t just change it. Therefore Allbirds can compete on a new paradigm until someone else comes after comfort and direct distribution. But by then Allbirds will be too advanced in both areas to easily knock them off.

It takes time to figure out your quadrant. The more you do this exercise the easier it gets. You can do it both at a product level and a market level.

Word Of Caution

If you enter a market with another startup and compete for the same quadrant it’s going to be a winner take all scenario unless your market is gigantic AND you can raise enough capital to compete.

Uber and Lyft is a great example. This market was so significant they were able to raise massive amounts of capital in order to compete. They are still well behind Uber but were able to succeed into a public company.

This is very rare. In the case of GoPro vs Contour the market was not big enough and therefore no one wanted to fund number two. Once they raised $80M we had to either raise more money or find a new paradigm to compete on. We weren’t smart enough to do this. We just kept doing the same thing, self justifying that every market was big enough for Coke and Pepsi. This was wrong.

You can read more here about what happens when you are losing.

The reason I say winning a quadrant against a fellow startup is harder is because they are going to be just as aggressive and scrappy as you are. They are not going to be too big or too complacent to let you gain market share. You can compete head to head, just know what you are up against.

Email me or dm me @marcbarros if you have questions.

This is a three part series on how to win your startup market. Part 1 is this post, Part 2 is finding your quadrant, and Part 3 is finding your tidal wave

Delivery, it’s where startups fail.

What’s delivery? It’s your methodology for winning your market.

What does winning your market mean? To be the largest, most successful, and therefore the most enduring company in your space.

Why do you care? It’s called the Law Of Increasing Returns. Chapter 1 of Eating the Big Fish explains this best, but number one has every advantage in the market. This means everything is easier from acquiring customers to raising capital to attracting employees to being profitable.

Back to delivery….In my first company I spent a decade of my life not realizing that winning a market was by far the hardest aspect of building a company. I was naive to assume that the best product wins, it doesn’t. Instead the company who figures out delivery has the best shot to both win their market and give themselves time to make the best products.

GoPro beat the shit out of us with content to retail. They copied the RedBull model but instead of selling a can of sugar water they sold you a camera. They built their company DNA around content marketing and retail distribution. The result was brand value that allowed them to sell an inferior product at the same price. Ultimately better product margins gave them more money to put back into Delivery, which further increased their market share.

A second example is Box. They started in the same market as Dropbox, both trying make data storage easy. Early on they realized they had very little chance of winning in the online, consumer storage game. Therefore they pivoted to enterprise where they quickly realized their Delivery was about enterprise sales and marketing. They had to shift their DNA from consumer internet to the enterprise and therefore had to spend a lot of capital to establish customer relationships quickly. They knew that if they could win customers they could then make their offering better over time. They too became a public company.

Every market is different. Below is the process I use to discover Delivery.

Keep in mind this is not a list of steps but instead a circle you keep spinning to find your answers. This process takes 2-3 years to figure out.

1- Who Is The Customer And Why Do They Buy?

The who is different from the why.

The who, is the person who will eventually purchase and use the offering you make. Ignore how you get to them, just understand who they are.

When you start you don’t have customers so you have to do this through interviews within an existing market. You have to find out how people solve their problem today. If they are buying/products or services you want to know what and why they bought it. If they didn’t buy anything you want to know that too. Why people don’t buy is as powerful as why they do buy because in their "no" you can uncover a lot of potential.

Please note these are not customer persona’s. Those are just made up people and a waste of time. Instead just talk a lot to potential customers, to the point that you can see the trends of what people are saying.

The why, is deeper than the features or the price. It’s about understanding their motivations and what triggered them to act on them. You want to find out…

• Why did you buy?
• Why did you buy now versus later?
• How long was it from thinking about buying to actually buying?

When you get surface level answers, like price, ask follow-up questions to understand their deeper why. Such as, what problems are you trying to solve, why is it a problem, what are you trying to get out of the solution?

