So far this year, I’ve probably met with over 100 unique start-ups, inclusive of mentorship, investing, and media buying activities. Since I’ve met with a high volume of companies, I’m starting to see a pattern. Most entrepreneurs in the advertising and technology space are pitching an idealistic vision. Unfortunately though, we do not live in an idealistic world so in my mind, I need to take their vision and transform it into something that’s much more tangible.
Advertising agencies are looking for solutions that solve today and tomorrow’s problems and we need companies who can help us do it with flawless execution. Many early stage organizations are far from flawless not because they are terrible, which they are not, but they are early stage and building out their product and team while trying to satisfy the demands of a large agency and a global fortune 500 marketer. It’s hard to do both. The early stage organizations who can do this are the ones who accelerate revenue fastest.
Additionally, because entrepreneurs tend to be idealistic, only a portion of their product vision can be bought off today. It’s rare, though not impossible, that we as an agency can buy a total offering from an early stage company. Agencies are trying to get their clients key performance indicators satisfied and surpassed and sometimes much of the entrepreneurial product is not relevant to do so.
So, what’s the net/net?
As an agency, be very specific with what you need from an early stage company and make sure you understand the ins/outs of working with a startup. It’s one of the most rewarding experiences to work with an early stage company but it’s also one of the most painful. Back in May of 2011, I released this document thru The Media Kitchen about lessons we’ve learned working with startups. Read it. For the record, I am pro-startup and working with as many early stage companies as possible.
As an investor, try and understand what the market is ready to buy today. While you are ultimately investing in a vision for the future, as well as a solid team, the market rewards current acceleration. Also, product changes and pivots are common, so make sure to understand what media buyers are looking for. We’ve all heard Wayne Gretzky’s quote, “skate to where the puck is going to be, not where it has been” and that’s also relevant here, just don’t go too far up the ice or you’ll be waiting for your portfolio company to be generating revenue.
As an entrepreneur, understand that not everything you are selling might be bought off today. Build a product that can be serviced today but has enough visionary legs to pull it into the future. Your product you are selling should be relevant for today’s needs. Meet with agencies to understand exactly what those are. There are some great people you should connect with to take the temperatures of agencies. Here are just a few of them: Brandon Berger, Ian Schafer, David Berkowitz, and Mark Silva (sorry if I forgot to mention you).
** The graphic from this post was something I drew after being inspired by Hugh Macleod. Hope you enjoy.