What you’ll start to discover are consistent themes. At Moment we learned that people purchased because they were going to take a trip. It represented the reason they wanted better photos or videos..and therefore the products and services we offered.

2 – Who Has Reached This Customer Before?

Take your customer and look at who has reached them before.

Start outside of your direct market to avoid repeating tactics they have already seen. Instead look at random, different markets and what tactics have worked to reach this same type of customer.

For example, early on we thought people had to see and touch Moment gear before buying. If true, this tactic is similar to sampling. So we looked at sampling industries…

• Beverage
• Food
• Cars
• etc.

We would then look at the tactics the winning companies used to see which ideas were relevant to us that we could test. The ideas we liked we copied and applied to our market.

• Local street team with gear who would visit local events.
• Small trips where people try our gear.
• Photo walks.
• Etc.

All of these were small bets we could take and test to figure out our Delivery.

At scale a great example is RedBull. Somewhere along the way they realized they could take the the tactics of an alcohol company (sampling, parties, vip) and marry them with the tactics of an entertainment company (entertainers, content, and big events). They were able to take tactics used in ancillary industries, bring them to beverage, and create something no one had ever seen before.

3 – What Tactics Work?

Try everything…quickly.

You need to create a culture built around experimentation. Everything your team is working on is in support of figuring out your Delivery. You don’t care if it’s about products or sales or sampling, etc. Every dollar the team is spending is a bet and you need the team learning which bets work to acquire a new customer.

What you care most about is that the team has a decision framework to make bets, learn from them, and decide what’s next. They need a bet size, in dollars, they can use. They need to be able to measure the results, even if in a basic way. And they need to take notes so you can find the threads.

The basic process…

• Create a culture that experiments.
• Provide a bet size, in dollars.
• Have simple ways to measure ROI.
• Take notes to find the trends.
• Be part of as many bets as you can.

In order to roll this up into one Delivery methodology you need to be in the middle of the action. You can’t run all the experiments yourselves but you need to be looking at the data, reading the notes, and talking to people. In between the tactics are the bigger trends and it’s really important that you find them.

4 – What Is Your Delivery?

Now comes the hard part.

You have to roll-up the tactics into one strategy. You will build your entire cultural DNA around this strategy, therefore it’s important to figure this out as fast as you can. If not you risk hiring people that aren’t going to fit.

In creating a delivery strategy you want to keep it as simple as 1,2,3. It probably starts as just one strategy and over time you add the second and the third. Keep in mind you will get some of this wrong so don’t be afraid go backwards in reducing your list to then re-add.

The easiest way to summarize your Delivery is to answer the finish the statement…we win our market through_____. To start it will be, we win our market through ______. Then it’s we win our market through ______ and ______. Then it’s probably…we win our market through ____, ______, and ______.

If you list a bunch of tactics you’re doing it wrong. Your answer should be simple enough if fits in a single sentence.

At Moment we win through Content to E-commerce. Therefore we have built our whole team DNA around both content and e-commerce. From the people we hire to the way they area organized to the tactics we use, we are building around this Delivery.

We still have a ways to go in adding our third element but now five years in we’re starting to uncover what our third element is to winning our market.

If you have questions email me or send a dm to @marcbarros.

If you raise venture or angel money there is one expectation…grow. It is the one metric every investor values, whether private or public. Everything else is just noise.

How fast do you have to grow?

It depends. It’s not actually easy to control your growth rate as it’s highly dependent on your timing, team, and luck. In consumer 6x annual growth is really strong, 2x is good, and below that you get a "meh."

Personally I’ve found that a 2x annual revenue growth rate is fast enough but not too fast that you can’t develop the team. This is a far cry from blitz scaling, but over time 2x compounds into real revenue numbers.

If you have to grow, it’s a stressful reality. Grow and everything is easier. Raising money, hiring people, working harder, and everything in between.

Don’t grow and you’re on the path to running out of money. Or worse and you’re stuck running a company that is slowly dying.

Slower growth isn’t just that life got harder. It’s much more binary than that. It changes your entire trajectory to survive.

Going back to the public markets, growth drives the stock up. Missed numbers or slower future growth brings it crashing down. Recent startup examples like Blue Apron, Snap, GoPro, Fitbit, and Stitchfix stand out. These companies won the startup game, but are getting trashed because they aren’t growing fast enough.

The same phenomena happens in the private markets, you just don’t directly see it until you can’t raise money. It’s unclear until you’re writing your startup’s post mortem about how you were so close…just missing this one thing. That one thing was growth. You didn’t have enough of it.

A cold reality is that people won’t directly tell you how f’d you are. Investors will still take your meetings. Press will still write about you. New employees will still apply. The perception is that if you just try a little bit harder it will click. That’s not true.

If your growth slows you have to dramatically change your trajectory to get back on track. These are not small decisions. These are massive decisions that may require restarting your own company to create the growth required.

In making that pivot, what is underestimated is the personal toll this expectation takes on a CEO. Yes it’s their job, but it’s incredibly stressful.

And to a founder it’s even more peril. To everyone else your startup is just one of many opportunities. To your investors you are one bet within a portfolio. To your employees you are one job in their career. To your customers you are a solution they will find a way to move on from. But to a founder, this is one of the few companies you get to start in your career.

The energy it takes to start a new company is too great to start over multiple times. It’s one thing to run a company you scaled, i.e. Bezos, Musk, and Hastings. It’s another thing entirely to start over from scratch and build a new one.

Therefore if you raise money and can’t grow fast enough, good luck.

This is a cynical way to look at building of venture funded startups but it’s true. The outcomes are binary. Just ask every founder that didn’t make it. Or every founder that got stuck running a "not growing fast enough" venture backed startup. It’s just something you can’t fathom until it doesn’t work out.

How To Handle Growth

Everyone handles this expectation differently. Here is how I think about it…

• Set expectations up front about what rate you want to grow at. It’s ok to start slow and build into the growth as you understand your business. It’s not ok to start fast and then slow down. If anything you want to hedge towards growth accelerating over time.

• Determine how much growth you can personally handle as the CEO. If your team is new, it takes time to go faster. If this is one of your first companies it also takes time to learn how to grow. Growth is a learned skill and you need time to develop how to do it.

• Build this growth curve into the culture of the company. Your whole startup philosophy should be built around how fast you need to grow in order to win the market. The answer to that question is different for every founder.

• Teach your team how to grow. Constantly run brainstorm sessions about how you can 2-4x the business and the team. This gets people thinking about this earlier so as you make decisions they aren’t surprised. People don’t teach growth in a business environment. Therefore you have to work on teaching it.

• Find your outlets for the stress. If you show it, your team will sense it. The more they sense it the worse they perform. Learning how to handle your emotions is critical to achieving the growth you’re searching for.

What Happens If Growth Slows

If growth is slowing here is how to think about it…

• Pivot to a market segment where you can be number one. Investors fund and companies buy market leaders.

• Dig deeper to figure out what is and is not working. Here is where a Customer Journey can help you. Be ruthless to cut what isn’t working and shift to things that are working.

• Watch your burn. Cash is survival so if you want any chance to change your growth rate make the business profitable so you have more time. Generally those cuts come in the form of people, which is really painful.

• Sell the business before it’s a fire sale. Selling the business doesn’t mean you’ve given up it just means someone else is the owner of the upside and downside. This path can allow you to still serve your customers without the same stress of survival.

Conclusion.

If you crack growth everything else gets easier. If you don’t crack it, you’re in a tough spot.

Alternatively don’t raise capital and just worry about one half of the equation…enough cash in the bank. This stress comes with investor backed startups, but isn’t compounded by the requirement to grow.

In startup culture there is a classic metaphor, "no surprises." It’s often used in referring to how a CEO and Board are supposed to function.

"No surprises".

The first time you hear it you go, huh. The second time, you start to wonder. By the umpteenth time you finally get over the fear to just ask…WTF are they talking about with "no surprises"?

A startup, by its nature, is one giant science experiment. You start with a thesis and then you test the shit out of it, day after day, week after week, year after year. This process is constant and anything but predictable.

So if you have no idea what is going to work, how can you have no surprises?!

You can’t.

Instead consider everything will be a surprise. The question then how do you manage it?

The Background

I have three little kids. When they decide to throw peanut butter covered apple slices across the room…that is a surprise. Even if you carefully place them on their plate, put a 6 foot tarp around the table, and sit with them…they still decide to throw their apples across the room.

Why?

Because they are experimenting. They are trying to learn and test where the line is.

So as a parent what do you do? Before you make the food you communicate about what you’re going to do. Before you put it on the plate you let them know the expectations. And before they take it from you they look you in the eyes and agree to what you’ve told them.

You do the same thing with a Board. You tell them where the company is going, what you are testing next, and what is expected from those tests. What’s important is that you share the downsides of what you are testing and not just the upside. Otherwise all they hear is the upside so when your effort doesn’t work they will go…oh that’s a surprise.

This holds true whether you are super early testing basic assumptions or further along and testing annual plans.

Another Way To Think About It

I don’t like the term, no surprises. It’s reminds you of being told by your parents not to let them down. It’s kind of like no shit, why would I want to let myself down, let alone you?!

What they really mean by no surprises is they want predictability. Boards LOVE predictability. They may say they love supporting founders figure out their path, but deep down the want you to crush what ever plan you put down. Anything to the contrary is a "surprise" in their mind.

Another way to think about no surprises is be transparent. Tell us when shit breaks. And if you steer away from the plan we talked about last meeting please let us know.

Managing To No Surprises

Assuming this nomenclature isn’t going to changed anytime soon here are a few ways to manage that expectation.

1. Build Your Plan In Phases

Early on in a startup you have zero predictability and even less validation that your founding thesis is correct. Instead of building financial models, work on defining the major phases of the business and what you want to prove to yourself with each phase. If you are your harshest critic then meeting everyone else’s "no surprise" expectations will be easier. And if you need help in making these phases, they all include "not running out of cash."

2. Build Into Annual Plans

It takes years to build into business predictability. It took four years at Moment until we had an annual plan. Instead we moved from predicting a month to a trimester to a year. It allowed us to experiment and learn faster without having to guess at what would happen 12 months from now. Building into predictability trains your board on what types of surprises they can expect. Together you want to learn as the startup scales from smaller to larger bets.

3. Don’t Hype

Shit is going to go wrong. It always does. And if you are known for hyping, you immediately look out of control when you hit a rough patch. There are times that you want your team and board excited about the potential, but that potential doesn’t last long. Building a successful startup is at least a 10 year journey, which means you need to manage this consistently.

4. Don’t Get Emotional

Business is matter of fact, especially with a Board. If you take people’s money then you have a job to do…provide them with a return. If you don’t like this expectation then don’t take their money. Otherwise recognize that your job is to test and re-test until you find the successful path you promised. That path may be a different direction than what you pitched, but none the less it will be a path towards the return you promised.

5. Prioritize What’s Broken

Always start with the bad news. Hit it first thing in your emails, updates, Board prep materials, and meetings. Most importantly make it concise. The more words you use the more out of control you appear. Instead make the problem succinct, provide alternative directions, and your recommendation. And at the end you want to have a clear ask from your Board.

6. Escalate Major Changes

Put yourself in a Board member’s shoes…from the last meeting we talked about "blah." If in operating the company something changes that impacts your ability to deliver blah then you should escalate that. One path is an email that outlines what happened, why, and what you are going to do going forward. A more serious path is that same email with a phone call on the end of it.

Board’s have a fiduciary responsibility, which means they too can get sued if you screw up. So use your best judgement…if I was on the board would I want to know this new information? If yes then escalate.

Just remember you can only escalate so many times until it looks like you don’t know what you’re doing.

Google "brand and startup" and you get a lot of content. Talk brand with startups and you get a lot of glazed eyes. Most of the internet content comes in a list format and most of the startup talks are from creatives who eat, sleep, and breathe brand.

What a lot of people get wrong at a startup level is that brand isn’t about beautiful visual execution. It’s not about having a great logo, stunning imagery, or a well designed website. It’s not even about hiring a rad agency that “does that brand thing that we suck at.”

As a startup, brand is much deeper. Brand is about purpose.

Figuring out how you are going to win the market is a much harder problem to solve than brand. Winning is binary, brand is not.

You don’t even have to make a pretty brand to win. Ugly brands win all the time, just ask Amazon. They could give two cents about visual identity. Instead they just crush the living s%&# out of everyone, in every market they touch.

I’ve lost to an ugly brand before. It made losing that much more excruciating. All I could do was shake my head and go WTF.

Whether you are creating an ugly brand or a beautiful one, here is what I’ve learned about startup brands the past 15 years.

Brand Forces You To Have A Clear Purpose

A brand should answer the question…"why do you exist?"

Regardless of B2B or B2C, being able to answer this question is both hard and important. Not because the exercise is difficult, but because you often make up words trying to craft the perfect sentence.

Usually the answer is simple. Everyone starts their company for a reason, that reason is your purpose. It’s probably around making something better, people happier, others more successful, etc. Whatever the reason, write it down.

That is the foundation of your brand.

Have A Character

Read this book, “The Hero And The Outlaw.” It will help you visualize the archetype that represents the person your brand will become.

Even if you just express brand through words, having a clear picture of the character helps to move brand past visual to something tangible. It’s easy to describe your friend and their attributes. Your brand should be equally as clear.

Learn To Tell Stories

Everyone wants to fall in love, especially with new young brands. They provide an un-biased opportunity to discover a company that shares their same beliefs. The reality is that people are buying into your beliefs as much as they are the product. Who you are, what you believe in, and why you made this product….is brand.

Learn how to share that message through stories. All kinds of stories from short ones to long ones to visual ones to words. Tap into emotion and purpose as much as you can. It’s the narrative that people want to connect with.

Your stories may suck at first and that’s ok. It takes a lot of practice to get good at telling stories.

If you are just competing on a check list of features it is a very long road to winning hearts. And even longer road to winning the market.

Consistency Wins

What ever your brand stands for, don’t stop repeating it. That goes for your name and it especially goes for your purpose. Once people create a perception of who you are and what you stand for, it’s very hard to change it.

To GoPro’s credit they were incredibly consistent with their brand. They didn’t change their name, we did three times. They didn’t change their message, we did that a lot. They didn’t compete on the features, that’s all we competed on. Instead they focused on the emotion of action video and told that story over and over again through video.

It is much harder to capture minds than it it so to capture hearts.

You Can’t Be Wrong

Here’s the thing…if you go all in, you can’t be wrong. If you are sharing your beliefs no one can say that you are wrong. They may choose not to believe what you believe, but they can’t argue that you are wrong.

On the other hand if you just sell features anyone can argue that something else is better. That your product doesn’t do X as well as company Y. Or that they prefer company Z because they do feature W better.

MLK often used the word, ‘believe’. It was a powerful statement that you couldn’t challenge.

Brand Alone Doesn’t Win

This isn’t discussed enough within the startup community, but winning is incredibly hard. Once a market develops there is one winner and a whole lot of losers. And unfortunately if you are a venture backed startup you have only one choice but to win. Coming in second doesn’t provide nearly the return that is required.

Having a purpose, sharing your beliefs, and telling your story over and over again is just one piece in figuring out a market winning strategy.